##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
     Form 10-KSB
  (Mark One)þ

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007o

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-49635.
    MINRAD INTERNATIONAL,
    INC.
 (Name of small business issuer
    in its charter)
  Delaware

870299034(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)50 Cobham Drive, Orchard Park, New York

14127(Address of principal executive
    offices)

(Zip Code)   Issuers Telephone Number
 (716) 855-1068
  Securities registered under Section 12(b) of the
    Exchange Act:
 Common Stock $.01 par value
  Title of Each Class:

Name of Each Exchange on Which Registered:Common Stock, $.01 par value

American Stock Exchange   Securities registered under Section 12(g) of the
    Exchange Act:
  o
  þ o
  Regulation S-B Form 10-KSB Form 10-KSB. þ
    Large accelerated filer
    o

Accelerated
    filer o

Non-accelerated filer
    þ
    (Do not check if a smaller reporting company)

Smaller reporting company
    o   Rule 12b-2 o þ
        o þ




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##### 





TABLE OF
    CONTENTS
   
 PageNumberItem 1


Description of Business


1Item 2


Description of Property


20Item 3


Legal Proceedings


21Item 4


Submission of Matters to a vote of Security
    Holders


21Item 5


Market for Common Equity And Related Stockholder
    Matters


21Item 6


Managements Discussion and Analysis or Plan
    of Operation


22Item 7


Financial Statements


29Item 8


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


51Item 8A


Controls and Procedures


51Item 9


Directors, Executive Officers, Promoters and
    Control Persons


53Item 10


Executive Compensation


56Item 11


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


60Item 12


Certain Relationships and Related Transactions


62Item 13


Exhibits


62Item 14


Principal Accountant Fees and Services


64EX-10.16EX-23EX-31.1EX-31.2EX-32.1




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##### Table of Contents



INDUSTRY
    AND MARKET DATA
  Form 10-KSB
  PART I
  Item 1.
    Description
    of Business.  General
    Business Overview
  Form 10-KSB,
      tm tm tm tm
  same-day
 1




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##### Table of Contents



Anesthesia &
    Analgesia
    tm
  Sevoflurane
      Desflurane
    Enflurane
    and Isoflurane
   2




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##### Table of Contents



tm tm
  Real-Time
    Image Guidance
  Industry
    Overview
    
    aging of the population;
    development of new minimally invasive surgical procedures;
    focus on increased productivity and lower costs;
    transition from hospital-based to outpatient procedures; and
    demand for improved therapeutic outcome.    
    decreasing operating time;
    enabling additional procedures to be performed on a minimally
    invasive basis;
    reducing patient trauma and recovery time;
    improving surgical accuracy; and
    reducing radiation exposure to patients and medical
    professionals in fluoroscopically-guided procedures.  Image
    Guidance Product Overview
  tm tm ® tm ®
  tm tm
  tm tm
 3




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##### Table of Contents



tm tm tm
  tm ®
  
    improved surgical accuracy and corresponding reduction in
    complications;
    a reduction in x-ray on-time of 25% to 90% depending on the type
    of procedures; and
    the elimination of multiple instrument penetrations in attempts
    to locate subsurface targets and a corresponding reduction in
    time, expense and trauma.  tm tm
  Light
    SabretmProcedure Instruments
  tm tm tm
  tm tm tm tm
  tm tm tm
  tm tm tm 30-day
 4




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##### Table of Contents



Conscious
    Sedation
          Sales,
    Distribution and Marketing
  Overview
    Our
    International Partners
   5




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##### Table of Contents



Partner
    Annual Minimum Purchases
  tm
          Our
    Sales and Marketing Organization
  tm
     6




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##### Table of Contents



tm
    Competition
      Research &
    Development
  tm tm
      Intellectual
    Property
   7




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##### Table of Contents



Product
    Regulatory Status
  Inhalation
    Anesthetics  United States
    Inhalation
    Anesthetics  International
    
    enflurane approvals in 18 countries and two applications filed;
    isoflurane approvals in 36 countries with nine applications
    filed;
    sevoflurane approvals in 13 countries with 41 applications filed.  Real-time
    image guidance medical devices  United
    States
  tm tm
  Real-time
    image guidance medical devices 
    International
  tm
  Manufacturing
    tm tm
  Raw
    Materials
     8




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##### Table of Contents



Intellectual
    Property Position
      PatentNumber


Title

Filing Date


Expiration Date5,810,841


ENERGY GUIDED APPARATUS AND METHOD


5/20/1997



5/20/20175,969,193


METHOD FOR THE PREPARATION OF SEVOFLURANE


8/18/1997



8/18/20176,036,639


LARYNGOSCOPE HAVING LOW MAGNETIC SUSCEPTIBILITY


4/11/1997



4/11/20176,096,049


LIGHT GUIDING DEVICE AND METHOD


7/27/1998



7/27/20186,200,274


REMOVABLE NEEDLE RULE


7/7/1998



7/7/20186,264,618


SAMPLING DEVICE AND METHOD OF RETRIEVING A SAMPLE


1/28/2000



1/28/20206,297,502


ALIGNMENT VERIFICATION DEVICE AND METHOD OF USING THE SAME WITH
    A VISUAL LIGHT BEAM AND AN X-RAY


5/29/1998



5/29/20186,283,125


STERILE DRAPE


11/19/1998



11/19/20186,444,358


LARYNGOSCOPE HAVING LOW MAGNETIC SUSCEPTIBILITY


3/10/2000



3/10/20206,679,267


STERILE DRAPE


8/31/2001



8/31/20216,694,169


TARGETING SYSTEM AND METHOD OF TARGETING


2/22/2001



2/22/20216,829,500


METHOD AND DEVICE FOR DETERMINING ACCESS TO A SUBSURFACE TARGET


6/15/1999



6/15/201910/644,500


METHOD FOR THE PREPARATION OF SEVOFLURANE


8/20/2003



8/20/202311/098,243


REMOVAL OF CARBON DIOXIDE AND CARBON MONOXIDE FROM PATIENT
    EXPIRED GAS DURING ANESTHESIA


4/4/2005



4/4/2025     Application







Expiration DateNumber


Title

Filing Date


Assuming Issuance10/272,794


DRUG DELIVERY SYSTEM FOR CONSCIOUS SEDATION


10/17/2002



10/17/202210/977,759


TARGETING SYSTEM AND METHOD OF TARGETING


10/29/2004



10/29/202411/281,294


METHOD FOR THE PREPARATION OF SEVOFLURANE


11/17/2005



11/17/202511/281,293


PROCESS FOR PRODUCTION OF 1,2,2,2   TETRAFLUORO ETHYL
    DIFLUORO METHYL ETHER


11/17/2005



11/17/202511/406,480


PREPARATION OF SEVOFLURANE WITH NEGLIGIBLE WATER CONTENT


4/18/2006



4/18/2026    9




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##### Table of Contents



Government
    Regulation
        Product
    Classifications and Pre-marketing Submission
    Requirements
  Real-Time
    Image Guidance Medical Devices
    tm tm tm
  tm tm tm
     10




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##### Table of Contents



Drugs
    Other
    Anticipated Regulatory Submissions
    Registration
    and Listing
    Labeling
    Manufacturing
    regulations for devices, including design controls
  13485-2003
  Post-marketing
    obligations
  13485-2003
  Penalties
    and legal remedies available to FDA for violations of its
    regulations
  on-site
 11




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##### Table of Contents



Employees
    Risk
    Factors
    We are
    currently in a growth stage and may experience setbacks in both
    business and product development.
  tm
  We may
    need additional capital to fulfill our business strategies. We
    may also incur unforeseen costs. Failure to obtain such capital
    would adversely affect our business.
    The loss
    of the services of key personnel would adversely affect our
    business.
   12




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##### Table of Contents



The loss
    of distribution partners who hold registrations in their
    territories for international sales of our products could
    negatively affect our projected sales.
    We face
    competition in our industry, and many of our competitors have
    substantially greater experience and resources than we
    do.
        We are
    dependent upon sales outside the United States, which are
    subject to a number of risks.
    
    Unforeseen changes in regulatory requirements;
    Weaker intellectual property rights protection in some countries;
    New export license changes in tariffs or trade restrictions;
    Political and economic instability in our target
    markets; and
    Greater difficulty in collecting receivables from product sales.  We rely
    upon third-party manufacturers and suppliers, which puts us at
    risk for supplier business interruptions.
   13




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##### Table of Contents



We rely
    upon a single manufacturing facility for the majority of our
    revenue
    We may
    face future product liability claims relating to the use of our
    products.
      Significant
    existing or additional governmental regulation could subject us
    to unanticipated delays and costs, which would adversely affect
    our revenues.
    
    Fines;
    Injunctions;
    Civil penalties;
    Recalls or seizures of our products;
    Total or partial suspension of the production of our products; 14




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##### Table of Contents




    Withdrawal of existing approvals or premarket clearances of our
    products;
    Refusal to approve or clear new applications or notices relating
    to our products;
    Recommendations by the FDA that we not be allowed to enter into
    government contracts; and
    Criminal prosecution.    Failure
    to obtain regulatory approvals for our products in the future
    may adversely affect our business.
    Medical
    Devices
    Pharmaceutical
    Products
    Manufacturing
    Guidelines
       15




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##### Table of Contents



We may
    not be able to expand or enhance our existing product lines with
    new products limiting our ability to grow our company.
    We are
    subject to environmental regulations, and any failure to comply
    may result in substantial fines and sanctions.
      Future
    acquisitions may divert the attention of management and may
    involve risk of undisclosed liabilities.
   16




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##### Table of Contents



We became
    public by means of a reverse merger, and as a result we are
    subject to the risks associated with the prior activities of the
    public company.
    We will
    need to make additional investments in financial processes and
    staffing in order to ensure that our internal controls over
    financial reporting are effective.
    Risks
    Related to Our Intellectual Property
  If we are
    not able to adequately protect our intellectual property, we may
    not be able to compete effectively.
       17




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##### Table of Contents



PatentNumber


Title

Filing Date


Expiration Date5,810,841


ENERGY GUIDED APPARATUS AND METHOD


5/20/1997



5/20/20175,969,193


METHOD FOR THE PREPARATION OF SEVOFLURANE


8/18/1997



8/18/20176,036,639


LARYNGOSCOPE HAVING LOW MAGNETIC SUSCEPTIBILITY


4/11/1997



4/11/20176,096,049


LIGHT GUIDING DEVICE AND METHOD


7/27/1998



7/27/20186,200,274


REMOVABLE NEEDLE RULE


7/7/1998



7/7/20186,264,618


SAMPLING DEVICE AND METHOD OF RETRIEVING A SAMPLE


1/28/2000



1/28/20206,297,502


ALIGNMENT VERIFICATION DEVICE AND METHOD OF USING THE SAME WITH
    A VISUAL LIGHT BEAM AND AN X-RAY


5/29/1998



5/29/20186,283,125


STERILE DRAPE


11/19/1998



11/19/20186,444,358


LARYNGOSCOPE HAVING LOW MAGNETIC SUSCEPTIBILITY


3/10/2000



3/10/20206,679,267


STERILE DRAPE


8/31/2001



8/31/20216,694,169


TARGETING SYSTEM AND METHOD OF TARGETING


2/22/2001



2/22/20216,829,500


METHOD AND DEVICE FOR DETERMINING ACCESS TO A SUBSURFACE TARGET


6/15/1999



6/15/201910/644,500


METHOD FOR THE PREPARATION OF SEVOFLURANE


8/20/2003



8/20/202311/098,243


REMOVAL OF CARBON DIOXIDE AND CARBON MONOXIDE FROM PATIENT
    EXPIRED GAS DURING ANESTHESIA


4/4/2005



4/4/2025     Application







Expiration DateNumber


Title

Filing Date


Assuming Issuance10/272,794


DRUG DELIVERY SYSTEM FOR CONSCIOUS SEDATION


10/17/2002



10/17/202210/977,759


TARGETING SYSTEM AND METHOD OF TARGETING


10/29/2004



10/29/202411/281,294


METHOD FOR THE PREPARATION OF SEVOFLURANE


11/17/2005



11/17/202511/281,293


PROCESS FOR PRODUCTION OF 1,2,2,2  TETRAFLUORO ETHYL
    DIFLUORO METHYL ETHER


11/17/2005



11/17/202511/406,480


PREPARATION OF SEVOFLURANE WITH NEGLIGIBLE WATER CONTENT


4/18/2006



4/18/2026    18




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##### Table of Contents



If we
    infringe on the rights of third parties, we may not be able to
    sell our products, and we may have to defend against litigation
    and pay damages.
    If our
    trademarks and trade names are not adequately protected, we may
    not be able to build brand loyalty and our sales and revenues
    may suffer.
  tm tm tm tm tm tm
  Risks
    Related to Our Securities
  We have a concentration of stock ownership and control, and a
    small number of stockholders have the ability to exert
    significant control in matters requiring stockholder vote and
    may have interests that conflict with yours.
   19




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Our stock price may be volatile because of factors beyond our
    control and you may lose all or a part of your investment.
    
    Our failure to achieve and maintain profitability;
    Our failure to meet financial analysts performance
    expectations;
    Changes in earnings recommendations by financial analysts;
    Actual or anticipated variations in our quarterly results of
    operations;
    Changes in market valuations of similar companies;
    Announcements by us or our competitors of significant contracts,
    new products, acquisitions, commercial relationships, joint
    ventures or capital commitments;
    The loss of major customers or product or component suppliers;
    The loss of significant partnering relationships;
    Product liability lawsuits or product recalls; and
    General market, political and economic conditions.    Item 2.
    Description
    of Property.            Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   20




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##### Table of Contents



PART II
  Item 5.
    Market
    for Common Equity And Related Stockholder Matters.    Market
    Information
  High


Low2006March 31, 2006


2.75



1.55June 30, 2006


4.60



2.25September 30, 2006


4.25



3.40December 31, 2006


5.89



3.522007March 31, 2007


5.83



4.63June 30, 2007


6.55



4.82September 30, 2007


5.99



4.43December 31, 2007


5.08



2.19   Holders
    Dividends
      Securities
    authorized for issuance under equity compensation plan
    Equity
    Compensation Plan Information
  (a)

(b)

(c)Number of SecuritiesRemaining Available forNumber of Securities to be



Future Issuance Under EquityIssued upon Exercise of

Weighted-Average Exercise

Compensation PlansOutstanding Options,

Price of Outstanding

(Excluding SecuritiesPlan Category

Warrants and Rights(1)

Options, Warrants and Rights

Reflected in Column (a))Equity compensation plans approved by security holders


5,059,411


$
3.84



1,187,770     (1)
    
    Reflects shares issuable upon exercise of options issued and
    issuable under the Companys 2004 Stock Option Plan and
    2005 Directors Compensation Plan. 21




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##### Table of Contents



Purchase
    of shares
    Item 6.
    Managements
    Discussion and Analysis or Plan of Operation.  Cautionary
    Factors That May Affect Future Results
  Form 10-KSB
  Form 10-KSB Form 10-KSB,
  
    our limited operating history and business development
    associated with being a growth stage company;
    our need to obtain future funding through equity or debt
    financings;
    our dependence on key personnel;
    our need to attract and retain technical and managerial
    personnel;
    our ability to execute our business strategy;
    our dependence on strategic partnerships;
    intense competition with established leaders in the medical
    devices industry;
    our reliance on third party suppliers;
    our exposure to product liability claims resulting from the use
    of our products;
    our exposure to unanticipated and uncontrollable business
    interruptions;
    changes in international economic, political and regulatory
    conditions, interest rates and currency movements;
    the costs and effects of complying with changes to existing laws
    and regulations;
    the effect of failing to receive regulatory approval for new and
    existing products;
    the costs and effects of complying with laws and regulations
    relating to the environment and to the manufacture, storage,
    distribution and regulation of our products;
    our ability to successfully complete the integration of any
    future acquisitions;
    our ability to project the market for our products based upon
    estimates and assumptions;
    our ability to achieve and maintain adequate internal controls
    necessary to comply with regulations governing financial
    reporting;
    our ability to protect our intellectual property and proprietary
    technologies; 22




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##### Table of Contents




    costs associated with potential intellectual property
    infringement claims asserted by a third party; and
    our ability to protect, and build recognition of, our trademarks
    and tradenames.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
  Form 10-KSB.
  Results
    Of Operations  Year Ended December 31, 2007
    Compared To Year Ended December 31, 2006.
  Years EndedDecember 31,


December 31,2007


2006(All amounts in thousands USD, except per share data)Revenue

$
12,952


$
16,341Cost of goods sold


13,518



10,754Gross profit (loss)

$
(566
)

$
5,587Gross margin


(4.4
)%


34.2
%   Revenue
  start-up
      Gross
    Profit (Loss)
  start-up work-in-process
  23




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##### Table of Contents



Years EndedDecember 31,


December 31,2007


2006Operating expenses:Sales and marketing

$
8,407


$
5,074Research and development


5,404



2,916Finance and administrative


4,375



4,636Total operating expenses

$
18,186


$
12,626   Sales &
    Marketing
    Research &
    Development
    Finance &
    Administration
    Years EndedDecember 31,


December 31,2007


2006Non-operating income (expense):Interest expense

$
(2
)

$
(155
)Interest income


162



642Warrant inducement


(206
)


Net loss on disposal of fixed assets






(51
)Total non-operating income (expense)

$
(46
)

$
436     Years EndedDecember 31,


December 31,2007


2006Net Loss

$
18,798


$
(6,603
)Less preferred stock dividends  cash






(486
)Less preferred stock dividends  non cash






(183
)Net loss available to common stockholders

$
18,798


$
(7,272
)Net loss per share, basic and diluted

$
(0.39
)

$
(0.20
)Weighted average common shares outstanding, basic and
    diluted


46,676



36,639  24




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##### Table of Contents



Liquidity
    and Capital Resources
              Critical
    Accounting Policies and Estimates
   25




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##### Table of Contents



Allowance
    for Doubtful Accounts
    Inventory
    Valuation
  first-in, work-in-process
  Property,
    Equipment and Depreciation
    Patents
    Income
    Taxes
     26




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##### Table of Contents



Revenue
    Recognition
    Research
    and Development Costs
    Stock
    Based Compensation
    Recent
    Accounting Pronouncements
     27




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##### 



No. 07-3,
    Item 7.
    Financial
    Statements.  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm

29Consolidated Financial Statements:Balance Sheets

30Statements of Operations

31Statement of Changes in Stockholders
    Equity

32Statements of Cash Flows

33Notes to the Consolidated Financial Statements

34-50   28




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               29




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS

(IN
    THOUSANDS EXCEPT SHARE AND PER SHARE DATA)  December 31,


December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
238


$
4,664Investments






7,249Accounts receivable


3,310



10,473License agreement receivable


1,000



Inventories, net


12,402



4,360Prepaid expenses and other


1,121



1,563Total current assets


18,071



28,309Property and equipment:Machinery and equipment


15,169



2,420Computer equipment and software


1,471



571Furniture and fixtures


815



662Leasehold improvements


385



385Construction in progress


7,692



4,17725,532



8,215Less accumulated depreciation


2,247



1,234Net property and equipment


23,285



6,981Other assets, net


639



439$
41,995


$
35,729LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Demand notes payable

$
6,000


$
Accounts payable


12,983



965Accrued expenses


1,004



1,262Current portion of long term debt


206



Current portion of deferred income


103



Total current liabilities


20,296



2,227Long-term liabilitiesLong-term debt


1,725



Long-term deferred income


897



Total long-term liabilities


2,622



Commitments and contingencies (See Note 14)






Stockholders equity:Series A convertible preferred stock






Common stock


487



470Additional paid in capital


80,869



76,513Accumulated deficit


(62,279
)


(43,481
)Total stockholders equity


19,077



33,502$
41,995


$
35,729    30




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF OPERATIONS

(IN
    THOUSANDS EXCEPT SHARE AND PER SHARE DATA)  Years EndedDecember 31,


December 31,2007


2006Revenue

$
12,952


$
16,341Cost of goods sold


13,518



10,754Gross profit (loss)


(566
)


5,587Operating expenses:Sales and marketing


8,407



5,074Research and development


5,404



2,916Finance and administrative


4,375



4,636Total operating expenses


18,186



12,626Operating loss


(18,752
)


(7,039
)Non-operating income (expenses):Interest expense


(2
)


(155
)Interest income


162



642Warrant inducement


(206
)


Loss on disposal of property and equipment






(51
)Total non-operating income (expenses)


(46
)


436Net loss


(18,798
)


(6,603
)Less preferred stock dividends:Cash dividends






(486
)Non cash dividends






(183
)Net loss available for common stockholders

$
(18,798
)

$
(7,272
)Net loss per share, basic and diluted

$
(0.39
)

$
(0.20
)Weighted average common shares outstanding, basic and
    diluted


47,676,454



36,639,348    31




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

(IN
    THOUSANDS EXCEPT SHARE AND PER SHARE DATA)  Series A Convertible








AdditionalPreferred Stock


Common Stock


Paid-in


AccumulatedShares


Amount


Shares


Amount


Capital


Deficit


TotalBalance at December 31, 2005


11,200


$
3



29,058,431


$
290


$
40,262


$
(36,209
)

$
4,346Sale of common stock, net of costs










11,500,000



115



34,397







34,512Conversion of preferred stock and accrued dividends to common
    stock


(11,200
)


(3
)


5,677,666



57



129







183Preferred stock dividends






















(669
)


(669
)Stock warrants exercised










564,213



6



469







475Stock options exercised










247,930



2



415







417Stock based compensation


















841







841Net loss






















(6,603
)


(6,603
)Balance at December 31, 2006





$




47,048,240


$
470


$
76,513


$
(43,481
)

$
33,502Stock warrants exercised










1,121,047



12



2,260







2,272Stock options exercised










519,515



5



962







967Stock based compensation


















1,134







1,134Net loss






















(18,798
)


(18,798
)Balance at December 31, 2007





$




48,688,802


$
487


$
80,869


$
(62,279
)

$
19,077    32




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS

(IN
    THOUSANDS EXCEPT SHARE AND PER SHARE DATA)  Years EndedDecember 31, 2007


December 31, 2006Cash flows from operating activities:Net loss

$
(18,798
)

$
(6,603
)Adjustments to reconcile net loss to net cash used by operating
    activities:Depreciation and amortization


1,043



590Stock based compensation


1,134



841Loss on disposal of property and equipment






51Amortization of bond discount






(43
)Warrant inducement


206



(Increase) decrease in assets:Accounts receivable


7,163



(7,013
)License agreement receivable


(1,000
)


Inventories


(10,552
)


(499
)Inventory reserve


2,510



Prepaid expenses and other


442



(751
)Increase (decrease) in liabilities:Accounts payable


6,660



(2,450
)Accrued expenses


(258
)


856Deferred income


1,000



Net cash used by operating activities


(10,450
)


(15,021
)Cash flows from investing activities:Purchases of investments






(12,424
)Sales of investments


7,249



5,217Purchases of property and equipment


(11,960
)


(5,496
)Acquisition of other assets


(230
)


(309
)Net cash used by investing activities


(4,941
)


(13,012
)Cash flows from financing activities:Borrowings under demand notes payable


6,000



400Repayments under demand notes payable






(3,120
)Borrowings under long-term debt


2,015



Principal payments on long-term debt


(83
)


Proceeds from warrants exercised


2,066



475Proceeds from sale of common stock, net of costs






34,512Preferred cash dividends






(656
)Proceeds from options exercised


967



417Net cash provided by financing activities


10,965



32,028Net (decrease) increase in cash and cash equivalents


(4,426
)


3,995Cash and cash equivalents  beginning of year


4,664



669Cash and cash equivalents  end of year

$
238


$
4,664    33




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1. 
    NATURE OF
    BUSINESS  Basis of Presentation
    Business Description tm tm
  NOTE 2. 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Cash and Cash Equivalents
  Investments
  Accounts Receivable
  Inventories (first-in,
 34




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  work-in-process
  Property and Equipment
    Patents
  Income Taxes
  Revenue Recognition
  Research and Development Costs
  Advertising
  Shipping and Handling Costs
 35




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  Stock-Based Compensation
  Earnings Per Share
    Recent Accounting Pronouncements
       36




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
    No. 07-3,
    Accounting Estimates
  Segment Reporting
  Fair Value of Financial Instruments
  Concentration of Credit Risk
   37




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  NOTE 3. 
    INVESTMENTS    2006Gross


GrossUnrealized


UnrealizedCost


Gains


Losses


Fair ValueAvailable-for-sale:U.S. Government securities

$
2,872


$



$



$
2,872Corporate bonds  fixed rate


2,659











2,659Certificates of deposit and other


1,718











1,718Total available for sale securities

$
7,249


$



$



$
7,249   NOTE 4. 
    INVENTORIES    2007


2006Raw materials

$
5,003


$
1,179Work-in-progress


8,598



2,028Finished goods


1,311



1,153Inventory Reserves


(2,510
)


$
12,402


$
4,360   NOTE 5. 
    OTHER
    ASSETS    2007


2006Gross Carrying


Accumulated


Net Carrying


Gross Carrying


Accumulated


Net CarryingUseful Life


Amount


Amortization


Amoung


Amount


Amortization


AmoungPatent application costs


Varied(1
)

$
576


$
(18
)

$
558


$
283


$
(1
)

$
282Long-term deposits and other






81







81



157







157$
657


$
(18
)

$
639


$
440


$
(1
)

$
439     (1)
    
    Patents are amortized over their expected useful life which is
    generally the remaining useful life of the patent after it is
    placed in service. As of December 31, 2007, the weighted
    average remaining useful life of patents placed in service was
    14.3 years. 38




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
     2006 Actual

$
12007 Actual


17Expected :2008


182009


242010


362011


362012


36Thereafter


408Total

$
558   NOTE 6. 
    DEMAND
    NOTES PAYABLE        NOTE 7. 
    LONG-TERM
    DEBT     39




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
    2008

$
2062009


2142010


2222011


2292012


238Thereafter


823Total

$
1,932     NOTE 8. 
    INCOME
    TAXES    2007


2006Federal net operating loss carryforward

$
17,791


$
12,369Inventory


2,433



610Other temporary differences


420



87820,644



13,857Less valuation allowance


20,644



13,857Net deferred tax asset

$



$
       Loss Year

Annual LimitPrevious to 9/30/1998

$
1989/30/1998 to 9/30/2000


7309/30/01 to 6/2005


5,598  40




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
        Years EndedDecember 31,


December 31,2007


2006Statutory United States federal rate


(34
)%


(34
)%State income taxes net of federal benefit


(6
)


(6
)Stock option expense


2



4Other


1



4Change in valuation reserves


37



32Effective tax rate



%



%     Unrecognized tax benefits balance at January 1, 2007

$
811Gross increase for tax positions of prior years


Gross decrease for tax positions of prior years


(406
)Gross increase for tax positions of current year


1,149Gross decrease for tax positions of current year


Settlements


Lapse of statute of limitations


Unrecognized tax benefits balance at December 31, 2007

$
1,554     and/or
   41




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  NOTE 9. 
    STOCKHOLDERS
    EQUITY    2007


2006Common, voting, $.01 par value


100,000,000



100,000,000Series A Convertible Preferred


5,000,000



5,000,000Total


105,000,000



105,000,000   Series A Convertible Preferred Stock
        Stock Transactions  Year Ended
    December 31, 2007:
   42




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  Stock Transactions  Year Ended
    December 31, 2006:
      Stock Warrants 
  Number


Weightedof Warrants


AverageOutstanding


Exercise PriceOutstanding at December 31, 2005


8,928,392


$
2.02Exercised  Year ended December 31, 2006


(595,000
)

$
1.01Outstanding at December 31, 2006


8,333,392


$
2.09Exercised  Year ended December 31, 2007


(1,121,494
)

$
1.84Outstanding at December 31, 2007


7,211,898


$
2.10     WeightedAverageExercise Price


Number of


Weighted


RemainingRange


Warrants


Average Price


Life (Years)$0.75

$
1.00



2,735,000


$
.97



0.9$1.01

$
1.50



1,106,957


$
1.17



2.1$1.51

$
2.00



913,691


$
1.87



3.4$3.01

$
4.00



2,456,250


$
3.85



0.5Total






7,211,898


$
2.10



1.3   NOTE 10. 
    STOCK
    OPTIONS   43




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
        Service
    Based Options
  Years EndedDecember 31,


December 31,2007


2006Expected dividend yield



%



%Expected stock price volatility


30-34
%


34
%Risk-free interest rate


4.5
%


4.8
%Expected life of options


3.4 Years



4.9 Years  44




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  Performance
    Based Options
  Years EndedDecember 31,


December 31,2007


2006Expected dividend yield



%



%Expected stock price volatility


30
%


34
%Risk-free interest rate


4.1
%


4.8
%Expected life of options


3.3 Years



3.0 Years       Service
    Based Options
  Weighted


WeightedNumber of


Average


Average


AggregateShares Subject


Exercise


Remaining


Intrinsicto Options


Price


Life (Years)


ValueOutstanding as of December 31, 2006


3,470,051


$
2.47Granted to employees  Year ended December 31,
    2007


1,290,000


$
5.62Forfeited  Year ended December 31, 2007


(532,250
)

$
4.63Exercised  Year ended December 31, 2007


(509,765
)

$
1.81Outstanding as of December 31, 2007


3,718,036


$
3.35



3.23


$
3,304Exercisable as of December 31, 2007


2,333,536


$
2.18



3.24


$
2,944   Performance
    Based Options
  Weighted


WeightedNumber of


Average


Average


AggregateShares Subject


Exercise


Remaining


Intrinsicto Options


Price


Life (Years)


ValueOutstanding as of December 31, 2006


1,480,000


$
4.25Granted to employees  Year ended December 31,
    2007


1,235,000


$
5.30Forfeited  Year ended December 31, 2007


(1,363,875
)

$
4.27Exercised  Year ended December 31, 2007


(9,750
)

$
4.25Outstanding as of December 31, 2007


1,341,375


$
5.20



2.78


$
Exercisable as of December 31, 2007


131,375


$
4.25



0.75


$
  45




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
      Service
    Based Options
  Number of


Weighted-AverageNon-vested Shares


Grant-DateSubject to Options


Fair ValueNon-vested as of December 31, 2006


1,461,710


$
1.20Non-vested granted  year ended December 31, 2007


1,134,000


$
1.49Vested  year ended December 31, 2007


(714,960
)

$
1.12Forfeited  year ended December 31, 2007


(496,250
)

$
1.27Non-vested as of December 31, 2007


1,384,500


$
1.56   Performance
    Based Options
  Number of


Weighted-AverageNon-vested Shares


Grant-DateSubject to Options


Fair ValueNon-vested as of December 31, 2006


1,338,875


$
0.97Non-vested granted  year ended December 31, 2007


1,235,000


$
1.22Vested  year ended December 31, 2007





$
Forfeited  year ended December 31, 2007


(1,363,875
)

$
0.98Non-vested as of December 31, 2007


1,210,000


$
1.22    46




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
    Options Outstanding


Options ExercisableWeighted








WeightedWeighted


Average





Weighted


AverageExercise

Number of


Average


Remaining


Number of


Average


RemainingPrice Range

Options


Exercise Price


Life (Years)


Options


Exercise Price


Life (Years)$1.40  $1.99


1,479,536


$
1.46



3.47



1,474,536


$
1.46



3.47$2.00  $2.99


374,500


$
2.32



3.48



279,500


$
2.30



3.39$3.00  $3.99


265,000


$
3.31



2.45



217,500


$
3.22



2.21$4.00  $4.99


798,375


$
4.29



2.87



451,375


$
4.25



2.23$5.00  $5.99


1,638,000


$
5.38



2.97



41,000


$
5.46



2.17$6.00  $7.15


504,000


$
6.51



2.96



1,000


$
6.15



2.95Total


5,059,411


$
3.84



3.11



2,464,911


$
2.29



3.10     NOTE 11. 
    RELATED
    PARTY TRANSACTIONS     47




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
  NOTE 12. 
    MAJOR
    CUSTOMERS    Year Ended


Year EndedDecember 31, 2007


December 31, 2006Customer

Revenue


Accounts Receivable


Revenue


Accounts ReceivableA


11
%


40
%


33
%


48
%B


31
%


0
%


27
%


32
%C


11
%


2
%


2
%


4
%     NOTE 13. 
    RETIREMENT
    PLAN    NOTE 14. 
    COMMITMENTS
    AND CONTINGENCIES        2008

$
5062009


5062010


5062011


5142012


528Thereafter


1,941Total

$
4,501  48




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
    NOTE 15. 
    SUPPLEMENTAL
    CASH FLOW INFORMATION    Years EndedDecember 31,


December 31,2007


2006Non cash investing and financing activities:Property and equipment acquisitions recorded as accounts payable

$
6,230


$
873Cashless exercise of warrants

$
1


$
1Conversion of preferred stock to common stock

$



$
11,200Conversion of accrued dividends to common stock

$



$
183   NOTE 16. 
    BUSINESS
    SEGMENT INFORMATION    
    Anesthesia and Analgesia  We currently manufacture
    and sell three inhalation anesthetics; isoflurane, enflurane and
    sevoflurane.
    Real-Time Image Guidance  We currently manufacture
    and sell our
    SabreSourcetm
    system and complementary Light
    Sabretm    Revenues
    by Geographic Area
  Years EndedDecember 31,


December 31,2007


2006United States

$
3,358


$
7,062International


9,594



9,279Total revenues

$
12,952


$
16,341       NOTE 17. 
    SUBSEQUENT
    EVENTS   49




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##### Table of Contents



MINRAD
    INTERNATIONAL, INC. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
    FINANCIAL STATEMENTS  (Continued)
       50




---



##### Table of Contents



Item 8.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 8A(T).
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-KSB
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
    Internal
    Control  Integrated Framework
     51




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##### Table of Contents



Internal
    Control  Integrated Framework
    Plan for
    Remediation of Material Weaknesses
      Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(e) 15d-15(e)
 52




---



##### Table of Contents



PART III
  Item 9.
    Directors,
    Executive Officers, Promoters and Control Persons; Compliance
    with
    Section 16(a)
    of the Exchange Act.  Directors
    and Executive Officers
    Name

Age

PositionWilliam H. Burns, Jr.


58


Chairman of the Board and Chief Executive OfficerCharles Trego, Jr.


57


Executive Vice President, Chief Financial OfficerDennis Goupil


58


Executive Vice President, Chief Technology OfficerJohn McNeirney


75


Senior Vice PresidentKirk Kamsler


57


Senior Vice President of Commercial DevelopmentWilliam Rolfe


62


Vice President, Controller,Richard Tamulski


60


Vice President, TreasurerTerrence Vollrath


51


Vice President, OperationsDavid DiGiacinto


54


DirectorDavid Donaldson(3)


65


DirectorDonald Farley(3)


65


DirectorDuane Hopper(1)(2)


61


DirectorRobert Lifeso(1)


62


DirectorTheodore Stanley(1)


68


DirectorBrett Zbar


35


Director     (1)
    
    Audit Committee member(2)
    
    Compensation Committee member(3)
    
    Corporate Governance Committee member  William H. Burns, Jr.
  Charles Trego, Jr.
  Dennis Goupil
 53




---



##### Table of Contents



John McNeirney
  Kirk Kamsler
  William Rolfe
  Richard Tamulski
  Terrence Vollrath
  David DiGiacinto
  David Donaldson
  Donald Farley
 54




---



##### Table of Contents



Duane Hopper
  Robert Lifeso, MD
  Theodore Stanley, MD
  Brett Zbar, MD
  Director
    Independence
    Audit
    Committee
    Code of
    Ethics
  http://www.minrad.com.
 55




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##### Table of Contents



Section 16(a)
    Beneficial Ownership Reporting Compliance
      Item 10.
    Executive
    Compensation.    SUMMARY
    COMPENSATION TABLE
  Stock

Option

All Other

TotalSalary

Bonus

Awards

Awards

Compensation

CompensationName and Principle Position

Year

($)

($)(a)

($)(b)

($)(c)

($)(d)

($)William H. Burns, Jr.


2007



275,000



16,892



1,200



427,000



1,230



721,322Chairman and CEO(1)


2006



225,961



84,570



1,200



388,974



1,200



701,905Dennis Goupil


2007



78,000



125,000



1,200



250,750



36,200



491,150Executive Vice President and CTO(2)


2006























Kirk D. Kamsler


2007



175,000







1,200



30,500



14,645



221,345Senior Vice President of


2006



140,000



30,501



1,200



63,140



11,000



245,841Commercial Development     (a)
    
    The amount of bonus compensation is calculated based on a
    percentage of net or gross profit (or increase in gross profit),
    as well as for certain executives, contractual minimums,
    according to the employees employment agreement. The
    percentage is based on position and is approved by the
    compensation committee.(b)
    
    Stock awards are issued through the Companys 401(k) plan,
    in the amount of $100 per month.(c)
    
    During the year ended December 31, 2006, the Company
    granted performance based options that are exercisable upon
    meeting certain milestone performance thresholds. As of
    December 31, 2006, Management determined the probability of
    achieving these performance thresholds by the option expiration
    date of September 30, 2007 and valued them accordingly.
    Options which were determined to be unlikely to be earned prior
    to the option expiration date of September 30, 2007 were
    not valued and not included in compensation.During the year ended December 31, 2007, the Company
    granted performance based options that are exercisable upon
    meeting certain milestone performance thresholds. Management has
    determined the probability of achieving these performance
    thresholds by the option expiration date of December 31,
    2008 and valued them accordingly (See Note 10 of the
    December 31, 2007 Consolidated Financial Statements).
    Options which management believes will not be earned prior to
    the option expiration date of December 31, 2008 are not
    valued and are not included.(d)
    
    Other compensation includes the cash portion of the
    Companys retirement plan contribution and travel
    allowances, and in the case of Mr. Goupil, relocation
    payments. 56




---



##### Table of Contents



(1)
    
    Mr. Burns served as President and CEO of Minrad
    International, Inc. from December 16, 2004 through
    January 3, 2006. On January 4, 2006, Mr. Burns
    relinquished the title of President of Minrad International, Inc.(2)
    
    Mr. Goupil served as Senior Vice President from August 2007
    through December 2007. On January 1, 2008, Mr. Goupil
    was appointed to the position of Executive Vice President and
    Chief Technology Officer of Minrad International, Inc., a
    position he currently holds.  Compensation
    Philosophy
             57




---



##### Table of Contents



OUTSTANDING
    EQUITY AWARDS AT FISCAL YEAR-END
  Stock AwardsEquityincentiveEquity


planOption Awards







incentive


awards:Equity













plan


Marketincentive













awards:


or payoutplan













Number of


value ofawards:










Market


unearned


unearnedNumber of


Number of


Number of







Number of


value of


shares,


shares,securities


securities


securities







shares or


shares or


units or


unitsunderlying


underlying


underlying







units of


units of


other


or otherunexercised


unexercised


unexercised


Option


Option

stock that


stock that


rights that


rights thatName and

options (#)


options (#)


unearned


exercise


expiration

have not


have not


have not


have notPrinciple Position

exercisable


unexercisable


options (#)


price ($)


date

vested (#)


vested ($)


vested (#)


vested ($)(a)

(b)


(c)


(d)


(e)


(f)

(g)


(h)


(i)


(j)William H. Burns, Jr. Chairman, and CEO


456,668











1.40


(1)














212,918











1.40


(2)














84,500











4.25


9/30/08






















350,000



5.30


(3)






















400,000



5.30


(4)














Total


754,086







750,000Dennis Goupil Executive Vice President and CTO






62,500







6.35


6/25/2010


















62,500







6.35


6/25/2011














50,000











3.05


12/16/2009






















25,000



5.30


(3)






















50,000



5.30


(4)














Total


50,000



125,000



75,000Kirk D. Kamsler Senior Vice President of Commercial Development


66,250











1.40


4/30/2010














66,250











1.40


4/30/2011














5,000











1.90


9/30/2010














20,000











4.25


9/30/2011






















25,000



5.30


(3)






















50,000



5.30


(4)














Total


157,500







75,000     (1)
    
    Mr. Burns total award of 600,000 options vest monthly
    at a rate of 16,667 options per month during the period from May
    2004 to April 1, 2007. These options expire five years
    after vesting.(2)
    
    Mr. Burns total award of 285,000 options vest monthly
    at a rate of 7,917 options per month during the period from
    March 1, 2004 to February 1, 2007. These options
    expire five years after vesting.(3)
    
    Performance options that are expected to vest by the option
    expiration date of December 31, 2008. The options will
    expire two years after vesting.(4)
    
    Performance options that are not expected to vest by the
    deadline of December 31, 2008. The options are expected to
    be forfeited.   58




---



##### Table of Contents



Employment
    Agreements and Management Compensation
  William H. Burns, Jr.
  David DiGiacinto
      Director
    Compensation
    Non-qualifiedFees earned











deferredor paid


Stock





Non-equity


compensation


All otherin cash


awards


Option awards


incentive plan


earnings


compensation


TotalName

($)


($)


($)(a)


compensation


($)


($)


($)Dave DiGiacinto


10,750



10,750



7,625















29,125David Donaldson


9,750



9,750



7,625















27,125Donald Farley


9,000



9,000



7,625















25,625Duane Hopper


12,250



12,250



7,625















32,125Robert Lifeso


10,250



10,250



28,025















48,525John Rousseau(b)


9,000



9,000



















18,000Theodore Stanley


8,750



8,750



76,125















93,625Brett Zbar


9,250























9,250  59




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##### Table of Contents



(a)
    
    During the year ended December 31, 2007, the Company
    granted performance based options that are exercisable upon the
    Company meeting certain milestone performance thresholds.
    Management has determined the probability of achieving these
    milestones by the option expiration date of December 31,
    2008 and valued them accordingly (See Note 10 of the
    Financial Statements). Options which management believes will
    not be earned prior to the deadline of December 31, 2008
    are not valued and are not included.(b)
    
    Resigned from the Board of Directors, effective October 16,
    2007  Compensation
    Philosophy
            Item 11.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Security
    Ownership of Certain Beneficial Owners and Management
      Number ofName of Beneficial Owner

Shares


PercentBeneficial owners of 5% of our common stock &
    affiliates(1)Kevin Kimberlin Partners L.P.(2)


6,933,084



13.3
%HealthCor Management L.P.(3)


6,000,000



12.3
%Laird Q. Cagan(4)


5,541,928



11.0
%Lehman Brothers Holding, Inc.(5)


4,646,983



9.5
% 60




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##### Table of Contents



Number ofName of Beneficial Owner

Shares


PercentWellington Management Company, LLP(6)


3,880,800



8.0
%New England Partners Capital LLC(7)


3,339,192



6.9
%Laminar Direct Capital, LP(8)


3,208,427



6.2
%Aisling Capital II L.P.(9)


2,603,000



5.3
%Sub-Total for all 5% owners & affiliates


36,153,414



63.7
%Directors & executive officers(10)William H. Burns, Jr.(11)


2,224,624



4.5
%David DiGiacinto(12)


55,536



0.1
%David Donaldson(13)


55,318



0.1
%Donald F. Farley(14)


365,150



0.7
%Duane Hopper(15)


141,210



0.3
%Robert Lifeso(16)


753,484



1.5
%Theodore Stanley(17)


56,941



0.1
%Brett Zbar(18)


0



0.0
%Charles Trego, Jr.(19)


0



0.0
%Dennis Goupil(20)


50,144



0.1
%Kirk Kamsler(21)


163,844



0.3
%John McNeirney(22)


185,520



0.4
%William Rolfe(23)


45,538



0.1
%Richard Tamulski(24)


90,538



0.2
%Terrence Vollrath(25)


10,144



0.0
%All directors and executive officers as a group
    (15 persons)(26)


4,197,991



8.4
%     (1)
    
    Excludes shares held by directors and executive officers, who as
    a group beneficially own in excess of 5% of the outstanding
    common stock of the Company.(2)
    
    Includes (i) 3,548,455 shares held by Kevin Kimberlin
    Partners L.P. (KKP) and various affiliates,
    (ii) 3,384,629 shares of common stock that KKP or its
    affiliates has the right to acquire by exercising warrants that
    are exercisable within 60 days of February 15, 2008.
    Kevin Kimberlin, the General Partner of KKP & its
    affiliates. Address: 535 Madison Ave.
    12th
    Floor NY, NY 10022(3)
    
    Includes 6,000,000 shares held by HealthCor Management,
    L.P. , HealthCor Associates, LLC, HealthCor Offshore, Ltd,
    HealthCor Hybrid Offshore, Ltd., HealthCor Group, LLC, HealthCor
    Capital, L.P., HealthCor, L.P., Mr. Arthur Cohen, and
    Mr. Joseph Healey. Address: Carnegie Hall Tower
    152 West 57th Street, 47th Floor New York, NY 10019.(4)
    
    Includes (i) 4,044,532 shares held directly by
    Mr. Cagan, (ii) 249,100 shares held by Cagan
    McAfee Capital Partners, LLC, an entity in which Mr. Cagan
    owns a 50% interest and shares voting and dispositive power,
    (iii) 1,472,396 shares that Mr. Cagan has the
    right to acquire by exercising warrants that were exercisable
    within 60 days of Feb. 15, 2008 and
    (iv) 25,000 shares that Mr. Cagan has the right
    to acquire by exercising options that were exercisable within
    60 days of Feb. 15, 2008. Address C/O Cagan McAfee Capital
    Partners, LLC 10600 N. DeAnza Blvd. Suite 250,
    Cupertino, CA 95014(5)
    
    Includes 4,646,983 shares held by Lehman Brothers Holdings
    Inc., Lehman Brothers Inc. and LBI Group Inc. Address: 745
    Seventh Avenue New York, NY 10019(6)
    
    Address: 75 State St. Boston, MA 02109(7)
    
    Address: One Boston Place, Suite 3630 Boston, Massachusetts
    02108(8)
    
    Includes 3,208,427 shares that Laminar Direct Capital L.P.
    or its affiliates has the right to acquire by exercising
    warrants that are exercisable within 60 days of
    February 15, 2008. The affiliates are Laminar Direct
    Capital GP Inc., D.E. Shaw & Co., L.P., and David E.
    Shaw. Address: 120 W. 45th Street, Tower 45, 39th
    Floor New York, NY 10036.(9)
    
    Includes 2,603,000 shares held by Aisling Capital II, LP, a
    Delaware limited partnership (Aisling), Aisling
    Capital Partners, LP, a Delaware limited partnership
    (Aisling Partners and general partner of Aisling),
    Aisling Capital Partners, LLC, a Delaware limited liability
    company (Aisling Partners GP and general partner of
    Aisling Partners), Mr. Dennis Purcell
    (Mr. Purcell and a managing member of Aisling
    Partners 61




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##### Table of Contents



GP), Mr. Andrew Schiff (Mr. Schiff and a
    managing member of Aisling Partners GP), and Mr. Steve Elms
    (Mr. Elms and a managing member of Aisling
    Partners GP). In their capacity as managing members of Aisling
    Partners GP, each of Messrs. Purcell, Schiff and Elms may
    be deemed to be beneficial owners of the securities held for the
    account of Aisling. Address 888
    7th
    Ave.,
    30th
    Floor, New York, NY 10106.(10)
    
    The address for all directors and executive officers is: 50
    Cobham Dr. Orchard Park, NY 14127(11)
    
    Includes (i) 1,470,538 shares held by Mr. Burns
    and (ii) 754,086 shares that Mr. Burns has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb 15, 2008.(12)
    
    Includes (i) 4,036 common shares held by
    Mr. DiGiacinto and (ii) 51,500 shares that
    Mr. DiGiacinto has the right to acquire pursuant to options
    that were exercisable within 60 days of Feb. 15, 2008.
    Mr. DiGiacinto is a Senior Managing Director of Spencer
    Trask Specialty Group, LLC.(13)
    
    Includes (i) 3,818 common shares held by Mr. Donaldson
    and (ii) 51,500 shares that Mr. Donaldson has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb. 15, 2008.(14)
    
    Includes (i) 291,578 shares held by Mr. Farley,
    (ii) 22,072 shares that Mr. Farley has the right
    to acquire pursuant to outstanding warrants that were
    exercisable within 60 days of Feb 15, 2008 and
    (iii) 51,500 shares that Mr. Farley has the right
    to acquire pursuant to outstanding options that were exercisable
    within 60 days of Feb. 15, 2008.(15)
    
    Includes (i) 89,710 shares held by Mr. Hopper and
    (ii) 51,500 shares that Mr. Hopper has the right
    to acquire pursuant to options that were exercisable within
    60 days of Feb. 15, 2008.(16)
    
    Includes (i) 681,984 shares held by Dr. Lifeso
    and (ii) 71,500 shares that Dr. Lifeso has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb. 15, 2008.(17)
    
    Includes (i) 31,941 shares held by Dr. Stanley
    and (ii) 25,000 shares that Dr. Stanley has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb. 15, 2008.(18)
    
    Includes (i) 0 shares held by Dr. Zbar and
    (ii) 0 shares that Dr. Zbar has the right to
    acquire pursuant to options that were exercisable within
    60 days of Feb. 15, 2008. Does not include the 2,603,000
    held by Aisling Capital II L.P. described in footnote
    (9) above. Dr. Zbar is a principal at Aisling Capital,
    but does not hold sole voting and dispositive power.(19)
    
    Includes (i) 0 shares held by Mr. Trego and
    (ii) 0 shares that Mr. Trego has the right to
    acquire pursuant to options that were exercisable within
    60 days of Feb 15, 2008.(20)
    
    Includes (i) 144 shares held by Mr. Goupil and
    (ii) 50,000 shares that Mr. Goupil has the right
    to acquire pursuant to options that were exercisable within
    60 days of Feb 15, 2008.(21)
    
    Includes (i) 6,344 shares held by Mr. Kamsler,
    and (ii) 157,500 shares that Mr. Kamsler has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb. 15, 2008.(22)
    
    Includes (i) 42,020 shares held by Mr. McNeirney
    and (ii) 143,500 shares that Mr. McNeirney has
    the right to acquire pursuant to options that were exercisable
    within 60 days of Feb. 15, 2008.(23)
    
    Includes (i) 538 shares held by Mr. Rolfe and
    (ii) 45,000 shares that Mr. Rolfe has the right
    to acquire pursuant to options that were exercisable within
    60 days of Feb 15, 2008.(24)
    
    Includes (i) 20,538 shares held by Mr. Tamulski
    and (ii) 70,000 shares that Mr. Tamulski has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb 15, 2008.(25)
    
    Includes (i) 144 shares held by Mr. Vollrath and
    (ii) 10,000 shares that Mr. Vollrath has the
    right to acquire pursuant to options that were exercisable
    within 60 days of Feb 15, 2008.(26)
    
    Officers & Directors as a group includes
    (i) 2,643,333 common stock held, (ii) warrants to
    acquire 22,072 shares of common stock, and
    (iii) 1,532,586 options to purchase common stock that were
    exercisable by members of the group within 60 days of Feb.
    15, 2008.  Item 12.
    Certain
    Relationships and Related Transactions.   62




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##### Table of Contents



Item 13.  Exhibits.  Form 10-KSB:
  3
.1

Articles of Incorporation of Minrad International, Inc.
    (incorporated by reference to Exhibit 3.1 to Form SB-2
    filed on July 1, 2005)3
.2

Certificate of Designations of Minrad International, Inc.
    (incorporated by reference to Exhibit 99.2 to Form 8-K
    filed on June 14, 2005)3
.3

Bylaws of Minrad International, Inc. (incorporated by reference
    to Exhibit 3.1 to
    Form 8-K
    as filed on March 28, 2008.)4
.1

Note Subscription Agreement, dated February 8, 2005, relating to
    the sale of $1.5 million of Convertible Promissory Notes and
    Warrants to Tobin Family Trust (incorporated by reference to
    Exhibit 99.1 to Form 8-K filed on February 14, 2005)4
.2

Note Subscription Agreement, dated February 8, 2005, relating to
    the sale of $1 million of Convertible Promissory Notes and
    Warrants to Laird Q. Cagan (incorporated by reference to Exhibit
    99.2 to Form 8-K filed on February 14, 2005)4
.3

Form of Convertible Promissory Note, dated February 8, 2005,
    used in connection with the sale of an aggregate of $2.5 million
    of Convertible Promissory Notes and Warrants (incorporated by
    reference to Exhibit 99.3 to Form 8-K filed on February 14,
    2005)4
.4

Form of Warrant, dated February 8, 2005, used in connection with
    the sale of an aggregate of $2.5 million of Convertible
    Promissory Notes and Warrants (incorporated by reference to
    Exhibit 99.4 to Form 8-K filed on February 14, 2005)4
.5

Form of Registration Rights Agreement, dated February 8, 2005,
    used in connection with the sale of an aggregate of $2.5 million
    of Convertible Promissory Notes and Warrants (incorporated by
    reference to Exhibit 99.5 to Form 8-K filed on February 14,
    2005)4
.6

Form of Guaranty, dated February 8, 2005, used in connection
    with the sale of an aggregate of $2.5 million of Convertible
    Promissory Notes and Warrants (incorporated by reference to
    Exhibit 99.6 to Form 8-K filed on February 14, 2005)4
.7

Amendment To Convertible Promissory Notes dated as of May 11,
    2005, between and among Minrad International, Inc., Laird Cagan
    and the Morrie Tobin Family Trust (incorporated by reference to
    Exhibit 10.9 to Form 10-QSB on May 13, 2005)4
.8

Securities Purchase Agreement dated as of June 8, 2005, by and
    among Minrad International, Inc. an the purchasers listed
    therein (incorporated by reference to Exhibit 99.1 to form 8-K
    filed on June 14, 2005)4
.9

Form of Warrant dated June 8, 2005 (incorporated by reference to
    Exhibit 99.3 to form 8-K filed on June 14, 2005)4
.10

Registration Rights Agreement dated June 8, 2005 (incorporated
    by reference to Exhibit 99.4 to form 8-K filed on June 14, 2005)4
.11

Securities Purchase Agreement dated as of June 17, 2005, by and
    among Minrad International, Inc. and the investors listed
    therein (incorporated by reference to Exhibit 99.1 to Form 8-K
    filed on June 21, 2005)4
.12

Form of Warrant, dated as of June 21, 2005, issued to Buyers
    under Securities Purchase Agreement of the same date by Minrad
    International, Inc. (incorporated by reference to Exhibit 99.3
    to Form 8-K filed on June 21, 2005)4
.13

Registration Rights Agreement, dated as of June 17, 2005,
    between Minrad International, Inc. and Buyers under Stock
    Purchase Agreement of the same date (incorporated by reference
    to Exhibit 99.4 to Form 8-K filed on June 21, 2005)4
.14

Securities Purchase Agreement Securities Purchase Agreement
    dated as of June 28, 2005, among Minrad International, Inc. and
    the investors listed therein (incorporated by reference to
    Exhibit 10.8 to
    Form 10-QSB
    filed August 5, 2005)4
.15

Form of Warrant dated June , 2005 (incorporated by reference to
    Exhibit 10.9 to Form 10-QSB filed August 5, 2005)4
.16

Registration Rights Agreement dated June 28, 2005 (incorporated
    by reference to Exhibit 10.10 to
    Form 10-QSB
    filed August 5, 2005)4
.17

Form of Stock Option Agreement, dated December 15, 2004, by and
    among the Registrant, Minrad Inc., Cagan McAfee Capital
    Partners, LLC, Liviakis Financial Communications, Inc., Laird Q.
    Cagan, Eric 63




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##### Table of Contents



McAfee and the Tobin Family Trust (incorporated by reference to
    Exhibit 4.2 to Form 8-K filed on December 21, 2004)10
.1

Employment Agreement of William H. Burns, Jr., dated October 31,
    2006 (incorporated by reference to Exhibit 10.1 to Form 8-K
    filed on November 6, 2006)10
.2

Employment Agreement of John McNeirney, dated March 29, 2004
    (incorporated by reference to Exhibit 10.2 to Form 8-K
    filed on December 21, 2004)10
.3

Amendment to Employment Agreement between Minrad, Inc. and John
    McNeirney dated November 14, 2005 (incorporated by reference to
    exhibit 10.1 to Form 8-K file November 17, 2005)10
.4

Separation Agreement, Waiver and Release with William L.
    Bednarski, dated August 28, 2006 (incorporated by reference to
    Exhibit 10.1 to Form 8-K filed on August 28, 2006).10
.5

Supply Agreement, effective February 11, 2005, between Minrad EU
    and Merk Generiques (incorporated by reference to Exhibit 10.1
    to Form 8-K filed on February 24, 2005)10
.6

Minrad Inc. Patents and Inventions Policy (incorporated by
    reference to Exhibit 10.6 to Form 10-KSB filed on March 31,
    2005)10
.7

Minrad International, Inc. 2004 Stock Option Plan (incorporated
    by reference to Appendix C to Schedule 14C filed on September
    16, 2004)10
.8

Minrad International, Inc. Code of Ethics for senior financial
    officers10
.9

Exclusive Distribution Agreement effective June 9, 2004 between
    Minrad, Inc., and RxElite Holdings Inc. (incorporated by
    reference to Exhibit 10.8 to Form 10-QSB on May 13, 2005),
    amended on June 15, 2006 (incorporated by reference to Exhibit
    1.01, filed on June 20, 2006)10
.10

Lease between Peter L. Krog and the Company dated as of October
    20, 2005 (incorporated by reference to Exhibit 10.12 to Form
    10-QSB filed November 14, 2005)10
.11

Credit Agreement with KeyBank National Association dated
    December 21, 2005. (incorporated by reference to Exhibit 10.16
    to Form 10-KSB filed on March 29, 2006)10
.12

Form of Milestone Stock Option Agreement to be used in
    connection with stock options approved on April 21, 2005
    (incorporated by reference to Exhibit 10.1 to Form 8-K filed
    April 27, 2005)10
.13

Milestone Option Agreement (incorporated by reference to Exhibit
    10.01 to Form 8-K filed August 17, 2006)10
.14

Supply Agreement, dated as of February 17, 2005, by and between
    Minrad Inc. and Merck Génériques (incorporated by
    reference to Exhibit 10.1 to Form 8-K filed February 24, 2005)10
.15

Amended Advisory Consulting Agreement between Minrad
    International and International Capital Advisory (incorporate by
    reference to Exhibit 10.1 to Form 8-K filed November 1, 2006)10
.16*

Investment Agreement between Minrad Inc. as Company and Minrad
    International, Inc as parent and Laminar Direct Capital L.P.,
    dated as of February 8, 200810
.17

Employment Agreement between Minrad International, Inc. and
    David DiGiacinto dated March 28, 2008 (incorporated by
    reference to Exhibit 99.2 to Form 8-K filed March 28,
    2008.)21


Subsidiaries of the Registrant (incorporated by reference to
    Exhibit 21 to Form 10-KSB filed on March 31, 2005)23
.1*

Consent of Freed Maxick & Battaglia, CPAs, PC31
.1*

Certification of Principal Executive Officer Pursuant to Rules
    13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
    as amended31
.2*

Certification of Principal Financial Officer Pursuant to Rules
    13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
    as amended32
.1*

Certifications Pursuant to Section 906 of the Sarbanes- Oxley
    Act of 2002     *
    
    Filed herewith 64




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services.  Fees of
    Independent Public Accountants
    Audit Fees. Form 10-KSB, Form 10-QSB
  Audit-Related Fees. Form 8-K Form 8-K/A.
  Tax Fees.
  All Other Fees.
  Pre-approval Policy for Audit and Non-Audit
    Services.
 65




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##### Table of Contents



Signatures
  Form 10-KSB
  Date: March 31, 2008

MINRAD INTERNATIONAL, INC.By: /s/  William
    H. Burns, Jr.William
    H. Burns, Jr., Chief Executive Officer   Form 10-KSB
  Signature/Title

Date(i) Principal Executive Officer:/s/  William
    H. Burns, Jr.William
    H. Burns, Jr./CEO

March 31, 2008(ii) Principal Financial Officer:/s/  Charles
    R. Trego, Jr.Charles
    R. Trego, Jr./CFO

March 31, 2008(iv) Directors:/s/  William
    H. Burns, Jr.William
    H. Burns, Jr./Director

March 31, 2008/s/  David
    DiGiacintoDavid
    DiGiacinto/Director

March 31, 2008/s/  David
    DonaldsonDavid
    Donaldson/Director

March 31, 2008Donald
    Farley/Director/s/  Duane
    HopperDuane
    Hopper/Director

March 31, 2008/s/  Robert
    LifesoRobert
    Lifeso/Director

March 31, 2008/s/  Theodore
    StanleyTheodore
    Stanley/Director

March 31, 2008/s/  Brett
    ZbarBrett
    Zbar/Director

March 31, 2008  66