|   x |   Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|----------|--------------------------------------------------------------------------------------------|

|   o |    Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|----------|------------------------------------------------------------------------------------------------------|

| Nevada                       | 86-1006416          |
|------------------------------|---------------------|
| (State or other jurisdiction | (I.R.S. Employer    |
| of incorporation)            | Identification No.) |

| Name of exchange on which registered | Title of Each Class |
|--------------------------------------|---------------------|
| None                                 | None                |

----

|   | EXPLANATORY NOTE |
|--------|------------------|

| TABLE OF CONTENTS |   |                                                                                       |
|-------------------|--------|--------------------------------------------------------------------------------------------|
|              |   |                                                                                       |   |   |
| PART I            |   |                                                                                       |
|              |   |                                                                                       |   |   |
| Item 1            |   | Description of Business                                                                    | 2 |   |
| Item 1A           |   | Risk Factors                                                                               | 5 |   |
| Item 1B           |   | Unresolved Staff Comments                                                                  | 7 |   |
| Item 2            |   | Properties                                                                                 | 8 |   |
| Item 3            |   | Legal Proceedings                                                                          | 8 |   |
|              |   |                                                                                       |   |   |
| PART II           |   |                                                                                       |
|              |   |                                                                                       |   |   |
| Item 5            |   | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of |   |   |
|              |   | Equity Securities                                                                          | 8 |   |
| Item 6            |   | Selected Financial Data                                                                    | 11 |   |
| Item 7            |   | Management's Discussion and Analysis of Financial Condition and Results of Operations      | 11 |   |
| Item 7A           |   | Quantitative and Qualitative Disclosures About Market Risk                                 | 17 |   |
| Item 8            |   | Financial Statements and Supplementary Data                                                | 17 |   |
| Item 9            |   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure       | 18 |   |
| Item 9A           |   | Controls and Procedures                                                                    | 18 |   |
| Item 9B           |   | Other Information                                                                          | 19 |   |
|              |   |                                                                                       |   |   |
| PART III          |   |                                                                                       |
|              |   |                                                                                       |   |   |
| Item 10           |   | Directors, Executive Officers and Corporate Governance                                     | 20 |   |
| Item 11           |   | Executive Compensation                                                                     | 22 |   |
| Item 12           |   | Security Ownership of Certain Beneficial Owners and Management and Related                 |   |   |
|              |   | Stockholder Matters                                                                        | 25 |   |
| Item 13           |   | Certain Relationships and Related Transactions, and Director Independence                  | 25 |   |
| Item 14           |   | Principal Accountant Fees and Services                                                     | 26 |   |
|              |   |                                                                                       |   |   |
| PART IV           |   |                                                                                       |
|              |   |                                                                                       |   |   |
| Item 15           |   | Exhibits, Financial Statement Schedules                                                    | 27 |   |
|              |   | SIGNATURES                                                                                 | 29 |   |
|              |   |                                                                                       |   |   |

----

----

| (a)   | The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland – Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Due Date                                                                 | Interest Rate | Amount                                                                                                              |   | Accrued Interest***                                                                                             | Total Owed |                                                                                 | Convertible/Non-Convertible |
|--------------------------------------------------------------------------|---------------|---------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------|-----------------------------|
|                                                                     |          |                                                                                                                |   |                                                                                                            |       |                                                                                 |                        |   |
| 01/07/2011 (1)                                                           | 6.00%         |  $          25,000                                           |   |  $            1,615                            |       |  $          26,615            |                        | Non-convertible |
| 01/18/2011 (1)                                                           | 6.00%         |              25,000                                |   |                   986 |       |              25,986 |                        | Non-convertible |
|        10/26/2010                          | 6.00%         |                    25,000 |   |                1,237                 |       |              26,237 |                        | Convertible at $0.02 per share |
|                                                                     |          |                                                                                                                |   |                                                                                                            |       |                                                                                 |                        |   |
|                                                                     |          |                                                                                                                |   |                                                                                                            |       |                                                                                 |                        |   |
|                                                                     |          |        $          75,000            |   |  $            3,838                            |       |  $          78,838            |                        |   |
|                                                                     |          |                                                                                                                |   |                                                                                                            |       |                                                                                 |                        |   |
| (1)  Note payable to Anthony Silverman, our President and CEO. |          |                                                                                                                |   |                                                                                                            |
| ***  Interest calculated to maturity or conversion             |          |                                                                                                                |   |                                                                                                            |       |
|                                                                     |          |                                                                                                                |   |                                                                                                            |       |                                                                                 |                        |   |

----

----

|   |               |   | High   |   |   | Low    |   |   |
|--------|--------------------|--------|--------|--------|--------|--------|--------|--------|
|   | FISCAL YEAR ENDED: |   |   |   |   |   |   |   |
|   | August 31, 2010    |   |   |   |   |   |   |   |
|   | First Quarter      |   | $      | 0.04   |   |   | $      | 0.02   |   |   |
|   | Second Quarter     |   | $      | 0.06   |   |   | $      | 0.02   |   |   |
|   | Third Quarter      |   | $      | 0.06   |   |   | $      | 0.02   |   |   |
|   | Fourth Quarter     |   | $      | 0.04   |   |   | $      | 0.02   |   |   |
|   |               |   |   |   |   |   |   |   |   |   |
|   | FISCAL YEAR ENDED: |   |   |   |   |   |   |   |   |   |
|   | August 31, 2009    |   |   |   |   |   |   |   |   |   |
|   | First Quarter      |   | $      | 0.05   |   |   | $      | 0.03   |   |   |
|   | Second Quarter     |   | $      | 0.04   |   |   | $      | 0.01   |   |   |
|   | Third Quarter      |   | $      | 0.07   |   |   | $      | 0.02   |   |   |
|   | Fourth Quarter     |   | $      | 0.06   |   |   | $      | 0.02   |   |   |

----

| Date of Issuance                   | Principal Amount of Note(s) | Further Description and Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------------------------------|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| September , October, November 2007 | $1,090,000                  | During September through November 2007, we issued twenty-seven Convertible Promissory Notes in an aggregate principal amount of $1,090,000.  These Convertible Promissory Notes are due September 17, 2009, bear interest at the rate of 6% per annum and are convertible into our common stock at a rate of $0.30.  The Convertible Promissory Notes were issued in a private offering of Units, each consisting of a Convertible Promissory Note and a warrant for the purchase of the number of common shares into which each Convertible Promissory Note is convertible.  The warrants expire on September 17, 2009 and have an exercise price of $0.50 per share.  We recognized a discount of $180,330 related to the warrants and a beneficial conversion feature of $318,330 related to these notes.  On October 29, 2008, the Company issued 793,720 shares of its common stock to holders of convertible promissory notes in lieu of an annual cash interest payment of $39,686.  The company also recorded $26,457 in conversion expense as a result of reducing the conversion price from $0.30 to $0.05 per share for this conversion.  In September 2009, holders of $1,090,000 in principal and $83,828 in accrued interest converted their notes into 23,476,566 shares of common stock at a conversion price of $0.05. The Company recognized $391,276 in conversion expense as a result of the reduction of the conversion price to induce conversion.  |
| December 29, 2009                  | $25,000                     | On December 29, 2009, we issued a 60-Day convertible promissory note to an accredited investor.  This note bears interest at 6% per annum and is convertible into the Company’s common stock at a rate of $0.02 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Date of Sale                       | Proceeds from Sale          | Further Description and Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| October 13, 2008                   | $15,000                     | On October 13, 2008, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| October 13, 2008                   | $15,000                     | On October 13, 2008, the Company sold 1,500,000 shares of common stock to its CEO, Anthony Silverman at a price of $0.01 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| December 1, 2008                   | $15,000                     | On December 1, 2008, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| January 13, 2009                   | $3,000                      | On January 13, 2009, the Company sold 300,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| March 17, 2009                     | $15,000                     | On March 17, 2009, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| March 22, 2010                     | $2,660                      | On March 22, 2010, Holders of 13,300 Units contributed $2,660 to convert 13,300 shares of preferred stock into 26,600 shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| April 8, 2010                      | $4,160                      | On April 8, 2010, Holders of 20,800 Units contributed $4,160 to convert 20,800 shares of preferred stock into 41,600 shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| May 13, 2009                       | $30,000                     | On May 13, 2009, the Company sold 2,000,000 shares of common stock to three accredited investors at $0.015 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| May 22, 2009                       | $15,000                     | On May 22, 2009, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| June 13, 2009                      | $30,000                     | On June 13, 2009, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| September 30, 2009                 | $25,000                     | On September 30, 2009, the Company sold 1,250,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| November 3, 2009                   | $25,000                     | On November 3, 2009, the Company sold 1,250,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| February 1, 2010                   | $25,000                     | On February 1, 2010, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.025 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| April 16, 2010                     | $50,000                     | On April 16, 2010, the Company sold 1,666,667 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| May 13, 2010                       | $25,000                     | On May 13, 2010, the Company sold 833,333 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| June 17, 2010                      | $25,000                     | On June 17, 2010, the Company sold 833,333 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| August 11, 2010                    | $25,000                     | On August 11, 2010, the Company sold 1,666,667 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

|                         | Number of Securities                                                                                                                                                                                                                                          |   |                |   | Number of Securities                                                                                                                                                                                                                                          |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         | To Be Issued Upon                                                                                                                                                                                                                                             |   | Weighted Average    |   | Remaining Available                                                                                                                                                                                                                                           |
|                         | Exercise of Outstanding                                                                                                                                                                                                                                       |   | Exercise Price of   |   | For Future                                                                                                                                                                                                                                                    |
|                         | Options                                                                                                                                                                                                                                                       |   | Outstanding Options |   | Issuance Under Plans                                                                                                                                                                                                                                          |
|                         |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |
| Equity compensation plans    |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |
| approved by stockholders     |                              2,933,332                                                                       |   | $0.50               |   |                              8,251,171                                                                       |
|                         |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |
| Equity compensation plans    |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |
| not approved by stockholders |                                           - |   | $0.00               |   |                                           - |
|                         |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |
| TOTAL                        |                              2,933,332                                                                       |   | $0.50               |   |                              8,251,171                                                                       |
|                         |                                                                                                                                                                                                                                                          |   |                |   |                                                                                                                                                                                                                                                          |

----

| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------|

----

----

|                                          |                                                                                             |   |                                                                                                             |   |   | For the Year Ended |   |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------|--------|
|                                          |                                                                                             |   |                                                                                                             |   |   | August 31,         |   | August 31, |   |
|                                          |                                                                                             |   |                                                                                                             |   |   | 2010               |   | 2009 |   |
| Interest expense on non-convertible notes     |  $              2,973 |   |  $                 793 |   |
| Interest expense on convertible notes payable |                29,190 |   |              160,149                            |   |
| Amortization of note payable discounts        |                24,925 |   |              391,788                            |   |
| Other interest and finance charges            |                23,173 |   |                85,511                 |   |
|                                          |                                                                                             |   |                                                                                                             |   |   |               |   |   |   |
| Total interest and finance charges            |  $            80,261            |   |  $          638,241                                       |   |
|                                          |                                                                                             |   |                                                                                                             |   |   |               |   |   |   |

----

|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   | For the Year Ended |   |
|-------------------------|---------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   | August 31,         |   | August 31, |   |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   | 2010               |   | 2009 |   |
| Operating expenses:     |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |
|                    | General and administrative                  |  $                      255                                                                                   |                                                                                                                                                  |  $                   2,183                                   |                                                                                                                                  |
|                    | Depreciation and amortization               |                       2,669                                                                                        |                                                                                                                                                  |                     28,935                                   |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    | Total operating expenses                    |                       2,924                                                                                        |                                                                                                                                                  |                     31,118                                   |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    | Loss from operations                        |                                                                                                                                                                                                                             |                      (2,924)                 |                                                                                                                                                             |                    (31,118)            |   |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
| Other income (expense): |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |
|                    | Loss on disposal of assets                  |                                       - |                                                                                                                                                  |                      (4,463)                            |                                                                                                                                  |
|                    | Loss on impairment                          |                                                                                                                                                                                                                             |                         (212) |                                                                                                                                                             |                    (22,432)            |   |
|                    | Other income (expense)                      |                    -                                                                                                              |                                                                                                                                                  |                           (30) |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    | Total other income (expense)                |                         (212)                                                                            |                                                                                                                                                  |                    (26,925)                                       |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    | Loss from discontinued operations           |                      (3,136)                                                                                            |                                                                                                                                                  |                    (58,043)                                       |                                                                                                                                  |
|                    | Gain on disposal of discontinued operations |                  -                                                                                                                          |                                                                                                                                                  |                     22,116                                   |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    |                                        | Loss from discontinued operations                                                                                                                                                                                                |                      (3,136)                 |                                                                                                                                                             |                    (35,927)            |   |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    |                                        | Less loss attributable to noncontrolling interest                                                                                                                                                                                |                         (314) |                                                                                                                                                             |                      (3,346) |   |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |
|                    | Net loss from discontinued operations       |  $                  (2,822)                                                                                                       |                                                                                                                                                  |  $                (32,581)                                                  |                                                                                                                                  |
|                    |                                        |                                                                                                                                                                                                                             |                                                                                                                                                  |                                                                                                                                                             |                                                                                                                                  |   |               |   |   |   |

----

| Due Date                                                                 | Interest Rate | Amount                                                                               |   | Accrued Interest***                                                                                             | Total Owed |                                                                                 | Convertible/Non-Convertible |
|--------------------------------------------------------------------------|---------------|--------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------|-----------------------------|
|                                                                     |          |                                                                                 |   |                                                                                                            |       |                                                                                 |                        |   |
| 01/07/2011 (1)                                                           | 6.00%         |  $          25,000            |   |  $            1,615                            |       |  $          26,615            |                        | Non-convertible |
| 01/18/2011 (1)                                                           | 6.00%         |              25,000 |   |                   986 |       |              25,986 |                        | Non-convertible |
|        10/26/2010                          | 6.00%         |              25,000 |   |                1,237                 |       |              26,237 |                        | Convertible at $0.02 per share |
|                                                                     |          |                                                                                 |   |                                                                                                            |       |                                                                                 |                        |   |
|                                                                     |          |                                                                                 |   |                                                                                                            |       |                                                                                 |                        |   |
|                                                                     |          |  $          75,000            |   |  $            3,838                            |       |  $          78,838            |                        |   |
|                                                                     |          |                                                                                 |   |                                                                                                            |       |                                                                                 |                        |   |
| (1)  Note payable to Anthony Silverman, our President and CEO. |          |                                                                                 |   |                                                                                                            |
| ***  Interest calculated to maturity or conversion             |          |                                                                                 |   |                                                                                                            |       |

----

----

|                                                  Report of Seale and Beers, CPAs,                                                      Independent Registered Public Accounting Firm                              |  F-1 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                  Report of Chisholm, Bierwolf, Nilson & Morrill, LLC,                                                      Independent Registered Public Accounting Firm |  F-2 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |      |
|                                                 Audited Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                               |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |      |
|                                                        Consolidated Balance Sheets                                                                                                                                                                                                                                                                                                                                                                      | F-3       |
|                                                        Consolidated Statements of Operations                                                                                                                                                                                                                                                                                                                                                            | F-4       |
|                                                        Consolidated Statements of Changes in Stockholders' Deficit                                                                                                                                                                                                                                                                                                                                      | F-5       |
|                                                        Consolidated Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                                            | F-6       |
|                                                        Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                       | F-7       |

----

----

----

|                                                                     |   | August 31, |        |   | August 31, |   |
|--------------------------------------------------------------------------|--------|------------|-------------|--------|------------|--------|
|                                                                     |   | 2010       |        |   | 2009       |   |
|                                                                     |   |       |        |   |       |   |
| ASSETS                                                                   |   |       |        |   |       |   |
| Current Assets:                                                          |   |       |        |   |       |   |
| Cash and cash equivalents                                                |   | $          | 10,596      |   |       | $      | 743 |   |
| Prepaid expenses and other current assets                                |   |       | 6,163       |   |       |   | 7,092 |   |
| Prepaid commissions                                                      |   |       | -           |   |       |   | 2,691 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Total current assets                                                     |   |       | 16,759      |   |       |   | 10,526 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Property and equipment (net of accumulated depreciation                  |   |       |        |   |       |   |   |   |
| of $20,211 and $18,793)                                                  |   |       | 1,835       |   |       |   | 2,709 |   |
| Investment in IUTM                                                       |   |       | -           |   |       |   | 3,186 |   |
| Marketing rights                                                         |   |       | -           |   |       |   | 212 |   |
| Long-term assets of discontinued operations                              |   |       | -           |   |       |   | 4,795 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Total assets                                                             |   | $          | 18,594      |   |       | $      | 21,428 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                    |   |       |        |   |       |   |   |   |
| Current liabilities:                                                     |   |       |        |   |       |   |   |   |
| Convertible notes payable (net of discount of $0 and $12,425)            |   | $          | 25,000      |   |       | $      | 1,107,575 |   |
| Notes payable                                                            |   |       | -           |   |       |   | - |   |
| Notes payable - related parties                                          |   |       | 50,000      |   |       |   | - |   |
| Accounts payable and other accrued expenses                              |   |       | 131,069     |   |       |   | 263,736 |   |
| Accrued interest payable                                                 |   |       | 24,276      |   |       |   | 96,863 |   |
| Accrued interest payable - related parties                               |   |       | 22,210      |   |       |   | 5,872 |   |
| Current liabilities of discontinued operations                           |   |       | -           |   |       |   | 2,000 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Total current liabilities                                                |   |       | 252,555     |   |       |   | 1,476,046 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Long-term liabilities:                                                   |   |       |        |   |       |   |   |   |
| Convertible notes payable                                                |   |       | 127,712     |   |       |   | 127,712 |   |
| Convertible notes payable - related parties                              |   |       | 235,025     |   |       |   | 235,025 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Total long-term liabilities                                              |   |       | 362,737     |   |       |   | 362,737 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Total liabilities                                                        |   |       | 615,292     |   |       |   | 1,838,783 |   |
|                                                                     |   |       |        |   |       |   |   |   |
| Stockholders' Deficit:                                                   |   |       |        |   |       |   |   |   |
| Preferred stock, par value $.001 per share; 10,000,000 shares authorized |   |       |        |   |       |
| 261,762 and 295,862 shares issued and outstanding at                     |   |       |        |   |       |   |   |   |
| August 31, 2010 and August 31, 2009, respectively                        |   |       | 262         |   |       |   | 296 |   |
| Common stock, par value $.001 per share; 200,000,000 shares authorized;  |   |       |        |   |       |
| 188,622,326 and 178,282,995 shares issued at August 31, 2010 and         |   |       |        |   |       |
| August 31, 2009, respectively; 188,622,326 and 155,900,627 shares        |   |       |        |   |       |
| outstanding at August 31, 2010 and August 31, 2009, respectively         |   |       | 188,622     |   |       |   | 155,901 |   |
| Additional paid-in capital                                               |   |       | 57,035,566  |   |       |   | 55,104,084 |   |
| Accumulated deficit                                                      |   |       | (57,817,700 | )      |       |   | (57,074,502 | ) |
| Noncontrolling interest                                                  |   |       | (3,448      | )      |       |   | (3,134 | ) |
|                                                                     |   |       |        |   |       |   |   |   |
| Total stockholders' deficit                                              |   |       | (596,698    | )      |       |   | (1,817,355 | ) |
|                                                                     |   |       |        |   |       |   |   |   |
| Total liabilities and stockholders' deficit                              |   | $          | 18,594      |   |       | $      | 21,428 |   |
|                                                                     |   |       |        |   |       |   |   |   |

----

|                                              |   | For the Year Ended |        |
|---------------------------------------------------|--------|--------------------|-------------|
|                                              |   | August 31,         |        |   | August 31, |   |
|                                              |   | 2010               |        |   | 2009 |   |
|                                              |   |               |        |   |   |   |
| Revenue                                           |   | $                  | -           |   |   | $ | - |   |
|                                              |   |               |        |   |   |   |   |   |
| Cost of Revenues                                  |   |               | -           |   |   |   | - |   |
|                                              |   |               |        |   |   |   |   |   |
| Gross margin                                      |   |               | -           |   |   |   | - |   |
|                                              |   |               |        |   |   |   |   |   |
| Operating expenses:                               |   |               |        |   |   |   |   |   |
| General and administrative                        |   |               | 190,656     |   |   |   | 358,217 |   |
| Depreciation and amortization                     |   |               | 1,418       |   |   |   | 1,668 |   |
|                                              |   |               |        |   |   |   |   |   |
| Total operating expenses                          |   |               | 192,074     |   |   |   | 359,885 |   |
|                                              |   |               |        |   |   |   |   |   |
| Loss from operations                              |   |               | (192,074    | ) |   |   | (359,885 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Other income (expense):                           |   |               |        |   |   |   |   |   |
| Interest and finance charges                      |   |               | (63,924     | ) |   |   | (626,808 | ) |
| Interest and finance charges -related parties     |   |               | (16,337     | ) |   |   | (11,433 | ) |
| Conversion expense                                |   |               | (413,841    | ) |   |   | (1,530,384 | ) |
| Discounted stock issuance expense                 |   |               | (123,334    | ) |   |   | - |   |
| Loss on disposal of assets                        |   |               | -           |   |   |   | (382 | ) |
| Loss on impairment                                |   |               | (3,187      | ) |   |   | - |   |
| Cancellation of debt                              |   |               | 73,000      |   |   |   | - |   |
| Other income (expense)                            |   |               | (679        | ) |   |   | (13,659 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Total other income (expense)                      |   |               | (548,302    | ) |   |   | (2,182,666 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Net loss from continuing operations               |   |               | (740,376    | ) |   |   | (2,542,551 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Discontinued operations:                          |   |               |        |   |   |   |   |   |
| Operating loss from discontinued operations       |   |               | (3,136      | ) |   |   | (58,043 | ) |
| Gain on disposal of discontinued operations       |   |               | -           |   |   |   | 22,116 |   |
|                                              |   |               |        |   |   |   |   |   |
| Loss from discontinued operations                 |   |               | (3,136      | ) |   |   | (35,927 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Less loss attributable to noncontrolling interest |   |               | (314        | ) |   |   | (3,346 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Net loss from discontinued operations             |   |               | (2,822      | ) |   |   | (32,581 | ) |
|                                              |   |               |        |   |   |   |   |   |
|                                              |   |               |        |   |   |   |   |   |
| Net loss before income taxes                      |   |               | (743,198    | ) |   |   | (2,575,132 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Income taxes                                      |   |               | -           |   |   |   | - |   |
|                                              |   |               |        |   |   |   |   |   |
| Net loss                                          |   | $                  | (743,198    | ) |   | $ | (2,575,132 | ) |
|                                              |   |               |        |   |   |   |   |   |
| Loss per common share, basic and diluted:         |   |               |        |   |   |   |   |   |
| Continuing operations                             |   | $                  | (0.00       | ) |   | $ | (0.02 | ) |
| Discontinued operations                           |   |               | (0.00       | ) |   |   | (0.00 | ) |
|                                              |   |               |        |   |   |   |   |   |
|                                              |   | $                  | (0.00       | ) |   | $ | (0.02 | ) |
| Weighted average number of shares                 |   |               |        |   |   |   |   |   |
| outstanding - basic and diluted                   |   |               | 182,567,324 |   |   |   | 129,061,857 |   |
|                                              |   |               |        |   |   |   |   |   |

----

|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   | Additional |    |   |        |   |       | Common     |   |   | Non-        |   |   |   |   |
|-----------------------------------------------|--------|-----------------|---------|--------|--------------|--------|--------|---------|--------|--------|-------------|--------|--------|------------|---------|--------|-------------|--------|------------|------------|--------|--------|-------------|--------|--------|--------|--------|
|                                          |   | Preferred Stock |    |   | Common Stock |   |   | Paid-in |   |   | Accumulated |   |   | Stock      |    |   | Controlling |   |       |       |   |
|                                          |   | Shares          |    |   | Amount       |   |   | Shares  |   |   | Amount      |   |   | Capital    |    |   | Deficit     |   |       | Subscribed |   |   | Interest    |   |   | Total  |   |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |
| Balance, August 31, 2008                      |   |            | 295,862 |   |         | $      | 296    |    |   |   | 113,734,946 |   |   | $          | 113,735 |   |        | $      | 51,889,552 |       |   | $      | (54,499,370 | )      |   | $      | -      |   |   | $ | - |   |   | $ | (2,495,787 | ) |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock based compensation                      |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 1,030      |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 1,030 |   |
| Issuance of stock for services                |   |            | -       |   |         |   | -      |    |   |   | 150,000     |   |   |       | 150     |   |        |   | 1,350      |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 1,500 |   |
| Issuance of stock for interest                |   |            | -       |   |         |   | -      |    |   |   | 793,720     |   |   |       | 794     |   |        |   | 38,892     |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 39,686 |   |
| Issuance of stock purchased for cash          |   |            | -       |   |         |   | -      |    |   |   | 10,300,000  |   |   |       | 10,300  |   |        |   | 127,700    |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 138,000 |   |
| Induced conversion expense - interest         |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| paid with stock                               |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 26,457     |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 26,457 |   |
| Induced conversion expense - conversion       |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| notes payable                                 |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 1,503,927  |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 1,503,927 |   |
| Conversion of notes payable                   |   |            | -       |   |         |   | -      |    |   |   | 29,505,289  |   |   |       | 29,506  |   |        |   | 1,445,758  |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 1,475,264 |   |
| Conversion of notes payable - related parties |   |            | -       |   |         |   | -      |    |   |   | 1,416,672   |   |   |       | 1,416   |   |        |   | 69,418     |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 70,834 |   |
| Sale of noncontrolling interest               |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | -          |       |   |   | -           |   |   |   | -      |   |   |   | 212 |   |   |   | 212 |   |
| Net loss                                      |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | -          |       |   |   | (2,575,132  | )      |   |   | -      |   |   |   | (3,346 | ) |   |   | (2,578,478 | ) |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, August 31, 2009                      |   |            | 295,862 |   |         | $      | 296    |    |   |   | 155,900,627 |   |   | $          | 155,901 |   |        | $      | 55,104,084 |       |   | $      | (57,074,502 | )      |   | $      | -      |   |   | $ | (3,134 | ) |   | $ | (1,817,355 | ) |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of stock purchased for cash          |   |            | -       |   |         |   | -      |    |   |   | 8,500,000   |   |   |       | 8,500   |   |        |   | 191,500    |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 200,000 |   |
| Discounted stock issuance expense             |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 123,334    |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 198,334 |   |
| Conversion of notes payable                   |   |            | -       |   |         |   | -      |    |   |   | 24,153,499  |   |   |       | 24,153  |   |        |   | 1,183,522  |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 1,207,675 |   |
| Induced conversion expense - conversion       |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| notes payable                                 |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 413,840    |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 413,840 |   |
| Issuance of stock for unit conversions        |   |            | (34,100 | )      |         |   | (34    | )       |   |   | 68,200      |   |   |       | 68      |   |        |   | 6,786      |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 6,820 |   |
| Beneficial conversion feature notes payable   |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | 12,500     |       |   |   | -           |   |   |   | -      |   |   |   | - |   |   |   | 12,500 |   |
| Net loss                                      |   |            | -       |   |         |   | -      |    |   |   | -           |   |   |       | -       |   |        |   | -          |       |   |   | (743,198    | )      |   |   | -      |   |   |   | (314 | ) |   |   | (818,512 | ) |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, August 31, 2010                      |   |            | 261,762 |   |         | $      | 262    |    |   |   | 188,622,326 |   |   | $          | 188,622 |   |        | $      | 57,035,566 |       |   | $      | (57,817,700 | )      |   | $      | -      |   |   | $ | (3,448 | ) |   | $ | (596,698 | ) |
|                                          |   |            |    |   |         |   |   |    |   |   |        |   |   |       |    |   |        |   |       |       |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|   |                                                                                                      (FORMERLY BESTNET COMMUNICATIONS CORP.) |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                              |   | For the Year Ended |     |
|-------------------------------------------------------------------|--------|--------------------|----------|
|                                                              |   | August 31,         |     |   | August 31, |   |
|                                                              |   | 2010               |     |   | 2009 |   |
| Operating activities:                                             |   |               |     |   |   |   |
| Net loss                                                          |   | $                  | (743,198 | ) |   | $ | (2,575,132 | ) |
| Net loss from discontinued operations                             |   |               | 2,822    |   |   |   | 32,581 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Net loss from continuing operations                               |   |               | (740,376 | ) |   |   | (2,542,551 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash used                |   |               |     |   |   |   |   |   |
|   in operating activities:                              |   |               |     |   |   |   |   |   |
| Depreciation and amortization                                     |   |               | 1,418    |   |   |   | 1,668 |   |
| Loss on disposal of property and equipment                        |   |               | -        |   |   |   | 382 |   |
| Stock based compensation expense                                  |   |               | -        |   |   |   | 1,030 |   |
| Amortization of discount on notes payable and warrants            |   |               | 12,425   |   |   |   | 391,788 |   |
| Induced conversion expense notes payable                          |   |               | 413,840  |   |   |   | 1,530,384 |   |
| Discounted stock issuance expense                                 |   |               | 123,334  |   |   |   | - |   |
| Impairment loss                                                   |   |               | 3,186    |   |   |   | - |   |
| Issuance of stock and warrants for services                       |   |               | -        |   |   |   | 1,500 |   |
| Beneficial conversion feature - notes payable                     |   |               | 12,500   |   |   |   | - |   |
| Beneficial conversion feature - stock issued for interest         |   |               | -        |   |   |   | 39,686 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Changes in operating assets and liabilities:                      |   |               |     |   |   |   |   |   |
| Prepaid expenses and other current assets                         |   |               | 20,129   |   |   |   | 19,724 |   |
| Prepaid commissions                                               |   |               | 2,691    |   |   |   | 72,820 |   |
| Deposits and other assets                                         |   |               | -        |   |   |   | 2,691 |   |
| Accounts payable and other accrued expenses                       |   |               | (105,667 | ) |   |   | 229,875 |   |
| Accrued interest payable                                          |   |               | 31,426   |   |   |   | 120,463 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Net operating cash flows - continuing operations                  |   |               | (225,094 | ) |   |   | (130,540 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Net operating cash flows - discontinued operations                |   |               | (255     | ) |   |   | (276 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Net cash used in operating activities                             |   |               | (225,349 | ) |   |   | (130,816 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Investing activities:                                             |   |               |     |   |   |   |   |   |
| Purchase of property and equipment                                |   |               | (568     | ) |   |   | - |   |
| Investment in joint venture                                       |   |               | -        |   |   |   | (3,186 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Net investing cash flows - continuing operations                  |   |               | (568     | ) |   |   | (3,186 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Net investing cash flows - discontinued operations                |   |               | 150      |   |   |   | 6,990 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Net cash used in investing activities                             |   |               | (418     | ) |   |   | 3,804 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Financing activities:                                             |   |               |     |   |   |   |   |   |
|  Proceeds from issuance of convertible notes payable         |   |               | 25,000   |   |   |   | - |   |
|  Proceeds from issuance of notes payable - related parties   |   |               | 50,000   |   |   |   | - |   |
|  Proceeds from conversion of units                           |   |               | 6,820    |   |   |   | - |   |
|  Proceeds from the issuance of common stock                  |   |               | 200,000  |   |   |   | 138,000 |   |
|  Repayment of notes payable                                  |   |               | (46,200  | ) |   |   | (20,157 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Net cash provided by financing activities - continuing operations |   |               | 235,620  |   |   |   | 117,843 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents              |   |               | 9,853    |   |   |   | (9,169 | ) |
|                                                              |   |               |     |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                    |   |               | 743      |   |   |   | 9,912 |   |
|                                                              |   |               |     |   |   |   |   |   |
| Cash and cash equivalents, end of period                          |   | $                  | 10,596   |   |   | $ | 743 |   |
|                                                              |   |               |     |   |   |   |   |   |

----

|   | CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) |
|--------|---------------------------------------------------|

|                           |   | For the Year Ended |   |
|--------------------------------|--------|--------------------|--------|
|                           |   | August 31,         |   |   | August 31, |   |
|                           |   | 2010               |   |   | 2009 |   |
|                           |   |               |   |   |   |   |
| Cash paid during the year for: |   |               |   |   |   |   |
|                           |   |               |   |   |   |   |
| Interest                       |   | $                  | 738    |   |   | $ | 793 |   |
| Income Taxes                   |   | $                  | -      |   |   | $ | - |   |
|                           |   |               |   |   |   |   |   |   |

----

| 1. | ORGANIZATION AND BASIS OF PRESENTATION |
|----|----------------------------------------|

| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------|

|                                                                         Furniture and fixtures | 5 to 7 years |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                         Computer equipment     | 5 years      |
|                                                                         Equipment              | 5 to 7 years |
|                                                                         Software               | 3 to 5 years |

----

----

----

|                                         |   | For the Year Ended |        |
|----------------------------------------------|--------|--------------------|-------------|
|                                         |   | August 31,         |        |   | August 31, |   |
|                                         |   | 2010               |        |   | 2009 |   |
|                                         |   |               |        |   |   |   |
| Net loss attributable to common shareholders |   |               |        |   |   |   |
| Continuing operations                        |   | $                  | (740,376    | ) |   | $ | (2,542,551 | ) |
| Discontinued operations                      |   |               | (2,822      | ) |   |   | (32,581 | ) |
|                                         |   |               |        |   |   |   |   |   |
|                                         |   | $                  | (743,198    | ) |   | $ | (2,575,132 | ) |
|                                         |   |               |        |   |   |   |   |   |
| Weighted average shares outstanding          |   |               | 182,567,324 |   |   |   | 129,061,857 |   |
|                                         |   |               |        |   |   |   |   |   |
| Loss per common share, basic and diluted:    |   |               |        |   |   |   |   |   |
| Continuing operations                        |   | $                  | (0.00       | ) |   | $ | (0.02 | ) |
| Discontinued operations                      |   | $                  | (0.00       | ) |   | $ | (0.00 | ) |
|                                         |   |               |        |   |   |   |   |   |
|                                         |   | $                  | (0.00       | ) |   | $ | (0.02 | ) |
|                                         |   |               |        |   |   |   |   |   |

----

----

----

|                                              |   | August 31, |   |   | August 31, |   |
|---------------------------------------------------|--------|------------|--------|--------|------------|--------|
|                                              |   | 2010       |   |   | 2009       |   |
| Current assets of discontinued operations:        |   |       |   |   |       |   |
| Prepaid expenses and other current assets         |   | $          | -      |   |       | $      | - |   |
|                                              |   |       |   |   |       |   |   |   |
| Total current assets of discontinued operations   |   |       | -      |   |       |   | - |   |
|                                              |   |       |   |   |       |   |   |   |
| Long-term assets of discontinued operations:      |   |       |   |   |       |   |   |   |
| Property and equipment                            |   |       | -      |   |       |   | 4,795 |   |
|                                              |   |       |   |   |       |   |   |   |
| Total long-term assets of discontinued operations |   |       | -      |   |       |   | 4,795 |   |
|                                              |   |       |   |   |       |   |   |   |
| Total assets of discontinued operations           |   | $          | -      |   |       | $      | 4,795 |   |
|                                              |   |       |   |   |       |   |   |   |
| Current liabilities of discontinued operations:   |   |       |   |   |       |   |   |   |
| Accounts payable and other accrued expenses       |   | $          | -      |   |       | $      | 2,000 |   |
|                                              |   |       |   |   |       |   |   |   |
| Total liabilities of discontinued operations      |   | $          | -      |   |       | $      | 2,000 |   |
|                                              |   |       |   |   |       |   |   |   |
| Net assets of discontinued operations             |   | $          | -      |   |       | $      | 2,795 |   |
|                                              |   |       |   |   |       |   |   |   |

----

|                                              |   | For the Year Ended |   |
|---------------------------------------------------|--------|--------------------|--------|
|                                              |   | August 31,         |   |   |   | August 31, |   |
|                                              |   | 2010               |   |   |   | 2009 |   |
| Operating expenses:                               |   |               |   |   |   |   |   |
| General and administrative                        |   | $                  | 255    |   |   |   | $ | 2,183 |   |
| Depreciation and amortization                     |   |               | 2,669  |   |   |   |   | 28,935 |   |
|                                              |   |               |   |   |   |   |   |   |   |
| Total operating expenses                          |   |               | 2,924  |   |   |   |   | 31,118 |   |
|                                              |   |               |   |   |   |   |   |   |   |
| Loss from operations                              |   |               | (2,924 | ) |   |   |   | (31,118 | ) |
|                                              |   |               |   |   |   |   |   |   |   |
| Other income (expense):                           |   |               |   |   |   |   |   |   |   |
| Loss on disposal of assets                        |   |               | -      |   |   |   |   | (4,463 | ) |
| Loss on impairment                                |   |               | (212   | ) |   |   |   | (22,432 | ) |
| Other income (expense)                            |   |               | -      |   |   |   |   | (30 | ) |
|                                              |   |               |   |   |   |   |   |   |   |
| Total other income (expense)                      |   |               | (212   | ) |   |   |   | (26,925 | ) |
|                                              |   |               |   |   |   |   |   |   |   |
| Loss from discontinued operations                 |   |               | (3,136 | ) |   |   |   | (58,043 | ) |
| Gain on disposal of discontinued operations       |   |               | -      |   |   |   |   | 22,116 |   |
|                                              |   |               |   |   |   |   |   |   |   |
| Loss from discontinued operations                 |   |               | (3,136 | ) |   |   |   | (35,927 | ) |
|                                              |   |               |   |   |   |   |   |   |   |
| Less loss attributable to noncontrolling interest |   |               | (314   | ) |   |   |   | (3,346 | ) |
|                                              |   |               |   |   |   |   |   |   |   |
| Net loss from discontinued operations             |   | $                  | (2,822 | ) |   |   | $ | (32,581 | ) |
|                                              |   |               |   |   |   |   |   |   |   |

| (a)   | The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland – Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                            |   | August 31, |    |   | August 31, |   |    |    |
|-------------------------------------------------|--------|------------|---------|--------|------------|--------|---------|---------|
|                                            |   | 2010       |    |   | 2009       |   |    |    |
| Furniture                                       |   | $          | -       |   |       | $      | -       |    |   |   |
| Research and development equipment              |   |       | -       |   |       |   | -       |    |   |   |
| Computer equipment                              |   | $          | 8,939   |   |       | $      | 8,939   |    |   |   |
| Software                                        |   |       | 7,876   |   |       |   | 7,332   |    |   |   |
| Leasehold improvements                          |   |       | -       |   |       |   | -       |    |   |   |
| Equipment                                       |   |       | 5,231   |   |       |   | 5,231   |    |   |   |
|                                            |   |       |    |   |       |   |    |    |   |   |
| Total property and equipment at cost            |   |       | 22,046  |   |       |   | 21,502  |    |   |   |
|                                            |   |       |    |   |       |   |    |    |   |   |
| Less: accumulated depreciation and amortization |   |       | (20,211 | )      |       |   | (18,793 |  ) |   |   |
|                                            |   |       |    |   |       |   |    |    |   |   |
|                                            |   | $          | 1,835   |   |       | $      | 2,709   |    |   |   |
|                                            |   |       |    |   |       |   |    |    |   |   |

----

----

| 8. | NOTES PAYABLE |
|----|---------------|

|                                                                |   | August 31, |    |   |   | August 31, |   |
|---------------------------------------------------------------------|--------|------------|---------|--------|--------|------------|--------|
|                                                                |   | 2010       |    |   |   | 2009       |   |
|                                                                |   |       |    |   |   |       |   |
| 12.0% convertible note due March 31, 2012                           |   | $          | 2,712   |   |   |       | $      | 2,712 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| 8.0% convertible notes due March 31, 2012                           |   |       | 125,000 |   |   |       |   | 125,000 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| 6% convertible note due October 26, 2010                            |   |       | 25,000  |   |   |       |   | 0 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| 6.0% convertible note due January 22, 2010, net of a discount of    |   |       |    |   |   |       |   |   |   |
| $0 and $0 as of February 28, 2010 and August 31, 2009 (1)           |   |       | -       |   |   |       |   | 30,000 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| 6.0% convertible notes due September 17, 2009, net of a discount of |   |       |    |   |   |       |   |   |   |
| $0 and $12,425 as of February 28, 2010 and August 31, 2009 (2)      |   |       | -       |   |   |       |   | 1,077,575 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| Total unsecured convertible notes payable                           |   |       | 152,712 |   |   |       |   | 1,235,287 |   |
| Less:  Current portion                                    |   |       | (25,000 | )      |   |       |   | (1,107,575 | ) |
|                                                                |   |       |    |   |   |       |   |   |   |
| Long-term portion                                                   |   | $          | 127,712 |   |   |       | $      | 127,712 |   |
|                                                                |   |       |    |   |   |       |   |   |   |
| (1) This note was converted into common stock in February 2010.     |   |       |    |   |   |       |   |   |   |
| (2) These notes were converted into common stock in September 2009. |   |       |    |   |   |       |   |   |   |
|                                                                |   |       |    |   |   |       |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Convertible                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
| Fiscal Year Ending August 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Notes Payable                     |
|                                                                        2011                                                                       2012 | $  25,000$127,712  |

----

----

|                                                                       |   | August 31, |    |   | August 31, |   |
|----------------------------------------------------------------------------|--------|------------|---------|--------|------------|--------|
|                                                                       |   | 2010       |    |   | 2009       |   |
|                                                                       |   |       |    |   |       |   |
| 6.0% convertible note due March 31, 2012 (1)                               |   | $          | 235,025 |   |       | $      | 235,025 |   |
|                                                                       |   |       |    |   |       |   |   |   |
|                                                                       |   |       |    |   |       |   |   |   |
| Outstanding unsecured related party convertible notes payable              |   | $          | 235,025 |   |       | $      | 235,025 |   |
|                                                                       |   |       |    |   |       |   |   |   |
| (1)  Note Due 3/31/12 payable to former CEO who resigned 4/1/09. |   |       |    |   |       |   |   |   |
|                                                                       |   |       |    |   |       |   |   |   |

----

|   | RELATED PARTY NOTES PAYABLE: |
|--------|------------------------------|

|                                                                         |   | August 31, |   |   | August 31, |   |
|------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
|                                                                         |   | 2010       |   |   | 2009       |   |
| 6.00% note payable due January 7, 2011 (1)                                   |   | $          | 25,000 |   |       | $      | - |   |
| 6.00% note payable due January 18, 2011 (1)                                  |   |       | 25,000 |   |       |   | - |   |
|                                                                         |   |       |   |   |       |   |   |   |
|                                                                         |   |       |   |   |       |   |   |   |
| Outstanding unsecured related party convertible notes payable                |   | $          | 50,000 |   |       | $      | - |   |
|                                                                         |   |       |   |   |       |   |   |   |
| (1) Note payable to Anthony Silverman, the Company's President and CEO. |   |       |   |   |       |

| 9. | STOCKHOLDERS' EQUITY |
|----|----------------------|

----

|                         |   | Preferreds  |    |   | Number of     |   |    |        |   |   | Weighted Avg.  |   |
|------------------------------|--------|-------------|---------|--------|---------------|--------|---------|-------------|--------|--------|----------------|--------|
|                         |   |        |    |   | Common Shares |   |    | Proceeds if |   |   |           |   |
|                         |   | Outstanding |    |   | Convertible   |   |    | Converted   |   |   | Exercise Price |   |
| Outstanding, August 31, 2008 |   |        | 295,862 |   |          |   | 591,724 |        |   | $      | 59,172         |   |   | $ | 0.20 |   |
| Expired/Retired              |   |        | -       |   |          |   | -       |        |   |   | -              |   |   | $ | - |   |
| Converted                    |   |        | -       |   |          |   | -       |        |   |   | -              |   |   | $ | - |   |
| Issued                       |   |        | -       |   |          |   | -       |        |   |   | -              |   |   | $ | - |   |
| Outstanding, August 31, 2009 |   |        | 295,862 |   |          |   | 591,724 |        |   |   | 59,172         |   |   | $ | 0.20 |   |
|                         |   |        |    |   |          |   |    |        |   |   |           |   |   |   |   |   |
| Expired/Retired              |   |        | -       |   |          |   | -       |        |   |   | -              |   |   | $ | - |   |
| Converted                    |   |        | (34,100 | )      |          |   | (68,200 | )           |   |   | (6,820         | )      |   | $ | 0.20 |   |
| Issued                       |   |        | -       |   |          |   | -       |        |   |   | -              |   |   | $ | - |   |
| Outstanding, August 31, 2010 |   |        | 261,762 |   |          |   | 523,524 |        |   | $      | 52,352         |   |   | $ | 0.20 |   |
|                         |   |        |    |   |          |   |    |        |   |   |           |   |   |   |   |   |

| Date of Conversion | Proceeds from Conversion | Further Description and Remarks                                                                                                                                                          |
|--------------------|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| July-August 2004   | $487,523                 | During July and August 2004, holders of 2,437,614 Units contributed $487,523 to convert 2,437,614 shares of Series A. Convertible Preferred stock into 4,875,228 shares of common stock. |
| February 2005      | $230,393                 | During February 2005, holders of 1,151,967 Units contributed $230,393 to convert 1,151,967 shares of Series A. Convertible Preferred stock into 2,303,934 shares of common stock.        |
| April/June 2008    | $29,460                  | During April and June 2008, holders of 147,300 Units contributed $29,460 to convert 147,300 shares of Series A. Convertible Preferred stock into 294,600 shares of common stock.         |
| March/April        | $6,820                   | During March and April 2010, holders of 34,100 Units contributed $6,820 to convert 34,100 shares of Series A. Convertible Preferred stock into 68,200 shares of common stock.            |

----

| Date of Sale       | Proceeds from Sale |                                         Further Description and Remarks |
|--------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| October 13, 2008   | $15,000            | On October 13, 2008, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                       |
| October 13, 2008   | $15,000            | On October 13, 2008, the Company sold 1,500,000 shares of common stock to its CEO, Anthony Silverman at a price of $0.01 per share.                                                                                                                                        |
| December 1, 2008   | $15,000            | On December 1, 2008, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                       |
| January 13, 2009   | $3,000             | On January 13, 2009, the Company sold 300,000 shares of common stock to an accredited investor at $0.01 per share.                                                                                                                                                         |
| March 17, 2009     | $15,000            | On March 17, 2009, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                        |
| March 22, 2010     | $2,660             | On March 22, 2010, Holders of 13,300 Units contributed $2,660 to convert 13,300 shares of preferred stock into 26,600 shares of common stock.                                                                                                                              |
| April 8, 2010      | $4,160             | On April 8, 2010, Holders of 20,800 Units contributed $4,160 to convert 20,800 shares of preferred stock into 41,600 shares of common stock.                                                                                                                               |
| May 13, 2009       | $30,000            | On May 13, 2009, the Company sold 2,000,000 shares of common stock to three accredited investors at $0.015 per share.                                                                                                                                                      |
| May 22, 2009       | $15,000            | On May 22, 2009, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                          |
| June 13, 2009      | $30,000            | On June 13, 2009, the Company sold 1,500,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                          |
| September 30, 2009 | $25,000            | On September 30, 2009, the Company sold 1,250,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                     |
| November 3, 2009   | $25,000            | On November 3, 2009, the Company sold 1,250,000 shares of common stock to an accredited investor at $0.02 per share.                                                                                                                                                       |
| February 1, 2010   | $25,000            | On February 1, 2010, the Company sold 1,000,000 shares of common stock to an accredited investor at $0.025 per share.                                                                                                                                                      |
| April 16, 2010     | $50,000            | On April 16, 2010, the Company sold 1,666,667 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                         |
| May 13, 2010       | $25,000            | On May 13, 2010, the Company sold 833,333 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                             |
| June 17, 2010      | $25,000            | On June 17, 2010, the Company sold 833,333 shares of common stock to an accredited investor at $0.03 per share.                                                                                                                                                            |
| August 11, 2010    | $25,000            | On August 11, 2010, the Company sold 1,666,667 shares of common stock to an accredited investor at $0.015 per share.                                                                                                                                                       |

----

|                          |   |                                                                                                                                        |   | Weighted                                                                              |   |                                                                                                                                        |   |               |   |
|-------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                          |   |                                                                                                                                        |   | Average                                                                               |   |                                                                                                                                        |   |               |   |
| Date of                       |   | Number                                                                                                                                      |   | Exercise                                                                              |   |  Remaining                                                                                                                             |   | Expiration         |   |
| Grant                         |   | of Shares                                                                                                                                   |   | Price                                                                                 |   |  Exercise Life                                                                                                                         |   | Date               |   |
| First quarter of fiscal 2002  |   |                 25,000                                      |   |  $       2.90                                 |   |                        - |   | October 17, 2007   |   |
| Second quarter of fiscal 2002 |   |                   5,751                           |   |           1.19                      |   |                        - |   | January 30, 2008   |   |
| Third quarter of fiscal 2002  |   |            1,100,000                                                                 |   |           0.50                      |   |                        - |   | April 23, 2007     |   |
| Second quarter of fiscal 2004 |   |               100,000                                                 |   |           0.32                      |   |                        - |   | January 8, 2007    |   |
| Third quarter of fiscal 2004  |   |                 40,000                                      |   |           0.27                      |   |                        - |   | May 31, 2009       |   |
| Fourth quarter of fiscal 2004 |   |                 10,000                                      |   |           0.29                      |   |                        - |   | June 4, 2009       |   |
| Third quarter of fiscal 2006  |   |               200,000                                                 |   |           0.35                      |   |                        - |   | March 13, 2008     |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Outstanding, August 31, 2006  |   |            1,480,751                                                                 |   |                                                                                  |   |                                                                                                                                        |   |               |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Second quarter of fiscal 2007 |   |             (100,000)                                                           |   |           0.32                      |   |                        - |   | January 8, 2007    |   |
| Second quarter of fiscal 2007 |   |            2,158,327                                                                 |   |           0.50                      |   |                        - |   | December 4, 2008   |   |
| Third quarter of fiscal 2007  |   |          (1,100,000)                                                                           |   |           0.50                      |   |                        - |   | April 23, 2007     |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Outstanding, August 31, 2007  |   |            2,439,078                                                                 |   |                                                                                  |   |                                                                                                                                        |   |               |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| First quarter of fiscal 2008  |   |               (25,000)                                                |   |           2.90                      |   |                        - |   | October 17, 2007   |   |
| First quarter of fiscal 2008  |   |            3,633,332                                                                 |   |           0.50                      |   |                        - |   | September 17, 2009 |   |
| Second quarter of fiscal 2008 |   |                 (5,751)                                     |   |           1.19                      |   |                        - |   | January 30, 2008   |   |
| Second quarter of fiscal 2008 |   |                 57,500                                      |   |           0.40                      |   |                        - |   | December 3, 2009   |   |
| Third quarter of fiscal 2008  |   |             (200,000)                                                           |   |           0.35                      |   |                        - |   | March 13, 2008     |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Outstanding, August 31, 2008  |   |            5,899,159                                                                 |   |                                                                                  |   |                                                                                                                                        |   |               |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Second quarter of fiscal 2009 |   |          (2,158,327)                                                                           |   |           0.50                      |   |                        - |   | December 4, 2008   |   |
| Third quarter of fiscal 2009  |   |               (40,000)                                                |   |           0.27                      |   |                        - |   | May 31, 2009       |   |
| Fourth quarter of fiscal 2009 |   |               (10,000)                                                |   |           0.29                      |   |                        - |   | June 4, 2009       |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Outstanding, August 31, 2009  |   |            3,690,832                                                                 |   |                                                                                  |   |                                                                                                                                        |   |               |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| First quarter of fiscal 2010  |   |          (3,633,332)                                                                           |   |           0.50                      |   |                        - |   | September 17, 2009 |   |
| Second quarter of fiscal 2010 |   |               (57,500)                                                |   |           0.40                      |   |                        - |   | December 3, 2009   |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |
| Outstanding, August 31, 2010  |   |                        - |   |               - |   |                        - |   |               |   |
|                          |   |                                                                                                                                        |   |                                                                                  |   |                                                                                                                                        |   |               |   |

----

|                         |   |   |             |   | Weighted Avg.  |   |
|------------------------------|--------|--------|------------------|--------|----------------|--------|
|                         |   | Number |             |   | Exercise Price |   |
| Outstanding, August 31, 2008 |   |   |  5,899,159  |   |           | $      | 0.50 |   |
| Expired/Retired              |   |   | (2,208,327       | )      |           | $      | 0.49 |   |
| Exercised                    |   |   |  -          |   |           | $      | - |   |
| Issued                       |   |   |  -          |   |           | $      | - |   |
| Outstanding, August 31, 2009 |   |   |  3,690,832  |   |           | $      | 0.50 |   |
|                         |   |   |             |   |           |   |   |   |
| Expired/Retired              |   |   |  (3,690,832 | )      |           | $      | 0.50 |   |
| Exercised                    |   |   |  -          |   |           | $      | - |   |
| Issued                       |   |   |  -          |   |           | $      | - |   |
| Outstanding, August 31, 2010 |   |   |  -          |   |           | $      | - |   |
|                         |   |   |             |   |           |   |   |   |

----

|                         |   |                                                                                                                                                                             |   |                                                                                                                                                                             |   |           Weighted Average                                                                                                                                             |
|------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   | Number of                                                                                                                                                                        |   | Option Price                                                                                                                                                                     |   | Exercise Price                                                                                                                                                                                                      |
|                         |   | Options Granted                                                                                                                                                                  |   | Per Share                                                                                                                                                                        |   | Per Share                                                                                                                                                                                                           |
|                         |   |                                                                                                                                                                             |   |                                                                                                                                                                             |   |                                                                                                                                                                                                                |
| Outstanding, August 31, 2008 |   |                     4,402,526                                                     |   | $0.17 - $7.38                                                                                                                                                                    |   |  $                   0.64                                                                                       |
| Granted                      |   |                              -       |   |                               - |   |                                    - |
| Exercised                    |   |                              -       |   |                               - |   |                                    -      |
| Cancelled                    |   |                    (1,388,334)                                                         |   | $0.24 - $3.00                                                                                                                                                                    |   |                       0.99                                                                            |
| Outstanding, August 31, 2009 |   |                      3,014,192                                               |   | $0.17 - $7.38                                                                                                                                                                    |   |  $                   0.55                                                                                       |
| Granted                      |   |                               - |   |                               - |   |                                    -      |
| Exercised                    |   |                               - |   |                               - |   |                                    -      |
| Cancelled                    |   |                         (80,860)                         |   | $0.30 - $7.38                                                                                                                                                                    |   |                       2.21                                                                            |
| Outstanding, August 31, 2010 |   |                      2,933,332                                               |   | $0.17 - $7.38                                                                                                                                                                    |   |  $                   0.50                                                                                       |
|                         |   |                                                                                                                                                                             |   |                                                                                                                                                                             |   |                                                                                                                                                                                                                |

|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              | Options                                                                                                                                                                                    |                                                                                                                                           | Options     |   |
|-----------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|
|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              | Outstanding                                                                                                                                                                                |                                                                                                                                           | Exercisable |   |
| Number of options                                   |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                      2,933,332                                                |                                                                                                                                                                                       |                        2,933,332 |        |
| Aggregate intrinsic value of options                |                                                                                                                                                                                |                $             - |                                                                                                                                                                                                  |                   $            - |                                                                                                                                                                                       |
| Weighted average remaining contractual term (years) |                               2.23 |                                                                                                                                                                  |                                  2.23 |                                                                                                                                                                              |
| Weighted average exercise price                     |                                                                                                                                                                                |                                                                                                                                                                  |                $             0.50                                   |                                                                                                                                                                              |                   $             0.50 |                                                                                                                                           |
|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              |                                                                                                                                                                                       |                                                                                                                                           |        |   |
|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              |                                                                                                                                                                                       |                                                                                                                                           |        |   |
|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              |                                                                                                                                                                                       |                                                                                                                                           |        |   |
|                                                |                                                                                                                                                                                |                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                                                                                              |                                                                                                                                                                                       |                                                                                                                                           |        |   |

----

|                       |                                        |   |                                                                                                                                                    |                                                                                                                                                    | Year Ended August 31,                                                                                                                                   |                                                                                                                                                    |
|----------------------------|---------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |                                        |   |                                                                                                                                                    |                                                                                                                                                    | 2010                                                                                                                                                    |                                                                                                                                                    | 2009 |   |
|                       |                                        |   |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |   |   |
| Balance, beginning of year |                                        |   |  $                      -            |                                                                                                                                                    |  $                      -            |                                                                                                                                                    |
|                       | Decreases in tax positions for prior years  |   |                          - |                                                                                                                                                    |                          - |                                                                                                                                                    |
|                       | Increase in tax positions for prior years   |   |                          - |                                                                                                                                                    |                          - |                                                                                                                                                    |
|                       | Increases in tax positions for current year |   |                          - |                                                                                                                                                    |                          - |                                                                                                                                                    |
|                       | Settlements                                 |   |                                                                                                                                                    |                                                                                                                                                    |                          - |                                                                                                                                                    |                          - |   |
|                       | Lapse in statute of limitations             |   |                                                                                                                                                    |                          - |                                                                                                                                                    |                          - |   |
|                       |                                        |   |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |   |   |
| Balance, end of year       |                                        |   |                                                                                                                                                    |  $                      -            |                                                                                                                                                    |  $                      -            |   |
|                       |                                        |   |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                    |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   2010 |     |   | 2009   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|----------|--------|--------|--------|
|                                                                                        Current:                                             |   | $                | --       |   |   | $      | -- |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |             |     |   |   |   |   |   |
|                                                                                        Deferred:                                            |   |             |     |   |   |   |   |   |
|                                                                                               Federal    |   |             | 124,000  |   |   |   | 376,000 |   |
|                                                                                               State |   |             | --       |   |   |   | 141,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |             | 124,000  |   |   |   | 517,000 |   |
|                                                                                       Valuation Allowance                                        |   |             | (124,000 | )      |   |   | (517,000 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                | --       |   |   | $      | -- |   |

----

|                          |      2010          |   |   |      2009          |
|-------------------------------|------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------|
| Statutory tax rate            | 34.0%                                                                                    |   |   | 34.0%                                                                                    |
| State income taxes            | --                                                                                       |   |   | 5.3%                                                                                     |
| Change in valuation allowance | (34.0)%                                                                                  |   |   | (39.3)%                                                                                  |
| Effective tax rate            | 0.0%                                                                                     |   |   | 0.0%                                                                                     |

|                               |             2010                               |            2009                                                       |
|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Deferred tax assets (liabilities): |                                                                                                                                                              |                                                                                                                                                                                |
| Property and equipment             | $                  --                                                        |           $            (3,000)                                             |
| Intangible assets                  | --                                                                                                                                                                |             --                                                                                                               |
| Other                              |           --                                                                                                         |             --                                                                                                               |
| Net operating loss carryforward    |               10,808,000                                                                    |                  10,687,000                                                                         |
|                               |               10,808,000                                                                         |                  10,684,000                                                                         |
| Valuation allowance                |              (10,808,000)                                                                             |                 (10,684,000)                                                                             |
|                               |            $                 -- |           $                     -- |

| 11. | RELATED PARTY TRANSACTIONS AND CONTINGENCIES: |
|-----|-----------------------------------------------|

| 12. | RETIREMENT PLAN |
|-----|-----------------|

|   |   |
|--------|--------|

----

| 13. | STATEMENTS OF CASH FLOWS |
|-----|--------------------------|

| The Company recognized a discount on the Convertible Promissory Notes issued to many accredited investors (See Note 10).  This discount is related to warrants and beneficial conversion feature issued in connection with these notes.                                                                                                                                             |  $        12,500                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|
| The Company recognized $198,334 of discounted stock issuance expense in connection with the sales of its common stock during fiscal 2010 to funds its operations.                                                                                                                                                                                                                             |          123,334                                          |
| During fiscal 2010, the Company converted $1,207,675 of principal and accrued interest into 24,153,499 shares of its common stock.  These shares were issued in November 2009 and January 2010.                                                                                                                                                                                     |       2,048,553                                                          |
| The Company recognized conversion expense as a result of reducing the conversion price on notes converted during fiscal 2010.                                                                                                                                                                                                                                                                 |         413,840                                                |
| On October 31, 2009, the Company entered into a note payable agreement to finance $19,200 of directors and officer’s insurance premiums.  The note bears interest at a rate of 8.99% per annum and was due in nine monthly installments of $2,214, including principal and interest, beginning on December 1, 2009.  This note was paid in full during fiscal 2010. |             19,200                              |
|                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                        |
|        Total non-cash transactions from investing and financing activities.                                                                                                                                                                                                                                                                                |                $  2,617,427 |

| The Company recognized a discount on the Convertible Promissory Notes issued to many accredited investors (See Note 9).  This discount is related to warrants and beneficial conversion feature issued in connection with these notes.                                                                                                                                            |  $      391,787                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                        |
| During fiscal 2008, the Company converted $1,551,100 of principal and accrued interest into 30,921,961 shares of its common stock.  These shares were issued in June and July 2009.                                                                                                                                                                                               |       1,551,100                                                          |
| The Company recognized conversion expense as a result of reducing the conversion price on notes converted during fiscal 2009.                                                                                                                                                                                                                                                               |      1,530,384                                                                |
| The Company issued 793,720 shares in lieu of annual interest payments.                                                                                                                                                                                                                                                                                                                 |           39,686                                          |
| On October 1, 2008, the Company entered into a note payable agreement to finance $20,157 of directors and officer’s insurance premiums.  The note bears interest at a rate of 9.35% per annum and is due in nine monthly installments of $2,328, including principal and interest, beginning on November 1, 2008.  This note was paid in full during fiscal 2009. |             20,157                              |
|                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                        |
|        Total non-cash transactions from investing and financing activities.                                                                                                                                                                                                                                                                              |                $  3,533,114 |

----

| 14. | SUBSEQUENT EVENTS |
|-----|-------------------|

| 15. | GOING CONCERN |
|-----|---------------|

----

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
|---------|---------------------------------------------------------------------------------------|

| ●   | We did not maintain a sufficient complement of personnel with the appropriate level of knowledge, experience and training to analyze, review and monitor the accounting of our financial transactions.   All accounting and financial transactions are currently recorded by our principal financial officer and sole employee.  As a result, the Company did not prepare adequate contemporaneous documentation that would provide a sufficient basis for an effective evaluation and review of those accounting and financial transactions. However, it is to be noted that during the period covered by this Report, we had no revenue producing operations or related expenses.  Our current expenses primarily include our principal financial officer’s wages, transfer agent fees, accounting fees, legal fees, insurance premiums and other expenses necessary to maintain our current status with our SEC filings.  We do not expect revenue producing operations to commence until such time as we are able to fulfill our plans to conduct business operations with IUTM (as initially described in our Current Report on Form 8-K filed on March 4, 2009) and/or to commence the "WatchMe" operation (as described in our Current Report on Form 8-K filed on February 11, 2011).   Both plans are, as previously reported, contingent on our ability to raise funds to finance the operations. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | There is a lack of segregation of duties in preparation of the financial statements and other key financial transactions.  We currently rely heavily on our only employee, our principal financial officer, for almost every key financial duty and he has access to all of the Company’s financial information.  Such a lack of segregation of duties is typical in a company with limited resources.  Although the Company’s CEO and Board of Directors review the financial statements and would most likely discover any misappropriation of funds, this cannot be assured by the existing system. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In addition, we have a lack of a functioning Audit Committee as we only have one independent director is not considered a Financial Expert within the meaning of Section 407 of the Sarbanes-Oxley Act.  Currently, our Board of Directors acts as the Audit Committee. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ITEM 10.  DIRECTORS EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|---------------------------------------------------------------------------|

| Name                | Age |                  Position held with Company |
|---------------------|-----|-----------------------------------------------------------------------------------------------------------------------------|
| Anthony Silverman   | 67  | Chief Executive Officer, President and Director                                                                             |
| Michael Kramarz     | 41  | Chief Financial Officer                                                                                                     |
| Barry Griffith      | 42  | Director                                                                                                                    |
| Judy Lindstrom      | 65  | Chief Executive Officer, Director, of Oncologix Corporation, our subsidiary                                                 |
| Steven Kurtzman, MD | 48  | Director, Oncologix Corporation, our subsidiary                                                                             |

----

----

| SUMMARY COMPENSATION TABLE  |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |
|-----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       | Non-qualified                                                                                                                                                              |                                                                                                                                                                       |                                                                                                                                                                       |   |
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       | Nonequity                                                                                                                                                                  | deferred                                                                                                                                                                   |                                                                                                                                                                       |                                                                                                                                                                       |   |
| Name and Principal          |   |                                                                                                                                         |                                                                                                                                         | Stock                                                                                                                                                                      | Option                                                                                                                                                                     | incentive plan                                                                                                                                                             | compensation                                                                                                                                                               | All Other                                                                                                                                                                  | All Other                                                                                                                                                                  |   |
| Position                    | Year   | Salary                                                                                                                                       | Bonus ($)                                                                                                                                    | awards($)                                                                                                                                                                  | awards($)                                                                                                                                                                  | compensation($)                                                                                                                                                            | earnings($)                                                                                                                                                                | compensation($)                                                                                                                                                            | Total($)                                                                                                                                                                   |   |
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |   |
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |   |
| Judy Lindstrom              | 2010   |  $                      - |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |   |
| Chief Executive Officer and | 2009   |  $           116,666                                                             |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |  $               116,666                                                                   |   |
| Chairman of the Board (1)   |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |   |
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |   |
| Michael A. Kramarz          | 2010   |  $             73,920                                                  |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |  $                 73,920                                                        |   |
| Chief Financial Officer (2) | 2009   |  $             85,928                                                  |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |  $                 85,928                                                        |   |
|                        |   |                                                                                                                                         |                                                                                                                                         |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |                                                                                                                                                                       |   |

| (1)   | Ms. Lindstrom was appointed to the Company’s Board of Directors on June 25, 2007.  On January 4, 2008, Ms. Lindstrom was elected Chairman of the Board.  On February 18, 2008, Ms. Lindstrom was elected President and CEO with an annual salary of $200,000. On December 19, 2007, Ms. Lindstrom was granted options to purchase 10,000 shares of our common stock at a per share exercise price of $0.24 and vest in one year.  These options were cancelled due her resignation on April 1, 2009.  On April 1, 2009, Ms. Lindstrom resigned her positions and President, CEO and Chairman of the Board but remains on the Board of Directors of our subsidiary, Oncologix Corporation. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Mr. Kramarz was hired by Oncologix as our Controller on September 16, 2002.  Mr. Kramarz was appointed Chief Financial Officer on July 15, 2004.  Mr. Kramarz salary was set at $76,000 annually on June 25, 2007.  Effective January 1, 2008, Mr. Kramarz has been serving as Chief Financial Officer and is being compensated on a consulting basis. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                        OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                            Option awards |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |                                           Stock awards |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                | Equity incentive                                                                                                                                                                      |                                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                | plan awards:                                                                                                                                                                          |                                                                                                                                      |   |   |   |   | Equity incentive | Equity incentive |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Number of                                                                                                                                                                                                                                                                                                                                                                  | Number of                                                                                                                                                           | number of                                                                                                                                                                             |                                                                                                                                      |   |   |   |   | plan awards: | plan awards: |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | securities                                                                                                                                                                                                                                                                                                                                                                 | securities                                                                                                                                                          | securities                                                                                                                                                                            |                                                                                                                                      |   |   |   |   | number of | market or payout |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | underlying                                                                                                                                                                                                                                                                                                                                                                 | underlying                                                                                                                                                          | underlying                                                                                                                                                                            |                                                                                                                                      |   |   | Number of | Market value | unearned shares, | value ofunearned |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | unexercised                                                                                                                                                                                                                                                                                                                                                                | unexercised                                                                                                                                                         | unexercised                                                                                                                                                                           |                                                                                                                                      |   |   | shares or units of | of shares or units | units or other | shares, units or |   |
| Name and Principal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | options                                                                                                                                                                                                                                                                                                                                                                    | options                                                                                                                                                             | unearned                                                                                                                                                                              | Option exercise                                                                                                                           | Option expiration |   | stock that have | of stock that have | rights that have | other rights that |   |
| Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | (#) Exercisable                                                                                                                                                                                                                                                                                                                                                            | (#) Unexercisable                                                                                                                                                   | options (#)                                                                                                                                                                           | price($)                                                                                                                                  | date |   | not vested (#) | not vested ($) | not vested (#) | have not vested ($) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
| Anthony Silverman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                 20,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.17 | 08/09/14 |   |                               - |  $                           - |                               - |  $                           - |   |
| CEO & President as of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                 50,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.17 | 08/09/14 |   |                               - |  $                           - |                               - |  $                           - |   |
| April 1, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
| Judy Lindstrom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |               100,000                                                                                                                                                                                                                                                                                |                            - |                               - |  $                     0.40 | 07/06/13 |   |                               - |  $                           - |                               - |  $                           - |   |
| Former CEO & President                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
| Resigned April 1, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |
| Michael A. Kramarz                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 45,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     1.33 | 09/16/12 |   |                               - |  $                           - |                               - |  $                           - |   |
| Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                 10,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.53 | 12/12/12 |   |                               - |  $                           - |                               - |  $                           - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                 30,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.50 | 10/06/13 |   |                               - |  $                           - |                               - |  $                           - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                 50,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.23 | 07/15/14 |   |                               - |  $                           - |                               - |  $                           - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                 20,000                                                                                                                                                                                                                                                                     |                            - |                               - |  $                     0.17 | 03/24/15 |   |                               - |  $                           - |                               - |  $                           - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               100,000                                                                                                                                                                                                                                                                                |                            - |                               - |  $                     0.40 | 03/22/13 |   |                               - |  $                           - |                               - |  $                           - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                |                                                                                                                                                                                  |                                                                                                                                      |   |   |   |   |   |   |   |

----

| DIRECTOR COMPENSATION |                                                                                                                                         |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                         |   |   |   |   |   |   |   |
|                  |                                                                                                                                         |   |   |   | Non-qualified |   |   |   |
|                  | Fees earned                                                                                                                                  |   |   | Nonequity | deferred |   |   |   |
| Name and Principal    | or paid in                                                                                                                                   | Stock | Option | incentive plan | compensation | All Other | All Other |   |
| Position              | cash ($)                                                                                                                                     | awards($) | awards($) | compensation($) | earnings($) | compensation($) | Total($) |   |
|                  |                                                                                                                                         |   |   |   |   |   |   |   |
| Barry Griffith        |  $                      - |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |   |
|                  |                                                                                                                                         |   |   |   |   |   |   |   |
| Dr. Steven Kurtzman   |  $                      - |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |   |
|                  |                                                                                                                                         |   |   |   |   |   |   |   |
| Anthony Silverman     |  $                      - |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |   |
|                  |                                                                                                                                         |   |   |   |   |   |   |   |
| Judy Lindstrom        |  $                      - |  $                      - |  $                           - |  $                           - |  $                           - |  $                           - |  $                           - |   |
|                  |                                                                                                                                         |   |   |   |   |   |   |   |

----

|           | Name and Address                          | Amount and Nature       |   | Percent         |   |
|----------------|-------------------------------------------|-------------------------|--------|-----------------|--------|
| Title of Class | of Beneficial Owner (2)                   | of Beneficial Owner (1) |   | of Class (1)(3) |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Anthony Silverman                         | 17,840,850              | (4)    | 9.45%           |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Michael Kramarz                           | 255,000                 | (5)    | 0.14%           |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Judy Lindstrom                            | 100,000                 | (6)    | 0.05%           |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Barry Griffith                            | 509,000                 | (7)    | 0.27%           |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Steven Kurtzman, MD                       | 400,000                 | (8)    | 0.21%           |   |
|           |                                      |                    |   |            |   |
| Common Stock   | Pension Financial Services of Canada Inc. | 10,736,745              | (9)    | 5.69%           |   |
|           | 360 St. Jacques Quest                     |                    |   |            |   |
|           | Suite 1100                                |                    |   |            |   |
|           | Montreal, Quebec, H2Y 1P5                 |                    |   |            |   |
|           |                                      |                    |   |            |   |
| Common Stock   | All directors and executive officers      | 19,104,850              |   | 10.06%          |   |
|           | as a group                                |                    |   |            |   |
|           |                                      |                    |   |            |   |

| (1)   | Unless otherwise noted, the address of each holder is P.O. Box 8832, Grand Rapids, MI  49518-8832. |
|-----------------|--------------------------------------------------------------------------------------------------------------|

| (2)   | A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from January 7, 2010 through the exercise of any option, warrant or other right. Shares of Common Stock subject to options, warrants or rights which are currently exercisable or exercisable within 60 days are deemed outstanding solely for computing the percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the percentage of any other person. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The amounts and percentages in the table are based upon 188,622,326 shares of Common Stock outstanding as of September 21, 2010 |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Includes 70,000 shares subject to vested options, direct ownership of 17,770,850 shares |
|-----------------|-----------------------------------------------------------------------------------------|

| (5)   | Includes 255,000 shares subject to vested options. |
|-----------------|----------------------------------------------------|

| (6)   | Includes 100,000 shares subject to vested options. |
|-----------------|----------------------------------------------------|

| (7)   | Includes 500,000 shares subject to vested options and 9,000 shares of stock underlying units held. |
|-----------------|----------------------------------------------------------------------------------------------------|

| (8)   | Includes 400,000 shares subject to vested options. |
|-----------------|----------------------------------------------------|

| (9)   | Includes direct ownership of 10,736,745 shares. |
|-----------------|-------------------------------------------------|

----

|                                           | August 31, 2010                                                                                                                                                                          | August 31, 2009                                                                                                                                          |
|------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                                                                                     |                                                                                                                                                     |
| (i)     Audit Fees    |                   $   33,369                                                         |                       $   29,268 |
| (ii)    Audit Related Fees |                    $            -- |    $            --                                                                 |
| (iii)   Tax Fees                |                    $            -- |    $            --                                                            |
| (iv)   All Other Fees           |                   $   12,105                                                         |    $            --                                                                 |

----

| Number | Description of Filing                                                                                                                                                                          | Method |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2.1    | Agreement of Merger and Plan of Reorganization between BestNet Communications Corp, Oncologix Corporation and JDA Medical Technologies, Inc.                                                   | (9)    |
| 3.1    | Articles of Incorporation, as originally filed with the Nevada Secretary of State on February 19, 1998, and as amended to date                                                                 | (1)    |
| 3.3    | Certificate of Amendment to Articles of Incorporation, as originally filed with the Nevada Secretary of State.                                                                                 | (6)    |
| 3.4    | Amended Certificate of Designations, Rights, Preferences and Limitations of Series A Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. | (6)    |
| 3.5    | Amended Certificate of Designations, Rights, Preferences and Limitations of Series B Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. | (6)    |
| 3.6    | Amended Certificate of Designations, Rights, Preferences and Limitations of Series C Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. | (6)    |
| 3.7    | Amended and Restated Bylaws of BestNet Communications Corp.                                                                                                                                    | (8)    |
| 3.8    | Certificate of Amendment of Articles of Incorporation, as originally filed with the Nevada Secretary of State.                                                                                 | (11)   |
| 4      | 2000 Incentive Stock Plan                                                                                                                                                                      | (2)    |
| 4.1    | Form of Unit Purchase Agreement                                                                                                                                                                | (7)    |
| 10.1   | Securities Purchase Agreement between Wavetech and the investor and the Placement Agent                                                                                                        | (3)    |
| 10.2   | Registration Rights Agreement between Wavetech, the Investor and the Placement Agent                                                                                                           | (3)    |
| 10.3   | Registration Right Agreement                                                                                                                                                                   | (3)    |
| 10.4   | Securities Purchase Agreement                                                                                                                                                                  | (3)    |
| 10.5   | Product Customization Agreement                                                                                                                                                                | (4)    |
| 10.6   | Purchase Agreement by and among Softalk, Inc., Interpretel (Canada) Inc. and Wavetech International, Inc. dated October 25, 1999                                                               | (5)    |
| 10.7   | Amendment No. 1 to Amended and Restated License Agreement                                                                                                                                      | (5)    |
| 10.8   | Amended and Restated License Agreement                                                                                                                                                         | (5)    |
| 10.9   | Share Exchange Agreement by and among Wavetech International, Inc., Interpretel (Canada) Inc. and Softalk, Inc. dated November 13, 1999                                                        | (5)    |
| 10.10  | Minutes of Settlement between BestNet Communications Corp. and Softalk, Inc.                                                                                                                   | (8)    |
| 10.11  | Lease Agreement Dated November 1, 2005, by and between Noto’s Properties LLC. and Bestnet                                                                                                | (10)   |
| 10.12  | Lease Agreement Dated July 25, 2006, by and between R & J Ventures LLC. and Oncologix Corporation                                                                                          | (10)   |
|   |                                                                                                                                                                                           |   |

----

|   |                                                                                                      |   |
|--------|-----------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                      |   |
| 10.13  | Lease Agreement Dated July 12, 2006, by and between Office Suites Plus and Oncologix Corporation          | (10)   |
| 10.14  | Form of Note and Warrant Purchase Agreement between BestNet and Mountainview Opportunistic Growth Fund LP | (10)   |
| 10.15  | Form of Note Purchase Agreement Issued July 7, 2006                                                       | (10)   |
| 10.16  | Franco Consulting Agreement                                                                               | (9)    |
| 10.17  | Kennedy Employment Agreement                                                                              | (9)    |
| 10.18  | Green Employment Agreement                                                                                | (9)    |
| 10.19  | Lowe Employment Agreement                                                                                 | (9)    |
| 10.20  | License to Fountain Pharmaceuticals, Inc.                                                                 | (11)   |
| 14.1   | Oncologix Tech, Inc. Code of Ethics                                                                       | (6)    |
| 21     | Subsidiaries of the Registrant                                                                            | *      |
| 32.1   | Section 906 Certification of Andrew M. Green                                                              | *      |
| 32.2   | Section 906 Certification of Michael A. Kramarz                                                           | *      |
| 31.1   | Certification of Chief Executive Officer                                                                  | *      |
| 31.2   | Certification of Chief Financial Officer                                                                  | *      |
| 99     | Consent of Seale and Beers, CPAs                                                                          | *      |

| * | Filed herewith |
|---|----------------|

| (1) | Incorporated by reference to the like numbered exhibit to Form 10-QSB for the quarter ended February 28, 1998. |
|-----|----------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to the like numbered exhibit to Form S-8 as filed on May 29, 2001. |
|-----|----------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to exhibit 4.2 to Form 8-K filed on May 16, 2000. |
|-----|-----------------------------------------------------------------------------|

| (4) | Incorporated by reference to exhibit 10.1 to the Form 10-K for the fiscal year ended August 31, 2000. |
|-----|-------------------------------------------------------------------------------------------------------|

| (5) | Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 1999, exhibits 10.6, 10.7, 10.8 and 10.9 were numbered exhibits 10.1, 10.2, 10.3 and 10.4 respectively in the Form 10-KSB for the year ended August 31, 1999. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2003. |
|-----|-----------------------------------------------------------------------------------------|

| (7) | Incorporated by reference to the Form 10-QSB for the quarter ended May 31, 2003, exhibit 4.4 was exhibit 10.1 in the Form 10-QSB for the quarter ended May 31, 2003. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated by reverence to the Form 10-KSB for the fiscal year ended August 31, 2004. |
|-----|-----------------------------------------------------------------------------------------|

| (9) | Incorporated by reference to the Current Report on Form 8-K, dated July 26, 2006. |
|-----|-----------------------------------------------------------------------------------|

| (10) | Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2006. |
|------|-----------------------------------------------------------------------------------------|

| (11) | Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2007 |
|------|----------------------------------------------------------------------------------------|

| (b) | Reports on Form 8-K Filed during the Last Quarter of The Period Covered by This Report are as Follows: |
|-----|--------------------------------------------------------------------------------------------------------|

----

|                           | ONCOLOGIX TECH, INC.                                                       |
|--------------------------------|----------------------------------------------------------------------------|
|                           |                                                                       |
|                           |                                                                       |
| Date:  March 7, 2011 | By:   /s/  Anthony Silverman                           |
|                           |        Anthony Silverman                     |
|                           |        Chief Executive Officer and President |
|                           |                                                                       |
|                           |                                                                       |
| Date:  March 7, 2011      | By:   /s/ Michael A. Kramarz                                |
|                           |        Michael A. Kramarz                    |
|                           |        Chief Financial Officer               |
|                           |                                                                       |

| By:   /s/  Anthony Silverman                                                                | Date:  March 7, 2011 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                Anthony Silverman, Chief Executive Officer,               President and Director                                                                                                                                                                                                |                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                       |                           |
| By:  /s/  Michael A. Kramarz                                                                                                                                                                                                                                                                                                                                                                                                | Date:  March 7, 2011 |
|               Michael A. Kramarz, Chief Financial Officer                                                                                                                                                                                                                                                                                                                 |                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                       |                           |
| By:  /s/ Barry Griffith                                                                                                                                                                                        | Date:  March 7, 2011 |
|               Barry Griffith, Director                                                                                                                                                                                                                                                                                                                                    |                           |