**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**




Annual
      Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934


for
      the
      fiscal year ended December 31, 2006




**0-49764**


(Commission
      File No.)




**SINOFRESH
      HEALTHCARE, INC.**


(Name
      of
      Small Business Issuer in Its Charter)





**FLORIDA**
              (State
                or other jurisdiction of incorporation or organization)
            **65
                - 1082270**
              (I.R.S.
                Employer
              Identification
                No.)





**516
                PAUL MORRIS DRIVE ENGLEWOOD, FLORIDA**
              (Address
                of principal executive offices)
            **34223**
              (Zip
                Code)





Issuer's
      Telephone Number, including area code: (941) 681-3100


Securities
      registered under Section 12(b)


of
      the
      Securities Exchange Act of 1934:





**NONE**





Securities
      registered under Section 12(g)


of
      the
      Securities Exchange Act of 1934:





**COMMON
      STOCK, NO PAR VALUE**





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes
x No
o





Check
      if
      disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not
      contained herein, and will not be contained, to the best of registrant's
      knowledge, in definitive proxy or information statements incorporated by
      reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
      o





Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b2
      of the Exchange Act). Yes  o No
o




Issuer's
      revenues for its most recent fiscal year were $1,083,576.





The
      aggregate market value of the common stock held by non-affiliates computed
      by
      reference to the last sale price of such stock as of March 20, 2007 was
      approximately $912,000.





As
      of
      March 20, 2007, there were 16,902,055 shares of the issuer's common stock
      outstanding.


-1-


**Table
        of Contents**


**Page**PART
                    IITEM
                    1.DESCRIPTION
                    OF BUSINESS
                4ITEM
                    2.DESCRIPTION
                    OF PROPERTY
                9ITEM
                    3.LEGAL
                    PROCEEDINGS
                9ITEM
                    4.SUBMISSION
                    OF MATTERS TO A VOTE BY SECURITY HOLDERS
                910PART
                    IIITEM
                    5.MARKET
                    FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                12ITEM
                    6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS
                22ITEM
                    7.FINANCIAL
                    STATEMENTS
                41ITEM
                    8.CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                    DISCLOSURE
                41ITEM
                    8A.CONTROLS
                    AND PROCEDURES
                41ITEM
                    8B.OTHER INFORMATION
                41PART
                    IIIITEM
                    9.DIRECTORS
                    AND EXECUTIVE OFFICERS
                42ITEM
                    10.EXECUTIVE
                    COMPENSATION
                44ITEM
                    11.SECURITY
                    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                    STOCKHOLDER MATTERS
                48ITEM
                    12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                51ITEM
                    13.EXHIBITS
                    AND REPORTS ON FORM 8-K
                52ITEM
                    14.PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                52





-2-


Unless
      otherwise indicated in this Form 10-KSB, "SinoFresh," the "Company" and similar
      terms refer to SinoFresh HealthCare, Inc. and its subsidiary. "SinoFreshTM" is a
      registered trademark of SinoFresh HealthCare, Inc., and the SinoFresh name
      and
      logo are trademarks of the Company.




**DISCLOSURE
      REGARDING FORWARD-LOOKING STATEMENTS**





This
      annual report contains forward-looking statements within the meaning of Section
      21E of the Securities Exchange Act of 1934, as amended, and Section 27A of
      the
      Securities Act of 1933, as amended. When used in this annual report, the words
      "may," "will," "expect," "anticipate," "continue," "estimate," "project" or
      "intend" and similar expressions identify forward-looking statements regarding
      events, conditions and financial trends in connection with the Company's future
      plan of operations, business strategy, operating results and financial position.
      Discussions containing such forward-looking statements may be found in
      "Management's Discussion and Analysis of Financial Condition and Results of
      Operations," "Business" and elsewhere in this report. Current shareholders
      and
      prospective investors are cautioned that any forward-looking statements are
      not
      guarantees of future performance. Such forward-looking statements by their
      nature involve substantial risks and uncertainties, certain of which are beyond
      the Company's control, and actual results for future periods could differ
      materially from those discussed in this annual report, depending on a variety
      of
      important factors, among which are the Company's ability to implement its
      business strategy, its ability to compete with major established companies,
      the
      outcome of litigation, its ability to attract and retain qualified personnel,
      its ability to obtain financing, its ability to continue as a going concern,
      and
      other risks some of which are described under "Risk Factors" and elsewhere
      in
      this report and which may also be described from time to time in future filings
      with the Securities and Exchange Commission. Forward-looking statements
      contained in this report speak only as of the date of this report. Future events
      and actual results could differ materially from the forward-looking statements.
      You should read this report completely and with the understanding that actual
      future results may be materially different from what the Company expects. The
      Company will not update forward-looking statements even though its situation
      may
      change in the future.


-3-


**PART
      I** ****


**ITEM
      1.**  **DESCRIPTION
      OFBUSINESS** ****




**Company
      History**




Our
      predecessor, SinoFresh HealthCare, Inc., a Delaware corporation
      ("SinoFresh-Delaware"), was formed on October 15, 2002. It acquired certain
      assets of SinoFresh Laboratories, Inc., an Alabama corporation, effective
      November 15, 2002. In September 2003, we acquired SinoFresh-Delaware by merger
      of SinoFresh-Delaware into our wholly-owned subsidiary, SinoFresh Acquisition
      Corp., a Florida corporation, which is now our operating subsidiary bearing
      the
      name SinoFresh Corporation.




Prior
      to
      our acquisition of SinoFresh-Delaware, we operated as e-Book Network, Inc.
      and
      sold books over the Internet. e-Book was originally a division of e-Miracle,
      Inc. which was incorporated in July 1999 and was an online service provider
      and
      Internet shopping mall developer. Due to under-capitalization and credit
      problems, e-Miracle filed a Chapter 11 Bankruptcy proceeding in the United
      States Bankruptcy Court. We were a division of e-Miracle when e-Miracle filed
      bankruptcy. Subsequently we incorporated as a Florida corporation in accordance
      with the Chapter 11 Plan of Reorganization of e-Miracle.




The
      Company's corporate headquarters are located at 516 Paul Morris Drive,
      Englewood, Florida 34223. Our website address is http://www.sinofresh.com.




**The
      Company and its Business**




OVERVIEW




We
      are a
      pharmaceutical company engaged in the research, development and marketing of
      novel therapies to treat inflammatory and infectious diseases and disorders
      of
      the upper respiratory system. Our principal product is SinoFreshTM Nasal and
      Sinus Care, which we market through national drug and food chain stores,
      including, Wal-Mart, Walgreens, CVS, Osco Drug, Publix Super Markets, Rite
      Aid,
      Sav-on Drugs, and Duane Reade. We are seeking to expand our retail distribution
      network to include the remainder of the chain stores we are already servicing,
      other national food and drug chain stores and independent pharmacies.




Charles
      Fust, the inventor of the SinoFreshTM products, transferred to the Company his
      three U.S. patents issued by the U.S. Patent & Trademark Office for the
      Company's proprietary composition for freshening the nostrils and sinus
      cavities. He has also transferred to the Company various foreign patents and
      patent applications relating to that proprietary composition. The Company also
      has a patent pending on a new proprietary over-the-counter (“OTC”) product for
      the treatment of otitis. Currently, the Company has under development several
      promising new products for upper respiratory disorders and related
      diseases.




Prior
      to
      June 2005, the Company's principal product was SinoFreshTM Nasal & Sinus
      Care, which was originally marketed under the oral antiseptic monograph system
      of the U.S. Food and Drug Administration (FDA) applicable to certain OTC drugs.
      On April 21, 2005, the FDA issued a letter to the Company indicating that it
      could no longer market its nasal spray under this monograph system.




The
      Company immediately reformulated its nasal spray as a health and beauty aid
      product, emphasizing the nasal spray's many non-therapeutic cleansing and
      moisturizing benefits. The product’s name was changed to SinoFreshTM Nasal Mist.
      In mid-2006, the nasal product was reformulated a third time. This latest
      reformulation was based on homeopathic ingredients designed to provide an
      antiseptic solution targeting relief of sinus pain, pressure and inflammation.
      The product was then renamed back to SinoFreshTM Nasal & Sinus
      Care.




-4-


The
      Company has a plan to continue the New Drug Application (NDA) process for a
      therapeutic nasal spray, requesting the FDA to approve a nasal spray indicated
      for treatment of and/or reduction in the symptoms of certain diseases. In August
      2005, the Company held a meeting with the FDA to discuss an Investigational
      New
      Drug Application (INDA) for a nasal spray - a prerequisite to the conduct of
      the
      clinical investigations necessary to support a NDA. Assuming that the safety
      and
      efficacy of the nasal spray is demonstrated in these clinical studies, the
      Company will seek FDA approval of the nasal spray under an NDA. Conducting
      the
      clinical trials and obtaining FDA approval for any pharmaceutical product
      requires substantial resources (including a substantial amount of additional
      capital) and may take several years. There is no assurance that FDA will approve
      an NDA for the Company's therapeutic nasal spray or any other Company product
      or
      that the Company can obtain sufficient funding to underwrite the cost of
      obtaining FDA approval.




In
      April
      2005 we entered into an agreement with the Lovelace Respiratory Research
      Institute (LRRI) to conduct mammalian-based studies of the anti-infective
      properties of SinoFreshTM Nasal & Sinus Care. The results of these studies
      were very encouraging and will lead into more advanced studies as funding
      becomes available to the Company. The new agreement was prompted by preliminary
      in-vitro study results demonstrating strong evidence that this product can
      reduce the infectivity of common respiratory viruses including adenovirus and
      respiratory syncytial virus (RSV). Our original collaboration with LRRI,
      initiated in May of 2004, was designed to assess the virucidal properties of
      SinoFreshTM. Viruses are widely recognized as the most frequent cause of acute
      respiratory infections and are a leading cause of child mortality
      worldwide.




PRODUCTS




*Non-Ethical
      Pharmaceutical Products*




SinoFreshTM
      Nasal and Sinus Care is the Company’s principal product. This product is a nasal
      spray which contains two active homeopathic ingredients. This product is
      formulated to kill mold, bacteria and certain viruses that reside in the nose
      and sinus passages, and to remove dust, pollen and other irritants. In addition,
      this formulation is designed to relieve sinus pain, pressure and inflammation.
      SinoFreshTM Nasal and Sinus Care generally retails between $13.49 and $15.99
      before rebates for a 1-fluid ounce bottle (approximately a 30-day supply).




SinoFreshTM
      Daily Throat Spray is an over-the-counter antiseptic product formulated to
      kill
      bacteria and other pathogens colonizing in the mouth and back of the throat.
      The
      key ingredient is cetylpyridinium chloride (CPC), a surface-active antiseptic.
      CPC is a common ingredient in over-the-counter oral hygiene products and has
      a
      safety and efficacy history of over 50 years. Daily use is encouraged in order
      to eliminate pathogens that can lead to infection and illness and prevent them
      from re-colonizing in the throat. The product may also be used at the first
      sign
      of a sore throat in order to thwart further spread of an infection. Like our
      nasal spray, Daily Throat Spray is recommended especially for people who are
      frequently in crowded, poorly ventilated environments such as airplanes, schools
      and offices where airborne organisms easily spread from one person to another.
      The Daily Throat Spray formula is augmented with xylitol, a natural
      antibacterial ingredient, and mint flavors that cool and freshen the breath
      while it protects the oral-throat cavity. SinoFreshTM Daily Throat Spray comes in
      a 2-fluid ounce bottle. When used twice daily as directed, one bottle lasts
      approximately 3-4 weeks. The suggested retail price per bottle is
      $9.99.




*Ethical
      Pharmaceutical Products*




The
      Company has plans to continue development of a nasal spray product
      (preliminarily called "Rhinox") for the treatment of chronic rhinosinusitis
      ("CRS"). The Company is seeking funding in order to continue with clinical
      studies. **** Assuming
      the efficacy of the Company's clinical studies, management would seek FDA
      approval of the new product as an NDA. The Company may develop new drugs in
      the
      prescription drug category. Obtaining FDA regulatory approval for these
      pharmaceutical products will require substantial resources and may take several
      years. The length of this process will depend upon the method of administration,
      pharmaceutical complexity, novelty of the product, the nature of the disease
      or
      ailment, and the indications to be treated. If the Company is not granted
      regulatory approval for these new products in a timely manner, or if the patents
      sought are not granted, or if the patents granted are subsequently challenged,
      these events could have a material effect on the business and financial
      conditions of the Company.




-5-


RESEARCH
      AND DEVELOPMENT




Research
      and development activities are identified and planned by in-house staff members.
      Because of limited personnel and facility resources, the Company relies
      primarily on external sources for conducting its research and development
      activities. Research and development costs for the years ended December 31,
      2006
      and 2005 were approximately $1,000 and $181,000, respectively. The Company
      has a
      pipeline of several new products based on its current product platform. Assuming
      that the Company can obtain sufficient financing or other support, the Company
      plans to establish the protocols and file an INDA with the FDA geared toward
      the
      use of antiseptic therapies in the upper respiratory system and to undertake
      the
      clinical studies necessary for the FDA approval of a nasal spray product for
      the
      prescription drug market. Additionally, extensive clinical and developmental
      testing is anticipated in connection with the Company's development of other
      new
      ethical drug products related to the treatment of various upper respiratory
      disorders and related diseases. Many of these new products are expected to
      lead
      to applications for new patents in the United States as well as abroad. The
      Company is pursuing partnering and collaborative arrangements with several
      additional prominent organizations. These arrangements are being sought in
      order
      to further enhance the Company's research and development activity.




REGULATORY
      MATTERS




The
      Company's business is subject to federal and state laws and regulations adopted
      for the health and safety of consumers and users of its products. The Company's
      SinoFreshTM Nasal and Sinus Care and SinoFreshTM Daily Throat Spray products are
      subject to regulation by various federal, state and foreign agencies, and the
      Company is subject to regulatory and legislative changes that can affect the
      economics of both the Company and the industry by requiring changes in operating
      practices and protocols or by influencing the demand for, and the costs of,
      production and distribution of SinoFreshTM products. Management believes that the
      Company is in compliance with all applicable laws, regulations and standards
      currently in effect, including the Food, Drug and Cosmetics Act of 1938 and
      amendments thereto. Although it is possible that the future results of
      operations could be affected by the future costs of compliance, the Company's
      management believes that future costs of compliance will not have a material
      adverse effect on either the Company's financial position or competitive
      position.




The
      costs
      and length of time required to develop and obtain regulatory (and patent)
      approval for future products and extensions of current products are subject
      to
      several uncertainties and risks, among them, legal, administrative and
      regulatory risks, inflation, market conditions, consumer demand, and the
      Company's ability to protect its patents against infringement and its products
      against duplication by others.




FDA
      CLASSIFICATION OF DRUG PRODUCTS




Products
      that are labeled and marketed as drug products are approved and regulated by
      the
      FDA. Implied in this registration is the adherence to very strict quality
      standards known as current Good Manufacturing Practices, which govern the
      manufacture of these products.




Entry
      into this category of drugs is usually accomplished by one of two routes. The
      first and least burdensome process is through the OTC drug monograph system,
      which is based on a pharmacology/physiology category. This allows the Company
      to
      make only claims related to the pharmacology of the active ingredients.
      Currently, SinoFreshTM Daily Throat Spray is encompassed in the monograph system
      which provides regulatory cover for marketing the product.




The
      next
      and more arduous process is the NDA system, which is based on the
      treatment/prevention of a disease or condition. This allows the Company to
      make
      treatment or prevention claims related to a disease or condition. Also required
      for this process is the successful completion of two controlled clinical
      studies.




-6-


Currently,
      SinoFreshTM Nasal and Sinus Care is being marketed as a Homeopathic Drug product.
      This approach allows for statements regarding the proper use of the product
      based on the active ingredients. This enables the Company to emphasize not
      only
      that it is an antiseptic nasal product but also that it is specifically designed
      to address particular sinusitis conditions.




PATENTS
      AND TRADEMARKS




The
      Company currently owns three U.S. patents under which it has the exclusive
      right
      to manufacture, market and distribute in the United States a proprietary
      composition for freshening the nostrils and sinus cavities. United States Patent
      No. 5,785,988 (issued July 28, 1998) pertains to a composition for freshening
      the nostrils and sinus cavities; Patent No. 6,083,525 (issued July 4, 2000)
      pertains to a composition for freshening sinus cavities and includes a carrier
      for a masking agent that conceals and eliminates odors emanating from the sinus
      cavities, and also includes an anti-septic or anti-infective constituent; and
      Patent No. 6,344,210 (issued February 5, 2002) is a continuation-in-part patent
      related to the freshening of the sinus cavities. All three patents were issued
      to Charles Fust, the principal of SinoFresh Laboratories, Inc., who subsequently
      assigned them to the Company. All of the assignments have been recorded and
      filed with the United States Patent and Trademark Office.




In
      July,
      2005, a utility patent filing, Serial Number 11/187,575 was submitted entitled, *Methods
      And Compositions For Inhibiting, Destroying, And/or,
      Inactivating* Viruses *(Antiseptics* ).
      This
      application claims priority to co-pending U.S. provisional application with
      the
      same title having Serial Number 60/590/781, which is entirely incorporated
      in
      the later filing. This invention represents a collaboration between Charles
      Fust, The Lovelace Respiratory Institute (LRRI), Kevin Harrod and Adriana Kajon.
      The embodiment of this patent has been filed on a timely basis in numerous
      foreign countries. Foreign filing status, by country, is available upon request.
      This patent is pending.




The
      Company has patents or patent applications pending for the Company's proprietary
      composition in Canada and various other foreign countries located in Europe,
      Eastern Europe, Asia, Latin America and the Middle East. The strength of the
      Company's patent position is important to the long-term success of the Company.
      There can be no assurance that these patents and the patent applications made
      in
      the United States and abroad will effectively protect the Company's products
      from infringement or from duplication by others.




The
      Company currently has trademark rights and/or trademark registrations on the
      "SINO-FRESH" and "SinoFresh" names in the United States and several foreign
      countries. The Company is currently in the process of registering these
      trademarks in 61countries that are parties to the Madrid Protocol.




PRODUCT
      DISTRIBUTION AND CUSTOMERS




The
      Company's products are marketed and sold through various brokers, distributors
      and independent sales representatives. The Company pays commissions based on
      sales volumes.




The
      Company's products are retailed through numerous food and chain drug stores
      throughout the United States, including Wal-Mart, CVS, Osco Drug, Publix Super
      Markets, Rite Aid, Sav-on Drugs, Duane Reade and Walgreens. The Company plans
      to
      continue expanding its retail distribution network to other food and drug chain
      stores and independent pharmacies as well as the chain stores the Company is
      currently servicing. In addition, the Company is exploring the possibilities
      of
      developing alliances with other entities for the purpose of manufacturing,
      distributing, marketing and regulatory compliance of its products in certain
      foreign countries.




The
      Company's primary customers in 2006 were Wal-Mart, Walgreens, CVS, and Rite
      Aid
      which accounted for more than 68% of the Company's annual gross sales volume
      in
      2006. Wal-Mart, which represented 18% of the 2006 gross sales, substantially
      reduced distribution of the Company’s nasal product mid-way through the year.
      The Company had two customers that accounted for over 79% of gross accounts
      receivable at December 31, 2006. The loss of any one of these customers could
      adversely impact the Company's future revenue.




-7-


COMPETITION




There
      are
      a variety of competitors in both the OTC and prescription “Rx” marketplace for
      SinoFreshTM Nasal & Sinus Care and Daily Throat Sprays. Generally, our
      competitors can be segmented into three types:


·  large,
      well-resourced pharmaceutical companies with established prescription brands
      such as GlaxoSmithkline (Flonase) and Pfizer (Zithromax);


·  small
      to
      mid-size companies with an OTC focus such as Matrixx Initiatives (Zicam brand),
      BF Ascher (Ayr brand), Prestige Brands (Chloraseptic), and Combe, Inc. (Cepacol
      brand); and


·  large
      pharmaceutical companies with an OTC focus such as Schering-Plough (Afrin &
Claritin), Bristol Myers (4-Way Nasal Spray), and Wyeth (Alavert).





Our
      nasal
      spray also competes in the OTC and Rx markets. Competitive therapies for
      nasal-sinus ailments primarily provide symptomatic relief without addressing
      underlying causes of the condition. Additionally, nasal-sinus symptoms can
      have
      several origins (e.g. bacterial infection, viral infection, allergens, mold,
      other airborne contaminants) but very similar outward signs which has led to
      misdiagnosis by the medical community as well as confusion among self-medicating
      consumers. The result of these dynamics is a variety of nasal therapies
      competing for both the acute and chronic sinus sufferer. Examples of products
      in
      the OTC market that compete with our nasal spray are decongestant nasal sprays
      (Afrin, Dristan, 4-Way), saline nasal rinses (Ocean, Ayr), homeopathic remedies
      (Zicam), antihistamines (Claritin, Alavert), and decongestant tablets.





In
      the Rx
      market, our nasal spray primarily competes with nasal corticosteroids and
      antibiotics/antibacterials manufactured and marketed by large pharmaceutical
      companies. Nasal corticosteroids are formulated to shrink sinus inflammation
      and
      include brands such as Flonase, Nasonex, and RhinocortAQ.
      Antibiotics/antibacterials are intended to eliminate bacterial organisms and
      include brands such as Zithromax, Augmentin, and Bactroban.





At
      first
      glance the competitive landscape appears crowded, in particular for our nasal
      spray. However, we believe that if properly marketed, the versatility of our
      product should enable us to effectively gain share across many product segments.
      SinoFreshTM Nasal & Sinus Care is an effective nasal cleanser and moisturizer
      in competition with saline rinses, and rinses away allergens, which can help
      eliminate the need for antihistamines. SinoFresh also targets the underlying
      causes of chronic sinus ailments, such as mold, bacteria and viruses. Chronic
      sufferers are most likely to use OTC products such as decongestant nasal sprays,
      or to receive prescriptions from their physician for corticosteroids and
      antibiotics.




EMPLOYEES




As
      of
      March 20, 2007, the Company had six (6) full-time employees. None of the
      Company's employees are subject to collective bargaining agreements. The Company
      periodically engages independent contractors to fulfill certain sales, marketing
      and business development needs.




SUPPLIERS




The
      Company has qualified two third-party (contract) manufacturers, both of which
      are FDA approved manufacturing facilities, to manufacture its products. The
      Company believes that either of these manufacturers is capable of sustaining
      and
      providing its production needs.




Raw
      materials used in the production of the SinoFreshTM Nasal & Sinus Care and
      SinoFreshTM Daily Throat Spray are readily available from numerous sources.
      Should any vendor be unable or unwilling to supply the Company's manufacturer
      with an ingredient, other sources have been identified. However, any situation
      where the vendor is not able to supply the contract manufacturer with the
      ingredients may result in a temporary delay in production until replacement
      supplies are obtained to meet the Company's production requirements.




-8-


SALES
      AND
      MARKETING




SinoFresh
      is aided in its sales and marketing efforts through various individual broker
      arrangements which provide the Company with sales support in retail accounts
      throughout the United States and Canada. The Company pays these brokers a
      percentage of net revenue attributable to their sales. Management believes
      that
      these arrangements are cost-effective and, as such, saves valuable resources
      that can otherwise be expended in its marketing and product branding efforts




The
      Company anticipates that drug stores will continue to provide a significant
      portion of its revenue from product sales. We are focusing our sales efforts
      on
      the large chain drugstore companies. Small local pharmacies are generally
      serviced through large national independent distributors. There are more than
      45,000 pharmacies in the United States of which approximately 25,000 are
      independent. Large grocery store chains are also targeted as they account for
      more than 7,000 outlets. The Company estimates that its products are available
      in more than 20,000 retail outlets.




SinoFresh
      is currently exploring the possibility of launching the SinoFreshTM brand in
      markets in Europe, Asia and elsewhere around the world through licensing
      arrangements with joint ventures or partnerships.




**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY** ****




The
      Company's executive offices are located at 516 Paul Morris Drive, Englewood,
      Florida 34223. This facility consists of approximately 10,000 square feet of
      office and warehouse space. The Company leases the facility from an entity
      owned
      by Stacey Maloney-Fust, a director of the Company. Base lease payments are
      $5,998 per month, plus sales tax. The lease has a five-year term which expires
      in April 2008, and may be renewed for two additional terms of five years each.
      In addition, the Company is responsible for payment of real estate taxes on
      the
      property, association maintenance fees and assessments, insurance, and all
      non-exterior maintenance and repairs on the property. The Company believes
      that
      the existing facility is adequate to meet its current and anticipated needs.




**ITEM
      3.**  **LEGAL
      PROCEEDINGS** ****




Cabral
      v. SinoFresh Laboratories, Inc., Charles Fust, et. al. Circuit Court of
      Jefferson County, Alabama (CV026963). The
      Company’s predecessor, SinoFresh HealthCare, Inc., a Delaware corporation,
      acquired certain assets and liabilities of SinoFresh Laboratories, Inc., an
      Alabama corporation (“Labs”), effective November 15, 2002. The sale transaction
      was approved by majority vote of Labs’ shareholders. Dr. John Cabral, a Labs
      shareholder filed a lawsuit on November 15, 2002, based on several claims
      including faulty notice for the shareholders meeting, breach of fiduciary duty,
      conflicts of interest by the directors, minority shareholder oppression and
      a
      claim for breach of a consulting agreement. Labs and the individual defendants
      deny any wrong doing in the case and will seek the least costly solution to
      this
      matter. Accordingly, it is estimated that the likely outcome of this case will
      result in a settlement of not more than $225,000. The Company has agreed to
      indemnify Labs for costs associated with this lawsuit not to exceed
      $300,000.




From
      time
      to time, the Company is a party to other litigation or proceedings in connection
      with its business, as either a plaintiff or defendant. There are no such pending
      legal proceedings to which the Company is a party that, in the opinion of
      management, is likely to have a material adverse effect on the Company's
      business, financial condition or results of operations.




**ITEM
      4.**  **SUBMISSION
      OF MATTERSTO A VOTE BY SECURITY HOLDERS** ****




Not
      applicable.


-9-


**PART
      II** ****




**ITEM5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**




**Market
      Information**




Our
      common stock is traded in the over-the-counter market and is quoted on the
      OTC
      Electronic Bulletin Board (“OTCBB”) under the symbol "SFSH.OB." The following
      table represents the range of the high and the low closing bid prices, as quoted
      on the OTCBB, for each calendar quarter during the last two fiscal years. These
      quotations represent prices between dealers, may not include retail mark-ups,
      markdowns or commissions, and may not necessarily represent actual transactions.




**Fiscal
                Quarter Ended**
            
            **Low**
            
            **High**December
                31, 2006
            
            $
            0.06
            
            $
            0.21September
                30, 2006
            
            $
            0.05
            
            $
            0.12June
                30, 2006
            
            $
            0.10
            
            $
            0.25March
                31, 2006
            
            $
            0.19
            
            $
            0.33December
                31, 2005
            
            $
            0.20
            
            $
            0.35September
              30,
              2005
            
            $
            0.13
            
            $
            0.54June 30,
              2005
            
            $
            0.13
            
            $
            0.51March
                31, 2005
            
            $
            0.30
            
            $
            0.77




There
      are
      approximately 713 shareholders of the Company's common stock as of March 20,
      2007.




**Dividends
      and Dividend Policy**




The
      Company has not paid any cash dividends on its common or preferred stock during
      the last two fiscal years, and it does not anticipate paying any cash dividends
      in the foreseeable future. The Company currently intends to retain any future
      earnings for reinvestment in its business. Any future determination to pay
      cash
      dividends will be at the discretion of the Board of Directors and will be
      dependent on the Company's financial condition, results of operations, capital
      requirements and other relevant factors.




-10-


**Equity
      Compensation Plan Information**




The
      following table sets forth information about the Company's equity compensation
      plans, including the Company's 2002 Stock Option Plan (the Plan) and non-plan
      equity compensation agreements as of December 31, 2006.




**Number
                of Securities to**
            
            **Number
                of Securities****be
                Issued Upon**
            **Weighted-Average**
            **Remaining
                Available****Exercise
                of**
            **Exercise
                Price of**
            **For
                Future Issuance****Outstanding
                Options,**
            **Outstanding
                Options,**
            **Under
                Equity****Plan
                Category**
            **Warrants
                and Rights**
            **Warrants
                and Rights**
            **Compensation
                Plans**Equity
                Compensation Plans Approved By Shareholders
            1,873,750
            (1)
            $0.33
            1,126,250
            (2)Equity
                Compensation Plans Not Approved by Shareholders
            6,442,474
            (3)
            $0.89
            N/ATotal
            8,316,224
            
            $0.77
            1,126,250


_____________________


(1) Represents shares subject to outstanding options under the Plan.


(2) Represents shares available for option grants under the Plan.


(3) Represents non-plan options and warrants.





Charles
      Fust is employed as the Company's Chief Executive Officer under an employment
      agreement dated December 1, 2002. The employment agreement provides, among
      other
      things, that the Company and Mr. Fust enter into a stock option agreement under
      which he would be provided anti-dilution rights so that Mr. Fust's equity
      ownership of the Company, on a fully diluted basis, will be no less than 15%
      so
      long as the total outstanding shares on a fully diluted basis are less than
      100,000,000.




The
      Company has an employment agreement with Scott M. Klein, the Chief Financial
      Officer and Secretary, which provides, among other things, that Mr. Klein will
      be granted a 5-year option for 50,000 shares on November 1, 2007, at an exercise
      price that is the closing sale price of the Company's common stock on that
      date,
      and will vest ratably over three years commencing on the date of
      grant.




In
      2006,
      the Company granted a total of 345,000 plan options to various employees. In
      addition, the Company reduced the exercise prices for 1,265,000 stock options
      to
      $0.25 per share. These options had original exercise prices ranging from $0.57
      to $1.70.





*Equity
      Compensation Plans Not Approved by Shareholders*




In
      2006,
      a 5-year non-plan option for 40,000
      shares was issued in connection with a lawsuit settled at the end of 2005.
      The
      option vested
      on the date of grant. In addition, 100,000 non-plan options previously issued
      to
      a consultant were cancelled because the performance criteria for vesting were
      not met.




-11-


In
      connection with a debenture financing in 2004, we issued to the debenture
      holders and a placement agent warrants to purchase shares of common stock.
      The
      warrants, which expire on December 6, 2009, contain anti-dilution provisions
      under which the number of shares issuable upon exercise of the warrants and
      the
      exercise price will be adjusted upon the issuance of common stock or securities
      convertible into or exercisable for common stock at prices lower than the then
      effective exercise price of the warrants, the occurrence of stock splits, stock
      distributions, and other corporate events. As a result of dilutive issuances
      during 2006, outstanding warrants connected with this financing increased from
      1,951,645 warrants to 4,626,348 warrants and had exercise prices decrease from
      between $0.60 and $0.55 per share to $0.25 per share.




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




The
      following information and analysis of SinoFresh's financial condition and
      results of operations for the fiscal years ended December 31, 2006 and December
      31, 2005 should be read in conjunction with the consolidated financial
      statements of SinoFresh and the notes thereto appearing elsewhere in this
      report. Statements in this section and elsewhere in this report that are not
      statements of historical or current fact constitute "forward-looking
      statements." Such statements are subject to certain risks and uncertainties,
      which could cause results to differ materially from those projected, including,
      but not limited to, those set forth below under "Risk Factors" and elsewhere
      in
      this report.




**Summary
      Financial Information**





The
      following table provides selected consolidated financial and operating data
      for
      the years ended December 31, 2006 and 2005.




**Statement
      of Operations Data**





**Year
                Ended**
              **December
                31,**
              **2006**
            ****
            **Year
                Ended**
              **December
                31,**
              **2005**Revenue,
                net
            
            $
            1,083,576
            
            $
            2,939,189Gross
                Profit
            
            
            546,371
            
            
            2,064,575Loss
                From Operations
            
            
            (1,583,592
            )
            
            (1,543,564
            )Net
                Loss
            
            
            (4,963,031
            )
            
            (1,833,508
            )




**Balance
      Sheet Data**




**December
                31**
            ********
            ****
            **2006**
            ****
            **2005**Current
                Assets
            
            $
            233,796
            
            $
            728,394Current
                Liabilities
            
            
            4,537,152
            
            
            3,543,407Total
                Assets
            
            
            2,346,062
            
            
            5,689,576Long
                Term Debt
            
            
            14,260
            
            
            37,915Stockholders'
                Equity (Deficit)
            
            
            (2,205,350
            )
            
            2,108,254




-12-


*Results
      of Operations*




Revenues
      for 2006 were $1,083,576 representing a decrease of $1,855,613 from revenues
      in
      2005. The Company believes that these decreases were primarily a result of
      the
      lack of marketing and advertising funds available in 2006 and also due to
      inferior labeling claims as a result of a change to the Health and Beauty Aid
      category. Labeling improvements were made to coincide with the new homeopathic
      formulation for our nasal spray that was introduced in September 2006. The
      loss
      of Wal-Mart in the third quarter of 2006 also had an adverse effect on revenues.
      Wal-Mart accounted for approximately 30% of revenues in 2005 and while it is
      anticipated that the loss of Wal-Mart will benefit sales at other retail
      locations, the net impact on future sales cannot be readily
      ascertained.





Gross
      profit for 2006 was $546,371 (50%), compared to $2,064,575 (70%) for 2005.
      The
      decrease in the gross margin is primarily due the return of throat spray after
      it was discontinued by one of our major retailers. In addition, cooperative
      programs were maintained at near the same level as in 2005, however, these
      programs were much higher in terms of a percentage of sales in 2006. Finally,
      a
      rebate program implemented from late 2005 through 2006 resulted in a higher
      percentage of sales compared to similar incentive programs in place during
      2005.





Salaries
      and related expenses decreased $253,277, from $1,159,504 to $906,227 for the
      years ended December 31, 2005 and 2006, respectively. The decrease is a result
      of specific reductions in personnel in order to streamline the organization
      and
      to reduce administrative costs offset by costs associated with stock-based
      compensation as a result of the implementation of SFAS 123R.




Professional
      fees decreased $63,339, from $583,322 to $519,983 for the years ended December
      31, 2005 and 2006, respectively. Professional fees for 2005 were higher than
      2006 as a result of an on-going lawsuit that was substantially complete by
      the
      end of 2005. These fees in 2005 were offset by a reversal of $183,000 in accrued
      consulting fees, which had been subject to litigation. The Company eliminated
      this accrual in 2005, after the claims of the consultant were dismissed.




Other
      general and administrative expenses decreased $70,736 from $454,649 to $383,913
      for the years ended December 31, 2005 and 2006, respectively. This decrease
      was
      primarily due to a reduction in certain insurance premiums and other costs.
      The
      cost reductions for 2006 are partially offset by a charge for an uncollectible
      receivable associated with a small distributor.





Marketing
      and advertising expenses decreased $911,076 from $967,942 to $56,866 for the
      years ended December 31, 2005 and 2006, respectively. The Company’s marketing
      and advertising activities have been significantly curtailed in 2006 due to
      the
      lack of working capital.





Research
      and development expenditures reflect the costs associated with basic research,
      product development, clinical testing, regulatory compliance, product
      enhancement and the development of new products related and unrelated to our
      current product line. Research and development costs were down $179,749 from
      $180,921 to $1,172 for the years ended December 31, 2005 and 2006, respectively.
      The Company's research and development activities for 2006 have been limited
      due
      to the lack of financial resources.





Depreciation
      and amortization totaled $261,801 and $261,802 for the years ended December
      31,
      2005 and 2006, respectively. These expenses principally consist of amortization
      of patent costs.





-13-


Total
      net
      interest expense was $584,387 in 2006 compared to $661,532 in 2005. The interest
      relates primarily to the outstanding debentures including the amortization
      of
      debt discounts.





Total
      other expense was $385,651 in 2006 compared to other income of $371,588 in
      2005.
      The 2006 expense relates primarily to a default penalty incurred when the
      Company failed to repay its debenture debt due in December. The 2005 total
      is
      primarily related to amounts received by the Company from a litigation
      settlement.





We
      assessed the carrying value of recorded goodwill as of December 31, 2006 and
      determined that the entire amount of recorded goodwill was impaired. Accordingly
      we charged off the entire amount of $2,409,401.





As
      a
      result of the factors discussed above, SinoFresh had a net loss of $4,963,031
      ($0.31 per share) compared to a net loss of $1,833,508 ($0.13 per share) for
      the
      years ended December 31, 2006 and 2005, respectively.





As
      of
      December 31, 2006, SinoFresh had total assets of $2.3 million, liabilities
      of
      $4.6 million and stockholders' deficit of $2.2 million. Working capital deficit
      totaled approximately $4.3 million as of December 31, 2006.





*Taxes*




At
      December 31, 2006, SinoFresh had a net operating loss carry forward (NOL) for
      federal income tax purposes of approximately $11 million. The NOL expires at
      various dates through the year 2026. Utilization of SinoFresh's net operating
      loss may be limited in the event of significant changes in ownership of
      Sinofresh under the regulations of the Internal Revenue Code.




*Inflation
      and Currency Fluctuation*




Inflation
      and currency fluctuations have not previously had a material impact upon the
      results of operations and are not expected to have a material impact in the
      near
      future.




*Cash
      and Sources of Liquidity*




The
      Company historically has satisfied its operating cash requirements primarily
      through cash flow from operations, from borrowings and from trade and equity
      financings. At December 31, 2006, the Company had approximately $1,000 in cash
      and approximately $159,000 in net accounts receivable.




On
      June
      9, 2006, the Company entered into an unsecured loan agreement with a
      non-affiliated third party in the amount of $100,000. According to the loan
      provisions, the principal and interest totaling $120,000 was due on July 31,
      2006. The Company is currently in default on the repayment of this loan and
      intends to enter into negotiations with the note holder to redefine the
      repayment provisions.




As
      of
      December 31, 2006 the company was in default on its principal and interest
      obligations due under a debenture agreement. The total amount due as of December
      31, 2006 including principal, interest and penalties was $2,006,352. The
      debentures are secured by essentially all of the Company’s assets. The Company
      has not been able to reach an agreement with the debenture holders to either
      waive the default provisions or enter into any other modification or extension
      of the agreement. The debenture holders have the right to begin foreclosure
      proceedings, but have not yet exercised this right. The Company will continue
      to
      work amicably with the debenture holders in order to either obtain a
      modification of the debenture terms or secure additional capital in order to
      satisfy the debenture obligation. However, no assurance can be made that the
      Company will be successful in this effort.




-14-


On
      December 31, 2006, the Company had current assets of approximately $233,796,
      including cash of approximately $887 and current liabilities of $4,537,152.
      As a
      result, the Company's current liquidity is extremely limited and the Company
      will require a significant amount of additional working capital in order to
      meet
      its working capital requirements and implement its business plan. In order
      to
      address these issues, the Company is seeking to raise additional working capital
      through the issuance of debt and equity securities. The Company is also seeking
      to enter into strategic alliances with third parties to support its research
      and
      development activities and the marketing of its products. Although the Company
      believes that it will be able to obtain additional working capital and financial
      support, there can be no assurance that the Company's efforts will be
      successful.




*Significant
      Events Subsequent toYearEnd*




In
      March
      2007, Stacey Maloney-Fust, P. Robert DuPont and Stephen Bannon resigned from
      the
      board of directors. The remaining directors elected Thomas Fitzgerald, Bruce
      Simpson and Raymond Zipprich to serve on the board of directors effective in
      March 2007.




*Critical
      Accounting Policies*




Revenue
      Recognition :
      The
      Company recognizes revenue on its products in accordance with the Securities
      Exchange Commission (SEC) Staff Accounting Bulletin No. 101, "Revenue
      Recognition in Financial Statements." Under these guidelines, SinoFresh defers
      revenue recognition on transactions if any of the following existed: persuasive
      evidence of an arrangement did not exist, title had not transferred, product
      payment was contingent, the price was not fixed or determinable, or payment
      was
      not reasonably assured. The Company accrues a provision for estimated returns
      concurrent with revenue recognition.




SinoFresh
      has adopted Emerging Issues Task Force Issue 01-9, "Accounting for Consideration
      Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)"
      (EITF 01-9), which became effective for fiscal years beginning after December
      15, 2001. Management has concluded that EITF 01-9 is applicable to the
      accounting for its cooperative agreements with certain customers, as the
      benefits received from consideration given to those customers are not
      sufficiently separable from the revenue derived. Accordingly, all such
      cooperative expenses are recorded as reductions to revenues.




Asset
      Impairments :
      The
      Company has adopted Statement of Financial Accounting Standards No. 141,
      "Business Combinations," (FAS 141) and Statement of Accounting Standards No.
      142, "Goodwill and Other Intangible Assets" (FAS 142). FAS 141 requires business
      combinations completed after June 30, 2001 to be accounted for using the
      purchase method of accounting. It also specifies the types of acquired
      intangible assets that are required to be recognized and reported separately
      from goodwill. Under FAS 142, goodwill and other intangible assets (with
      indefinite lives) will not be amortized but will be tested for impairment at
      least annually. The Company completed its transitional impairment test of
      existing goodwill and patents as of December 31, 2006. This test was performed
      internally and consisted of evaluating potential future revenue streams, current
      market capitalization, shareholder equity values and the estimated market value
      of such assets in a liquidation of the Company. As a result of the Company’s
      evaluation, an impairment of goodwill was recognized in the amount of $2,409,401
      during 2006.




*Recent
      Accounting Pronouncements*





In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      (SFAS) No. 123R, "Share-Based Payment." SFAS No. 123R requires employee stock
      options and rights to purchase shares under stock participation plans to be
      accounted for under the fair value method, and eliminates the ability to account
      for these instruments under the intrinsic value method prescribed by Accounting
      Principles Board (APB) Opinion No. 25, and allowed under the original provisions
      of SFAS No. 123. SFAS No. 123R requires the use of an option pricing model
      for
      estimating fair value, which is amortized to expense over the service periods.
      The requirements of SFAS No. 123R are effective for fiscal periods beginning
      after December 15, 2005. If the Company had applied the provisions of SFAS
      No.123R to the financial statements for the year ending December 31, 2005,
      net
      loss would have increased by approximately and $165,000. SFAS No. 123R allows
      for either prospective recognition of compensation expense or retrospective
      recognition, which may be back to the original issuance of SFAS No. 123 or
      only
      to interim periods in the year of adoption. The Company adopted the prospective
      method for the year ending December 31, 2006.





-15-


In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections -
      a replacement of APB No. 20 and SFAS No. 3”. The pronouncement requires that all
      voluntary changes in accounting principle be reported by retrospectively
      applying the principle to all prior periods that are presented in the financial
      statements. The statement is effective for fiscal years beginning after December
      15, 2005. The Company’s financial position, results of operations or cash flows
      will only be impacted by SFAS No. 154 if it implements changes in accounting
      principles that are addressed by the standard or corrects accounting errors
      in
      future periods. Adoption of this statement did not have a material impact on
      the
      Company’s consolidated financial statements.




In
      June
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes-an interpretation of FASB Statement No. 109” (“FIN48”). The
      interpretation contains a two-step approach to recognizing and measuring
      uncertain tax positions accounted for in accordance with SFAS No. 109,
“Accounting for Income Taxes”. The first step is to evaluate the tax position
      for recognition by determining if the weight of available evidence indicates
      that it is more likely than not that the position will be sustained on audit,
      including resolution of related appeals or litigation processes, if any. The
      second step is to measure the tax benefit as the largest amount which is more
      than 50% likely of being realized upon ultimate settlement. The Company is
      still
      assessing the impacts of the adoption of FIN 48.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      purpose of SFAS No. 157 is to define fair value, establish a framework for
      measuring fair value, and enhance disclosures about fair value measurement.
      The
      measurement and disclosure requirements are effective for the Company beginning
      in the first quarter of fiscal year 2008. The Company is currently evaluating
      the impact that SFAS No. 157 will have on its consolidated financial
      statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities”. SFAS No. 159 permits companies to
      choose to measure certain financial instruments and certain other items at
      fair
      value. The standard requires that unrealized gains and losses on items for
      which
      the fair value option has been elected be reported in earnings. SFAS No. 159
      is
      effective for the Company beginning in the first quarter of fiscal year 2008,
      although earlier adoption is permitted. The Company is currently evaluating
      the
      impact that SFAS No. 159 will have on its consolidated financial
      statements.




**Risk
      Factors**




*SinoFresh
      operates in a rapidly changing environment that involves numerous risks, some
      of
      which are beyond our control. The following discussion highlights some of these
      risks* .




*Risks
      Related to the Business*




**We
      have incurred substantial losses and we have a negative cash flow from
      operations and negative working capital.** We
      have
      incurred substantial losses since inception. We have also incurred negative
      cash
      flow from operations during each of the last four years. We had negative working
      capital of $4,303,356, including a cash of $887, as of December 31, 2006. As
      a
      result, our auditors have qualified their report on our financial statements
      for
      the year ended December 31, 2006 with respect to our ability to continue as
      a
      going concern. In light of the foregoing, we need to obtain additional external
      financing in order to continue as a going concern. There can be no assurance
      that any additional financing will be available, or if available, that it will
      be on terms and conditions favorable to us.




**We
      have a limited relevant operating history, and we may not be able to achieve
      profitability.** Our
      company has had a cumulative net loss from inception. While we have reduced
      expenditures for administrative costs, product research and development, among
      other things, it will be difficult for us to continue to significantly reduce
      our operating expenses in order to deal with lack of sales growth or
      unanticipated reductions in existing sales. Our failure to balance expenditures
      in any period with sales could have an adverse effect on results of operations.




-16-


**We
      have a limited relevant operating history upon which an evaluation of our
      prospects can be made.** Such
      prospects must be considered in light of the risks, expenses and difficulties
      frequently encountered in the establishment of a new company and the development
      of new products in established and crowded markets in a highly-competitive
      consumer industry, such as the U.S. pharmaceutical industry. There are also
      risks, expenses and difficulties encountered in the shift from development
      to
      commercialization of new products. There can be no assurance that we will be
      able to implement successfully our development, manufacturing, and marketing
      strategies, generate meaningful revenues, or attain or maintain profitable
      operations. The possibility of our future success must be considered relative
      to
      the problems, challenges, complications and delays frequently encountered in
      connection with the development and operation of a new business, and the
      development and marketing of relatively new health care products such as the
      SinoFresh products.




**We
      will need significant additional financing to implement our business plan.** We
      need
      additional financing to meet our working capital requirements and to implement
      our business objectives such as marketing, research and development on new
      products and clinical trials. There is no assurance that we will succeed in
      obtaining additional financing or if additional financing is available, that
      it
      will be on terms favorable to us.




**Substantially
      all of our assets, including U.S. patents, are collateral for loans to SinoFresh
      by third parties.** The
      debentures issued in the 2004 debt financing are collateralized by substantially
      all of our assets, including our patents. The debentures are convertible into
      common stock, contain anti-dilution provisions and until the debentures are
      paid
      in full, prohibit us from incurring other indebtedness without the consent
      of
      the debenture holders, except for borrowings in existence on the date of the
      debenture financing or indebtedness to trade creditors or financial institutions
      incurred in the ordinary course of business. The maturity date of the debentures
      was December 6, 2006. We are currently in default on the payment of these
      debentures. We do not have the capital necessary to pay the outstanding amount
      due and are working with the debenture holders to renegotiate the terms of
      the
      agreement. There is no assurance that we will be able to successfully negotiate
      new terms favorable to all parties. In that event, the lenders may elect to
      exercise their right against our collateral, including our patents, which would
      have material adverse consequences to our business and operations.




**We
      may not be able to off-set all of our net operating loss carry-forwards against
      future income** .
      At
      December 31, 2006, net operating losses available to be carried forward for
      federal income tax purposes were approximately $11 million expiring in various
      amounts through 2026. Utilization of our net operating losses may be subject
      to
      substantial limitations due to the ownership changes under regulations of the
      Internal Revenue Code and similar state provisions. Such annual limitation
      could
      result in the expiration of the net operating loss before utilization, which
      would subject the Company to have more tax liability than if it had been able
      to
      off-set the net operating losses against income.




**Our
      ability to implement our business plan depends on our ability to attract and
      retain key personnel.** Our
      future success will depend to a significant extent on the continued services
      of
      the current officers and other necessary personnel, particularly Mr. Fust,
      the
      Chairman of our board of directors and Chief Executive Officer, Mr. Klein,
      the
      Chief Financial Officer and Mr. Wilferth, the Director of Research and
      Development. The loss of either of these personnel would likely have a
      significantly detrimental effect on our business. We have obtained key man
      life
      insurance policies on the life of Mr. Fust in the amount of
      $400,000.




Our
      prospects will also depend on our ability to attract and retain highly qualified
      research and development, sales, marketing, and managerial personnel.
      Competition for such personnel is intense, and there can be no assurance that
      we
      will be able to employ or retain such personnel.




**If
      the SinoFresh products do not gain widespread market acceptance, results of
      operations will suffer.** The
      Company's original product, SinoFreshTM Nasal & Sinus Care was sold and
      marketed as an over-the-counter drug. It has been reformulated and is now being
      sold and marketed as a homeopathic product. Management cannot be certain that
      this change in status will achieve widespread acceptance by the market.
      Additionally, if any unanticipated problem arises concerning the efficacy of
      any
      of the Company’s current or new products we may bring to market, or if one or
      more of these products fails to achieve widespread market acceptance because
      of
      a lack of marketing capital or for any other reason, our operating results
      and
      prospects would be materially adversely affected.


-17-




**Unanticipated
      problems associated with product development and commercialization could
      adversely affect our operating results.** The
      successful development of our existing and new products is subject to the risks
      of failure and delay inherent in the development and commercialization of
      products based on innovative technologies. These risks include the possibilities
      that:




·  we
      may
      experience unanticipated or otherwise negative research and development
      results;




·  existing
      or proposed products may be found to be ineffective or unsafe, or may otherwise
      fail to receive required regulatory clearances or approvals;




·  we
      may
      find that existing or proposed products, while effective, are uneconomical
      to
      commercialize or market;




·  existing
      or proposed products may not achieve broad market acceptance; or




·  proprietary
      rights held by third parties preclude us from developing or marketing existing
      or proposed products.




Our
      inability to develop and commercialize our existing products or any new products
      on a timely basis and within our financial budgets could have a material adverse
      effect on operating results and future prospects.




**FDA
      and other government regulation may restrict our ability to sell our products.** We
      are
      subject to various federal, state and local laws and regulations affecting
      our
      business. Our products are subject to regulation by the FDA, including
      regulations with respect to labeling of products, approval of ingredients in
      products, claims made regarding the products, and disclosure of product
      ingredients. If we do not comply with these regulations, the FDA could force
      us
      to stop selling the affected products or require us to incur substantial costs
      in adopting measures to maintain compliance with these regulations. Our
      advertising claims regarding our products are subject to the jurisdiction of
      the
      FTC as well as the FDA. In both cases we are required to obtain scientific
      data
      to support any advertising or labeling health claims we make concerning our
      products. If we are unable to provide the required support for such claims,
      the
      FTC may stop us from making such claims or require the company to stop selling
      the affected products.




**Our
      inability to provide scientific proof for product claims may adversely affect
      sales.** The
      marketing of SinoFreshTM Daily Throat Spray involves claims that the product
      kills germs and bacteria. Under the FDA and Federal Trade Commission (FTC)
      rules, we are required to obtain scientific data to support any health claims
      we
      make concerning these products. Although we have conducted independent clinical
      tests and provided scientific data to the FDA in support of claims regarding
      these products, we may be required to provide additional data in the future.
      In
      such an event, we cannot be certain that the scientific data we have obtained
      or
      will obtain in support of our claims will be deemed acceptable to the FDA or
      FTC. If the FDA or the FTC requests any supporting information, and we are
      unable to provide support that is acceptable to the FDA or the FTC, either
      agency could require us to stop making the claims in question or restrict us
      from selling the affected products.




**We
      may fail to compete effectively against larger companies.** The
      consumer health products industry is highly competitive. We compete with
      companies in the United States and abroad that are engaged in the development
      of
      both traditional and innovative health care products, including sinus products.
      Many of these companies have much greater financial and technical resources
      and
      production and marketing capabilities than we do. Further, many of these
      companies have already achieved significant product acceptance and brand
      recognition with respect to products that compete directly with the SinoFresh
      products. Our competitors may successfully develop and market superior or less
      expensive products, which could render the current SinoFresh products and other
      future SinoFresh products less valuable or unmarketable.




-18-


**If
      we are unable to protect our intellectual property or if we infringe on the
      intellectual property of others, our financial condition and future prospects
      could be materially harmed.** We rely
      significantly on the protections afforded by patent and trademark registrations
      that we routinely seek from the U.S. Patent and Trademark Office (USPTO) and
      from similar agencies in foreign countries. We cannot be certain that any patent
      or trademark application that is filed will be approved by the USPTO or other
      foreign agencies. In addition, we cannot be certain that we will be able to
      successfully defend any trademark, trade name or patent that we hold against
      claims from, or use by, competitors or other third parties. No consistent policy
      has emerged from the USPTO or the courts regarding the breadth of claims allowed
      or the degree of protection afforded under biotechnology and similar patents.
      Our future success will depend on our ability to prevent others from infringing
      on our proprietary rights, as well as our ability to operate without infringing
      upon the proprietary rights of others. We may be required at times to take
      legal
      action to protect our proprietary rights and, despite our best efforts, we
      may
      be sued for infringing on the patent rights of others. Patent litigation is
      costly and, even if we prevail, the cost of such litigation could adversely
      affect our financial condition. If we do not prevail, in addition to any damages
      we might have to pay, we could be required to stop the infringing activity
      or
      obtain a license. We cannot be certain that any required license would be
      available on acceptable terms, or at all. If we fail to obtain a license, our
      business might be materially adversely affected. In addition to seeking patent
      protection, we rely upon a combination of non-disclosure agreements, other
      contractual restrictions and trade secrecy laws to protect proprietary
      information. There can be no assurance that these steps will be adequate to
      prevent misappropriation of our proprietary information or that our competitors
      will not independently develop technology or trade secrets that compete with
      our
      proprietary information.




**We
      may incur significant costs resulting from product liability claims.** We
      would
      be subject to significant liability should use or consumption of our products
      cause injury, illness or death. Although we carry product liability insurance,
      there can be no assurance that our insurance will be adequate to protect us
      against product liability claims or that insurance coverage will continue to
      be
      available on reasonable terms. A product liability claim, even one without
      merit
      or for which we have substantial coverage, could result in significant legal
      defense costs, thereby increasing our expenses and lowering earnings. Such
      a
      claim, whether or not proven to be valid, could have a material adverse effect
      on product branding and goodwill, resulting in reduced market acceptance of
      our
      products. This in turn could materially adversely affect our results of
      operations and financial condition.




**We
      do not have manufacturing capabilities.** We
      currently do not have the physical or personnel resources to independently
      manufacture our products or any other products that we may develop. We currently
      outsource all of our product manufacturing and packaging operations and intend
      to continue this outsourcing for the foreseeable future. If we are unable to
      maintain suitable arrangements for manufacturing of our SinoFresh products
      or
      any other products, or if our third party contractors fail to adequately perform
      their manufacturing operations, our sales and related financial results could
      be
      materially adversely affected. If, in the future, we decide to establish our
      own
      manufacturing facilities, we will require substantial additional funds and
      significant additional personnel to undertake such operations. We cannot be
      certain that such funding or a sufficient number of such qualified persons
      will
      be available **.**




**Return
      of a significant amount of product could harm our business.** Our
      product has a 30-day, unconditional, money back guarantee. Any consumer, who
      is
      not satisfied with our product within this time period for any reason, or no
      reason at all, may return it or any unused portion for a full refund. Most
      large
      retail chains have their own established policies for product returns and we
      intend to fully comply with these policies as well.




We
      believe product returns will be less than one percent (1%) of sales, but there
      can be no assurance that actual levels of returns will not significantly exceed
      the amounts anticipated. Should an adverse reaction to any of our products
      occur
      affecting a significant number of customers, a product "recall" could occur
      which could materially impact our financial condition and our ability to
      successfully re-enter the market following the recall. Additionally, although
      we
      will not directly engage in the manufacture of any product we market and sell,
      we could be exposed to product liability claims from faulty
      manufacture.




**We
      may be required to indemnify our directors and officers.** We have
      authority under Section 607.0850 of the Florida Business Corporation Act to
      indemnify our directors and officers to the extent provided in that statute.
      Our
      Articles of Incorporation require SinoFresh to indemnify each of our directors
      and officers against liabilities imposed upon them (including reasonable amounts
      paid in settlement) and expenses incurred by them in connection with any claim
      made against them or any action, suit or proceeding to which they may be a
      party
      by reason of their being or having been a director or officer of the company.
      We
      maintain officer's and director's liability insurance coverage with limits
      of
      liability of $5,000,000. There can be no assurance that such insurance will
      be
      available in the future, or that if available, it will be available on terms
      that are acceptable to us. Furthermore, there can be no assurance that the
      insurance coverage provided will be sufficient to cover the amount of any
      judgment awarded against an officer or director (either individually or in
      the
      aggregate). Consequently, if such judgment exceeds the coverage under the
      policy, SinoFresh may be forced to pay such difference.




-19-


***Risks
      Related to Our Common Stock***




**The
      large number of shares eligible for immediate and future sales may depress
      the
      price of our stock.** Our
      Articles of Incorporation authorize the issuance of 500,000,000, shares of
      common stock, no par value per share, and 200,000,000 shares of preferred stock,
      no par value per share. As of December 31, 2006, we had outstanding 16,389,555
      shares of common stock. Also as of December 31, 2006, we had outstanding a
      total
      of 3,109,502 shares of Series A, B and C preferred stock which are convertible
      into a total of 5,440,252 shares of common stock. We have reserved 3,000,000
      shares of common stock for issuance in respect of option grants under our stock
      option plan. From those available shares, outstanding options have been granted
      for 1,873,750 shares of common stock, and there remain available for options
      under the plan 1,126,250 shares of common stock. In addition, there are 357,681
      shares of common stock that are issuable upon exercise of stock options issued
      to independent consultants. There are 6,084,793 shares that are issuable upon
      exercise of outstanding warrants, and 8,025,408 shares that are issuable upon
      conversion of debentures (including principal, interest and penalties). The
      outstanding warrants and options contain exercise prices ranging from $0.25
      to
      $7.00. Therefore, the desire of the holders of those warrants and options to
      sell will depend on the market price of our common stock at any given time.
      Further, we may be required to issue additional common stock to the debenture
      holders if we fail to make the default payment stated in the debentures. Sales
      of substantial amounts of our common stock in the open market, could adversely
      affect the market price of our common stock.




Our
      board
      of directors has the authority to issue additional shares of common stock and
      preferred stock up to the authorized amount stated in our Articles of
      Incorporation. Our board of directors may choose to issue some or all of such
      shares to acquire one or more businesses or other types of property, or to
      provide additional financing in the future. The issuance of any such shares
      may
      result in a reduction of the book value or market price of the outstanding
      shares of our common stock. If we do issue any such additional shares, such
      issuance also will cause a reduction in the proportionate ownership and voting
      power of all other shareholders. Further, any such issuance may result in a
      change of control of SinoFresh.




**The
      price of our common stock may continue to be volatile.** The
      market price of our common stock, which is quoted for trading on the OTC
      Electronic Bulletin Board, has been highly volatile and may continue to be
      volatile in the future. Any or a combination of the following factors could
      cause the market value of our common stock to decline quickly:




·
            operating
                results that differ from market
                expectations;




·
            negative
                or other unanticipated results of clinical trials or other
                testing;




·
            delays
                in product development;




·
            technological
                innovations or commercial product introductions by our
                competitors;




·
            changes
                in government regulations;




·
            developments
                concerning proprietary rights, including pending or threatened patent
                litigation;




·
            public
                concerns regarding the safety of any of our products;
                and




·
            general
                economic and stock market conditions.




-20-


Since
      the
      inception of trading activities in September 2003, the stock market has
      experienced, and it may continue to experience, significant price and volume
      fluctuations. These fluctuations have particularly affected the market prices
      of
      equity securities of many small capitalization companies that are not yet
      profitable or that experience low or inconsistent earnings. Often, the affect
      on
      the price of such securities is disproportionate to the operating performance
      of
      such companies. In our case, such broad market fluctuations may adversely affect
      your ability to dispose of your shares at a price equal to or above the price
      at
      which you purchased such shares.




**Our
      common stock may be subject to penny stock regulation, which may make it
      difficult for investors to sell our common stock.** The
      SEC
      has adopted rules that regulate broker/dealer practices in connection with
      transactions in penny stocks. Penny stocks generally are equity securities
      with
      a price of less than $5.00 per share (other than securities registered on
      certain national securities exchanges or quoted on the NASDAQ Stock Market,
      provided that current price and volume information with respect to transactions
      in such securities is provided by the exchange system). The penny stock rules
      require a broker/dealer, prior to completing a transaction in a penny stock
      not
      otherwise exempt from the rules, to deliver a standardized risk disclosure
      document prepared by the SEC that provides information about penny stocks and
      the nature and level of risks in the penny stock market. The broker/dealer
      also
      must provide the customer with bid and offer quotations for the penny stock,
      the
      compensation of the broker/dealer and its salesperson in the transaction, and
      monthly account statements showing the market value of each penny stock held
      in
      the customer's account. In addition, the penny stock rules require that prior
      to
      a transaction in a penny stock not otherwise exempt from such rules the
      broker/dealer must make a special written determination that a penny stock
      is a
      suitable investment for the purchaser and receive the purchaser's written
      agreement to the transaction. Our common stock will likely be subject to the
      penny stock rules. These disclosure requirements may have the effect of reducing
      the level of trading activity in any secondary market for our common stock.
      Accordingly, holders of our common stock may find it difficult to sell their
      shares, if they are able to do so at all.




**We
      do not expect to pay dividends for the foreseeable future.** For
      the
      foreseeable future, we intend to retain any earnings to finance the development
      and expansion of our business, and we do not anticipate paying any cash
      dividends on our common stock. Any future determination to pay dividends will
      be
      at the discretion of our board of directors and will be dependent upon then
      existing conditions, including our financial condition and results of
      operations, capital requirements, contractual restrictions, business prospects,
      and other factors that the board of directors considers relevant.




**Our
      preferred stock may cause dilution.** Our
      Articles of Incorporation authorize the issuance of up to 200,000,000 shares
      of
      "blank check" preferred stock with such rights and preferences as our board
      of
      directors, without further shareholder approval, may determine from time to
      time. Of these preferred shares, 858,170 shares are designated as Series A
      preferred stock, 1,500,000 shares are designated as Series B preferred stock,
      and 1,250,000 shares are designated as Series C preferred stock. As of December
      31, 2006, we had 778,752 shares of outstanding Series A preferred stock;
      1,500,000 shares of outstanding Series B preferred stock; and 830,750 shares
      of
      outstanding Series C preferred stock. Series A preferred stock is convertible
      into common and has voting rights with the common, on a one-for one basis.
      The
      Series B and Series C preferred stock are convertible into common stock and
      have
      voting rights with the common stock on a one for two basis. As of December
      31,
      2006, a total 5,440,252 shares of common stock issuable upon conversion of
      all
      of our outstanding preferred stock are eligible for public resale under Rule
      144. Furthermore, each share of Series A, Series B and Series C preferred stock
      has a liquidation preference of $2.00 per share on an as converted basis before
      any holders of common would be entitled to receive payment for their shares
      or
      dividends upon a liquidation of SinoFresh. As of December 31, 2006, there
      remained 196,890,498 shares of authorized but undesignated and unissued shares
      of preferred stock that may be sold in the future and that can, at the
      discretion of our board of directors, be designated as another series of
      preferred stock with dividend, liquidation, conversion, voting or other rights
      and preferences that are senior, and not available, to the holders of our common
      stock. Thus, issuances of new series of preferred stock could adversely affect
      the relative voting power, distributions and other rights of the common stock.
      Holders of our common stock could realize less than the amount of dividends
      and/or distributions to which they would otherwise be entitled.




Further,
      preferred stock could be used as a method of discouraging, delaying, or
      preventing a take-over of SinoFresh. If we issue "blank check" preferred stock,
      it could have a dilutive effect upon our common stock. This would decrease
      the
      chance that our shareholders would realize a premium over market price for
      their
      shares of common stock as a result of a takeover bid.




-21-


**ITEM
      7.**  **FINANCIAL
      STATEMENTS******




REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Board
      of
      Directors


SinoFresh
      HealthCare, Inc.


Englewood,
      Florida





We
      have
      audited the accompanying consolidated balance sheet of SinoFresh HealthCare,
      Inc. and subsidiary as of December 31, 2006 and the related consolidated
      statements of operations, changes in stockholders' equity and cash flows for
      each of the two years in the period ended December 31, 2006. These consolidated
      financial statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of SinoFresh HealthCare, Inc.
      and subsidiary at December 31, 2006, and the results of their operations and
      their cash flows for each of the two years in the period ended December 31,
      2006
      in conformity with accounting principles generally accepted in the United States
      of America.




The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1, the Company
      is
      in default on its debenture obligations, has incurred substantial losses since
      its inception, has a working capital deficiency at December 31, 2006, and has
      incurred negative cash flow from operations. These factors, among others, raise
      substantial doubt about its ability to continue as a going concern. Management's
      plans related to these matters are also described in Note 1. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.




/s/
      Moore
      Stephens Lovelace, P.A.


Certified
      Public Accountants


Orlando,
      Florida


Dated
      April 13, 2007


-22-


SINOFRESH
      HEALTHCARE, INC.


CONSOLIDATED
      BALANCE SHEET


As
      of
      December 31, 2006


ASSETSCURRENT
                  ASSETS:Cash
              
              $
              887Accounts
                  receivable, net of allowances of $59,426
              
              
              159,165Inventory,
                  net of reserves
              
              
              25,635Other
                  current assets
              
              
              48,109TOTAL
                  CURRENT ASSETS
              
              
              233,796FURNITURE
                  AND EQUIPMENT, NET
              
              
              48,140PATENTS,
                  NET
              
              
              2,057,708OTHER
                  ASSETS
              
              
              6,418$
              2,346,062LIABILITIES
                  AND STOCKHOLDERS’ DEFICITCURRENT
                  LIABILITIESConvertible
                  debentures, net of unamortized debt discounts
              
              $
              1,560,000Short-term
                  note payable
              
              
              100,000Current
                  portion of capital leases
              
              
              23,530Accounts
                  payable (including amounts due to related parties of $42,168)
              
              
              1,379,819Accrued
                  expenses (including amounts due to related parties of $48,917)
              
              
              1,473,803TOTAL
                  CURRENT LIABILITIES
              
              
              4,537,152CAPITAL
                  LEASES, NET OF CURRENT MATURITIES
              
              
              14,260TOTAL
                  LIABILITIES
              
              
              4,551,412COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS’
                  EQUITY (DEFICIT):Preferred
                  Stock, no par value; $2 liquidation value per share; 200,000,000shares
                  authorized:Series
                  A convertible preferred stock, voting; 858,170 shares
                  authorized,778,752
                  shares issued and outstanding
              
              
              1,557,503Series
                  B convertible preferred stock, voting; 1,500,000 shares authorized,
                  issuedand
                  outstanding
              
              
              3,000,000Series
                  C convertible preferred stock, voting; 1,250,000 shares authorized;830,750
                  shares issued and outstanding
              
              
              1,491,056Common
                  stock, no par value; 500,000,000 shares authorized; 16,389,555shares
                  issued and outstanding
              
              
              6,705,630Accumulated
                  deficit
              
              
              (14,783,996
              )Deferred
                  stock-based compensation
              
              
              (175,543
              )TOTAL
                  STOCKHOLDERS’ DEFICIT
              
              
              (2,205,350
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              2,346,062See
                  notes to consolidated financial statements.
  -23-


SINOFRESH
      HEALTHCARE, INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS


**Year
                      Ended****December 31,****2006**
                ****
                **2005**REVENUE,
                    net
                
                $
                1,083,576
                
                $
                2,939,189COST
                    OF REVENUE
                
                
                537,205
                
                
                874,614GROSS
                    PROFIT
                
                
                546,371
                
                
                2,064,575OPERATING
                    EXPENSESSalaries
                    and other compensation expenses
                
                
                906,227
                
                
                1,159,504Professional
                    fees
                
                
                519,983
                
                
                583,322Other
                    general and administrative expenses
                
                
                383,913
                
                
                454,649Marketing
                    and advertising expenses
                
                
                56,866
                
                
                967,942Research
                    and development expenses
                
                
                1,172
                
                
                180,921Depreciation
                    and amortization
                
                
                261,802
                
                
                261,801TOTAL
                    OPERATING EXPENSES
                
                
                2,129,963
                
                
                3,608,139LOSS
                    FROM OPERATIONS
                
                
                (1,583,592
                )
                
                (1,543,564
                )OTHER
                    INCOME (EXPENSE):Interest,
                    net
                
                
                (584,387
                )
                
                (661,532
                )Goodwill
                    impairment charge
                
                
                (2,409,401
                )
                
                -Other
                    income (expense)
                
                
                (385,651
                )
                
                371,588TOTAL
                    OTHER EXPENSE
                
                
                (3,379,439
                )
                
                (289,944
                )NET
                    LOSS BEFORE INCOME TAXES
                
                
                (4,963,031
                )
                
                (1,833,508
                )PROVISION
                    FOR INCOME TAXES
                
                
                -
                
                
                -NET
                    LOSS
                
                $
                (4,963,031
                )
                $
                (1,833,508
                )NET
                    LOSS PER COMMON SHARE-Basic
                    and diluted
                
                $
                (0.31
                )
                $
                (0.13
                )WEIGHTED
                    AVERAGE COMMON SHARES OUTSTANDING-Basic
                    and diluted
                
                
                15,804,742
                
                
                14,336,037See
                    notes to consolidated financial statements.
 -24-


SINOFRESH
      HEALTHCARE, INC.


CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY







****
              **Preferred
                  Stock**
              ****
              **Deferred**
              ****
              ****
              ****
              ****
              ****
              ****
              ********
              ****
              **Common
                  Stock**
              ****
              **Series
                  A**
              ****
              **Series
                  B**
              ****
              **Series
                  C**
              ****
              **stock-**
              ****
              ****
              ****
              ****
              ****
              **Total**
              ********
              ****
              **Number**
              ****
              ****
              ****
              **Number**
              ****
              ****
              ****
              **Number**
              ****
              ****
              ****
              **Number**
              ****
              ****
              ****
              **based**
              ****
              **Subscriptions**
              ****
              **Accumulated**
              ****
              **Stockholders'**
              ********
              **of
                  Shares**
              ****
              **Amount**
              ****
              **of
                  Shares**
              ****
              **Amount**
              ****
              **of
                  Shares**
              ****
              **Amount**
              ****
              **of
                  Shares**
              ****
              **Amount**
              ****
              **compensation**
              ****
              **Receivable**
              ****
              **Deficit**
              ****
              **Equity**Balance
                  at December 31, 2004
              
              
              14,097,120
              
              $
              5,585,378
              
              
              823,795
              
              $
              1,647,589
              
              
              1,500,000
              
              $
              3,000,000
              
              
              944,500
              
              $
              1,695,681
              
              $
              (91,133
              )
              $
              (132,000
              )
              $
              (7,987,457
              )
              $
              3,718,058Write-off
                  of unpaid subscriptions
              
              
              -
              
              
              (132,000
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              $
              132,000
              
              
              -
              
              $
              -Conversion
                  of Series A preferredto
                  common
              
              
              13,793
              
              
              27,586
              
              
              (13,793
              )
              
              (27,586
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Conversion
                  of Series C preferredto
                  common
              
              
              162,500
              
              
              146,125
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (81,250
              )
              
              (146,125
              )
              
              -
              
              
              -
              
              
              -
              
              
              -Issuance
                  of options and warrantsfor
                  services
              
              
              -
              
              
              58,832
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              58,832Amortization
                  of unearned stockbased
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              27,372
              
              
              -
              
              
              -
              
              
              27,372Conversion
                  of debentures to equity
              
              
              181,816
              
              
              100,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              100,000Issuance
                  of shares to settle lawsuit
              
              
              50,000
              
              
              37,500
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              37,500Net
                  loss, year endedDecember
                  31, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,833,508
              )
              
              (1,833,508
              )Balance
                  at December 31, 2005
              
              
              14,505,229
              
              $
              5,823,421
              
              
              810,002
              
              $
              1,620,003
              
              
              1,500,000
              
              $
              3,000,000
              
              
              863,250
              
              $
              1,549,556
              
              $
              (63,761
              )
              $
              -
              
              $
              (9,820,965
              )
              $
              2,108,254
 -25-


SINOFRESH
      HEALTHCARE, INC.


CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)







**Preferred
                  Stock**
              
              **Deferred****Common
                  Stock**
              
              **Series
                  A**
              
              **Series
                  B**
              
              **Series
                  C**
              
              **stock-**
              
              
              
              
              
              **Total****Number**
              
              
              
              **Number**
              
              
              
              **Number**
              
              
              
              **Number**
              
              
              
              **based**
              
              **Subscriptions**
              
              **Accumulated**
              
              **Stockholders'****of
                  Shares**
              
              **Amount**
              
              **of
                  Shares**
              
              **Amount**
              
              **of
                  Shares**
              
              **Amount**
              
              **of
                  Shares**
              
              **Amount**
              
              **compensation**
              
              **Receivable**
              
              **Deficit**
              
              **Equity**Balance
                  at December 31, 2005
              
              
              14,505,229
              
              $
              5,823,421
              
              
              810,002
              
              $
              1,620,003
              
              
              1,500,000
              
              $
              3,000,000
              
              
              863,250
              
              $
              1,549,556
              
              $
              (63,761
              )
              $
              -
              
              $
              (9,820,965
              )
              $
              2,108,254Conversion
                  of Series A preferredto
                  common
              
              
              31,250
              
              
              62,500
              
              
              (31,250
              )
              
              (62,500
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Conversion
                  of Series C preferredto
                  common
              
              
              65,000
              
              
              58,500
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (32,500
              )
              
              (58,500
              )
              
              -
              
              
              -
              
              
              -
              
              
              -Issuance
                  of options to employees
              
              
              
              
              
              304,763
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (304,763
              )
              
              
              
              
              
              
              
              -Issuance
                  of shares and optionsfor
                  services
              
              
              870,000
              
              
              217,500
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              217,500Amortization
                  of unearned stockbased
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              192,981
              
              
              -
              
              
              -
              
              
              192,981Issuance
                  of shares to theCompany's
                  401(K) plan
              
              
              103,076
              
              
              25,769
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              25,769Conversion
                  of debentures to equity
              
              
              680,000
              
              
              170,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              170,000Issuance
                  of shares and optionsto
                  settle lawsuit
              
              
              135,000
              
              
              43,177
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              43,177Net
                  loss, year endedDecember
                  31, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,963,031
              )
              
              (4,963,031
              )Balance
                  at December 31, 2006
              
              
              16,389,555
              
              $
              6,705,630
              
              
              778,752
              
              $
              1,557,503
              
              
              1,500,000
              
              $
              3,000,000
              
              
              830,750
              
              $
              1,491,056
              
              $
              (175,543
              )
              $
              -
              
              
              (14,783,996
              )
              $
              (2,205,350
              )


See
      Notes
      to Consolidated Financial Statements


-26-


SINOFRESH
      HEALTHCARE, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


**Year
                    Ended****December 31,****2006**
              ****
              ****
              **2005**CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (4,963,031
              )
              $
              (1,833,508
              )Adjustments
                  to reconcile net loss to net cashused
                  in operations:Amortization
                  of stock, options and warrants issued for services
              
              
              242,981
              
              
              62,962Amortization
                  and depreciation
              
              
              261,802
              
              
              261,801Stock
                  issued as settlement cost
              
              
              -
              
              
              37,500Goodwill
                  impairment charge
              
              
              2,409,401
              
              
              -Provision
                  for bad debts
              
              
              22,360
              
              
              35,459Provision
                  for excess inventory
              
              
              95,380
              
              
              34,467Amortization
                  of debt discount
              
              
              264,306
              
              
              320,277Amortization
                  of deferred debt issuance costs
              
              
              177,713
              
              
              215,349Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              92,901
              
              
              (80,612
              )Inventory
              
              
              (8,014
              )
              
              (104,344
              )Other
                  current assets
              
              
              144,821
              
              
              153,780Accounts
                  payable
              
              
              159,162
              
              
              (460,379
              )Accrued
                  expenses
              
              
              876,938
              
              
              217,927NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (223,280
              )
              
              (1,139,321
              )FINANCING
                  ACTIVITIES:Proceeds
                  from short-term notes payable
              
              
              100,000
              
              
              -Payments
                  on debt and capital leases
              
              
              (23,870
              )
              
              (45,066
              )NET
                  CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
              
              
              76,130
              
              
              (45,066
              )DECREASE
                  IN CASH AND CASH EQUIVALENTS
              
              
              (147,150
              )
              
              (1,184,387
              )CASH
                  AND CASH EQUIVALENTS - beginning of year
              
              
              148,037
              
              
              1,332,424CASH
                  AND CASH EQUIVALENTS - end of year
              
              $
              887
              
              $
              148,037SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid during the period for interest
              
              $
              78,223
              
              $
              136,619NON-CASH
                  ACTIVITY:Reduction
                  of accounts payable and accrued liabilites through the
                  issuanceof
                  common stock and stock options
              
              $
              236,446
              
              $
              -Conversion
                  of accounts payable to a short term note payable
              
              $
              -
              
              $
              22,875Options
                  and warrants issued in connection with servicesagreements
                  increasing other current assets and common stock
              
              $
              -
              
              $
              23,242Conversion
                  of convertible debentures into common stock
              
              $
              170,000
              
              $
              100,000See
                  notes to consolidated financial statements.
 -27-
  **SINOFRESH
      HEALTHCARE, INC.**




Notes
      to
      Condensed Consolidated Financial Statements


For
      the
      years ended December 31, 2006 and 2005





**NOTE
      1: Nature of Business and Summary of Significant Accounting Policies**




ORGANIZATION:
      SinoFresh HealthCare, Inc., a Florida Corporation (“SinoFresh” or the “Company”)
      came into existence as a result of a series of events. The Company's
      predecessor, SinoFresh HealthCare, Inc. ("SinoFresh - Delaware") was
      incorporated in the state of Delaware on October 15, 2002. In November 2002
      SinoFresh - Delaware entered into an asset purchase agreement (the "Asset
      Purchase Agreement") whereby it received certain assets and liabilities of
      SinoFresh Laboratories, Inc. effective at the close of business on November
      15,
      2002 in exchange for 808,170 shares of its Series A preferred stock.




On
      September 8, 2003 (the "Merger Date"), SinoFresh - Delaware, SinoFresh
      Acquisition Corp. (Acquisition), SinoFresh Corp., formerly known as e-Book
      Network, Inc., a Florida corporation, and the sole director and majority
      shareholder of SinoFresh Corp. entered into a Merger Agreement. In addition,
      SinoFresh Corp. changed its name to SinoFresh HealthCare, Inc.




Under
      the
      Merger Agreement, SinoFresh Corp. acquired all of the outstanding capital stock
      of SinoFresh - Delaware.




Subsequent
      to the merger, Acquisition, which changed its name to SinoFresh Corporation,
      remains the operating subsidiary of the Company. Since the former shareholders
      of SinoFresh - Delaware also obtained management control of SinoFresh, the
      merger transaction was treated as a recapitalization of the Company, with
      SinoFresh - Delaware as the acquirer for financial accounting purposes.




The
      Company's ability to continue as a going concern is subject to uncertainty
      due
      to the Company’s history of losses, current default status on the repayment of
      debentures (see note 5), limited financial resources and need for additional
      working capital to implement the Company's business plan. In this connection,
      the Company requires additional funding in order to repay its debentures and
      to
      market and distribute its products, exploit the technology underlying its
      patents, further develop existing and new products, and pay its existing
      accounts payable. As a result of the Company being in default on its debenture
      obligations, substantially all of the Company’s assets are subject to
      foreclosure by the debenture holders. On December 31, 2006, the Company had
      current assets of approximately $234,000 (including cash of approximately
      $1,000) and current liabilities of approximately $4,537,000. As a result, the
      Company's current liquidity is extremely limited and the Company will require
      a
      significant amount of additional funding in order to meet its current working
      capital requirements, including repayment of its debentures. In order to address
      these issues, the Company is seeking to raise additional funding through the
      issuance of debt and equity securities, joint ventures or other arrangements.
      Although the Company believes that it will be able to obtain additional funding,
      there can be no assurance that the Company's efforts will be successful. The
      accompanying statements do not include any adjustments that might be necessary
      if the Company were unable to continue as a going concern.




NATURE
      OF
      BUSINESS: The Company is engaged in the research, development, and marketing
      of
      novel therapies to treat inflammatory and infectious diseases and disorders
      of
      the upper respiratory system.




-28-


ACCOUNTING
      ESTIMATES: The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the consolidated
      financial statements and the reported amounts of revenues and expenses during
      the reporting period. Actual results could differ from those estimates. The
      Company's significant estimates and assumptions primarily arise from risks
      and
      uncertainties associated with potential future product returns, the
      uncollectibility of accounts and other receivables, inventory obsolescence,
      valuation of acquired assets for purposes of allocating the purchase price,
      including patents and goodwill, subsequent recoverability analysis, and
      estimated accruals relating to legal contingencies.




CONCENTRATION
      OF RISK: Financial instruments that potentially subject the Company to
      significant concentrations of credit risk consist primarily of cash and cash
      equivalents and accounts receivable. The Company's investment policy is to
      invest in low risk, highly liquid investments. At December 31, 2006, over
      seventy-nine percent (79%) of gross accounts receivable were due from two
      customers. Additionally, approximately sixty-eight percent (68%) of the
      Company's revenues during 2006 were derived from four customers. In 2005,
      approximately seventy-two percent (72%) of the Company’s revenues were derived
      from four customers.




The
      Company's business is dependent on its ability to utilize the underlying patents
      and a third party manufacturer provides all of the Company's manufacturing
      capacity. The Company is also dependent on the revenue from the sale of
      SinoFreshTM Nasal & Sinus Care, its primary product available for sale, which
      accounted for approximately ninety-nine percent (99%) and ninety-five percent
      (95%) of its revenues for the years ended December 31, 2006 and 2002,
      respectively.




CASH
      AND
      CASH EQUIVALENTS: The Company considers all highly liquid investments with
      maturity of three months or less when purchased to be cash equivalents.




FAIR
      VALUE OF FINANCIAL INSTRUMENTS: All financial instruments are carried at amounts
      that approximate fair value.




ACCOUNTS
      RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: Accounts receivable result
      from
      the sale of the Company's products at sales prices, net of estimated sales
      returns and other allowances. The Company estimates an allowance for doubtful
      accounts based on a specific identification basis and additional allowances
      based on historical collections experience. Accounts are considered past due
      when outstanding beyond the stated payment terms. The Company will not write-off
      any account receivable until all reasonable means of collection have been
      exhausted and collection does not appear probable.




INVENTORIES:
      Inventories are valued at the lower of cost (determined on a first-in, first-out
      basis) or market and are evaluated for product obsolescence on a periodic basis
      (see note 2).




DEFERRED
      DEBT ISSUANCE COSTS: Deferred debt issuance costs related to placement agent
      fees and legal fees associated with the convertible debentures (see note 5).
      The
      valuation of the warrants utilized to pay these fees was computed using the
      Black-Scholes method and were amortized over the original 24 month term of
      the
      debentures.




FURNITURE
      AND EQUIPMENT: Furniture and equipment is stated at cost and is depreciated
      using the straight-line method over five to seven years (see note 3).




PATENTS:
      Patents are stated at cost and are amortized over thirteen years (the
      approximate life of the patents on the date of purchase) using the straight-line
      method (see note 4).




LONG-LIVED
      ASSETS: The Company reviews long-lived assets, including intangible assets,
      for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable. Recoverability of long-lived
      assets is measured by comparison of its carrying amount to the undiscounted
      cash
      flows that the asset or asset group is expected to generate. If such assets
      are
      considered to be impaired, the impairment to be recognized is measured by the
      amount by which the carrying amount of the property, if any, exceeds its fair
      market value.




-29-


GOODWILL:
      Goodwill represents the excess purchase price and related costs over the fair
      value assigned to the net tangible and identifiable intangible assets of
      businesses acquired. Goodwill is carried at lower of cost or market and is
      subject to annual impairment evaluation, or interim impairment evaluation if
      an
      interim triggering event occurs which indicates that the carrying amount of
      goodwill may not be recoverable. The Company completed its impairment test
      of
      existing goodwill and patents as of December 31, 2006. This test was performed
      internally and consisted of evaluating potential future revenue streams, current
      market capitalization, shareholder equity values and the estimated market value
      of such assets. As a result of the Company’s evaluation, an impairment of
      goodwill was recognized in the amount of $2,409,401 during 2006.




REVENUE
      RECOGNITION: In general, revenue from sales is recognized at the time products
      are shipped less estimated sales returns, certain vendor cooperative promotional
      costs and other allowances.




MARKETING
      AND ADVERTISING EXPENSES:  Marketing
      and advertising expenses were limited in 2006 due to the limited amount of
      working capital. These expenses consisted of product promotion costs of $47,927,
      public relations costs of $2,700 and other internal related marketing costs
      of
      $6,239 for the year ended December 31, 2006. In 2005, the Company used
      television, radio and print as its primary forms of media for product promotion.
      In addition to media, the Company also promoted its product through the services
      of a public relations firm and through entertainer, Ed McMahon. For the year
      ended December 31, 2005, product promotion costs were $581,027, public relations
      expenses were $287,237 and the Company incurred $99,678 for market studies
      and
      other internal related expenses. All costs for advertising media are expensed
      in
      the period in which such media has been presented to its targeted
      audience.




RESEARCH
      AND DEVELOPMENT COSTS: SinoFresh's policy is to expense all research and
      development expenses as incurred. Research and development expenses during
      the
      years ended December 31, 2006 and 2005 totaled approximately $1,000 and
      $181,000, respectively. Future research and development will be focused on
      advancing scientific research on existing products as well as planned new
      product offerings in the health care industry, in general, and in the
      respiratory and infectious disease category, in particular. These product
      offerings may include both over-the-counter and ethical products. However,
      substantial research and development costs are not anticipated until outside
      funding is received for such projects or cash flow from operations is sufficient
      to support continued programs. New product development will be supported by
      clinical studies to ensure the safety and efficaciousness of the Company's
      products, as well as for line extension derivatives of current and future
      products.




SALES
      INCENTIVES AND CONSIDERATION PAID TO RETAILERS: The Company accounts for certain
      promotional costs such as sales incentives, promotional funds, cooperative
      advertising, rebates and consumer coupon redemptions as a reduction of net
      sales. For the years ended December 31, 2006 and 2005, the Company had recorded
      approximately $501,000 and $475,000, respectively, as a reduction of revenue
      related to these costs.




SHIPPING
      AND HANDLING COSTS: Shipping and handling costs are classified as a cost of
      sales and those billed to customers are recorded as revenue on the consolidated
      statements of operations.




STOCK-BASED
      COMPENSATION: Effective January 1, 2006, the Company has transitioned from
      Accounting Principles Board Opinion (APB) No. 25 “Accounting for Stock Issued to
      Employees”, to Statement of Financial Accounting Standards No. 123R, “Accounting
      for Stock-Based Compensation” (SFAS No. 123R). Using the prospective method
      under SFAS No. 123R, the Company recorded approximately $247,000 of deferred
      stock-based compensation relating to the unamortized balance of options issued
      prior to 2006.




In
      addition, the Company recognized an additional amount of compensation expense,
      using the Black-Scholes valuation model, of approximately $58,000 in deferred
      stock-based compensation related to options awarded in 2006. In determining
      fair
      market value for options granted during 2006, the Company assumed a risk-free
      rate of 3%, an expected life of 5 years, volatility ranging from 1.49 to 1.60
      and no expected dividends. The weighted average option grant fair value in
      2006
      was $0.17 per share.




-30-


In
      2006,
      the Company recognized stock compensation expense of approximately $193,000
      relating to the amortization of deferred stock-based compensation.




The
      fair
      value of each stock option or warrant granted to non-employees is estimated
      on
      the measurement date using the fair value method of SFAS 123R.




The
      following table reflects proforma supplemental financial information related
      to
      stock-based employee compensation for the year ended December 31,
      2005:




Net
                loss, as reported
            
            $
            (1,833,508
            )Additional
                stock-based employee compensation costs that would have been included
                in
                the determination of net loss if the fair value method (SFAS No.
                123) had
                been applied to all awards
            
            
            (164,584
            )Unaudited
                pro forma net loss, as if the fair value method had been applied
                to all
                awards
            
            $
            (1,998,092
            )Net
                loss per common share, as reported
            
            $
            (0.13
            )Unaudited
                pro forma net loss per common share, as if the fair value method
                had been
                applied to all awards
            
            $
            (0.14
            )




In
      determining fair market value for options granted during 2005, the Company
      assumed a risk-free rate of 3%, an expected life of 5 years, volatility ranging
      from 0.81 to 1.84 and no expected dividends The weighted average option grant
      fair value in 2005 was $0.35 per share.




INCOME
      TAXES: Deferred tax assets and liabilities and the resultant provision for
      income taxes are determined based on the difference between the financial
      statements and tax basis of assets and liabilities using enacted tax rates
      in
      effect for the year in which the differences are expected to reverse. Deferred
      tax assets are recognized when management determines that it is more likely
      than
      not that the asset will be realized (see note 9).




NET
      INCOME (LOSS) PER SHARE: Basic net income (loss) per share and diluted net
      income (loss) per share have been computed based upon the weighted average
      number of common shares outstanding during the year. Assumed common stock
      equivalents were excluded from the net loss per share computations, as their
      effect is antidilutive. Common stock equivalents could potentially dilute basic
      earnings per share in future periods if the Company generates net income. At
      December 31, 2006 and 2005, there were 6,084,793 and 3,410,909 warrants issued,
      respectively, to purchase common stock. At December 31, 2006 and 2005, there
      were 2,231,431 and 1,946,431 options issued to purchase common stock,
      respectively. At December 31, 2006 and 2005, there were 3,109,502 and 3,173,252
      preferred shares, respectively, convertible to 5,440,252 and 5,536,502 common
      shares. At December 31, 2006 and 2005, there were outstanding debentures
      convertible into 6,240,000 and 3,145,455 common shares which may dilute future
      EPS (see note 10).




PRINCIPLES
      OF CONSOLIDATION: The consolidated financial statements include the accounts
      of
      the Company and its wholly owned operating subsidiary, SinoFresh Corporation.
      All inter-company balances and transactions have been eliminated in
      consolidation.




-31-


RECLASSIFICATIONS:
      Certain amounts in the 2005 financial statements have been reclassified to
      conform to the 2006 presentation.




*Recent
      Accounting Pronouncements*




In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      (SFAS) No. 123R, "Share-Based Payment." SFAS No. 123R requires employee stock
      options and rights to purchase shares under stock participation plans to be
      accounted for under the fair value method, and eliminates the ability to account
      for these instruments under the intrinsic value method prescribed by Accounting
      Principles Board (APB) Opinion No. 25, and allowed under the original provisions
      of SFAS No. 123. SFAS No. 123R requires the use of an option pricing model
      for
      estimating fair value, which is amortized to expense over the service periods.
      The requirements of SFAS No. 123R are effective for fiscal periods beginning
      after December 15, 2005. If the Company had applied the provisions of SFAS
      No.123R to the financial statements for the year ending December 31, 2005,
      net
      loss would have increased by approximately and $165,000. SFAS No. 123R allows
      for either prospective recognition of compensation expense or retrospective
      recognition, which may be back to the original issuance of SFAS No. 123 or
      only
      to interim periods in the year of adoption. The Company adopted the prospective
      method for the year ending December 31, 2006.





In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154,
“Accounting Changes and Error Corrections - a replacement of APB No. 20 and
      SFAS
      No. 3”. The pronouncement requires that all voluntary changes in accounting
      principle be reported by retrospectively applying the principle to all prior
      periods that are presented in the financial statements. The statement is
      effective for fiscal years beginning after December 15, 2005. The Company’s
      financial position, results of operations or cash flows will only be impacted
      by
      SFAS No. 154 if it implements changes in accounting principles that are
      addressed by the standard or corrects accounting errors in future periods.
      Adoption of this statement did not have a material impact on the Company’s
      consolidated financial statements.




In
      June
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes-an interpretation of FASB Statement No. 109” (“FIN48”). The
      interpretation contains a two-step approach to recognizing and measuring
      uncertain tax positions accounted for in accordance with SFAS No. 109,
“Accounting for Income Taxes”. The first step is to evaluate the tax position
      for recognition by determining if the weight of available evidence indicates
      that it is more likely than not that the position will be sustained on audit,
      including resolution of related appeals or litigation processes, if any. The
      second step is to measure the tax benefit as the largest amount which is more
      than 50% likely of being realized upon ultimate settlement. The Company is
      still
      assessing the impacts of the adoption of FIN 48.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      purpose of SFAS No. 157 is to define fair value, establish a framework for
      measuring fair value, and enhance disclosures about fair value measurement.
      The
      measurement and disclosure requirements are effective for the Company beginning
      in the first quarter of fiscal year 2008. The Company is currently evaluating
      the impact that SFAS No. 157 will have on its consolidated financial
      statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities”. SFAS No. 159 permits companies to
      choose to measure certain financial instruments and certain other items at
      fair
      value. The standard requires that unrealized gains and losses on items for
      which
      the fair value option has been elected be reported in earnings. SFAS No. 159
      is
      effective for the Company beginning in the first quarter of fiscal year 2008,
      although earlier adoption is permitted. The Company is currently evaluating
      the
      impact that SFAS No. 159 will have on its consolidated financial
      statements.




-32-


**NOTE
      2: Inventories**




Inventories
      at December 31, 2006 consisted of the following:




Finished
                Product - nasal spray
            
            $
            320Finished
                Product - throat spray
            
            
            96,670Raw
                components
            
            
            25,315Less:
                Allowance for excess inventory
            
            
            (96,670
            )Net
                inventory
            
            $
            25,635




The
      Company has an agreement with a third party, who is a registered Federal Drug
      Administration and a cGMP (current Good Manufacturing Practices) qualified
      manufacturer, to manufacture its products. This agreement expires in August
      2008
      unless terminated earlier by either party with 90 days notice.




**NOTE
      3: Furniture and Equipment**




Furniture
      and equipment at December 31, 2006 summarized by major classification is as
      follows:




Furniture
                and Fixtures
            
            $
            75,485Computer
                Equipment
            
            
            73,055Warehouse
                Equipment
            
            
            9,267Less:
                Accumulated Depreciation
            
            
            (109,666
            )$
            48,140




Furniture
      and equipment included computer and warehouse equipment of approximately
      $115,000 acquired under capital lease arrangements at December 31, 2006.
      Depreciation expense for furniture and equipment acquired under capitalized
      lease arrangements was approximately $23,000 and $23,000 for the years ended
      December 31, 2006 and 2005, respectively. Total depreciation expense was
      approximately $31,000 and $31,000 for the years ended December 31, 2006 and
      2005, respectively.




-33-


**NOTE
      4: Patents**




Patents
      as of December 31, 2006 consist of the following:




Patents
            
            $
            3,000,000Less:
                Accumulated Amortization
            
            
            (942,292
            )$
            2,057,708




Patents
      are being amortized over 13 years based on the estimated remaining legal life
      as
      of the date of the acquisition of such patents. Amortization expense was
      approximately $231,000 for each of the years ended December 31, 2006 and 2005,
      respectively.




The
      estimated aggregate amortization expense for patents for each of the succeeding
      five calendar years is approximately as follows:




2007
            
            $
            231,0002008
            
            $
            231,0002009
            
            $
            231,0002010
            
            $
            231,0002011
            
            $
            231,000




The
      original valuation of the Company's patents was preformed by an independent
      valuation specialist and involved the use of estimates related to the fair
      value
      of the patents. As of December 31, 2006, the Company has evaluated it patents
      and has determined that there is no impairment in such asset value **.**




**NOTE
      5: Convertible Debentures, Short-term Notes Payable and Capital Leases**




On
      December 7, 2004, the Company obtained financing in the total amount of
      $1,830,000 through the sale of two-year Senior Secured 6% Convertible Debentures
      (the "Debentures") to various institutional and private investors. The
      Debentures, which matured on December 6, 2006, are collateralized by all of
      the
      assets of the Company and its operating subsidiary, SinoFresh Corporation
      (including the Company's patents and trademarks); and, the Debentures are
      currently convertible at a conversion price of $.25 per share, subject to
      certain anti-dilution provisions contained in the terms of the Debentures (see
      note 10). The Company reserves the right to require conversion of the Debentures
      at any time after an effective registration statement if the closing bid price
      of the Company's stock exceeds 300% of the conversion price then in effect
      for a
      period of 20 consecutive trading days. Interest is payable quarterly in arrears
      in cash; however, the Company may make interest payments with common stock
      so
      long as the market price of the common stock at such time is at least 115%
      of
      the then effective conversion price. The Company's subsidiary, SinoFresh
      Corporation, entered into a guaranty agreement with the investors, guaranteeing
      the Company's performance under the financing documents.




As
      an
      inducement to the Debenture holders, 1,663,645 warrants were issued and are
      currently exercisable at a price of $0.25 ,
      subject to certain anti-dilution provisions contained in the terms of the
      Debentures. Debenture proceeds allocated to these warrants totaled $610,000 and are
      reflected as a debt discount against the value of the total Debenture proceeds
      (see note 6). The debt discount was amortized to interest expense over the
      original 24-month term of the Debentures.




-34-


In
      connection with the debentures, the Company issued 320,000 warrants to a
      placement agent. These warrants were valued at approximately $268,000 and were
      amortized to interest expense over the original 24-month term of the debentures.
      The Company also paid approximately $142,000 for placement agent and other
      closing costs related to the Debentures. These costs were recorded as deferred
      debt issuance costs and were amortized to interest expense over the original
      24
      month term of the Debentures.




In
      accordance with Emerging Issues Task Force Issue Nos. 98-5 and 00-27, the
      convertible debentures were deemed to contain a beneficial conversion feature.
      The beneficial conversion feature for the debenture transaction was estimated
      to
      be approximately $1,600,000; however, the recorded amount was limited to the
      proceeds of the issuance, less the allocated value of warrants, or $1,220,000.
      Due to the Debentures being immediately convertible, the beneficial conversion
      feature was fully expensed to interest expense as of the date of
      issuance.




Under
      the
      debentures, we are prohibited from taking certain corporate actions without
      the
      written consent of the holders of the debentures, including the making of
      distributions on our capital stock; the redemption or repurchase of our
      securities; the creation of any liability or lien on our assets except
      borrowings existing or committed on December 6, 2004, obligations to trade
      creditors or financial institutions incurred in the ordinary course of business,
      and loans to repay the debentures; the sale or other disposition of any
      significant portion of our assets outside of the ordinary course of business;
      the loaning or the advancing of any funds or credit, except in connection with
      any such items in existence or committed on December 6, 2004, or made in the
      ordinary course of business, or that are not in excess of $50,000 if made
      outside the ordinary course of business; and create any contingent liabilities
      except those that are in existence on December 6, 2004 or are made in the
      ordinary course of business.




On
      December 6, 2006 the Company
      defaulted on its principal and interest obligations due under the debenture
      agreement. In accordance with the debenture agreement, upon default, the
      interest rate increased to 15% as of the default date and the Company also
      incurred a penalty of $397,490 which equated to 25% of the outstanding principal
      and interest as of the default date. The penalty is recorded as a liability
      under accrued expenses.




On
      June
      9, 2006, the Company entered into an unsecured loan agreement with a
      non-affiliated third party in the amount of $100,000. According to the loan
      provisions, the principal and interest totaling $120,000 was due on July 31,
      2006. The Company is currently in default on the repayment of this loan and
      intends to enter into negotiations with the note holder to redefine the
      repayment provisions.




At
      December 31, 2006, debt obligations consisted of the following:




Secured
                convertible debentures
            
            $
            1,560,000Short-term
                note payable
            
            
            100,000Capital
                lease obligations
            
            
            37,790$
            1,697,790Less
                current portion
            
            
            (1,683,530
            )$
            14,260




-35-


Future
                minimum maturities of debt obligations are as follows:Year
                Ended2007
            $
                1,683,5302008
            $
                14,260





**NOTE
      6: Stockholders' Equity**




**Common
      Stock**




The
      holders of SinoFresh's common stock are entitled to equal dividends and
      distributions per share with respect to the common stock when, as and if,
      declared by the board of directors from funds legally available therefore.
      No
      holder of any shares of common stock has a pre-emptive right to subscribe for
      any of our securities, nor are any common shares subject to redemption or
      convertible into other securities. Upon our liquidation, dissolution or
      winding-up, and after payment of creditors and preferred shareholders, if any,
      our assets will be divided pro rata on a share-for-share basis among the holders
      of the shares of common stock. Each share of the common stock is entitled to
      one
      vote with respect to the election of any director or any other matter upon
      which
      shareholders are required or permitted to vote. We have authorized 500,000,000
      shares of no par value common stock. As of December 31, 2006, there are
      16,389,555 shares issued and outstanding.




During
      2006, 870,000 common shares were issued in exchange for various services,
      135,000 common shares were issued in settlement of litigation and 103,076 shares
      were issued to the Company’s employee 401(K) plan. In addition, 31,250 Series A
      preferred shares were converted into 31,250 shares of common stock, 32,500
      Series C preferred shares were converted into 65,000 shares of common stock
      and
      $170,000 in convertible debentures were converted into 680,000 shares of common
      stock.




**Preferred
      Stock**




Our
      Articles of Incorporation authorize the issuance of up to 200,000,000 shares
      of
      "blank check" preferred stock with such rights and preferences as our board
      of
      directors, without further shareholder approval, may determine from time to
      time. Of these authorized preferred shares, SinoFresh has designated 858,170
      shares as Series A preferred stock, 1,500,000 shares as Series B preferred
      stock, and 1,250,000 shares as Series C preferred stock. All preferred stock
      ranks senior to common stock as to payment of dividends and distribution of
      assets. Series A and B preferred stock ranks junior to Series C preferred stock,
      and Series A preferred stock ranks junior to Series B preferred stock, as to
      payment of dividends and distribution of assets. All three series of preferred
      stock have a liquidation value of $2.00 per share. Series A preferred shares
      are
      convertible into common stock on a one-for-one basis, while Series B and C
      preferred shares are convertible on a two-for-one basis, and, all have voting
      rights equivalent to the common stock into which they are convertible. In
      September 2004, the shares of common stock underlying the outstanding preferred
      stock became eligible for resale under Rule 144.




-36-


**Convertible
      Debentures**




As
      of
      December 31, 2006, the Company had $2,006,352 total outstanding (including
      principal, interest and penalties) in connection with convertible debenture
      agreements which are eligible for conversion into 8,025,408 shares of common
      stock (see notes 5 and 10).




**Warrants
      and Stock Options**




*Warrants*




In
      connection with the debenture financing, we issued to the debenture holders
      and
      a placement agent warrants to purchase shares of common stock. The warrants,
      which expire on December 6, 2009, contain anti-dilution provisions under which
      the number of shares issuable upon exercise of the warrants and the exercise
      price will be adjusted upon the issuance of common stock or securities
      convertible into or exercisable for common stock at prices lower than the then
      effective exercise price of the warrants, the occurrence of stock splits, stock
      distributions, and other corporate events. As a result of dilutive issuances
      during 2006, outstanding warrants connected with this financing increased from
      1,951,645 warrants to 4,626,348 warrants and had exercise prices decrease from
      between $0.60 and $0.55 per share to $0.25 per share.




We
      have
      outstanding additional warrants to purchase a total of 1,458,445 shares of
      common stock. The warrants were issued in private placements and to consultants
      and vendors in respect of services. The warrants have exercise prices ranging
      from $0.29 to $7.00 per share, and expire at varying times from February 2007
      through August 2010. The warrants contain registration rights.




The
      weighted average exercise price of the Company’s 6,084,793 outstanding warrants
      as of December 31, 2006 is $0.90.




*Stock
      Options*




In
      2006,
      a 5-year non-plan option for 40,000
      shares was issued in connection with a lawsuit settled at the end of 2005.
      The
      option vested
      on the date of grant. In addition, 100,000 non-plan options previously issued
      to
      a consultant were cancelled because the performance criteria for vesting were
      not met.




We
      have
      additional outstanding options to purchase 317,681 shares of common stock to
      independent consultants and other service providers at exercise prices ranging
      from $0.55 to $1.50 per share. All of these options are currently exercisable
      and expire at varying times between September 2008 and December
      2010.




The
      weighted average exercise price of the Company’s 357,681 outstanding non-plan
      stock options as of December 31, 2006 is $0.84.




-37-


*Plan
      Stock Options*




We
      have
      reserved for options under our 2002 Stock Option Plan 3,000,000 shares of common
      stock. As of December 31, 2006, there were outstanding options under the Plan
      for 1,873,750 shares of common stock, at exercise prices ranging from $0.25
      to
      $1.00 per share. Stock options issued to employees are valued based on the
      Black-Scholes method and are expensed over the life of the option.




Plan
      stock option activity was as follows during the years ended December 31, 2006
      and 2005.




Options
            
            Weighted
                Average
              Exercise
                PriceOutstanding
                at December 31, 2004
            
            
            1,304,750
            
            $
            1.01Options
                granted
            
            
            266,500
            
            $
            0.51Exercised
            
            
            --
            
            
            --Expired
                or cancelled
            
            
            (42,500
            )
            $
            0.97Outstanding
                - December 31, 2005
            
            
            1,528,750
            
            $
            0.92Options
                granted
            
            
            345,000
            
            $
            0.25Exercised
            
            
            --
            
            
            --Expired
                or cancelled
            
            
            --
            
            
            --Outstanding
                - at December 31, 2006
            
            
            1,873,750
            
            $
            0.33
                (1
            )Exercisable
                as of December 31, 2006
            
            
            1,197,754
            
            $
            0.38





(1)
      During 2006, the Company repriced 1,265,000 options to twelve employess and
      directors that were issued prior to 2006. These options originally had exercise
      prices ranging from $0.57 to $2.00 per share and were repriced to $0.25 per
      share. No significant incremental compensation cost was incurred as a result
      of
      these modifications.





Options
      issued in 2006 vest ratably over three years and expire in five years. There
      was
      no intrinsic value associated with outstanding plan options as of December
      31,
      2006.





-38-


The
      following table summarizes information about options outstanding at December
      31,
      2006:





**Exercise**
              **Price**
            **Number
                of Shares**
            **Weighted
                Average Contractual Life (in years)**
            **Exercisable
                Options**$0.25
            1,660,000
            2.63
            987,337$0.57
            10,000
            3.08
            6,667$1.00
            203,750
            1.67
            203,7501,873,750
            2.53
            1,197,754





As
      of
      December 31, 2006, compensation costs related to nonvested plan options totaled
      approximately $176,000. The weighted average period over which the total
      compensation cost related to nonvested plan options is expected to be recognized
      is 2.94 years.





**NOTE
      7: Related Party Information**




A
      director of the Company is the principal owner of a law firm that provided
      services to the Company in 2006. The expenses incurred to that law firm were
      approximately $74,000 and $20,000 for the years ended December 31, 2006 and
      2005, respectively. As of December 31, 2006, the Company had $48,917 recorded
      in
      accrued liabilities due to this firm.




The
      Company leases its current facility from an entity currently controlled by
      one
      of the Company's Directors. Rent related to this facility totaled $77,000 for
      each of the years ended December 31, 2006 and 2005 (see note 8). As of December
      31, 2006, the Company had approximately $42,000 recorded in accounts payable
      due
      to this entity.




**NOTE
      8: Commitments and Contingencies**




The
      Company entered into a five-year agreement to lease a new headquarters facility
      for a base rate of $5,998 per month plus sales tax, effective April 2003, but
      did not move in or incur expenses until August 2003. The property is leased
      from
      a company owned by an officer/shareholder of the Company. The lease provides
      for
      two additional five-year terms with the Company. The Company expensed
      approximately $77,000 for each of the years ended December 31, 2006 and 2005,
      related to this lease.




The
      Company is subject to operating leases for the use of certain office equipment.
      Rental expense under these leases, amounted to approximately $7,000 and $11,000
      for the years ended December 31, 2006 and 2005, respectively. Future minimum
      noncancellable lease payments under the Company’s operating leases are as
      follows:




2007
            $ 
                77,0002008
            $ 
                45,000


-39-




The
      Company has an employment agreement with its Chief Executive Officer (CEO),
      which provides, among other things, that if the Company issues additional
      shares, the CEO shall receive options for the purchase of shares of the Company
      such that the CEO shall maintain no less than 15% ownership of the Company.




Cabral
      v. SinoFresh Laboratories, Inc., Charles Fust, et. al. Circuit Court of
      Jefferson County, Alabama (CV026963). The
      Company’s predecessor, SinoFresh HealthCare, Inc., a Delaware corporation,
      acquired certain assets and liabilities of SinoFresh Laboratories, Inc., an
      Alabama corporation (“Labs”), effective November 15, 2002. The sale transaction
      was approved by majority vote of Labs’ shareholders. Dr. John Cabral, a Labs
      shareholder filed a lawsuit on November 15, 2002, based on several claims
      including faulty notice for the shareholders meeting, breach of fiduciary duty,
      conflicts of interest by the directors, minority shareholder oppression and
      a
      claim for breach of a consulting agreement. Labs and the individual defendants
      deny any wrong doing in the case and will seek the least costly solution to
      this
      matter. Accordingly, it is estimated that the likely outcome of this case will
      result in a settlement of not more than $225,000. The Company has agreed to
      indemnify Labs for costs associated with this lawsuit not to exceed
      $300,000.




From
      time
      to time, the Company is subjected to other litigation or proceedings in
      connection with its business, as either a plaintiff or defendant. There are
      no
      such pending legal proceedings to which the Company is a party that, in the
      opinion of management, is likely to have a material adverse effect on the
      Company's business, financial condition or results of operations.




The
      Company has a retirement plan, which management
      believes qualifies as a deferred compensation plan (the "plan") under Section
      401(k) of the Internal Revenue code. All employees over the age of 18 are
      eligible to participate in the Plan once they have been employed for a minimum
      of 90 days. The Company contributes 3% of the eligible participant's W-2
      wages in the form of either cash or Company stock. Company contributions charged
      to wages and related expenses for the year ended December 31, 2006 and 2005
      approximated $16,000 and $26,000, respectively.




**NOTE
      9: Income Taxes**




At
      December 31, 2006, net operating losses available to be carried forward for
      federal income tax purposes are approximately $11 million expiring in various
      amounts through 2026. Utilization of SinoFresh's net operating losses may be
      subject to substantial annual limitation in the event of ownership changes
      under
      the provisions of the Internal Revenue Code and similar state provisions. Such
      annual limitation could result in the expiration of the net operating loss
      before utilization.




The
      following table is a reconciliation of the estimated U.S. statutory income
      tax
      rate and the effective income tax rate included in the accompanying financial
      statements for the years ended December 31, 2006 and 2005:


2006
              
              2005Estimated
                  statutory tax rate
              
              
              (37.6
              %)
              
              (37.6
              %)Increase
                  (reduction) in rates resulting from:Other
                  non-deductible
              
              
              0.3
              
              
              0.4Losses
                  for which no benefit is recorded
              
              
              37.3
              
              
              37.2Effective
                  tax rate
              
              
              0.0
              %
              
              0.0
              %





The
      Company had a deferred tax asset of approximately $5.1 million and $3.3 million
      as of December 31, 2006 and 2005, respectively, which primarily consisted of
      the
      potential benefit related to its net operating loss carryforwards. A valuation
      allowance is provided to reduce the deferred tax asset to the amount that is
      estimated more likely than not to be realized. The Company has established
      a
      valuation allowance for the entire deferred tax asset due to its recurring
      losses since the Company’s inception. The Company’s valuation allowance
      increased approximately $1.8 million during the year ended December 31,
      2006.





No
      income
      taxes were paid during 2006 or 2005.





-40-


**NOTE
      10: Subsequent Events**




In
      February and March 2007, the Company issued a total of 500,000 common shares
      at
      $0.09 per share, to a service provider. In addition, a five-year warrant was
      granted to a service provider to purchase 100,000 shares of common stock at
      an
      exercise price of $.09 per share. The warrant which was granted in February
      2007, vested immediately.




In
      March
      2007, Stacey Maloney-Fust, P. Robert DuPont and Stephen Bannon resigned from
      the
      board of directors. The remaining directors elected Thomas Fitzgerald, Bruce
      Simpson and Raymond Zipprich to serve on the board of directors effective in
      March 2007.




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




Not
      Applicable.




**ITEM
      8A.**  **CONTROLS
      AND PROCEDURES** ****




As
      of the
      end of the period covered by this report, SinoFresh carried out an evaluation
      of
      the effectiveness of the design and operation of SinoFresh's disclosure controls
      and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange
      Act of 1934). This evaluation was carried out under the supervision and with
      the
      participation of SinoFresh's management, including SinoFresh's Chief Executive
      Officer and Chief Financial Officer, who concluded that SinoFresh's disclosure
      controls and procedures were effective as of December 31, 2006.




During
      the fourth fiscal quarter of the period covered by this report, there were
      no
      changes in SinoFresh's internal control over financial reporting that materially
      affected or is reasonable likely to materially affect SinoFresh's internal
      control over financial reporting.




**ITEM
      8B.**  **OTHER
      INFORMATION** ****




None




-41-


**PART
      III******




**ITEM
                9.**
            **DIRECTORS
                AND EXECUTIVE OFFICERS******




SinoFresh's
      directors and executive officers are as follows:




**Name**
            **Position**
            ******Appointment**Charles
                A. Fust
            Chairman,
                Chief Executive Officer, Director
            November,
                2002Scott
                M. Klein
            Chief
                Financial Officer, Secretary
            November,
                2004Stacey
                Maloney-Fust
            Senior
                Vice President, Assistant Secretary, Director
            September,
                2003P.
                Robert DuPont
            Director
            November,
                2002Stephen
                Bannon
            Director
            September,
                2003David
                Otto
            Director
            October,
                2002


***Charles
      A. Fust, Chief Executive Officer (CEO) and Chairman of the Board of Directors.*** Mr.
      Fust,
      age 63, is a chemical engineer, whose research has resulted in various domestic
      and international patents, including the patents underlying the SinoFresh nasal
      product. Mr. Fust began the development of SinoFresh's first product in 1989.
      His expertise in the health care community has provided him with the opportunity
      to chair various health care boards, mainly Otorhinolaryngology related. Mr.
      Fust's business background covers ownership and management in international
      companies. Mr. Fust has been the Chief Executive Officer and Chairman of
      SinoFresh Laboratories, LLC from 1999 until acquired in 2002, Chief Executive
      Officer and Chairman of SinoFresh from November 2002 to the present. He holds
      a
      bachelor degree in Chemical Engineering from Auburn University and has a
      professional affiliation with the American Association of Pharmaceutical
      Scientists. Mr. Fust is the spouse of Stacey Maloney-Fust.




***Scott
      M. Klein, Chief Financial Officer and Secretary.*** Mr.
      Klein, age 43, has 20 years experience in financial administration for private
      industry and in public accounting. Mr. Klein joined SinoFresh in April, 2004
      as
      a Controller and was promoted to Chief Financial Officer in November, 2004.
      Prior to joining SinoFresh, Mr. Klein served three years as the CFO for ParView,
      Inc., a privately held manufacturer of GPS technology for the golf industry.
      From 1992 to 2001, Mr. Klein was the Corporate Controller for Elcotel, Inc.,
      a
      publicly-held manufacturer of computerized "smart" pay telephones. Prior to
      his
      private industry experience, Mr. Klein spent five years as an auditor in public
      accounting at both Ernst & Young and Grant Thornton. Mr. Klein is a
      Certified Public Accountant, licensed in the State of Florida and has a degree
      in Managerial Accounting from the University of Wisconsin - Stevens
      Point.




***Stacey
      Maloney-Fust, Senior Vice President, Assistant Secretary, Director.*** Ms.
      Maloney-Fust, age 42, joined SinoFresh HealthCare, Inc. in July 2003. She has
      15
      years experience in the financial industry. For several years in New York City
      she worked as an Executive Assistant for the President of AIG Global Investors,
      Inc., and as an Executive Assistant for the General Partner of Sandler Capital
      Management.  Ms. Fust passed the NASD Series 7, 63, and 65 licensing
      examinations and became a Financial Advisor for Salomon Smith Barney and most
      formerly with UBS before starting with SinoFresh in the second half of 2003.
      Ms.
      Fust is currently enrolled in pre-med at the University of South Florida and
      is
      the wife of Charles Fust.




-42-


***P.
      Robert DuPont, Director.*** Mr.
      DuPont, age 42, has over twenty years of experience in the bio-pharmaceutical
      and life sciences industries. Mr. DuPont resigned his position as Executive
      Vice
      President of SinoFresh in August 2005 in order to start up a new company, which
      provides specialized coating materials designed to detect hazardous material
      leaks. Mr. DuPont was with SinoFresh and its predecessors since June of 2001.
      Prior to joining SinoFresh, Mr. DuPont founded and acted in the capacity of
      CEO
      of UltraPure Group Limited. UltraPure Group Limited provided integrated services
      to multi-national pharmaceutical companies, which included design services,
      regulatory consultation, and contract staffing. He founded the company in 1993
      and sold his interest in the company in 2001. He is a member of the
      International Society of Pharmaceutical Engineers and has presented various
      lectures on the topic of pharmaceutical process design. Mr. DuPont is also
      a
      member of the American Association of Pharmaceutical Scientists.




***Stephen
      Bannon, Director.*** Mr.
      Bannon, age 53, has been a director of SinoFresh since September 2003. He is
      currently associated with Genius Products. Prior to his affiliation Genuis
      Products, Mr. Bannon was employed at Jeffries & Company, Inc. from 2000 to
      2002, with "The Firm" from 2002 to 2003 and with American Vantage Media from
      2003 to 2006 Prior to this, Mr. Bannon was employed by SG Cowan Securities
      Corporation from 1998 to 2000. Mr. Bannon received his MBA from Harvard
      University. He received his undergraduate degree from Virginia Polytechnical
      Institute's College of Architecture and has a graduate degree in Government
      from
      Georgetown University.




***David
      Otto, Director.*** Mr.
      Otto,
      age 48, has been a director of SinoFresh since September 2003. In July of 1999,
      Mr. Otto founded The Otto Law Group, PLLC, in Seattle, Washington. Mr. Otto
      is
      currently a member of the Board of Directors of Veritas Solutions, Inc.,
      Vocalscape Networks, Inc., Renaissance Window Fashions, Inc., Avisere, Inc.,
      TechAlt, Inc., Saratoga Capital Partners, Inc., Itec Environmental Group, Inc.
      and Cambridge Partners, LLC.  Mr. Otto is admitted to practice law in New
      York and Washington.  Mr. Otto graduated from Harvard University in 1981
      with his B.A. in Government and was the recipient of the Harvard-Shrewsbury
      Fellowship, and his J.D. from Fordham University School of Law in 1987.




Our
      directors are elected at the annual meeting of the shareholders and serve until
      their successors are elected and qualified, or their earlier resignation or
      removal. Officers are appointed by the board of directors and serve at the
      discretion of the board of directors or until their earlier resignation or
      removal.




**Director's
      Compensation**




The
      Company does not currently have a compensation plan for persons serving as
      directors of the Company. However, in March 2006, the board of directors voted
      to approve directors fees for services performed prior to 2006, in the amount
      of
      $42,500, payable in the form of common stock of the Company.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act of 1934 requires directors and executive
      officers, and persons who own 10% or more of SinoFresh common stock, to file
      reports of ownership and changes in ownership with the SEC. Officers, directors
      and greater than 10% stockholders are required to furnish the Company with
      copies of all Section 16(a) forms they file. Based solely on a review of the
      copies of such forms furnished to the Company, SinoFresh has determined that
      a
      Form 4 related to the grant of stock options was filed late for our Chief
      Executive Officer, Chief Financial Officer, Senior Vice President, the Executive
      Vice President and our two outside directors.




-43-


**Code
      of Ethics for Chief Executive Officer and Senior Financial Officers**




The
      Company has adopted a code of ethics for the CEO and Senior Financial Officers
      (Code of Ethics) which is required to be signed by each such officer, and is
      maintained on file by the Company. A copy of the Code of Ethics will be provided
      to you, free of charge, upon your written request to the Company sent to the
      attention of Investor Relations, SinoFresh HealthCare, Inc., 516 Paul Morris
      Drive, Englewood, Florida 34223.




If
      the
      Company makes any substantive amendments to the Code of Ethics, or grants any
      waiver, including any implicit waiver, from a provision of the Code of Ethics
      to
      the Chief Executive Officer or the Chief Financial Officer, the Company will
      disclose the nature of such amendment or waiver in a report on Form 8-K.




**Audit
      Committee and Audit Committee Financial Expert**




Three
      members of the Company's Board of Directors, Charles Fust, P. Robert DuPont
      and
      Stacey Maloney-Fust, currently serve as the audit committee. The Audit Committee
      does not currently have a financial expert. It is the company’s goal to add at
      least one director who is a financial expert, but the Company has been unable
      to
      identify an acceptable candidate who meets this requirement who is willing
      to
      serve as a director.




**ITEM
      10.**  **EXECUTIVECOMPENSATION** ****


The
        following table sets forth all the compensation earned by the Company's Chief
        Executive Officer and each other officer who earned greater than $100,000
        in
        total salary and bonuses during the 2006 fiscal year (collectively, the "Named
        Executive Officers").
 
 **SUMMARY
        COMPENSATION TABLE**
 
 **Name
                  and Principal**
                **Position**
              **Fiscal
                  Year**
              **Salary**
              **Bonus**
              **Stock
                  Awards**
              **Option
                  Awards**
              **Non-Equity
                  Incentive Plan Compensation**
              **Change
                  in Pension Value and Nonqualified Deferred Compensation
                  Earnings**
              **All
                  other Compensation**
              **Total**CEO
                  and Chairman Charles A. Fust
              2006
                2005
                2004
              $180,000**(1)**
                $180,000
                $180,000
              $0
                $100,000**(2)**
                $0
              $0
                $0
                $0
              $16,791**(3)**
                $8,706**(4)**
                $0
              N/A
              N/A
              $7,796**(5)**
                $14,160**(5)**
                $15,286**(5)**
              $204,587
                $302,866
                $195,286CFO
                  and Secretary Scott M. Klein**(6)**
              2006
                2005
                2004
              $120,000**(7)**
                $110,000
                $62,141
              $0
                $25,000**(2)**
                $10,000
              $0
                $0
                $0
              $44,932**(8)**
                $41,183**(9)**
                $73,096**(10)**
              N/A
              N/A
              $0
                $0
                $0
              $164,932
                $176,183
                $145,237
 ___________________________
 
 (1)
              Includes
                  $42,500 accrued for 2006, but not
                  paid.
 (2)
              This
                  amount was accrued for 2005, but not paid as of December 31,
                  2006.
 (3)
              Stock
                  options to purchase 125,000 common shares were issued in 2006 to
                  Mr. Fust.
                  These options vest over three years and are exercisable at a price
                  of
                  $0.25. The options expire five years from the date of grant. The
                  Company
                  recorded compensation expense of $7,294 related to these options
                  and
                  $9,497 related to options issued in prior years based on the fair
                  value as
                  determined by the Black-Scholes valuation model as of the date
                  of the
                  grant and amortized over the life of the
                  grants.
 (4)
              Stock
                  options to purchase 75,000 common shares were issued in 2005 to
                  Mr. Fust.
                  These options vest over three years and are exercisable at a price
                  of
                  $0.25. The options expire five years from the date of grant. The
                  Company
                  recorded compensation expense of $8,706 related to these options
                  based on
                  the fair value as determined by the Black-Scholes valuation model
                  as of
                  the date of the grant and amortized over the life of the
                  grant.
 (5)
              Other
                  compensation consists of car allowance and club dues in accordance
                  with
                  Mr. Fust’s employment agreement as described below in “Description of
                  Additional Material Factors”. Mr.
                  Fust agreed to discontinue his car allowance beginning August 1,
                  2006.
 (6)
              Mr.
                  Klein served as the Company's Controller from April 2004 until
                  assuming
                  the Chief Financial Officer position in November
                  2004.
 (7)
              Includes
                  $11,333 accrued for 2006, but not
                  paid.
 (8)
              Stock
                  options to purchase 50,000 common shares were issued in 2006 to
                  Mr. Klein.
                  These options vest over three years and are exercisable at a price
                  of
                  $0.25. The options expire five years from the date of grant. The
                  Company
                  recorded compensation expense of $476 related to these options
                  and $44,456
                  related to options issued in prior years based on the fair value
                  as
                  determined by the Black-Scholes valuation model as of the date
                  of the
                  grant and amortized over the life of the
                  grants.
 (9)
              Stock
                  options to purchase 50,000 common shares were issued in 2005 to
                  Mr. Klein.
                  These options vest over three years and are exercisable at a price
                  of
                  $0.25. The options expire five years from the date of grant. The
                  Company
                  recorded compensation expense of $655 related to these options
                  and $40,528
                  related to options issued in prior years based on the fair value
                  as
                  determined by the Black-Scholes valuation model as of the date
                  of the
                  grant and amortized over the life of the
                  grants.
 (10)
              Stock
                  options to purchase 200,000 common shares were issued in 2004 to
                  Mr.
                  Klein. Options to purchase 75,000 shares were vested immediately
                  and the
                  remaining options vest over three years. The options are exercisable
                  at a
                  price of $0.25 and expire five years from the date of grant. The
                  Company
                  recorded compensation expense of $73,096 related to these options
                  based on
                  the fair value as determined by the Black-Scholes valuation model
                  as of
                  the date of the grant and amortized over the life of the
                  grants.
  -44-
 **Grants
        of Plan Based Awards**
 
 The
        Company's Compensation Committee and the Board of Directors currently administer
        the 2002 Stock Option Plan (Plan). The Plan provides for the grant of options
        (incentive and non-statutory), to officers, employees and independent
        contractors capable of contributing to the Company's performance. The Company
        has reserved an aggregate of 3,000,000 shares of common stock for grants
        under
        the Plan. Incentive stock options may be granted only to employees eligible
        to
        receive them under the Internal Revenue Code of 1986, as amended. As of December
        31, 2006, the Company had outstanding non-statutory options for 1,873,750
        shares
        of the Company's common stock. These options have a term of five years from
        the
        date of grant, unless earlier terminated in accordance with the provisions
        of
        the Plan and applicable stock option agreements. The exercise prices of all
        of
        the options granted as of December 31, 2006 range from $0.25 to $1.00 per
        share.
        The options generally have scheduled vesting except for options for 451,000
        shares, which either vested immediately upon grant or were subsequently
        accelerated by the Board. Upon expiration or termination of unexercised options,
        the unpurchased shares subject to such options will again be available for
        purposes of the Plan.
  **Description
        of Additional Material Factors**
  Charles
        Fust is employed as the Company's Chief Executive Officer under an employment
        agreement dated December 1, 2002. The employment agreement has a term of
        five
        years and is renewable upon mutual agreement of the parties. Under that
        agreement, he is entitled to a base salary, as adjusted, of $180,000 annually
        and 5.0% of net earnings before taxes. In addition, Mr. Fust is entitled
        to
        receive a car allowance of $1,000 per month and certain club membership dues.
        The agreement also provides that the Company and Mr. Fust enter into a stock
        option agreement under which he would be provided anti-dilution rights so
        that
        Mr. Fust's equity ownership of the Company, on a fully diluted basis, will
        be no
        less than 15% so long as the total outstanding shares on a fully diluted
        basis
        are less than 100,000,000. The agreement also prohibits Mr. Fust from competing
        with the Company for a period of three years upon cancellation of the employment
        agreement.
  The
        Company has an employment agreement with Scott M. Klein, the Chief Financial
        Officer and Secretary, which provides for a 3-year term commencing as of
        November 1, 2004 with an annual salary of $110,000, increasing to $120,000
        on
        January 1, 2006 and $135,000 on January 1, 2007. In connection with the
        employment agreement, Mr. Klein was granted a 5-year option for 150,000 shares
        of common stock with an exercise price of $.75 per share (which was the closing
        sale price of the stock on November 1, 2004), vesting immediately as to 75,000
        shares and the remaining 75,000 shares will vest ratably over 3 years commencing
        on November 1, 2005. In addition, Mr. Klein will be granted additional 5-year
        options for 50,000 shares on November 1, 2005 and on November 1, 2006, each
        at
        an exercise price that is the closing sale price of the Company's common
        stock
        on such dates, and these additional options will vest ratably over three
        years
        commencing on the date of grant.
  **Director's
        Compensation**
  For
        2005,
        the Board approved the payment of $2,500 per calendar quarter to be paid
        to each
        of the outside Directors to be paid in the form of common stock. There was
        no
        compensation plan approved for Directors for 2006. Directors may also serve
        the
        company in other capacities as an officer, agent or otherwise, and may receive
        compensation for their services in such other capacity. Board members are
        reimbursed for reasonable travel expenses.
  **Outstanding
        Equity Awards at Fiscal Year-End**
  The
        Company did not offer equity awards during fiscal year 2006.
  -45-
 **Aggregate
        Stock Option Exercises and Year-End Option Value Table**
  The
        following table sets forth certain information concerning option exercises
        in
        fiscal 2006, the number of stock options held by the Named Executive Officers
        as
        of December 31, 2006 and the value (based on the fair market value of a share
        of
        stock at fiscal year-end) of in-the-money options outstanding as of such
        date.
  **Number
                  of Shares Acquired on**
              
              **Value**
              
              **Number
                  of Unexercised**
                **Options
                  Held at Fiscal Year-End(#)**
              
              **Value
                  of Unexercised**
                **In-the-Money
                  Options at Fiscal Year-End****(1)****Name**
              
              **Exercise
                  (#)**
              
              **Realized
                  ($)**
                **(1)**
              
              **Exercisable**
              
              **Unexercisable**
              
              **Exercisable**
              
              **Unexercisable**Charles
                  A. Fust
              
              -0-
              
              N/A
              
              25,000
              
              175,000
              
              N/A
              
              N/AScott
                  M. Klein
              
              -0-
              
              N/A
              
              175,001
              
              124,999
              
              N/A
              
              N/A
 ___________________________
 
 (1)
              Options
                  are in-the-money if the fair market value of the common stock exceeds
                  the
                  exercise price of the option. The closing sale price for the Company's
                  common stock as reported by the NASDAQ Trading and Market Services
                  on
                  December 31, 2006 was $0.07 per
                  share.
 
  **Stock
        Options Granted in Fiscal 2006**
  The
        following table sets forth certain information concerning grants of options
        made
        during fiscal 2006 to the Named Executive Officers.
  **Name**
              
              **Number
                  of Securities Underlying Options Granted**(#)
              
              **Percent
                  of Total Options Granted to Employees in 2006**
              
              **Exercise
                  or Base Price ($/SH)**
              
              **Grant
                  Value Based on Black-Scholes Valuation Method**
              
              **Expiration
                  Date**Charles
                  A. Fust
              
              125,000
              
              36%
              
              $0.25
              
              $21,881
              
              2/1/11Scott
                  M. Klein
              
              50,000
              
              14%
              
              $0.25
              
              $5,710
              
              11/1/11
  **REPORT
        OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
        COMPENSATION**
 
 **General**
  During
        fiscal year 2006 and currently, Charles Fust, P. Robert DuPont and Stacey
        Maloney-Fust constituted the Compensation Committee. Mr. Fust and Ms.
        Maloney-Fust are employee-directors of the Company
  The
        Board
        of Directors, upon recommendations made by the Compensation Committee,
        determines option grants. The Board monitors corporate performance and its
        relationship to compensation for executive officers and makes determinations
        concerning matters of executive compensation. The Compensation Committee
        determines salaries and incentive cash bonuses for non-executive
        employees.
 
 -46-
 **Compensation
        Philosophy**
  The
        Company has developed and implemented a compensation program that is designed
        to
        attract, motivate, reward and retain the broad-based management talent required
        to achieve the Company's business objectives and increase shareholder value.
        There are two major components of the Company's compensation program: base
        salary and incentives, each of which is intended to serve the overall
        compensation philosophy.
  **Base
        Salary**
  The
        Company's salary levels for executive officers, including its Chief Executive
        Officer, are intended to be consistent with competitive pay practices of
        similarly-sized companies within the industry. In determining executive
        officers' salaries, the board considers level of responsibility, competitive
        trends, the financial performance and resources of the Company, general economic
        conditions, as well as factors relating to the particular individual, including
        overall job performance, level of experience and prior service, ability,
        and
        knowledge of the job.
  **Incentives**
  Incentives
        consist of stock options and performance bonuses paid in cash. The board
        strongly believes that the compensation program should provide employees
        with an
        opportunity to increase their ownership and potential for financial gain
        from
        increases in the Company's stock price. This approach closely aligns the
        best
        interests of shareholders and, executives and employees. Therefore, executives
        and other employees are eligible to receive stock options, giving them the
        right
        to purchase shares of the Company's common stock at a specified price in
        the
        future. Currently, upon recommendations made by the Compensation Committee,
        the
        Board determines stock option grants. The grant of options is based primarily
        on
        an individual's past performance and potential future contribution to the
        Company's growth and profitability.
  Respectfully
        submitted,
 
 THE
        COMPENSATION COMMITTEE
 
 
 
 Charles
        A. Fust
 Chairman




-47-


**ITEM
                11.**
            **SECURITYOWNERSHIPOF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                RELATED STOCKHOLDER MATTERS******




The
      following table sets forth certain information regarding the beneficial
      ownership of our shares of voting stock as of March 20, 2007 by: (i) each person
      who is known by us to beneficially own more than 5% of the issued and
      outstanding shares of common stock; (ii) the Chairman and Chief Executive
      Officer; (iii) the directors; and (iv) all of the executive officers and
      directors as a group. For purposes of the beneficial ownership calculations
      below, the Series A preferred stock, which is convertible into common stock
      on a
      1-for-1 basis, and the Series B and Series C preferred stock, which are
      convertible into common stock on a 2-for-1 basis are included on an as converted
      basis, such that the total issued and outstanding voting stock becomes
      22,329,807. Unless otherwise indicated, the persons named below have sole voting
      and investment power with respect to all shares beneficially owned by them,
      subject to community property laws where applicable. Ownership information
      obtained, where necessary, through a combination of a review of previous SEC
      filings, review of stockholder records or discussions with expected owners
      of
      greater than 5% of our stock.




**Name
                of Beneficial Owner****(1)(2)**
            **No.
                of shares**
            **Percentage**Charles
                A. Fust, Chairman and Chief Executive Officer
            8,111,143(3)
            36.08%Charles
                Fust Family LTD Partnership
            6,621,677(4)
            29.65%Scott
                M. Klein, Chief Financial Officer, Secretary
            294,743(5)
            1.31%David
                Otto, Director(6)
            -0-
            *Raymond
                Zipperich, Director(7)
            -0-
            *Thomas
                Fitzgerald, Director(8)
            -0-
            *Bruce
                Simpson, Director(9)
            -0-
            *Stacey
                Maloney-Fust, Former Sr Vice President and a Director
            8,111,143(10)
            36.08%Stephen
                Bannon, Former Director(11)
            505,000(12)
            2.26%P.
                Robert DuPont, Former Director(13)
            442,000(14)
            1.96%Moty
                Hermon
            1,229,723(15)
            5.51%Bushido
                Capital Growth Fund, LP(16)
            1,456,667(17)
            6.12%Gamma
                Opportunity Capital Partners, LP(18)
            1,456,667(17)
            6.12%DCOFI
                Master LDC(19)
            1,477,105(20)
            6.20%Bluegrass
                Growth Fund, LP(21)
            1,252,288(22)
            5.31%Bluegrass
                Growth Fund, LTD(21)
            1,252,288(22)
            5.31%Asset
                Managers International, LTD(23)
            2,183,464(24)
            9.13%David
                N. Macrae(25)
            2,783,464(26)
            11.59%David
                N. Macrae Trust(25)
            1,579,294(27)
            6.61%All
                current officers and directors as a group (6 persons)
            8,302,810(28)
            36.62%


_____________________


*Represents
      less than 1% of all issued and outstanding voting stock of
      SinoFresh.




(1)  Unless
      otherwise noted, the address of each person or entity listed is c/o SinoFresh
      HealthCare, Inc., 516 Paul Morris Drive, Englewood, FL 34223.




-48-


(2)  Beneficial
      ownership is determined in accordance with the rules of the SEC and generally
      includes voting or investment power with respect to securities. Shares of common
      stock subject to options, warrants or convertible securities that are currently
      exercisable or exercisable within 60 days of March 20, 2007, are deemed
      outstanding for computing the percentage of the person holding such options,
      warrants or convertible securities but are not deemed outstanding for computing
      the percentage of any other person. Except as indicated by footnote and subject
      to community property laws where applicable, the persons named in the table
      have
      sole voting and investment power with respect to all shares of common stock
      shown as beneficially owned by them.




(3)  Represents
      3,621,677 shares of common stock owned by the Charles Fust Family Limited
      Partnership, for which, a corporation Mr. Fust owns, is the general partner;
      1,229,723 shares of common stock held in escrow for the benefit of Moty Herman,
      for which Mr. Fust holds voting rights; 103,076 shares of common stock held
      by
      the Company’s 401(K) Plan, for which Mr. Fust is a Trustee; 3,000,000 shares of
      common stock issuable upon conversion of 1,500,000 shares of Series B preferred
      stock held by the Charles Fust Family Limited Partnership, which shares of
      Series B preferred stock vote on an as converted basis; 91,667 shares of common
      stock issuable pursuant to options exercisable within the next 60 days; 5,000
      shares of common stock owned by his spouse; and 60,000 shares of common stock
      issuable pursuant to options exercisable by his spouse, Stacey Maloney-Fust,
      within the next 60 days.




(4)  Represents
      3,621,677 shares of common stock and 3,000,000 shares of common stock issuable
      upon conversion of 1,500,000 shares of Series B preferred which shares of Series
      B preferred stock vote on an as converted basis.




(5)  Represents
      103,076 shares of common stock held by the Company’s 401(K) Plan, for which Mr.
      Klein is a Trustee and 191,667 shares of common stock issuable pursuant to
      options exercisable within the next 60 days.




(6)  Mr. Otto's
      address is 601 Union Street, Suite 4500, Seattle, WA 98101.




(7)  Mr. Zipperich
      was appointed to the Board of Directors on February 21, 2007. His address is
      631
      Pines Way, Columbia, IL 62236.




(8)  Mr. Fitzgerald
      was appointed to the Board of Directors on February 21, 2007. His address is
      4
      St. Andrew’s Hill, Pittsford, NY 14534.




(9)  Mr. Simpson
      was appointed to the Board of Directors on March 01, 2007. His address is 4974
      Westbriar Drive, Fort Worth, TX 76109.




(10)  Represents
      5,000 shares of common stock and 60,000 shares of common stock issuable pursuant
      to option exercisable within the next 60 days. Includes 8,046,143 shares
      beneficially owned by her spouse, Charles Fust, an executive officer and
      director of the Company.




(11)  Mr. Bannon
      resigned from the Board of Directors, effective February 22, 2007. His address
      is 1819 Colorado Avenue, Santa Monica, CA 90404.




(12)  Represents
      455,000 shares of common stock and 50,000 shares of common stock issuable
      pursuant to options exercisable within the next 60 days.




-49-


(13)  Mr. DuPont
      resigned from the Board of Directors, effective February 20, 2007.




(14)  Represents
      250,000 shares of common stock, 10,000 shares of common stock issuable upon
      conversion of 10,000 shares of Series A preferred stock, and 182,000 shares
      of
      common stock issuable pursuant to options exercisable within the next 60
      days.




(15)  Represents
      1,229,723 shares of common stock Mr. Moty Hermon has a right to acquire from
      Mr.
      Fust pursuant to a put option, which shares of stock have been deposited into
      escrow by Mr. Fust for the benefit of Mr. Hermon. Mr. Fust holds a proxy to
      vote
      the escrowed shares.




(16)  This
      entity’s address is 275 Seventh Avenue, Suite 2000, New York, New York 10001.




(17)  Represents
      557,400 shares of common stock issuable pursuant to warrants exercisable within
      the next 60 days, and 899,267 shares of common stock issuable upon conversion
      of
      a debenture that is convertible within the next 60 days.




(18)  This
      entity’s address is 1967 Longwood-Lake Mary Rd, Longwood, Florida 32750.




(19)  This
      entity’s address is 350 Madison Avenue, New York, New York 10017.




(20)  Represents
      557,400 shares of common stock issuable pursuant to warrants exercisable within
      the next 60 days, and 919,705 shares of common stock issuable upon conversion
      of
      a debenture that is convertible within the next 60 days.




(21)  This
      entity’s address is 122 East 42 nd Street,
      Suite 2606, New York, New York 10168.




(22)  Represents
      557,400 shares of common stock issuable pursuant to warrants exercisable within
      the next 60 days, and 694,888 shares of common stock issuable upon conversion
      of
      a debenture that is convertible within the next 60 days.




-50-


(23)  The
      address for Asset Managers International, Ltd is One Knights Bridge, London,
      SW1X 7LX, UK




(24)  Represents
      418,051 shares of common stock issuable pursuant to warrants exercisable within
      the next 60 days, and 1,021,894 shares of common stock issuable upon conversion
      of a debenture that is convertible within the next 60 days.




(25)  Mr.
      Macrae's address is 621 Casey Key Rd, Nokomis, FL 34275.




(26)  Represents
      500,000 shares of common stock, 100,000 shares of common stock purchase warrants
      that are exercisable within the next 60 days, and the following securities
      held
      by the David N. Macrae Trust for which Mr. Macrae is the trustee: 604,170 shares
      of common stock 557,400 shares of common stock issuable pursuant to warrants
      exercisable within the next 60 days, and 1,021,894 shares of common stock
      issuable upon conversion of a debenture that is convertible within the next
      60
      days.




(27)  Represents
      604,170 shares of common stock, 557,400 shares of common stock issuable pursuant
      to warrants exercisable within the next 60 days, and 1,021,894 shares of common
      stock issuable upon conversion of a debenture that is convertible within the
      next 60 days.




(28)  Represents
      4,959,476 shares of common stock; 3,000,000 shares of common stock issuable
      upon
      conversion of 1,500,000 shares of Series B preferred stock; and 343,334 shares
      of common stock issuable upon exercise of outstanding options that are
      exercisable within the next 60 days.




**ITEM
      12.**  **CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS** ****




SinoFresh
      leases its facility at 516 Paul Morris Drive, Englewood, Florida, from Sta-Car,
      Inc., an entity owned by Stacey Maloney-Fust, Senior Vice President, Assistant
      Secretary, and a member of our board of directors. The lease has a 5-year term
      at a base rent of $5,998.00 per month (plus sales tax), effective April 2003.
      The lease provides for two additional five-year terms at the option of
      SinoFresh. As of December 31, 2006, the Company had $42,168 accrued for unpaid
      rent.




The
      Otto
      Law Group, PLLC, Seattle, Washington, represented the Company on legal matters
      and billed the Company for legal services pursuant to an engagement agreement.
      David Otto of The Otto Law Group, PLLC, is a shareholder and a member of the
      Board of Directors of the Company. In fiscal 2006 and 2005, The Otto Law Group,
      PLLC billed the Company approximately $74,000 and $20,000, respectively for
      legal fees and expenses. There was $49,000 in outstanding fees payable to this
      entity as of December 31, 2006.




-51-


**ITEM
      13.**  **EXHIBITS
      AND REPORTS ON FORM 8-K** ****




**A.**
            **Exhibits**




The
      exhibits in the accompanying Exhibit Index are filed as part of this Report
      on
      Form 10-KSB or are incorporated by reference.




**B.**
            **Reports
                on Form 8-K**


Form
              Description
              Filing
                  Date8-K
              Resignation
                  and Appointment of Directors
              03/02/078-K
              Resignation
                  and Appointment of Directors
              02/26/078-K
              Event
                  of Default on Outstanding Convertible Debentures
              12/08/068-K
              Press
                  Release: Third Quarter 2006 Financial Results
              11/15/068-K
              Press
                  Release: Second Quarter 2006 Financial Results
              08/15/068-K
              Loss
                  of Significant Customer
              07/21/068-K
              Announcement
                  of a Proposed Recapitalization Plan
              06/12/068-K
              Press
                  Release: First Quarter 2006 Financial Results
              05/15/068-K
              Press
                  Release: Fourth Quarter and Year End 2005 Financial
                  Results
              04/04/068-K
              Adjustment
                  to terms of Outstanding Convertible Debentures
              02/08/06




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANTFEES AND SERVICES** ****




*Audit
      Fees*




The
      Company was billed by its accountants approximately $92,000 and $96,000 during
      the years ended December 31, 2006 and 2005, respectively for fees and expenses
      related to professional services rendered in connection with the year end audits
      of the consolidated financial statements and reviews of the quarterly
      consolidated financial statements.




-52-


*Audit-Related
      Fees*




The
      Company was not billed any additional fees that are not disclosed under audit
      fees in each of the last two calendar years for assurance and related services
      that are reasonably related to the performance of the audit or review of the
      Company's consolidated financial statements.




*Tax
      Fees*




Fees
      for
      tax compliance, tax advice and tax planning, including the preparation of
      certain tax returns for the years ended December 31, 2006 and 2005 were
      approximately $9,000 and $4,000, respectively. Tax services were performed
      by a
      firm other than the Company’s principal auditors.




*All
      Other Fees*




There
      have been no other material fees charged for accounting products or services
      other than those described above for the years ended December 31, 2006 and
      2005.




*Audit
      Committee Pre-Approval Process, Policies and Procedures*




The
      appointment of Moore Stephens Lovelace, P.A. was approved by the Board of
      Directors as the principal auditors for the Company. Three members of the
      Company's Board of Directors, Charles Fust, P. Robert Dupont and Stacey
      Maloney-Fust, currently serve as the audit committee. Mr. DuPont was an employee
      of the Company until September 30, 2005. There are no board members that are
      considered to have significant financial experience. When independent directors
      with the appropriate financial background join the board, the board plans to
      establish a new audit committee, which will then adopt an appropriate charter
      and pre-approval policies and procedures in connection with services to be
      rendered by the independent auditors.


-53-


**SIGNATURES**





Pursuant
      to the requirements of the Securities and Exchange Act of 1934, as amended,
      SinoFresh HealthCare, Inc. has duly caused this annual report to be signed
      on
      its behalf by the undersigned thereunto duly authorized.


SINOFRESH
              HEALTHCARE, INC.Date:
              April 13, 2007
            By:
            /s/ Charles
              A. FustCharles
              A. FustChairman
              of the Board and Chief Executive Officer (principal executive officer)




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed by the following persons on its behalf of SinoFresh
      HealthCare, Inc. and in the capacities indicated.




**Signature**
            **Title**
            **Date**/s/
                Charles A. Fust
            Chairman
                of the Board and Chief Executive Officer
            April
                13, 2007Charles
                A. Fust
            (Principal
                Executive Officer)/s/
                Scott M. Klein
            Chief
                Financial Officer and Secretary
            April
                13, 2007Scott
                M. Klein
            (Principal
                Financial Officer)/s/
                Thomas Fitzgerald
            Director
            April
                13, 2007Thomas
                Fitzgerald/s/
                Bruce W. Simpson
            Director
            April
                13, 2007Bruce
                W. Simpson








-54-





**Exhibit
      Index**





**Exhibits**







Number
            Description2.1
            Merger
                Agreement dated September 8, 2003 (1)3.1
            Articles
                of Incorporation (2)3.1.1
            Amendment
                to Articles of Incorporation (3)3.2
            Bylaws
                (2)3.2.1
            Amendment
                to Bylaws(10)4.1
            Form
                of Common Stock Registration Rights Agreement (3)4.2
            Common
                Stock Registration Rights Agreement with D&J Properties
                (3)4.3
            Registration
                Rights Agreement with InvestLinc Equity Fund II, LP,
              InvestLinc
                Emerging Growth Equity Fund I, LLC and The Invest Line
              Group,
                Inc. dated November 15, 2002 (4)4.4
            Form
                of 2003 Warrant Agreement issued to warrant investors for 1,333,970
                warrants, dated September 8, 2003(4)4.5
            Cancelable
                Warrant Agreement with Dave Macrae Trust dated September 1, 2003
                (4)4.6
            2004
                Warrant Agreement with Dave Macrae Trust dated as of September 1,
                2004
                (4)4.7
            Warrant
                Certificate dated November 15, 2002 in favor of The InvestLinc Group
                (4)4.8
            Warrant
                issued to BestBet Media Group, Inc., dated October 1, 2004
                (6)4.9
            Warrant
                issued to Reno Rolle, dated August 19, 2004. (6)4.10
            Warrant
                issued to Ed McMahon, dated October 1, 2004. (6)4.11
            Registration
                Rights Agreement with Reno Rolle, dated August 19, 2004. (6)4.12
            Registration
                Rights Agreement with BestBet Media Group, Inc., dated October 1,
                2004.
                (6)4.13
            Form
                of Warrant issued to Debenture investors for a total of 1,663,645
                shares
                of common stock, dated December 6, 2004 (7)4.14
            Registration
                Rights Agreement with Debenture investors, dated December 6, 2004.
                (7)4.15
            Warrant
                issued to Bristol Investment Partners I, dated September 8,
                2003(8)4.16
            Warrant
                issued to Bristol Investment Partners I, dated September 8,
                2003(8)4.17
            Warrant
                issued to Bristol Investment Partners LP I, as of December 6,
                2004(8)4.18
            Warrant
                issued to Michael Gottlieb, dated January 5, 2005(8)4.19
            Warrant
                issued to Michael Gottlieb, dated January 5, 2005(8)4.20
            Form
                of Warrant issued to Medical Advisory Board(8)4.22
            Warrant
                issued to D&J Properties, LLC, dated June 19, 2003(8)4.23
            Warrant
                issued to D&J Properties, LLC, dated June 19, 2003(8)4.24
            Warrant
                issued to David N. Macrae, dated as of September 1, 2003(8)4.25
            Warrant
                issued to Tim Kepler, dated as of November 7, 2003(8)4.26
            Form
                of Debenture issued to Debenture investors, dated December 6, 2004
                (7)4.27
            Warrant
                issued to Adsouth Partners, Inc., dated February 24, 2005
                (11)4.28
            Registration
                Rights Agreement with Adsouth Partners, Inc., dated February 24,
                2005
                (11)4.29
            Non-qualified
                Stock Option Agreement issued to Thomas Fitzgerald, dated May 31
                2005
                (12)4.30
            Non-qualified
                Stock Option Agreement issued to W. Randolph Warner, dated November
                7,
                2005 (17)4.31
            Warrant
                issued to CAM-Global, dated August 26, 2005 (13)4.32
            Non-qualified
                Stock Option Agreement issued to Cynthia Dunn, dated August 30, 2005
                (13)10.1
            Contract
                Manufacturing Agreement between SinoFresh HealthCare, Inc. and AccuMed,
                Inc. (3)10.2
            Agreement
                with Bristol Investment Group, Inc. dated February 7, 2003
                (3)10.3
            Employment
                Agreement with Charles Fust dated December 1, 2002 (3)10.5
            Proprietary
                Development, Right of First Refusal and Acquisition Agreement with
                SinoFresh Research Laboratories, LLC (3)10.8
            National
                In-Store Agreement dated November 21, 2002 (3)10.9
            National
                In-Store Sales and Broker Agreement dated March 27, 2003 (3)10.10
            Agreement
                with David Farr dated October 9, 2003 (3)10.11
            Accounts
                Receivable Financing Agreement with Alliance Financial Capital, Inc.
                (3)10.12
            Agreement
                with Rubenstein Communications, Inc., dated March 18, 2003 (3)10.13
            Lease
                Agreement with DuPont & Fust Real Estate Ventures, LLC dated April 1,
                2003 (9)10.14
            Allonge
                to Promissory Note dated February 1, 2001, in favor of Invest Linc
                Equity
                Fund II (4)10.15
            Allonge
                to Promissory Note dated February 1, 2001, in favor of Invest
                Linc
              
              Emerging
                Growth Equity Fund I, LLC (4)10.16
            Assumption
                Agreement dated November 15, 2002 in favor of Invest Linc
                Equity
              
              Fund
                II, Invest Linc Emerging Growth Equity Fund I, LLC (4)10.17
            Consulting
                Agreement with The Invest Linc Group, LLC dated November 15, 2002
                (4)10.18
            Stock
                Purchase Agreement dated November 15, 2002 with Invest Linc Equity
                Fund
              
              II,
                Invest Linc Emerging Growth Equity Fund I, and The Invest Linc Group
                (4)10.19
            SinoFresh
                HealthCare, Inc. 2002 Stock Option Plan (3)10.19.1
            Form
                of Non-Qualified Stock Option Agreement for 2002 Stock Option
                Plan(10)10.20
            Agreement
                with Moty Herman dated October 21, 2003 (4)10.21
            Agreement
                between Charles Fust and Moty Herman dated October 22, 2003
                (4)10.22
            Supplemental
                Letter Agreement with Moty Herman dated October 28, 2003 (4)10.23
            Letter
                Agreement from Charles Fust dated April 12, 2003 re Moty Herman Agreements
                (4)10.24
            Teaming
                Agreement with Lovelace Respiratory Research Institute, dated April
                28,
                2004 (5)10.25
            Securities
                Purchase Agreement with Debenture investors, dated December 6, 2004
                (7)10.26
            Form
                of Convertible Debenture issued to investors for total of $1,830,000,
                dated December 6, 2004 (7)10.27
            Security
                Agreement with Debenture investors, and Bushido Capital Partners,
                L.P, as
                agent, dated December 6, 2004 (7)10.28
            Subsidiary
                Security Agreement between SinoFresh Corporation, Debenture investors
                and
                Bushido Capital Partners, L.P., as agent, dated December 6, 2004
                (7)10.29
            Intellectual
                Property Security Agreement with Debenture investors, and Bushido
                Capital
                Partners, L.P., as agent, dated December 6, 2004 (7)10.30
            Subsidiary
                Intellectual Property Security Agreement between SinoFresh Corporation,
                Debenture investors, and Bushido Capital Partners, L.P., as agent,
                dated
                December 6, 2004 (7)10.31
            Guaranty
                Agreement by SinoFresh Corporation in favor of Debenture investors,
                dated
                December 6, 2004 (7)10.32
            Strategic
                Planning Services Agreement with David Macrae, dated September 5,
                2003(8)10.33
            Employment
                Agreement for Scott M. Klein, dated March 28, 2005 as of and effective
                November 1, 2004(10)10.34
            Form
                of Non-Plan Option Agreement (10)10.35
            Settlement
                Agreement and Mutual Releases with various Plaintiffs in federal
                lawsuit
                (14)10.36
            Agreement
                with the Law Firm of David B. Haber, P.A. (14)10.37
            Settlement
                Agreement dated as of December 9, 2005 with Otto Law Group, PLLC
                and David
                Otto (15)10.38
            Consulting
                Agreement with Dane Solomon (16)10.39
            Consulting
                Agreement with David Coloris (16)10.40
            Legal
                Services Agreement dated as of January 20, 2006 with Otto Law Group,
                PLLC
                and David Otto (16)16.1
            Letter
                from Salberg & Co. dated March 30, 2004 (10)21.1
            Subsidiaries
                of the Registrant (10)31.1
            Certification
                of Chief Executive Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002*31.2
            Certification
                of Chief Financial Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002*32.1
            Certification
                of Chief Executive Officer pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002*32.2
            Certification
                of Chief Financial Officer pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002*


*
      Filed
      herewith.




(1)
      Incorporated by reference to Registrant's Form 8-K, filed on September 23,
      2003.


(2)
      Incorporated by reference to Registrant's Form 10-SB12G, filed on April 29,
      2002, File No. 0-49764.


(3)
      Incorporated by reference to Registrant's Form 10-QSB for the fiscal quarter
      ended September 30, 2003, filed on November 17, 2003, File No.
      0-49764.


(4)
      Incorporated by reference to Registrant's Form 10-KSB for the fiscal year ended
      December 31, 2003, filed on April 14, 2004, File No. 0-49764.


(5)
      Incorporated by reference to the Registrant's Form 10-QSB for the fiscal quarter
      ended March 31, 2004, filed on May 17, 2004, File No. 0-49764.


(6)
      Incorporated by reference to Registrant's Form 8-K dated October 18, 2004,
      filed
      on October 22, 2004, File No. 0-49764.


(7)
      Incorporated by reference to Registrant's Form 8-K dated December 6, 2004,
      filed
      on December 10, 2004, File No. 0-49764.


(8)
      Incorporated by reference to Registrant's Form SB-2 Registration Statement
      filed
      on January 6, 2005, File No. 333-121880.


(9)
      Incorporated by reference to Registrant's Amendment No. 1 to Form SB-2
      Registration Statement filed on January 27, 2005, File No.
      333-121880.


(10)
      Incorporated by reference to Registrant's Form 10-KSB for the fiscal year ended
      December 31, 2004, filed on March 31, 2005, File No. 0-49764.


(11)
      Incorporated by reference to the Registrant's Form 10-QSB for the fiscal quarter
      ended March 31, 2005, filed on May 16, 2005, File No. 0-49764.


(12)
      Incorporated by reference to the Registrant's Form 10-QSB for the fiscal quarter
      ended June 30, 2005, filed on August 15, 2005, File No.
      0-49764.


(13)
      Incorporated by reference to the Registrant's Form 10-QSB for the fiscal quarter
      ended September 30, 2005, filed on November 14, 2005, File No.
      0-49764.


(14)
      Incorporated by reference to Registrant's Form 8-K, filed on December 14, 2005,
      File No. 0-49764.


(15)
      Incorporated by reference to Registrant's Form 8-K, filed on December 20, 2005,
      File No. 0-49764.


(16)
      Incorporated by reference to Registrant's Form S-8 Registration Statement filed
      on February 7, 2006, File No. 333-131646.


(17)
Incorporated
      by reference to Registrant's Form 10-KSB for the fiscal year ended December
      31,
      2005, filed on March 31, 2006, File No.
      0-49764.