The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements included in our Form 10-K Annual Report for the year ended November 30, 2008, and notes thereto.

Overview

We are a medical research and development company that is specializing in pharmaceutical, bio-technical and medical gas generating systems. The primary gas our systems will generate is nitric oxide, along with other various combinations of beneficial medical gases suitable for the treatment of human diseases.

Nitric oxide gas is produced and sold commercially by major gas companies as a specialty gas mixture and calibration gas. Nitrogen dioxide is present in all nitric oxide gas currently produced; that limits the size of the dose

of nitric oxide gas that can be administered to humans and animals.

We have developed a proprietary compound formulation that will be utilized to produce nitric oxide gas in our desktop and portable generators. Management believes that with further formulation of our proprietary compound, we can make or filter nitric oxide gas with less toxic amounts of nitrogen dioxide, and that this process can produce nitric oxide gas in ample quantities for any current or prospective use, and at a substantially reduced price compared with all other currently available technologies.

Our current generator model is capable of delivering sufficient quantities of nitric oxide gas for individual laboratory desktop use. We will continue to further develop this and other generators and compound formulation for high production quantities and consistency. The product must have a known shelf life and be available in various configurations to produce known concentrations and known volumes of gas. Packaging is another developmental process that will need to be addressed. Management plans to rely on outside contractors to achieve these objectives.

We estimate that non-clinical laboratory sales could take place prior to the receipt of United States Food and Drug Administration ("FDA") approval.
Management anticipates that selling our generator into the market as laboratory equipment prior to receipt of final FDA approval will pave the way for sales of our medical generator and proprietary tablets, but expected financial contributions from non-medical generator and tablet sales will be too late to help offset the substantial costs of the FDA approval process for human medical uses. We expect that contributions will be able to support our manufacturing and set-up costs and contribute to the overall profitability of our Company in due time, but we believe that they will also require financing. We anticipate entering the non-clinical laboratory market in the next 12 months.

All human medical uses of nitric oxide gas require FDA approval, and the approval of similar international agencies. Approval can be a long and expensive process, with no assurance that any such approval will ever be granted. Management hopes to reduce time to regulatory approval by certain strategic approaches that are proprietary.

Our objectives are to establish GeNOsys (generated nitric oxide systems) as the premier nitric oxide generating pharmaceutical company, and to manufacture and sell medical grade nitric oxide generators and tablets for use in the relief of human diseases, offer value added services such as custom generators adapted for the treatment of various diseases, hire staff both currently identified and unidentified to implement our business model, and to gain FDA approval of our generating system.

Results of Operations

The following table presents our results of operations for the three and nine months ended August 31, 2009 and 2008:

                                 For the Three Months          For the Nine Months
                                   Ended August 31,              Ended August 31,
                                  2009          2008           2009            2008

Revenues                   $            - $           - $             - $            -

Cost of sales                           -             -               -              -

Gross margin                            -             -               -              -

Operating expenses:
  Research and development        178,149       146,541         384,006        400,369
  General and                     113,672        91,624         566,165        290,503
administrative
  Stock based compensation         65,461        94,116         192,885        281,616
charges

    Total operating               357,282       332,281       1,143,056        972,488
expenses

Net income (loss) from          (357,282)     (332,281)     (1,143,056)      (972,488)
operations

Other income (expense):
  Interest income                       -            47               -          2,379
  Interest expense                (2,639)             -         (6,507)              -

    Total other income            (2,639)            47         (6,507)          2,379
(expense), net

Net income (loss) before        (359,921)     (332,234)     (1,149,563)      (970,109)
income taxes

Provision for income tax                -           115             100            115

Income (loss) from         $    (359,921) $   (332,349)   $ (1,149,663)   $  (970,224)
continuing operations

For the Three Months Ended August 31, 2009 and 2008

During the three-month period ended August 31, 2009, we had a net loss of $359,921. This compares to a net loss of $332,349 for the comparable period ended August 31, 2008. Net loss per common share for these periods was $(.01) and $(.01), respectively.

Research and development ("R&D") expenses were $178,149 and $146,541, respectively, for the three-month periods ended August 31, 2009 and 2008. The increase in R&D expenditures results primarily from increased consulting fees, offset in part by increases and decreases in a number of other expense categories. As the documentation preparation and regulatory work for FDA approval intensifies, R&D expenses are expected to further increase.

General and administrative expenses were $113,672 and $91,624, respectively, for the three-month periods ended August 31, 2009, and 2008. The increase results primarily from increased consulting and legal fees, offset in part by smaller increases and decreases in a number of other expense categories. General and administrative expenses are expected to continue to increase in the remaining periods in this fiscal year as expenses are incurred to bring our products to market.

Non-cash stock based compensation charges of $65,461 were recognized for the three month period ended August 31, 2009. This compares to a charge of $94,116 for the same period in 2008. The reduction is due to a number of stock option grants which became fully vested in 2008. As the expense is recorded over the vesting period, there were no 2009 charges relating to those option grants that became fully vested in 2008.

Total other expense was $2,639 for the three month period ended August 31, 2009.
This compares to total other income of $47 for the three month period ended August 31, 2008. The charge in 2009 is for interest charges accrued on notes payable. The earnings in 2008 were from interest earned on funds held in a savings account.

For the Nine Months Ended August 31, 2009 and 2008

During the nine-month period ended August 31, 2009, we had a net loss of $1,149,663. This compares to a net loss of $970,224 for the nine-month period ended August 31, 2008. Net loss per common share was $(.02) for each of these periods.

R&D expenses were $384,006 and $400,369, respectively, for the nine-month periods ended August 31, 2009 and 2008. The decrease in R&D expenditures results primarily from reduced consulting fees and travel expenses. As the documentation preparation and regulatory work for FDA approval intensifies, R&D expenses are expected to increase through the balance of 2009.

General and administrative expenses were $566,165 and $290,503, respectively, for the nine-month periods ended August 31, 2009, and 2008, an increase of $275,662. Consulting charges in 2009 are $300,000 higher than in 2008, with $200,000 of the increase attributable to the non-cash charge taken for the issuance of common stock for consulting services. The remaining expense categories show a net decrease in 2009 as compared to 2008. General and administrative expenses are expected to continue to increase in the remaining period in this fiscal year as expenses are incurred in raising the additional capital required to bring our products to market.

Non-cash stock based compensation charges of $192,885 were made for the nine month period ended August 31, 2009. This compares to a charge of $281,616 recognized for the nine months ended August 31, 2008. The reduction is due to a number of stock option grants which became fully vested in 2008. As the expense is recorded over the vesting period, there were no 2009 charges relating to those option grants that became fully vested in 2008.

Total other expense was $6,507 for the nine-month period ended August 31, 2009 compared to other income of $2,379 for the nine month period ended August 31, 2008. The 2009 charge results from interest charges accrued on notes payable.
The 2008 earnings were from interest earned on funds in a savings account

Financial Position

We had $20,501 in cash and cash equivalents as of August 31, 2009, representing an increase of $16,133 from the $4,368 in cash as of November 30, 2008. Working capital as of August 31, 2009, was a deficit of $1,123,802 compared to a deficit of $394,885 as of November 30, 2008. The increase in cash results from funds loaned to the company by officers. The increased working capital deficit was primarily due to increases in notes payable and accrued liabilities.

Liquidity and Capital Resources

To date, we have financed our operations principally through private placements of our equity securities and loans from related parties. Net cash of $226,322 was used for operating activities during the nine months ended August 31, 2009.
This is a decrease of $210,763 as compared to the $437,085 used during the same period ended August 31, 2008. Also, during the nine months ended August 31, 2009, net cash of $31,450 was used for the purchase of intangible assets. This compares with $28,564 used for the purchase of intangible assets and equipment

for the same period ended August 31, 2008. As of August 31, 2009, our current liabilities totaled $1,185,468, and we had a working capital deficit of $1,123,802. As of August 31, 2009, we had no long-term debt obligations.

Our working capital requirements for the foreseeable future will vary based upon a number of factors, including the costs to complete development work, the cost of bringing our nitric oxide generator and nitric oxide tablets to commercial viability, the costs associated with obtaining FDA approval, the timing of the market launches of our products and the level of sales of those products when introduced into the market place. As of August 31, 2009, we had accounts payable and accrued liabilities totaling $1,185,468. At August 31, 2009, we had cash and cash equivalents of $20,501. We know that existing cash and cash equivalents will be insufficient to execute our business plan, or to meet our cash requirements during the next 12 months, and we are currently actively working to raise additional funds. However, there can be no assurance that additional funding will be available on acceptable terms, if at all. If we fail to obtain additional financing we will have no choice but to suspend development activity.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to our goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, and regulatory and technical factors affecting our operations, products, services and prices.

Unless otherwise required by applicable law, we do not undertake, and specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.