10-K 1 sgln04222013form10k.htm FORM 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑	ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended: JULY 31, 2012

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For transition period from to .

Commission File Number 333-48746

SIURGLINE INTERNATIONAL, INC.

(Name of Registrant in its charter)

NEVADA	87-0567853
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

319 Clematis Street – Suite 400, West Palm Beach, Florida 33401

(Address of principal executive offices)(Zip Code)

Issuer's telephone number, including area code: (561) 514-9042

Securities registered pursuant to Section 12(b) of the Exchange Act: None

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: ☐Yes ☑No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ☑Yes ☐No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange 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 ☑No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer:

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☑

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐Yes ☑No

The aggregate market value of the voting common equity held by non-affiliates of the Registrant as of January 31, 2012

was $6,266,000.

As of March 15, 2013, the Registrant had 5,690,116,745 shares of common stock, par value $0.001 per share, issued and outstanding.

Documents incorporated by reference: None

SURGLINE INTERNATIONAL, INC.

TABLE OF CONTENTS

Page No.

PART I
Item 1.	Business	2-7
Item 1A	Risk Factors	7-15
Item 1B	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	16
Item 4.	Reserved	16
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16-19
Item 6.	Selected Financial Data	20
Item 7.	Management’s Discussion and Analysis of Financial condition and results of operations	20-21
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	21
Item 8.	Financial Statements and Supplementary Data	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	21
Item9A(T)	Controls and Procedures	22-23
Item 9B.	Other Information	23
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	24-26
Item 11.	Executive Compensation	27-28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	29
Item 13.	Certain Relationships and Related Transactions and Director Independence	30
Item 14.	Principal Accountant Fees and Services	30
Item 15.	Exhibits and Financial Statement Schedules	31
	SIGNATURES	32

SURGLINE INTERNATIONAL, INC.

FORM 10-K

This report may contain certain “forward-looking” statemenTs as such term is defined in the private securities litigation reform act of 1995 or by the securities and exchange commission in iTs rules, regulations and releases, which represent the registrant’s expectations or beliefs, including but not limited to, statemenTs concerning the registrant’s operations, economic performance, financial condition, growth and acquisition strategies, investmenTs, and future operational plans. For this purpose, any statemenTs contained herein that are not statemenTs of historical fact may be deemed to be forward-looking statemenTs. Without limiting the generality of the foregoing, words such as “may”, “expect”, “believe”, “anticipate”, “intent”, “could”, “estimate”, “might”, or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statemenTs. These statemenTs by their nature involve substantial risks and uncertainties, certain of which are beyond the registrant’s control, and actual resulTs may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and iTs subsidiaries, volatility of stock price and any other factors discussed in this and other registrant filings with the securities and exchange commission.

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

(a) General Business development.

Current business

On September 1, 2011, the Company entered into and consummated the First Amendment to the Agreement Concerning that Exchange of Securities (the “Share Exchange Agreement”) with SurgLine, Inc., a Nevada corporation (“SurgLine”) and the shareholders of SurgLine. Upon consummation of the transactions set forth in the Agreement (the “Closing”), the Company adopted the business plan of SurgLine, and ceased all of the business development plans of Nuvo (see below).

Pursuant to the Share Exchange Agreement, we agreed to acquire all of the outstanding capital stock of SurgLine in exchange (the “Share Exchange”) for the original issuance of an aggregate of 857,143 shares (the “Exchange Shares”) of the Registrant’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). The Exchange Shares were issued on a pro rata basis, on the basis of the shares held by such security holders of SurgLine at the time of the Exchange. Further in accordance with the Agreement, and following an amendment of the Registrant’s Articles of Incorporation, the Exchange Shares were converted into 3,817,554,433 shares of the Registrant’s common stock, par value $0.001 per share (the “Common Stock”) equal to 70% of the issued and outstanding Common Stock of the Registrant. Additionally, pursuant to the provisions of the Share Exchange Agreement, the Company issued 163,609,476 restricted shares of Common Stock to the SurgLine shareholders, in satisfaction of the anti dilution provisions in the Share Exchange Agreement. As a result of the Share Exchange, the Registrant issued a total of 3,981,163,909 shares of its common stock to the SurgLine shareholders and SurgLine became a wholly-owned subsidiary of the Registrant.

On September 1, 2011, holders of a majority of the Company’s outstanding Common Stock approved an amendment to the Registrant’s Articles of Incorporation to increase the number of its authorized shares of capital stock from 1,500,000,000 shares to 6,500,000,000 par value $0.001 shares (the “Amendment”) of which (a) 6,475,000,000 shares were designated as Common Stock and (b) 25,000,000 shares were designated as blank check preferred stock.

At the effective time of the Exchange, our board of directors and officers was reconstituted by the resignation of Henry Fong as President and Chief Executive Officer of the Company and the appointment of Thomas G. Toland as a member of the Company’s Board of Directors, President and Chief Executive Officer and Richard Dutch as Secretary and Chief Operating Officer of the Company.

Historical background

We were originally organized under the laws of the State of Nevada in 1996 as Zacman Enterprises, Inc. and subsequently changed our name to eNutrition, Inc.

On May 17, 2002, our stockholders approved our acquisition of all of the issued and outstanding securities of Torpedo Delaware in exchange for 8,000,000 shares of our common stock issued to the Torpedo USA stockholders.

On February 1, 2005, we acquired all of the issued and outstanding common stock of Interactive Games, Inc. (“Interactive”). In conjunction with the Interactive agreement, we changed our name to Interactive Games, Inc. and approved an increase in our authorized common stock from 50,000,000 shares to 100,000,000 shares. The acquisition of Interactive by us was accounted for as a reverse merger because on a post-merger basis, the former Interactive shareholders held a majority of the outstanding common stock of our company on a voting and fully diluted basis. As a result, Interactive was deemed to be the acquirer for accounting purposes.

In June 2007, our stockholders, through a written consent executed by stockholders holding a majority of the outstanding shares of our common stock entitled to vote, adopted and approved Amended and Restated Articles of Incorporation and ratified the Amended and Restated Bylaws of the Company, which were adopted by our board of directors on June 26, 2007. The Amended and Restated Articles of Incorporation increased the authorized capital stock of the Company from 105,000,000 shares to 500,000,000 shares, of which 25,000,000 shares now may be preferred stock having the voting powers, designations, preferences, limitations, restrictions and relative rights as determined by the board of directors from time to time. The Company’s stockholders also authorized our chief executive officer to change our name to China Nuvo Solar Energy, Inc. at such time as the chief executive officer deemed appropriate in his sole discretion.

Pursuant to an Agreement and Plan of Reorganization dated as of April 23, 2007, as amended on July 25, 2007 (the “Share Exchange Agreement”), by and between the Company and Nuvo Solar Energy, Inc., a Colorado corporation (“Nuvo”), we and Nuvo entered into a share exchange whereby all of the issued and outstanding capital stock of Nuvo, on a fully-diluted basis, was exchanged for like securities of the Company, and whereby Nuvo became our wholly owned subsidiary (the “Share Exchange”). The Share Exchange was effective as of July 25, 2007, upon the completed filing of Articles of Exchange with the Nevada Secretary of State and a Statement of Share Exchange with the Colorado Secretary of State. Contemporaneously with the Share Exchange, we changed our name to “China Nuvo Solar Energy, Inc.”

Immediately prior to the effective time of the Share Exchange, Nuvo had outstanding 5,500,000 shares of its common stock (“Nuvo Common Stock”) and no shares of preferred stock. In accordance with the Share Exchange Agreement, each share of Nuvo Common Stock was acquired by us in exchange for approximately 24.24 shares of our common stock for a total of 133,333,255 shares issued. Accordingly, after giving effect to the Share Exchange, the Company had approximately 189,915,355 shares of Common Stock outstanding immediately following the transaction.

As a result of the Share Exchange, the former Nuvo shareholders together held approximately 66.6% of the Company’s outstanding common stock immediately following the transaction, on a fully-diluted basis. Accordingly, the Share Exchange constituted a change of control of the Company. As a result of the Share Exchange, Nuvo constituted the accounting acquirer in the Share Exchange; however, we elected to have a July 31 fiscal year end, which is the same fiscal year end that Interactive Games, Inc. had prior to the Share Exchange.

Effective with the SurgLine Share exchange Agreement, the Company ceased all activity related to Nuvo and is not pursuing the commercialization of any of the patents.

(b) Financial information about segments.

As of July 31, 2012, we operated in only one industry segment.

On September 1, 2011, we entered into and consummated the First Amendment to the Agreement Concerning that Exchange of Securities (the “Share Exchange Agreement”) with SurgLine, Inc., a Nevada corporation (“SurgLine”) and the shareholders of SurgLine.

COMPANY OVERVIEW

On September 17, 2012 the Securities and Exchange Commission (“SEC”) issued an Order of Suspension of Trading of our common stock. In the order the SEC stated that it appeared that there is a lack of current and accurate information concerning the securities of the issuers named in the order, including the Company. According to the SEC, questions have arisen concerning the adequacy and accuracy of press releases and public filings concerning the company’s operations. The suspension ended on September 28, 2012. However, in order for our common stock to resume quotations, the SEC requires that a broker-dealer must file Form 211 with the Financial Industry Regulatory Authority (“FINRA”), representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432. We have no agreement with any broker dealer to file Form 15c-211. Accordingly, our securities may be worthless and we may be forced to curtail or abandon our business plan.

SurgLine, Inc (“SurgLine”) was formed in March of 2011. Our plan is to provide our own proprietary label, of high quality medical and surgical products at discount prices. The Company’s founders saw the need to help reduce costs in the acute care healthcare system, and particularly that of the Operating Rooms. The Company’s core business strategy is simply: Source and sell the highest quality medical and surgical products for substantially less, thereby reducing the “historical brand premium” that has historically been absorbed by healthcare end users, including hospitals, outpatient surgery centers, medical clinics, self-insured employers, managed care organizations, commercial insurance carriers and state and1 federal governmental payers.

Widespread economic challenges have impacted all healthcare providers as costs of goods continue to rise, patient reimbursement becomes more difficult and a growing percentage of patients have either lost their health insurance or are in default on their medical bills. The healthcare sector consumes 16.2% of the economy and is growing annually.¹ Combined with these factors, 70 million baby boomers who either have entered or will be entering retirement age ² are putting additional pressure on the healthcare system. The demand for healthcare services is tied closer to age than any other factor. We believe the pressure on healthcare providers has never been greater and this trend is expected to accelerate.

We intend to provide lower cost products by selling high volume disposable medical products at substantially lower prices when compared to the historical supply chain sources available on the market. We plan to accomplish this by sourcing products within the U.S. and globally from many of the same factories that produce similar products for the world’s largest medical companies. The traditional acquisition cost of medical and surgical supplies, instrumentation, equipment, hospital beds, operating lights and more sold by the largest medical/surgical suppliers can hover at five to ten fold markups. We plan on attacking the “brand premium” much in the same way as Costco has with their Kirkland private label brand, or Home Depot has with their Hampton Bay brand. Essentially, we plan on offering virtually similar products, with our SurgLine brand, at substantial savings by reducing the massive markup percentages that are passed on to the end users. We believe our sourcing and competitive advantage is based on over a decade of international business relationships of our executive management team with worldwide manufacturers. Because of the relationships developed by our executives, we have connections to nearly 200 different manufacturers globally and over 10,000 products already identified.

Additionally, our executives have long and successful industry track records and long standing relationships with key healthcare decision makers. We believe that healthcare, like many businesses, is a relationship business. Knowing who makes the decisions within organizations and having access to that person is a distinct advantage over an industry outsider. Our founders’ 100 plus years of healthcare experience will be leveraged to drive our success.

The Management team believes that there is substantial likelihood that there will be an erosion in Hospital “physician preference” arrangements in the future which historically has allowed the physician to select his or her own preferred products to use with less regard for economic cost. These arrangements may come under scrutiny due to downward financial pressures being placed on hospitals and surgery center operators by the payer community including the governmental payers in an effort to reign in costs.

TARGET MARKETS AND MARKETING STRATEGY

Our initial target market will be to identify and contract with successful stock and bill distributors and institutional buyers. These entities purchase in bulk, have the ability to stock and support products, have direct relationships with healthcare institutions and are highly motivated to cut costs to meet institutional demands. We will endeavor to form relationships with stock and bill distributors that have end user customers in place as well as in-depth product knowledge. Additionally, we believe it is easier to service a hand full of large customers in the beginning rather than to attempt to sell directly to end users that would take hundreds of accounts to match the revenue potential. We intend to leverage the existing relationships of our executives and associates with buyers that have already shown great interest.

The initial product focus will be on surgical products, both disposable and instrumentation. We believe these are high volume, high margin products. Where possible, we intend to brand the products with our own label “Surg”. An example of the product range is:

Surgical Instruments including but not limited to:

i.e.: Scissors, forceps, basket punches, reamers

Surgical Sets / Specialties (not limited to)

—

Hand & foot

—

Hips and knees

—

Spine products, including but not limited to pedicle screws, plates, rods, hooks, cages and biologics

—

Small Fragment sets

—

Includes: tray, instruments, screws, implants, etc.

Emergency Removal

—

Broken screws, implant removal

Full Range of Endoscopes covering several specialties

Full Range of Surgical Disposable - single use items

Custom Surgical Packs

As our business focus develops, we intend to expand the depth and breadth of product offerings based on customer demand. Also, we may decide to sell directly to select end user customers in situations where the additional margin opportunity more than offsets the costs of managing those customers.

GROWTH STRATEGY

We intend to leverage existing relationships in major metropolitan markets throughout the U.S. As working capital permits, we plan to recruit a national sales force of experienced medical product sales professionals who have their own network of relationships in each market. These relationships will be leveraged in the same manner with sales focused on stocking distributors with existing end user customer bases in place, as well as product knowledge. As of the filing of this report we have not been successful in recruiting of any sales force and we may not be able to in the future.

COMPETITION

We will be competing against traditional purveyors of medical supplies in the medical/surgical supply space. Specifically, we will compete with Medtronic, Stryker, Zimmer and Synthes as well as a variety of small privately held local and regional distributors throughout the marketplace.

We believe that our strategy of delivering virtually similar proprietary products from many of the same supply sources, in many cases, virtually identical private labeled products at substantial savings to the end user that will average 20% to 30% or more will allow us to be highly successful against the legacy competitors.

We believe the larger legacy companies are bloated with thousands of employees, tremendous inefficiencies due to their sheer size, and that they cannot afford to reduce their prices to their customers by 20% to 30% or more as we plan to do. Some of these large suppliers have attempted to shift their customers to use their own “private labeled products” in an attempt to lower the end user’s cost while retaining the customer; however, their private label strategy leaves very substantial margins and profits while reducing the end user’s cost by only a small percentage savings on average.

The Company’s competitors have longer operating histories, significantly greater financial, technical, marketing, service and other resources and significantly greater name recognition. As a result, such competitors may be able to devote greater resources to the development and marketing of their platforms, and may be able to respond more quickly to changes in customer requirements or product technology. Accordingly, there can be no assurance that the Company will compete successfully with existing or new competitors, or that the competition will not have a material adverse effect on the business, operating results or financial condition of the Company (See “RISK FACTORS”)

The Company currently has no full time employees other than its’ officers. The Company is not a party to any collective bargaining agreements.

Liquidity and Capital ResourceS

The Company’s only known potential sources of capital are possible proceeds from private placements, issuance of notes payable, loans from its officers, and cash from revenues. The Company requires additional financing to continue operations. We have no agreements in place and there is no assurance that such additional financing will be available.

GOVERNMENT REGULATION

The Medical Device Amendments of 1976 to the federal Food, Drug and Cosmetic Act and the Safe Medical Devices Act of 1990, together with regulations issued or proposed thereunder, provide for regulation by the FDA of the design, manufacture and marketing of medical devices, including most of the Company’s products.

The FDA’s Quality System regulations set forth standards for the Company’s product design and manufacturing processes, require the maintenance of certain records and provide for inspections of the Company’s facilities by the FDA. There are also certain requirements of state, local and foreign governments that must be complied with in the manufacturing and marketing of the Company’s products.

Most of the Company’s products are purchased from third party manufacturers that fall into FDA classifications that require notification of and review by the FDA before marketing, submitted as a 510(k). Section 510(k) of the Food, Drug and Cosmetic Act requires device manufacturers who must register, to notify FDA of their intent to market a medical device at least 90 days in advance. This is known as Premarket Notification - also called PMN or 510(k). This allows FDA to determine whether the device is equivalent to a device already placed into one of the three classification categories. Thus, "new" devices (not in commercial distribution prior to May 28, 1976) that have not been classified can be properly identified. Specifically, medical device manufacturers are required to submit a premarket notification if they intend to introduce a device into commercial distribution for the first time or reintroduce a device that will be significantly changed or modified to the extent that its safety or effectiveness could be affected. Such change or modification could relate to the design, material, chemical composition, energy source, manufacturing process, or intended use. Prior to selling any product that requires a 510(k) approval, we ascertain that the manufacturer has complied with 510(k). Certain of the Company’s products require extensive clinical testing, consisting of safety and efficacy studies, followed by PMA applications for specific surgical indications.

SurgLine also is subject to the laws that govern the manufacture and distribution of medical devices of each country in which the Company manufactures or sells products. The member states of the European Union (EU) have adopted the European Medical Device Directives, which create a single set of medical device regulations for all EU member countries. These regulations require companies that wish to manufacture and distribute medical devices in EU member countries to obtain CE Marking for their products. SurgLine has authorization to apply the CE Marking to substantially all of its products.

Initiatives sponsored by government agencies, legislative bodies and the private sector to limit the growth of healthcare expenses generally and hospital costs in particular, including price regulation and competitive pricing, are ongoing in markets where the Company does business. It is not possible to predict at this time the long-term impact of such cost-containment measures on the Company’s future business.

ITEM 1A. RISK FACTORS

In General. The purchase of shares of our common stock is very speculative and involves a very high degree of risk. An investment in us is suitable only for the persons who can afford the loss of their entire investment. Accordingly, investors should carefully consider the following risk factors, as well as other information set forth herein, in making an investment decision with respect to securities of the Company.

RISK FACTORS ASSOCIATED WITH THE BUSINESS OF SURGLINE, INC.

We have a limited operating history on which to base an investment decision.

We have a very limited operating history. We are subject to unforeseen costs, expenses, problems and difficulties inherent in new business ventures. There is no history upon which to base any assumption as to the likelihood that the company will prove successful. We cannot provide investors with any assurance that our services will attract customers; generate any significant operating revenue or ever achieve profitable operations. If we are unable to address these risks, there is a high probability that our business can fail.

Our success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish and maintain such relationships would adversely affect our market penetration and revenue growth.

We may be required to establish strategic relationships with third parties in the medical and surgical products industry, including agreements with stocking distributors, sales channel agreements and others. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the competitive position of our product and marketing plan relative to our competitors. We may not be able to establish other strategic relationships in the future.

In addition, any strategic alliances that we establish may subject us to a number of risks, including risks associated with sharing proprietary information, loss of control of operations that are material to developed business and profit-sharing arrangements. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by a number of factors that are outside of our control.

Our management team may not be able to successfully implement our business strategies.

If our management team is unable to execute on its business strategies, then our development, including the establishment of revenues and our sales and marketing activities would be materially and adversely affected. In addition, we may encounter difficulties in effectively managing the budgeting, forecasting and other process control issues presented by any future growth. We may seek to augment or replace members of our management team or we may lose key members of our management team, and we may not be able to attract new management talent with sufficient skill and experience.

If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and defend against litigation.

If our products infringe the proprietary rights of other parties, we could incur substantial costs and we may have to:

obtain licenses, which may not be available on commercially reasonable terms, if at all;

redesign our product to avoid infringement;

stop using the subject matter claimed in the patents held by others, which could cause us to lose the use of one or more of our products;

pay damages; or

· defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our valuable management resources.

If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.

We will need to hire additional qualified personnel with expertise in the medical and surgical products industry related to procurement of product, sales and marketing. We may face significant competition for qualified individuals, and we cannot be certain that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.

If we fail to develop our brand and advertise the products we sell effectively, our business may suffer.

We believe that developing and maintaining awareness of our brand is critical to achieving widespread acceptance of our existing and future services and products and is an important element in attracting new customers. We believe that our efforts to build our brand, including advertisements that will be designed to promote our corporate image, our merchandise and the pricing of such products, will involve significant expense. Our proposed brand promotion activities may not yield revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brands. If we fail to successfully promote and maintain our brand, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new customers or retain any existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business could suffer.

We are subject to shifting customer preferences and we may fail to optimize our product offerings and inventory positions.

Consumer and healthcare provider’s preferences in the medical supply industry change rapidly and are difficult to predict. The success of our business depends on our ability to predict accurately and respond to future changes in such preferences, carry the inventory demanded by customers, deliver the appropriate quality of products, price products correctly and implement effective purchasing procedures. We must optimize our product selection and inventory positions based on these preferences and sales trends. If we fail to anticipate, identify or react appropriately to changes and adapt our product selection to these changing preferences, we could experience excess inventories, higher than normal markdowns or an inability to sell the products we sell, which, in turn, could significantly reduce our revenue and have a material adverse effect on our business, financial condition and results of operations.

If we are unable to acquire inventory or fail to maintain optimal inventory levels, our inventory holding costs could increase or cause us to lose sales, either of which could have a material adverse effect on our business, financial condition and results of operations.

While we must maintain sufficient inventory levels to operate our business successfully and meet our customers’ demands, we must be careful to avoid amassing excess inventory. Changing consumer demands, manufacturer backorders and uncertainty surrounding new product launches expose us to increased inventory risks. Demand for products can change rapidly and unexpectedly, including the time between when the product is ordered from the supplier to the time it is offered for sale. We offer a wide variety of products and must maintain sufficient inventory levels of the products we sell. We may be unable to sell certain products in the event that consumer demand changes. Our inventory holding costs will increase if we carry excess inventory. However, if we do not have a sufficient inventory of a product to fulfill customer orders, we may lose orders or customers, which may adversely affect our business, financial condition and results of operations. We cannot assure you that we can accurately predict consumer demand and events and avoid over-stocking or under-stocking products.

If any of our customers fail to pay all or part of their invoices or delay payment, our results of operations and financial condition will be adversely affected.

As of July 31, 2012 we have $44,491 in accounts receivables. If we are successful in increasing sales, we will be increasing accounts receivables. The standard credit period for most of our customers is anticipated to be approximately net 60 days. There is no assurance that our accounts receivable will be fully repaid on a timely basis. If any of our customers with accounts receivables fail to pay all or part of the accounts receivable or delay the payment due to us for whatever reason, our net profit will decrease and our profitability will be adversely affected.

Disruptions in our ability to source product and any changes in the competitive environment for our products may adversely affect our profitability.

We plan to sell a broad range of medical related products. A significant disruption in the supply of these products could decrease inventory levels and sales, and materially adversely affect our business and financial results. Shortages of products or interruptions in transportation systems, labor strikes, work stoppages, war, acts of terrorism or other interruptions or difficulties in the employment of labor or transportation in the markets in which we purchase products may adversely affect our ability to maintain sufficient inventories of our products to meet consumer demand. If we were to experience a significant or prolonged shortage of products from any of our suppliers and could not procure the products from other sources, we would be unable to meet customer demand, which, in turn, would adversely affect our sales, margins and customer relations. Further, rising cost of labor and consumer goods in general could reduce our margins, and reduce our net earnings.

Our operations would be materially adversely affected if third-party carriers were unable to transport our products on a timely basis.

All of our products are shipped through third party carriers. If a strike or other event prevented or disrupted these carriers from transporting our products, other carriers may be unavailable or may not have the capacity to deliver our products to our customers. If adequate third party sources to ship our products were unavailable at any time, our business would be materially adversely affected.

We face increasing competition from both domestic and foreign companies and, if we cannot effectively compete, our business will be harmed.

The medical supply industry in which we operate is highly fragmented and competitive. Our ability to compete in the industry is, to a significant extent, dependent on our ability to distinguish our wholesale distribution of medical supplies and related products from those of our competitors by providing high quality services and products with competitive prices and convenient access. We compete directly with local suppliers and with large foreign multinational companies that offer services and products that are similar to ours. Some of these competitors have larger local or regional customer bases, more locations, more brand equity, and substantially greater financial, marketing and other resources than we have. We anticipate that our competitors will continue to improve their wholesale distribution or retail medical supply businesses and may be in a stronger position to respond quickly to potential acquisitions and other market opportunities.

We cannot assure you that our current or potential competitors will not provide wholesale distribution or retail medical supply services and products comparable or superior to those we provide or adapt more quickly than we do to evolving industry trends or changing market requirements. Increased competition may result in price reductions, reduced margins and loss of market share, any of which could materially adversely affect our profit margins. We cannot assure you that we will be able to compete effectively against current and future competitors. Aggressive marketing or pricing by our competitors or the entrance of new competitors into our markets could have a material adverse effect on our business, results of operations and financial condition.

If we become subject to product liability claims, personal injury claims or defective products our business may be harmed.

We intend to brand certain products with our own brand. Such branding will subject us to increased risk as once branded with our name, we become subject to increased oversight and regulation, including from the FDA. As a result, our potential liability for product failure will increase significantly. In addition, the medical supplies we are going to sell and our business in general is exposed to risks inherent in the packaging and distribution of medical supplies, such as mislabeling, adequacy of warnings, and the failure of any particular product to perform as expected. There may come a point where we are required to warn customers regarding any potential negative effects of a particular product. We do not believe we are under any such obligation at this time or will be in the future. We may sell products which inadvertently have an adverse effect on the health of individuals. Product liability claims may be asserted against us with respect to any of the products we sell. We do not believe we have any liability for claims related to products we sell but there is no guarantee we either won’t be sued or we won’t be held responsible. We may be required to pay for damages for any successful product liability claim against us, although we may have the right under applicable laws, rules and regulations to recover from the relevant manufacturer compensation we paid to our customers in connection with a product liability claim. Any product liability claim, product recall, adverse side effects caused by improper use of the products we sell or manufacturing defects may result in adverse publicity regarding us and the products we sell, which would harm our reputation. If we are found liable for product liability claims, we could be required to pay substantial monetary damages. Furthermore, even if we successfully defend ourselves against this type of claim, we could be required to spend significant management, financial and other resources, which could disrupt our business, and our reputation as well as our brand name, may also suffer. We, like many other similar companies that sell medical supplies, do not carry product liability insurance. As a result, any imposition of product liability could materially harm our business, financial condition and results of operations. In addition, we do not have any business interruption insurance due to the limited coverage of any such business interruption insurance, and as a result, any business disruption or natural disaster could severely disrupt our business and operations and significantly decrease our revenue and profitability.

The failure to manage growth effectively could have an adverse affect on our employee efficiency, product quality, working capital levels and results of operations.

Any significant growth in the market for our products or our entry into new markets may require an expansion of our employee base for managerial, operational, financial, and other purposes. As of July 31, 2012, we had no full time employees. During any period of growth, we may face problems related to our operational and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand, train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate, and motivate new employees.

Aside from increased difficulties in the management of human resources, we may also encounter working capital issues, as we will need increased liquidity to finance the purchase of raw materials and supplies, development of new products, and the hiring of additional employees. For effective growth management, we will be required to continue improving our operations, management, and financial systems and controls. Our failure to manage growth effectively may lead to operational and financial inefficiencies that will have a negative effect on our profitability. We cannot assure investors that we will be able to timely and effectively meet that demand and maintain the quality standards required by our existing and potential customers.

We are dependent on certain key personnel and loss of these key personnel could have a material adverse affect on our business, financial condition and results of operations.

Our success is, to a certain extent, attributable to the management, sales and marketing, and operational and technical expertise of certain key personnel. Each of the named executive officers, including Mr. Tom Toland, our Chief Executive Officer and President and Richard Dutch, our Chief Operating Officer, perform key functions in the operation of our business. The loss of these employees could have a material adverse effect upon our business, financial condition, and results of operations. We do not maintain key-person insurance for members of our management team because it is cost prohibitive at this point. If we lose the services of any senior management, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely disrupt our business and prospects.

We will be dependent to hire, train, retain and effectively recruit employees and any inability to do so, could have a materially adverse affect on our business, financial condition and result of operations.

We must attract, recruit and retain qualified and trained staff in order to operate our business. We face competition for personnel from other medical product suppliers. We cannot assure you that we will be able to attract, hire and retain sufficient numbers of skilled employees that are necessary to continue to develop and grow our business. Although we are presently in compliance with government licensing requirements, these requirements are subject to change, and in the event that different or stricter professional standards are imposed, we may face difficulty in attracting, hiring and retaining sufficient numbers of personnel with the requisite credentials and qualifications, which could limit our ability to increase revenue or deliver high quality customer service, and this could have a material adverse effect on our financial condition and results of operations.

Our ability to implement effectively our business strategy and expand our operations will depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced managers and other technical and marketing personnel. There is significant competition for technically qualified personnel in our business and we may not be successful in recruiting or retaining sufficient qualified personnel consistent with our current and future operational needs.

Our financial results may not meet the expectations of investors and may fluctuate because of many factors and, as a result, investors should not rely on our historical financial data as indicative of future results.

Fluctuations in operating results or the failure of operating results to meet the expectations investors may negatively impact the value of our securities. Operating results may fluctuate in the future due to a variety of factors that could affect revenues or expenses in any particular quarter. Fluctuations in operating results could cause the value of our securities to decline. Investors should not rely on comparisons of results of operations as an indication of future performance. As a result of the factors listed below, it is possible that in future periods results of operations may be below the expectations of investors. This could cause the market price of our securities to decline. Factors that may affect our quarterly results include:

	Ÿ	vulnerability of our business to a general economic downturn in California and the U.S. generally;
	Ÿ	fluctuation and unpredictability of the prices of the products we sell;
	Ÿ	seasonality of our business;
	Ÿ	changes in laws that may affect our operations;
	Ÿ	competition from other medical supply companies; and
	Ÿ	our ability to obtain necessary government certifications and/or licenses to conduct our business.

Our strategy may include acquiring companies which may result in unsuitable acquisitions or failure to successfully integrate acquired companies, which could lead to reduced profitability.

We may embark on a growth strategy through acquisitions of companies or operations that complement existing product lines, customers or other capabilities. We may be unsuccessful in identifying suitable acquisition candidates, or may be unable to consummate desired acquisitions. To the extent any future acquisitions are completed, we may be unsuccessful in integrating acquired companies or their operations, or if integration is more difficult than anticipated, we may experience disruptions that could have a material adverse impact on future profitability. Some of the risks that may affect our ability to integrate, or realize any anticipated benefits from, acquisitions include:

	Ÿ	unexpected losses of key employees or customer of the acquired company;
	Ÿ	difficulties integrating the acquired company’s standards, processes, procedures and controls;
	Ÿ	difficulties coordinating new product and process development;
	Ÿ	difficulties hiring additional management and other critical personnel;
	Ÿ	difficulties increasing the scope, geographic diversity and complexity of our operations;
	Ÿ	difficulties consolidating facilities, transferring processes and know-how;
	Ÿ	difficulties reducing costs of the acquired company’s business;
	Ÿ	diversion of management’s attention from our management; and
	Ÿ	adverse impacts on retaining existing business relationships with customers.

Our Chief Executive Officer and certain related Company Officers and stockholders possess the majority of our voting power, and through this ownership, control our Company and our corporate actions.

Our current CEO and President, Thomas Toland, our Chief Operating Officer, Richard Dutch, MD Capital Advisors, Inc. and Core Winner Holdings Limited, collectively held approximately 58% of the voting power of the outstanding shares immediately after this Share Exchange Agreement. If these officers and/or stockholders were to act as a group, they would have a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. Such officers and/or stockholders may also have the power to prevent or cause a change in control. In addition, without the consent of these stockholders, we could be prevented from entering into transactions that could be beneficial to us. The interests of these stockholders may give rise to a conflict of interest with the Company and the Company’s shareholders. For additional details concerning voting power please refer to the section below entitled “Description of Securities.”

The lack of a market of our common stock could affect our ability to raise working capital and adversely impact our ability to continue operations.

Our common stock is not currently quoted on any exchange, there is no or very limited liquidity of our common stock and our ability to raise capital through sales of common stock is very doubtful. We can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.

Concentrated ownership of our common stock creates a risk of sudden changes in our common stock price.

The sale by any shareholder of a significant portion of their holdings could have a material adverse effect on the market price of our common stock.

Sales of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.

A substantial majority of the outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of common stock. Under Rule 144, affiliates who have held restricted securities for a period of at least six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to the sale (the four calendar week rule does not apply to companies quoted on the OTCQB). A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

If we issue additional shares or derivative securities in the future, it will result in the dilution of our existing stockholders.

Our Certificate of Incorporation authorizes the issuance of up to 6,475,000,000 shares of common stock, $0.001 par value per share, and 25,000,000 shares of preferred stock, $0.001 par value per share. Our board of directors may choose to issue some or all of such shares, or derivative securities to purchase some or all of such shares, to provide additional financing in the future.

We do not plan to declare or pay any dividends to our stockholders in the near future.

We have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

The requirements of being a public company may strain our resources and distract management.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements are extensive. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting.

We may incur significant costs associated with our public company reporting requirements and costs associated with applicable corporate governance requirements. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. This may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

We have not filed our quarterly reports with the SEC, we may never be re-listed on the OTCQB, or on any exchange.

Under OTCQB rules relating to the timely filing of periodic reports with the SEC, any OTCQB issuer who fails to file a periodic report (Forms 10-Q or 10-K) by the due date of such report, may be removed from the OTCQB and our common stock may only be able to be traded on the OTC Pink. We are late filing this annual report and we have not filed the quarterly report for the periods ended October 31, 2012 and January 31, 2013. The trading of our stock was suspended on September 17, 2012 by the SEC. The suspension ended on September 28, 2012. However, in order for our common stock to resume quotations, the SEC requires that a broker-dealer must file Form 211 with the Financial Industry Regulatory Authority (“FINRA”), representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432. We have no agreement with any broker dealer to file Form 15c-211. Accordingly, our securities may be worthless and we may be forced to curtail or abandon our business plan.

Persons associated with securities offerings, including consultants, may be deemed to be broker dealers.

In the event that any of our securities are offered without engaging a registered broker-dealer, we may face claims for rescission and other remedies. If any claims or actions were to be brought against us relating to our lack of compliance with the broker-dealer requirements, we could be subject to penalties, required to pay fines, make damages payments or settlement payments, or repurchase such securities. In addition, any claims or actions could force us to expend significant financial resources to defend our company, could divert the attention of our management from our core business and could harm our reputation.

Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.

A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct business.

We have the right to issue up to 25,000,000 shares of preferred stock, which may adversely affect the voting power of the holders of our other securities and may deter hostile takeovers or delay changes in management control.

We may issue up to 25,000,000 shares of preferred stock from time to time in one or more series, and with such rights, preferences and designations as our board of directors may determine from time to time. To date, our board of directors have authorized Series A and B of preferred stock. Additionally, our board of directors, without further approval of our common stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series of our preferred stock. Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our other securities and may, under certain circumstances, have the effect of deterring hostile takeovers or delay changes in management control.

The market price of our common stock may fluctuate significantly.

If we are successful in getting our common stock re-listed on any exchange, the market price of our common shares may fluctuate significantly in response to factors, some of which are beyond our control, such as:

the announcement of new products or product enhancements by us or our competitors;

developments concerning intellectual property rights and regulatory approvals;

quarterly variations in our and our competitors’ product development activities or results of operations;

changes in earnings estimates or recommendations by securities analysts;

developments in our industry; and

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

Further, the stock market in general has recently experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common shares, which could cause a decline in the value of our common shares. You should also be aware that price volatility might be worse if the trading volume of our common shares is low.

Trading of our common stock is limited.

Prior to the Order of Suspension, trading of our common stock was on the Over-the-Counter Quotation Board, or “OTCQB.” This has adversely effected the liquidity of our securities, not only in terms of the number of securities that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts' and the media's coverage of us. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

Because it is a “penny stock,” it will be more difficult for you to sell shares of our common stock.

Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our stock. Because of the rules, there is less trading in penny stocks. Also, many brokers choose not to participate in penny-stock transactions. Accordingly, you may not always be able to resell shares of our common stock publicly at times and prices that you feel are appropriate.

We currently have outstanding debt that is convertible into shares of our common stock at prices that may be significantly below the market price at any given time and therefore significant dilution could occur to our current stockholders.

At July 31, 2012, we had a total of $198,500 in debt that is convertible into shares of our common stock at discount of up to 50% of the market price for our common stock at any given time. The conversion of any or all of this debt could result in significant dilution to our stockholders at the time such debt is converted.

We currently have stock options and common stock purchase warrants outstanding that may be exercisable at prices below the market price for our common stock at any given time that could result in significant dilution to our stockholders.

At July 31, 2012, we had a total of 16,500,000 stock options and common stock purchase warrants outstanding exercisable at a weighted average exercise price of $0.03 at that date. The conversion of any or all of these options and warrants could occur at prices below the market price of our common stock at a given time and could cause substantial dilution to our stockholders. In addition, as we seek to raise additional capital to fund our future business operations, we could issue additional stock options and warrants at prices below market that cause additional dilution to our stockholders.

ITEM 2. PROPERTIES.

Our executive offices are located at 319 Clematis Street – Suite 400, West Palm Beach, Florida 33401 and are provided to us on a month to month basis by a limited liability corporation controlled by our Chief Financial Officer. We also utilize space in Centennial, Colorado that is provided to us on a month to month basis by a corporation in which one of our directors is affiliated with. These spaces are provided to us free of charge.

ITEM 3. LEGAL PROCEEDINGS.

Our company is not a party in to any bankruptcy, receivership or other legal proceeding, and to the best of our knowledge, no such proceedings by or against us have been threatened.

ITEM 4. REMOVED AND RESERVED

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

(a) Market information.

The trading of our stock was suspended on September 17, 2012 by the SEC. The suspension ended on September 28, 2012. However, in order for our common stock to resume quotations, the SEC requires that a broker-dealer must file Form 211 with the Financial Industry Regulatory Authority (“FINRA”), representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432. Through September 16, 2012 our common stock was quoted on the Over-the-Counter Quotation Board, or “OTCQB” under the trading symbol “SGLN”. The following table lists the high and low bid information for our common stock as quoted on the OTCQB for the fiscal years ended 2012 and 2011, respectively:

	Price Range
Quarter Ended	High ($)	Low ($)
October 31, 2010	$0.018	$0.003
January 21, 2011	0.0036	0.0013
April 30, 2011	0.0056	0.014
July 31, 2011	0.0069	0.018

October 31, 2011	.0034	.001
January 21, 2012	.0028	.001
April 30, 2012	.0016	.003
July 31, 2012	.0012	.0003

The above quotations from the OTCQB reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

(b) Holders.

The number of record holders of our common stock as of March 21, 2013, was approximately 140 based on information received from our transfer agent. This amount excludes an indeterminate number of shareholders whose shares are held in “street” or “nominee” name with a brokerage firm or other fiduciary.

We have not paid or declared any dividends on our common stock and we do not anticipate paying dividends on our common stock for the foreseeable future.

(d) Securities authorized for issuance under equity compensation plans.

We have the following securities authorized for issuance under our equity compensation plans as of July 31, 2012. This includes our 2002 Stock Option Plan, covering up to 1,000,000 shares of our common stock, our 2003 Stock Option Plan covering up to 2,500,000 shares of our common stock and our 2007 Stock Option Plan covering up to 18,000,000 shares of our common stock.

Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	-0-	$-0-	-0-
Equity compensation plans not approved by security holders	16,500,000	$0.03	5,000,000
Total	16,500,000	$0.03	5,000,000

The purpose of both the 2003 Stock Option Plan and the 2007 Stock Option Plan (together the “Plans”) is to increase shareholder value and to advance the interests of the Company by furnishing a variety of economic incentives designed to attract, retain and motivate employees, directors and consultants. Incentives may consist of opportunities to purchase or receive shares of the Company’s common stock. Grants may include both purchase options as well as direct grants of common shares upon conversion of accrued salaries, bonuses, notes payable, fees or other similar payments due from us to an eligible participant. The Plans are administered by our board of directors which determines the terms of all grants including their term, exercise price and vesting period, if applicable. Generally, grants must be at least 100% of the fair market value of our common stock on the date of grant and may be exercisable for up to ten years.

Recent Sales of Unregistered Equity Securities

Shares issued for conversion of subordinated debentures and accrued interest

On September 2, 2011 the Company issued 13,333,333 shares of common stock to Asher Enterprises, Inc., upon the conversion of $15,000 of debentures and $1,000 of unpaid interest on the debentures. The shares were issued at approximately $0.0012 per share.

On September 19, 2011 the Company issued 10,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures. The shares were issued at approximately $0.001 per share.

On September 26, 2011 the Company issued 12,500,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures. The shares were issued at approximately $0.008 per share.

On October 3, 2011 the Company issued 27,913,846 shares of common stock to Peak One Opportunity Fund, LLP upon the conversion of $20,000 of debentures and $7,216 of unpaid interest on the debentures. The shares were issued at approximately $0.000975 per share.

On October 4, 2011 the Company issued 10,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $6,000 of debentures. The shares were issued at approximately $0.0006 per share.

On October 6, 2011 the Company issued 10,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $6,000 of debentures. The shares were issued at approximately $0.0006 per share.

On October 10, 2011 the Company issued 15,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $9,000 of debentures. The shares were issued at approximately $0.0006 per share.

On October 14, 2011 the Company issued 13,333,333 shares of common stock to Asher Enterprises, Inc., upon the conversion of $8,000 of debentures. The shares were issued at approximately $0.0006 per share.

On October 20, 2011 the Company issued 12,240.000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $5,000 of debentures and $1,120 of unpaid interest on the debentures. The shares were issued at approximately $0.0005 per share.

On November 17, 2011 the Company issued 40,000,000 shares of common stock to Peak One Opportunity Fund, LLP upon the conversion of $30,000 of debentures. The shares were issued at approximately $0.00075 per share.

On November 18, 2011 the Company issued 14,925,373 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures. The shares were issued at approximately $0.00067 per share.

On November 23, 2011 the Company issued 16,119,403 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures and $800 of unpaid interest on the debentures. The shares were issued at approximately $0.00067 per share.

On September 2, 2011 the Company issued 13,333,333 shares of common stock to Asher Enterprises, Inc., upon the conversion of $16,000 of debentures and $5,522 of unpaid interest on the debentures. The shares were issued at approximately $0.001575 per share.

On January 23, 2012 the Company issued 10,000,000 shares of common stock to Hanover Holdings, LLC., upon the conversion of $5,000 of debentures. The shares were issued at approximately $0.0005 per share.

On January 30, 2012 the Company issued 13,969,560 shares of common stock to Hanover Holdings, LLC upon the conversion of $5,000 of debentures, $485 of unpaid interest on the debentures, and $1,500 of legal services. The shares were issued at approximately $0.0005 per share.

On January 30, 2012 the Company issued 31,250,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $15,000 of debentures. The shares were issued at approximately $0.00048 per share.

On February 1, 2012 the Company issued 22,916,667 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures and $1,000 of unpaid interest on the debentures. The shares were issued at approximately $0.00048 per share.

On February 7, 2012 the Company issued 24,689,393 shares of common stock to Peak One Opportunity Fund, LLP., upon the conversion of $13,000 of debentures and $3,295 of unpaid interest on the debentures. The shares were issued at approximately $0.00066 per share.

On March 14, 2012 the Company issued 22,727,273 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures. The shares were issued at approximately $0.00044 per share.

On March 19, 2012 the Company issued 32,432,432 shares of common stock to Asher Enterprises, Inc., upon the conversion of $12,000 of debentures. The shares were issued at approximately $0.00037 per share.

On April 23, 2012 the Company issued 44,500,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $6,000 of debentures and $1,120 of unpaid interest on the debentures. The shares were issued at approximately $0.00016 per share.

On May 29, 2012 the Company issued 66,666,667 shares of common stock to Asher Enterprises, Inc., upon the conversion of $12,000 of debentures. The shares were issued at approximately $0.00018 per share.

On June 4, 2012 the Company issued 66,666,667 shares of common stock to Asher Enterprises, Inc., upon the conversion of $12,000 of debentures. The shares were issued at approximately $0.00018 per share.

On June 11, 2012 the Company issued 36,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $6,000 of debentures and $1,200 of unpaid interest on the debentures. The shares were issued at approximately $0.0002 per share.

On July 2, 2012 the Company issued 66,666,667 shares of common stock to Asher Enterprises, Inc., upon the conversion of $10,000 of debentures. The shares were issued at approximately $0.00015 per share.

On July 11, 2012 the Company issued 80,000,000 shares of common stock to Asher Enterprises, Inc., upon the conversion of $12,000 of debentures. The shares were issued at approximately $0.00015 per share.

On July 18, 2012 the Company issued 26,666,667 shares of common stock to Asher Enterprises, Inc., upon the conversion of $3,000 of debentures and $1,000 of unpaid interest on the debentures. The shares were issued at approximately $0.00015 per share.

Shares issued for conversion of convertible notes

In November 2011, the Company issued $100,000 in convertible notes to seven investors. The notes convert at a discount equal to 50% of the average of the lowest three trading prices per share of the Company’s common stock for the ten (10) trading days immediately preceding the date of conversion. Accordingly, in November 2011, upon the Company receiving Conversion Notices on the $100,000 convertible notes from the noteholders, the Company issued 146,853,147 shares of restricted common stock. The shares were issued at $0.00068 per share.

Shares issued upon conversion of Series A Preferred Stock

On September 6, 2011 the Company issued 32,894,167 shares of common stock upon the conversion of 39,473 shares of Series A Preferred Stock. Pursuant to the Certificate of Designation of the Preferred Stock, as amended, the shares were issued at approximately $0.0012 per share.

Other issuance of shares of common stock

On October 20, 2011, the Company issued 76,677,667 shares of common stock pursuant to Debt Settlement and Release Agreements in exchange for the cancellation of $43,007 of accounts payable. The shares were issued at approximately $0.0006 per share.

On March 27, 2012 the Company issued 10,000,000 shares of common stock in a private placement for $0.0005 per share. The Company received proceeds of $5,000.

On May 1, 2012, pursuant to the Agreement Concerning that Exchange of Securities (the “Agreement”) with Eden Surgical Technologies, LLC (“Eden”), a Texas limited liability company and the equity holders of Eden, the Company agreed to acquire all of the outstanding membership interests of Eden in exchange (the “Exchange”) for the issuance of 50,000,000 shares of the Company’s common stock.

On May 1, 2012 the Company issued 75,036,208 shares of common stock pursuant to a one year consulting agreement.

We offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. We relied on this exemption and rule based on the fact that there were a limited number of investors, all of whom were accredited investors and (i) either alone or through a purchaser representative, had knowledge and experience in financial and business matters such that each was capable of evaluating the risks of the investment, and (ii) we had obtained subscription agreements from such investors indicating that they were purchasing for investment purposes only. The securities were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as permitted by Rule 135c under the Securities Act.

ITEM 6. SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General:

During the year ended July 31, 2012, the Company had entered into and announced several agreements related to sales and marketing, including a non-binding Letter of Intent (“LOI”) to acquire a distributor. The Company and the distributor were not able to satisfy the closing conditions and accordingly the transaction was not completed. Among the agreements, various distributors had agreed to carry the Company’s products. The distributors were either unable to purchase the necessary full line of inventory from the Company or the Company decided not to ship inventory to the distributors on consignment, per their request. Additionally, the Company did not have sufficient working capital to procure any significant level of inventory (see Risk Factors), as many of our vendors required either letters of credit or cash in advance of production.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto for the year ended July 31, 2012 and for the period of March 15, 2011(inception date of SurgLine, Inc.) to July 31, 2011.

The independent auditors’ report on our financial statements for the year ended July 31, 2012 and for the period from inception (March 15, 2011) to July 31, 2011 includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. Management’s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 1 to the audited consolidated financial statements.

While our independent auditor has presented our financial statements on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, they have raised a substantial doubt about our ability to continue as a going concern.

(a) Liquidity and Capital Resources.

For the year ended July 31, 2012, net cash used in operating activities was $357,444 compared to $213,785 for the period ended July 31, 2011. Net loss was $2,737,499 for the year ended July 31, 2012 compared to $699,871 for the period ended July 31, 2011. The net loss in the current period was impacted by stock compensation expense of $1,577,022, beneficial conversion features related to convertible promissory notes of $223,776, amortization of the discount on convertible debentures of $202,417, the initial expense on derivative liabilities of $130,687, the impairment of investment in subsidiary of $25,000 and amortization of deferred financing costs of $18,631. The net loss in the year ago period includes $439,580 associated with the issuance of common stock and warrants.

Net cash provided by financing activities for the year ended July 31, 2012 was $315,900 compared to $263,500 for the period ended July 31, 2011. For the year ended July 31, 2012 the Company received $216,000 on the issuance of convertible debentures, $100,000 on the issuance of convertible notes payable, $10,400 on the issuance of related party notes and $5,000 from the sale of common stock. For the year ended July 31, 2012 the Company paid $15,000 closing costs on the newly issued convertible debentures. For the period ended July 31, 2011 the Company received proceeds of $263,000 from the sale of shares of common stock and $8,000 on the issuance of notes payable related parties, and also repaid$7,500 of related party notes payable.

For the year ended July 31, 2012, cash and cash equivalents decreased by $41,544 compared to an increase of $49,011 for the period ended July 31, 2011. Ending cash and cash equivalents at July 31, 2012 was $7,467 compared to $49,011 at July 31, 2011.

We have limited cash and cash equivalents on hand and need to raise funds to continue to be able to support our operating expenses and to meet our other obligations as they become due. Sources available to us that we may utilize include the sale of unsecured convertible debentures, as well as the exercise of outstanding options and warrants, all of which may cause dilution to our stockholders.

(b) Results of Operations.

OPERATING EXPENSES

Operating expenses for the year ended July 31, 2012 were $2,121,141 compared to expenses of $699,871 for the period ended July 31, 2011, as follows:

	July 31,
	2012	2011
Stock compensation, non employees	$ 1,577,022	$ 439,580
Management and consulting fees, related parties	290,400	101,400
Consulting fees	117,500	65,000
Selling, general and administrative	49,279	75,544
Legal and accounting	86,940	18,347
	$ 2,121,141	$ 699,871

OTHER INCOME (EXPENSE)

Other expenses for the year ended July 31, 2012 were $655,468. The fair value change in derivative liabilities included in other expenses for the year ended July 31, 2011 was $130,372. Interest expense of $276,320 for the year ended July 31, 2012 is summarized as:

Amortization of debenture note discounts		$ 202,417
Debenture interest		14,110
Amortization of debt issuance costs		18,631
Notes interest, related		3,989
Note and other interest		37,173
Total interest expense		$ 276,320

During the fiscal year ended July 31, 2012, the Company did not engage in any off-balance sheet arrangements as defined in Item 303 of Regulation S-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS.

The financial statements and related information required to be filed are indexed and begin on page F-1 and are incorporated herein.

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

Not applicable.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

A review and evaluation was performed by the Company's management, including the Company's Chief Executive Officer (the "CEO") and Chief Financial Officer (the “CFO”), of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this annual report. Based on that review and evaluation, the CEO and CFO have concluded that as of July 31, 2012 disclosure controls and procedures, were not effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required in the application of SEC rules and forms.

Management’s Report on Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

•

Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our CEO and CFO have evaluated the effectiveness of our internal control over financial reporting as described in Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report based upon criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to the extent possible given the limited personnel resources and technological infrastructure in place to perform the evaluation. Based upon our management’s discussions with our auditors and other advisors, our CEO and CFO believe that, during the period covered by this report, such internal controls and procedures were not effective as described below.

We assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

Lack of Audit Committee: We do not have a functioning audit committee, resulting in lack of independent oversight in the establishment and monitoring of required internal controls and procedures.

We have discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION.

Prior Business Activity

Prior to the Share Exchange Agreement with SurgLine, Inc., the Company through its wholly owned subsidiary, Nuvo Solar Energy, Inc., (“Nuvo”) was a development-stage company that was working to develop and design, with a view toward manufacturing, solar photovoltaic (PV) cell technology products. Nuvo owns certain patent applications and patent rights and other photovoltaic intellectual property. The primary technology involves a unique patent pending solar cell technology based on photovoltaic cells with integral light-transmitting wave guides in a ceramic sleeve. The advantage of this technology is that less exposed surface area is required to generate electricity. The light-transmitting particles act as wave guides and allow the sun-exposed conversion area of the solar cell to be shifted readily from horizontal to vertical to capture more sunlight. The ceramic sleeve eliminates the need for expensive vacuum chambers, thereby allowing less expensive materials to be used in solar cell production.

We were working to develop, with plans to eventually manufacture and market in conjunction with strategic partners, innovative solar cells and solar power products for a wide range of applications based on our technology that increases light-trapping while enabling a variety of materials to be used.

We signed an agreement with PMI to establish a pilot production line by building out and modifying PMI’s existing manufacturing facility located in the Chengdu West High Tech Development Zone in Chengdu, Sichuan, China. Following a serious earthquake in the Chengdu, China region, Pioneer ceased performing under the contract and we ceased pursuing any production plans.

Our business plan focused on developing cost-effective, highly-efficient, environmentally-friendly solar energy products. We intended to enter into strategic partnerships with companies that can help advance our technology or acquire technologies and businesses that will help us implement our business strategy in certain circumstances. In order to do so, we must have developed working prototypes that can be readily adapted to larger scale production and manufacturing. To date we have not developed any prototypes and do not have any strategic working relationships to further our business plan and consequently we have ceased pursuing any further development of any solar related products.

Due to the Company’s lack of success in developing its solar technology and its inability to attract qualified technical personnel, in late 2010 and early 2011, the Company began to evaluate potential new business opportunities in an effort to create shareholder value, as outlined in a Company press release dated January 10, 2011.

Concurrent with this decision, the Company made a determination to eliminate funding of legal efforts pursuing intellectual property relating to solar energy, including the invention titled “Photovoltaic Cell with Integral Light Transmitting Waveguide in a Ceramic Sleeve.”

Accordingly, we do not have any current plans to commercialize any of the solar technology and also we do not have any plans to effectuate any of the patents that were previously pending. We have made no further applications of any patents.

In early 2011, the Company began its due diligence on Freya Energy, Inc. (“Freya”) as a potential acquisition candidate. On March 9, 2011 the Company announced the signing of a non-binding Letter of Intent (“LOI”). After the time period for the Freya LOI expired, the Company and Freya decided to move forward with their own individual plans and a public announcement terminating the Freya transaction was released on July 20, 2011.

We are solely operating in the medical and surgical products industry.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

(a)(b) Identification of directors and executive officers.

The following table sets forth the name, age, position and office term of each executive officer and director of the Company.

Name	Age	Position
Henry Fong	77	President, Chief Executive Officer (resigned September 1, 2011) and Director
Barry S. Hollander	55	Chief Financial Officer
Thomas G. Toland	56	Chief Executive Officer, President and Director (effective September 1, 2011)
Richard Dutch	52	Chief Operating Officer and Secretary (effective September 1, 2011)

Not applicable.

(d) Identification of family relationships.

None.

(e) Business experience.

Henry Fong. Mr. Fong has been a director of the Company since March 2002 and from March 2002 through September 1, 2011(the date of the acquisition of SurgLine) was also the president and chief executive officer. Mr. Fong is the president and a director of Nuvo since its inception in April 2006. Through August 2011, Mr. Fong had been the Chief Executive Officer of Techs Loanstar, Inc., a publicly traded Company, from February 2010 when it merged with ZenZuu USA (“ZZUSA”). Mr. Fong was the Chief Executive Officer of ZZUSA since its inception in June 2009 and the Chief Executive Officer of ZZPartners, Inc. from its inception (April 2008) through its merger with ZZUSA. Mr. Fong has been the president and a director of Alumifuel Power Corporation (f/k/a Inhibiton Therapeutics) since its inception in May 2004. Mr. Fong was the president, treasurer and a director of Hydrogen Power, Inc. (f/k/a Equitex, Inc.) a publicly traded alternative energy company, from its inception in 1983 to January 2007. Mr. Fong has been a director of FastFunds Financial Corporation, a publicly traded financial services company, since June 2004. Mr. Fong is currently the sole director, President and Chief Financial Officer of PB Capital International, Inc. (“PBIC”), a blank check shell company. PBIC is seeking to merge with a target company. PBIC filed a Form 10 registration statement which went effective in October 2009. From 1959 to 1982 Mr. Fong served in various accounting, finance and budgeting positions with the Department of the Air Force. During the period from 1972 to 1981 he was assigned to senior supervisory positions at the Department of the Air Force headquarters in the Pentagon. In 1978, he was selected to participate in the Federal Executive Development Program and in 1981, he was appointed to the Senior Executive Service. In 1970 and 1971, he attended the Woodrow Wilson School, Princeton University and was a Princeton Fellow in Public Affairs. Mr. Fong received the Air Force Meritorious Civilian Service Award in 1982. Mr. Fong has passed the uniform certified public accountant exam. In March 1994, Mr. Fong was one of twelve CEOs selected as Silver Award winners in FINANCIAL WORLD magazine's corporate American "Dream Team."

Barry S. Hollander. Chief Financial Officer Mr. Hollander has been the CFO of the Registrant since 2002. Simultaneously therewith, Mr. Hollander has served as the Chief Financial Officer of Mediswipe, Inc. (formerly Cannabis Medical Solutions, Inc.), a publicly traded Company, since April 2011 and as the CFO of Quture International, Inc. (formerly Techs Loanstar, Inc.) a publicly traded Company, from February 2010 through February 2013. Mr. Hollander was the Chief Financial Officer of ZZUSA, a private company that merged with (Techs Loanstar, Inc.) since its inception in June 2009 and the Chief Financial Officer of ZZPartners, Inc. from its inception (April 2008) through its merger with ZZUSA. Mr. Hollander has been the acting Chief Executive Officer of FastFunds Financial Corporation, a publicly traded company with limited business operations, since January 2007. From 1994 to 1999, Mr. Hollander was the chief financial officer of California Pro Sports, Inc., an in-line skate importer, marketer and distributor. In 1999 California Pro merged with Imaginon, Inc. Mr. Hollander has a BS degree in Accounting from Fairleigh Dickinson University.

Thomas Toland, President and Chief Executive Officer. Mr. Toland became the President and Chief Operating Officer of the Registrant effective with the acquisition of SurgLine. Mr. Toland has more than 30 years of healthcare management experience. Mr. Toland has served as the Chief Executive Officer of SurgLine, Inc. since its inception in March 2011. In 1983, Mr. Toland started his healthcare career with American Medical International until he resigned in 1986 and entered the accounting and financial management and business development positions with Summit Health Corporation, OrNda Health, and Tenet Healthcare. In 2004, Mr. Toland founded Nationwide Pharmacy Management Group, and through 2009focused on the delivery of generic medications and prescription based medical foods to orthopedic surgeons, pain management physicians and primary treating physicians focused on delivering care to injured workers in the state of California. In 2001Mr. Toland formed Toland Healthcare Group (“THG”) and has been the CEO of THG, a healthcare management consulting company located in Newport Beach, California. THG provides hospitals, surgery centers, physicians, medical groups and independent physician associations with healthcare consulting services including negotiating contracts, business strategies, and new revenue opportunities. Mr. Toland is a graduate of the University of Southern California with a Bachelor of Arts in Accounting in 1980.

Richard Dutch, Chief Operating Officer. Mr. Dutch became the Chief Operating Officer of the Registrant effective with the acquisition of SurgLine. Mr. Dutch has served as the President, Chief Operating Officer and Secretary of SurgLine, Inc. since its inception in March 2011. Prior thereto and from June 1985 to March 2011 over 24 years of senior level experience primarily in the healthcare industry. From April 2005 through July 2011, Mr.Dutch was the President of Sterling Medical Products (“Sterling”) a privately held healthcare company. At Sterling, Mr. Dutch was responsible for the success and growth of one of the fastest growing, national orthopedic suppliers in the medical industry. Primary responsibilities were productivity, operations, with specific focus on increasing gross profit, revenue and financial ratios in accordance with the company forecast and business plan. Duties also included strategic planning and maintaining the principles of Six Sigma to insure operational excellence and that all corporate objectives are met.

(f) Involvement in certain legal proceedings.

Not applicable.

(g) Promoters and control persons.

Not applicable

Code of Ethics

In 2003 we adopted a Code of Ethics for Senior Financial Management to promote honest and ethical conduct and to deter wrongdoing. This Code applies to our Chief Executive Officer, Chief Financial Officer, controller, principal accounting officer and other employees performing similar functions. The obligations of the Code of Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally.

Under the Code of Ethics, all members of the senior financial management shall:

Act honestly and ethically in the performance of their duties at our company,

Avoid actual or apparent conflicts of interest between personal and professional relationships,

Provide full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in other public communications by our company,

Comply with rules and regulations of federal, state and local governments and other private and public regulatory agencies that affect the conduct of our business and our financial reporting,

Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing the member's independent judgment to be subordinated,

Respect the confidentiality of information acquired in the course of work, except when authorized or legally obtained to disclosure such information,

Share knowledge and maintain skills relevant to carrying out the member's duties within our company,

Proactively promote ethical behavior as a responsible partner among peers and colleagues in the work environment and community,

Achieve responsible use of and control over all assets and resources of our company entrusted to the member, and

Promptly bring to the attention of the Chief Executive Officer any information concerning (a) significant deficiencies in the design or operating of internal controls which could adversely to record, process, summarize and report financial date or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in our financial reporting or internal controls.

Corporate Governance

There have been no material changes to procedures by which security holders may recommend nominees to our board of directors.

We currently have no standing audit or nominating committees of our board of directors. Our entire board of directors currently performs these functions. While we currently have no standing audit or nominating committee, we have determined that Mr. Perkins would be considered an audit committee financial expert.

Director Independence

Our board of directors currently has two directors and has no standing sub-committees at this time due to the associated expenses and the small size of our board. We are not currently listed on a national securities exchange that has requirements that a majority of the board of directors be independent.

In performing the functions of the audit committee, our board oversees our accounting and financial reporting process. In this function, our board performs several functions. Our board, among other duties, evaluates and assesses the qualifications of the Company’s independent auditors; determines whether to retain or terminate the existing independent auditors; meets with the independent auditors and financial management of the Company to review the scope of the proposed audit and audit procedures on an annual basis; reviews and approves the retention of independent auditors for any non-audit services; reviews the independence of the independent auditors; reviews with the independent auditors and with the Company’s financial accounting personnel the adequacy and effectiveness of accounting and financial controls and considers recommendations for improvement of such controls; reviews the financial statements to be included in our annual and quarterly reports filed with the Securities and Exchange Commission; and discusses with the Company’s management and the independent auditors the results of the annual audit and the results of our quarterly financial statements. While we do not currently have a standing compensation committee, our non-employee director considers executive officer compensation, and our entire board participates in the consideration of director compensation. Our non-employee board members oversee our compensation policies, plans and programs. Our non-employee board members further review and approve corporate performance goals and objectives relevant to the compensation of our executive officers; review the compensation and other terms of employment of our Chief Executive Officer and our other executive officers; and administer our equity incentive and stock option plans. Each of our directors participates in the consideration of director nominees. In addition to nominees recommended by directors, our board will consider nominees recommended by shareholders if submitted in writing to our secretary. Our board believes that any candidate for director, whether recommended by shareholders or by the board, should be considered on the basis of all factors relevant to our needs and the credentials of the candidate at the time the candidate is proposed. Such factors include relevant business and industry experience and demonstrated character and judgment.

ITEM 11. EXECUTIVE COMPENSATION.

(a) General.

The following tables set forth all of the compensation awarded to, earned by or paid to:

In Table (1): (i) each individual serving as our principal executive officer during the fiscal year ended July 31, 2012 and the period ended July 31, 2011; (ii) each other individual that served as an executive officer at the conclusion of the fiscal year ended July 31, 2012 and who received in excess of $100,000 in the form of salary and bonus during such fiscal year.

Table 1. Summary Compensation of Executive Officers

Name & Principal Position	Year	Salary		Bonus		Restricted Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		All Other Compensation		Total
Henry Fong,	2012	$	10,000	$	-		-		-	$	-	$	-	$	10,000
Chief Executive Officer (1)	2011	$	120,000	$	-		-		-	$	-	$	-	$	120,000
Barry Hollander	2012	$	55,000		-		-		-		-		-	$	55,000
Chief Financial Officer (2)	2011	$	10,200		-		-		-		-		-	$	10,200
Thomas G. Toland	2012	$	49,950		-		-		-		-		-	$	49,950
Chief Executive Officer (2)	2011	$	30,000		-		-		-		-		-	$	30,000
Richard Dutch	2012	$	46,950		-		-		-		-		-	$	49,950
Chief Operating Officer (2)	2011	$	30,000		-		-		-		-		-	$	30,000

(1)

Based on an accrual of $10,000 per month through August 2011. Subsequent to the Share Exchange Agreement, the Company was no longer accruing any compensation for Mr. Fong. During the fiscal year ended July 31, 2011 Mr. Fong received cash compensation of $73,400 and also converted $75,665 to 25,000,000 shares of common stock at an average price of $0.003 per share. Mr. Fong is owed $253,935 at July 31, 2012.

(2)

Subsequent to the Share Exchange Agreement, the Company had month-to-month arrangements whereby it paid as cash flow permitted up to $10,000 a month each to; Mr. Toland for his services as Chief Executive Officer and President, Mr. Dutch for his services as Chief Operating Officer and Mr. Hollander for his services as Chief Financial Officer. Due to lack of operating capital, effective April 30, 2102, the three executives agreed to suspend any future accruals. The 2012 amounts include compensation expensed for each individual. The cash received was $44,250 for Mr. Toland, $38,250 for Mr. Dutch and $54,144 for Mr. Hollander. As of July 31, 2012, Mr. Toland, Dutch and Hollander were owed $18,500, $18,500 and $70,856, respectively.

(e) Narrative disclosure to summary compensation table.

There are no written agreements with respect to the employment of any of our executive officers.

(f) Outstanding equity awards at fiscal year end table.

The following table sets forth information regarding each unexercised option and non-vested stock award held by each of our named executive officers as of July 31, 2012.

Name	Number of Securities Underlying Unexercised Options Exercisable	Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price ($)			Option Expiration Date
Henry Fong	1,000,000		-		$0.07	11/27/2012
	2,000,000		-		$0.01	8/10/2019
Barry S. Hollander	500,000		-		$0.07	11/27/2012
	900,000		-		$0.01	8/10/2019

(d) Securities authorized for issuance under equity compensation plans.

In November 2007, the Board of Directors granted options to purchase 1,000,000 shares of common stock under our 2007 Stock Option Plan (the “2007 Plan”) to Mr. Fong and options to purchase 500,000 shares of common stock under the 2007 Plan to Mr. Hollander. The options granted have an exercise price of $0.07 per share (the market price of our common stock on the date of the grant) and expire November 27, 2017.

On August 10, 2009, the Board of Directors granted options to purchase 2,000,000 shares of common stock under our 2007 Plan to Mr. Fong and options to purchase 900,000 shares of common stock under the 2007 Plan to Mr. Hollander. The options granted have an exercise price of $0.01 per share (the market price of our common stock on the date of the grant) and expire August 10, 2019.

Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	-0-	$-0-	-0-
Equity compensation plans not approved by security holders	16,500,000	$0.03	5,000,000
Total	16,500,000	$0.03	5,000,000

(k) Compensation of directors.

We do not pay fees to our directors for attendance at meetings of the board; however, we may adopt a policy of making such payments in the future. We will reimburse out-of-pocket expenses incurred by directors in attending board and committee meetings.

(q) Additional narrative disclosure.

We currently have no retirement plans or similar benefits for our officers. We also have no contracts or agreements with our officers for payments that may result neither from their resignation, retirement, or other termination, nor in the event of a change in control.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

(a) Security ownership of certain beneficial owners.

(b) Security ownership of management.

The following table sets forth information known to the Company with respect to the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the outstanding common stock of the Company as of March 21, 2013 by: (1) each person known by the Company to beneficially own 5% or more of the Company’s outstanding common stock; (2) each of the named executive officers as defined in Item 402(a)(3); (3) each of the Company’s directors; and (4) all of the Company’s named executive officers and directors as a group. The number of shares beneficially owned is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Including those shares in the tables does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares.

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned	Percent of Common Stock (1)
Henry Fong 319 Clematis Street, Suite 400 West Palm Beach, FL 33401	8,032,488 (2)	0.14%
Barry Hollander 319 Clematis Street, Suite 400 West Palm Beach, Fl. 33401	9,009,121 (3)	0.16%
Thomas G. Toland 319 Clematis street, Suite 400 West Palm beach, FL. 33401	600,218,406	10.55%
Richard Dutch 319 Clematis street, Suite 400 West Palm beach, FL. 33401	257,236,523	4.52%
MD Capital Advisers, Inc. (5) 319 Clematis street, Suite 400 West Palm beach, FL. 33401	444,757,684	7.82%
All Executive Officers and Directors as a Group (4 persons)	874,496,538 (4)	15.35%

(1)

Based on 5,690,116,745 shares of our common stock were outstanding.

(2)

In addition to 1,692,591 shares of common stock, this includes: (i) 3,000,000 shares underlying options granted under our 2007 Stock Option Plan; (ii) 900,364 shares of common stock owned by Gulfstream Financial Partners, of which Mr. Fong is the managing partner; (iii) 439,533 shares of common stock held by another corporation in which Mr. Fong is an 80% shareholder and (v) 2,000,000 shares owned by Mary Virginia Knight, the spouse of Mr. Fong.

(3)

In addition to 1,609,121 shares of common stock held directly by Mr. Hollander, this includes: (i) 6,000,000 shares of restricted common stock owned by a limited liability company that Mr. Hollander is the managing partner and (ii)1,400,000 shares underlying options granted under our 2007 Stock Option Plan.

(4)

Includes 4,400,000 shares underlying options granted under our 2007 Stock Option Plan.

(5)

Mr. Derek Cahill is the person with voting or dispositive powers with respect to the shares held by MD Capital Advisors, Inc.

NONE

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

(a) Transactions with related persons.

Pursuant to the Share Exchange Agreement, the Company assumed $36,143 of notes payable to affiliates of Mr. Fong. From the date of the Share Exchange agreement through July 31, 2012, we issued promissory notes to the affiliated companies of $10,400 and we owed a balance of $46,543 as of July 31, 2012. The remaining balance outstanding carries an interest rate of 10% and is due on demand.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

R.R. Hawkins & Associates International a PC (f/ka/ Hawkins Accounting, Inc.) served as our certifying accountant for the fiscal year ended July 31, 2012 and for the period ended July 31, 2011.

Audit Fees

Fees for audit services billed for the fiscal year ended July 31, 2012 and for the period ended July 31, 2011 were $xx,xxx and $31,500 respectively and consisted of (i) audit of the Company’s annual financial statements; (ii) reviews of the Company’s quarterly financial statements; (iii) consultations on financial accounting and reporting matters arising during the course of the audit and reviews.

Audit-Related Fees

There were no other aggregated fees billed in the fiscal years ended July 31, 2012 and for the period ended July 31, 2011 for assurance and related services by the principal accountants that were reasonably related to the performance of the audit or review of the financial statements that were not reported above.

Tax Fees

There were no aggregate fees billed in the fiscal year ended July 31, 2012 and for the period ended July 31, 2011 for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

All Other Fees

There were no other fees billed in the fiscal year ended July 31, 2012 and for the period ended July 31, 2011 for any other service provided by R.R. Hawkins accounting.

ITEM 15. EXHIBITS

Exhibits

2.1	Agreement and Plan of Reorganization by and between the Company and Nuvo Solar Energy, Inc. dated April 23, 2007. (incorporated by reference to Company’s Form 8-K filed on May 1, 2007)
2.2	Amendment No. 1 to Agreement and Plan of Reorganization by and between the Company and Nuvo Solar Energy, Inc. dated July 25, 2007. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
2.3	Articles of Exchange relating to the share exchange by and between Interactive Games, Inc. and Nuvo Solar Energy, Inc. as filed with the Nevada Secretary of State on July 25, 2007. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
2.4	Statement of Share Exchange relating to the share exchange by and between Interactive Games, Inc. and Nuvo Solar Energy, Inc. as filed with the Colorado Secretary of State on July 25, 2007. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
2.5	Amended Agreement Concerning the Exchange of Securities by and among the Registrant and SurgLine, Inc. dated September 1, 2011. (incorporated by reference to Company’s Form 8-k filed on September 8, 2011)
3.1	Amended and Restated Articles of Incorporation of Interactive Games, Inc. (incorporated by reference to Company’s Form 8-K filed on July 5, 2007).
3.2	Amended and Restated Bylaws of Interactive Games, Inc. (incorporated by reference to Company’s Form 8-K filed on July 5, 2007).
3.3	Amended and Restated Articles of Incorporation of China Nuvo Solar Energy, Inc. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
3.4	Certificate of Designation of Series A Preferred Stock. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
4.1	Amended and Restated Certificate of Designation Series A Preferred Stock of China Nuvo Solar Energy, Inc. (incorporated by reference to Company’s Form 8-K filed on July 1, 2011)
4.2	Amended and Restated Articles of Incorporation of China Nuvo Solar Energy, Inc. (incorporated by reference to Company’s Form 8-K filed on September 8, 2011).
4.3	Form of promissory note made by the Company in favor of certain investors in July 2007. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
4.4	Form of warrant issued by the Company to certain investors on July 2007. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
4.5	Amended and Restated Certificate of Designation Series B Preferred Stock of China Nuvo Solar Energy, Inc. (incorporated by reference to Company’s Form 8-k filed on September 8, 2011)
10.1	Agreement between the Company and Photovoltiacs.com, Inc. dated June 9, 2006, as amended. (incorporated by reference to Company’s Form 8-K filed on July 31, 2007)
14.1	Code of Ethics. (filed herewith)
21.1	List of Subsidiaries. (filed herewith).
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith).
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith).
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith).
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith).

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SURGLINE INTERNATIONAL, INC.
	(Registrant)


Date: May 1, 2013	By: /s/ Thomas G Toland
	Thomas G Toland
	Principal Executive Officer

	By: /s/ Barry S. Hollander
	Barry S. Hollander
	Principal Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: May 1, 2013	/s/ Henry Fong
	Henry Fong
	Director

Date: May 1, 2013	/s/ Thomas G. Toland
	Thomas G Toland
	Director

Board of Directors

Surgline International, Inc. and subsidiary

West Palm Beach, Florida

Report of Independent Registered Public Accounting Firm

We have audited the accompanying balance sheets of Surgline International, Inc. as of July 31, 2012 and 2011, and the related statements of operations, stockholders’ deficit, and cash flows for the year July 31, 2012 and from March 15, 2011 (date of inception) through July 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 audit provides reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Surgline International, Inc. as of July 31, 2012 and 2011, and the results of its operations, and its cash flows for the year ended July 31 2012, and from March 15, 2011 (date of inception) through July 31, 2011 in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred net losses since inception, which raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

/s/ R.R. Hawkins & Associates International, a PC

Los Angeles, CA

May 1, 2013

F-1

SURGLINE INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
				July 31, 2012		July 31,2011
Current Assets
	Cash		$	7,467	$	49,011
	Accounts receivable			44,491		-
	Notes and interest receivable, other			36,276		-
	Inventory			13,159		-
	Debt issuance costs			4,288		-
	Prepaid assets and deposits			0		22,500
		Total current assets		105,681		71,511
Property, plant and equipment, net				-		704
		Total assets	$	105,681	$	72,215
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
	Accounts payable and accrued liabilities, related parties		$	341,985	$	20,006
	Accounts payable and accrued expenses			503,963		49,000
	Convertible debentures payable, net			151,093		-
	Derivative liability convertible debentures			238,718		-
	Notes payable			375,759		500
	Notes payable, related parties			46,543		-
		Total current liabilities		1,658,062		69,506
Shareholders’ equity (deficit):
	Preferred stock, 25,000,000 shares authorized
	Series A, 1,000,000 shares authorized; stated value $1.00 per share;160,000 (April) issued and outstanding			160,000		-
	Series B, par value $0.001, 1,000,000 shares authorized; no shares Series B, par value $0.001, 1,000,000 shares authorized; no shares			-		-
	Common stock, $.001 par value, 6,475,000,000 shares authorized; 5,480,126,761 (2012) and 3,981,163,909 (2011) shares issued and outstanding			5,480,127		3,981,164
	Additional paid-in capital			(3,755,138)		(3,278,584)
	Retained earnings			(3,437,370)		(699,871)
		Total shareholders' equity (deficit)		(1,552,381)		2,709
		Total liabilities and shareholders' equity (deficit)	$	105,681	$	72,215

See notes to consolidated financial statements.

F-2

SURGLINE INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statement of Operations

					Year Ended		For the period from March 15, 2011 (inception) to July 31,
					July 31, 2012		2011
Revenues:
	Revenues			$	113,620	$	-
	Cost of revenues				74,510		-
		Gross profit			39,110		-
Operating costs and expenses:
	Selling, general and administrative				49,279		242,091
	Consulting fees				117,500		-
	Management and consulting fees, related parties				290,400		68,200
	Salaries including stock compensation cost				1,577,022		389,580
	Legal and accounting				86,940		-
		Total operating costs and expenses			2,121,141		699,871
			Operating loss		(2,082,031)		(699,871)
Other income (expenses)
	Interest expense, related parties				(3,989)		-
	Interest expense, other				(272,331)		-
	Beneficial conversion feature				(223,776)		-
	Fair value adjustment of derivative liabilities				(130,372)		-
	Impairment of investment in subsidiary				(25,000)		-
		Total other income (expenses)			(655,468)		-
		Net income (loss)		$	(2,737,499)	$	(699,871)
Basic and diluted net income (loss) per common share				$	(0.01)	$	(0.01)
Basic and diluted weighted average common shares outstanding					5,362,048,682		3,981,163,909

See notes to consolidated financial statements.

F-3

	SURGLINE INTERNATIONAL, INC. AND SUBSIDIARIES
	STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
	Period from March 15, 2011 (Inception) to July 31, 2011 and the Year Ended July 31, 2012

					Additional						Total
		Common stock			paid-in				Accumulated		stockholders'
		Shares	Amount		capital		Preferred stock		deficit		equity (deficit)
Issuance of common stock upon formation of SurgLine, Inc.		3,429,820,000	$	3,429,820	$	(3,429,820)	$	-	$	-	$	-
Issuance of common stock for services		325,832,900		325,833		54,167		-		-		380,000
Issuance of common stock in private placement		225,511,009		225,511		37,489		-		-		263,000
Warrants issued for services		-		-		59,580		-		-		59,580
Net loss		-		-		-		-		(699,871)		(699,871)
Balances, July 31, 2011		3,981,163,909		3,981,164		(3,278,584)				(699,871)		2,709
Reverse acquisition of SurgLine, Inc.		863,107,522		863,108		(2,677,155)		199,473		-		(1,614,574)
Issuance of shares of common stock pursuant to consulting agreements		620,401,127		620,401		956,621		-		-		1,577,022
Issuance of shares of common stock upon conversion of subordinated debentures		696,470,242		696,470		(427,470)		-		-		269,000
Issuance of shares of common stock upon conversion of Series A Preferred Stock		32,894,167		32,894		6,579		(39,473)		-		-
Issuance of shares of common stock pursuant to conversion of accounts payable		76,677,667		76,678		(33,671)		-		-		43,007
Issuance of shares of common stock pursuant to conversion of accrued interest		41,047,040		41,047		(21,811)		-		-		19,236
Issuance of shares of common stock for services		3,000,000		3,000		(1,500)		-		-		1,500
Issuance of common stock upon conversion of convertible notes		146,853,147		146,853		(46,853)		-		-		100,000
Issuance of common stock in private placement		10,000,000		10,000		(5,000)		-		-		5,000
Beneficial conversion feature		-		-		223,776		-		-		223,776
Shares of common stock cancelled		(1,041,488,059)		(1,041,488)		1,041,488		-		-		-
Redemption of subordinated debentures		-		-		533,443		-		-		533,443
Issuance of shares for acquisition of Eden Technologies,Inc.		50,000,000		50,000		(25,000)		-		-		25,000
Net loss		-		-		-		-		(2,737,499)		(2,737,499)
Balances, July 31, 2012		5,480,126,761	$	5,480,127	$	(3,755,138)	$	160,000	$	(3,437,370)	$	(1,552,381)

See notes to consolidated financial statements.

F-4

SURGLINE INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows

	Year Ended			For the period from March 15, 2011 (inception) to
	July 31,			July 31,
	2012			2011
Cash flows from operating activities:
Net loss	$	(2,737,499	)	$	(699,871	)
Adjustments to reconcile net loss to net cash used in operating activities:
Increase (decrease) in derivative liability		(315	)		—
Initial expense on derivative liabilities		130,687			—
Stock based compensation		1,577,022			—
Common stock issued for services		1,500			439,580
Cash acquired in merger		152			—
Amortization of discount on debentures payable		202,417			—
Amortization of debt issuance costs		18,631			—
Beneficial conversion feature		223,776			—
Depreciation		704
Impairment of investment in subsidiary		25,000
Change in operating assets and liabilities:
Increase in accounts receivable		(44,491	)		—
Increase in inventory		(13,159	)		—
Decrease (increase) in prepaid expenses and other current assets		22,500			(22,500	)
Increase in accounts payable and accrued expenses		282,156			69,006
Decrease in amounts due to related parties		(46,525	)		—
Net cash used in operating activities		(357,444	)		(213,785	)
Cash flows from investing activities:
Purchase of property and equipment		—			(704	)
Net cash used in investing activities		—			(704	)
Cash flows from financing activities:
Proceeds from sale of common stock		5,000			263,000
Proceeds from issuance of related party notes payable		10,400			8,000
Proceeds from issuance of notes payable		100,000			—
Proceeds from issuance of debentures payable		216,000			—
Placement fees paid		(15,000	)		—
Repayments of notes payable		(500	)		(7,500	)
Net cash provided by financing activities		315,900			263,500
Net increase (decrease) in cash and cash equivalents		(41,544	)		49,011
Cash and cash equivalents, beginning of period		49,011			—
Cash and cash equivalents, end of period	$	7,467		$	49,011
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	$	5,835		$	—
Cash paid during the year for taxes	$	—		$	—
Non-cash investing and financial activities:
Fair value of options and shares issued for services	$	1,578,522		$	439,580
Fair value of shares of common stock issued for debentures and accrued and unpaid interest	$	288,236		$	—
Fair value of shares of common stock issued for account payable	$	43,007		$	—

See notes to consolidated financial statements.

F-5

SurgLine International, Inc.

Notes to Consolidated Financial Statements

Organization, basis of presentation and summary of significant accounting policies:

Organization

We were originally organized under the laws of the State of Nevada in 1996 as Zacman Enterprises, Inc. and subsequently changed our name to eNutrition, Inc.

Pursuant to an Agreement and Plan of Reorganization dated as of April 23, 2007, as amended on July 25, 2007 by and between the Company and Nuvo Solar Energy, Inc., a Colorado corporation (“Nuvo”), we and Nuvo entered into a share exchange whereby all of the issued and outstanding capital stock of Nuvo, on a fully-diluted basis, was exchanged for like securities of the Company, and whereby Nuvo became our wholly owned subsidiary. Contemporaneously, we changed our name to “China Nuvo Solar Energy, Inc.”

Nuvo was formed on April 13, 2006 for the purpose of seeking a business opportunity in the alternate energy or “next-generation energy" sector. This industry sector encompasses non-hydro carbon based energy production and renewable energy technologies that are “net-zero" or emissions free.

SHARE EXCHANGE TRANSACTION WITH SURGLINE, INC.

On September 1, 2011, the Registrant entered into and consummated the First Amendment to the Agreement Concerning that Exchange of Securities (the “Share Exchange Agreement”) with SurgLine, Inc., a Nevada corporation (“SurgLine”) and the shareholders of SurgLine. SurgLine’s business plan is to provide high quality medical and surgical products at discount prices. Upon consummation of the transactions set forth in the Agreement (the “Closing”), the Registrant adopted the business plan of SurgLine. Effective with the Share Exchange Agreement the Company is operating in only one business segment and ceased all of the business development plans of Nuvo.

Pursuant to the Share Exchange Agreement, the Registrant agreed to acquire all of the outstanding capital stock of SurgLine in exchange (the “Share Exchange”) for the original issuance of an aggregate of 857,143 shares (the “Exchange Shares”) of the Registrant’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). The Exchange Shares were issued on a pro rata basis, on the basis of the shares held by such security holders of SurgLine at the time of the Exchange. Further in accordance with the Agreement, and following an amendment of the Registrant’s Articles of Incorporation, the Exchange Shares were converted into 3,817,554,433 shares of the Registrant’s common stock, par value $0.001 per share. The shares of common stock issued to the SurgLine shareholders’ were equal to 70% of the issued and outstanding Common Stock of the Registrant, immediately after the Share Exchange. Additionally, pursuant to the provisions of the Share Exchange Agreement, the Company issued 163,609,476 newly issued shares of Common Stock to the SurgLine shareholders, in satisfaction of the anti dilution provisions in the Share Exchange Agreement. As a result of the Share Exchange, the Registrant issued a total of 3,981,163,909 shares (the “SurgLine Shares”) of its common stock to the SurgLine shareholders and SurgLine became a wholly-owned subsidiary of the Registrant. The parties have taken the actions necessary to provide that the Exchange is treated as a “tax free exchange” under Section 368 of the Internal Revenue Code of 1986, as amended. The Agreement contains customary representations, warranties and covenants of the Registrant and SurgLine for like transactions. The Share Exchange was effective upon the completed filing of Articles of Exchange with the Secretary of State of Nevada. The foregoing descriptions of the above referenced agreements do not purport to be complete. For an understanding of their terms and provisions, reference should be made to the Agreement attached as Exhibit 10.1 to the Current Report on Form 8-K/A, filed on December 14, 2011.

F-6

Additionally, the Registrant issued 142,857 shares of its Series B Preferred Stock to Abod Partners, LLC. (“Abod”). Abod has acted as a consultant to the Registrant in facilitating the Agreement by and among the Registrant and SurgLine. Upon the effectiveness of the increase in the authorized shares of capital stock of the Registrant, the 142,857 shares of Series B Preferred Stock were exchanged for 545,364,919 shares of our Common Stock.

On September 1, 2011, as a covenant to the Agreement, holders of a majority of the Registrant’s outstanding Common Stock voted to amend the Registrant’s Articles of Incorporation to increase the number of its authorized shares of capital stock from 1,500,000,000 shares to 6,500,000,000 par value $0.001 shares (the “Amendment”) of which (a) 6,475,000,000 shares were designated as Common Stock and (b) 25,000,000 shares were designated as blank check preferred stock.

At the effective time of the Exchange, our board of directors and officers was reconstituted by the resignation of Henry Fong as President and Chief Executive Officer of the Registrant and the appointment of Thomas G. Toland as a member of the Registrant’s Board of Directors, President and Chief Executive Officer and Richard Dutch as Secretary and Chief Operating Officer of the Registrant.

On October 18, 2011 the Company filed with the Secretary of State of Nevada Amended and Restated Articles of Incorporation to change the name of Registrant to SurgLine International, Inc. The amendment was approved by a majority of the Company’s shareholders and the Company’s Board of Directors.

On or about March 7, 2012, 1,041,488,059 of the SurgLine Shares were returned to the Company and made available for future issuances.

Going concern and management’s plans

The Company had a working capital deficit of approximately $1,552,380 at July 31, 2012. Additionally, the Company to date has generated minimal revenues. Accordingly, the Company has no ready source of working capital. These factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. While management believes the Company may be able to raise funds through the issuance of debt, there is no assurance the Company will be able to raise sufficient funds to operate in the future. The debt financing may include loans from our officers and directors. Our balance sheet includes current liabilities of approximately $1,658,000, a portion of this amount are in the form of a derivative liability of $238,718 and convertible notes and debentures of $526,852. These amounts, plus other related party loans of approximately $46,543 and accrued and unpaid interest may be converted to common stock, thereby reducing considerably our debt service obligations. Nevertheless, we will be required to raise funds in order to fund our operations and costs associated with being a public company.

On September 1, 2011 the Company completed the acquisition of 100% of the common stock of SurgLine. Pursuant to the terms of the Share Exchange Agreement (see above) SurgLine became a wholly owned subsidiary of SurgLine International, Inc. (formerly China Nuvo Solar Energy, Inc.) We will require additional capital for general corporate working capital to fund our day-to-day operations of SurgLine. We presently believe the source of funds will primarily consist of debt financing, which may include debt instruments that may include loans from our officers or directors.

Basis of presentation

The consolidated financial statements for the year ending July 31, 2012 include the accounts of SurgLine, the Company and our wholly owned subsidiary Nuvo. For the year ended July 31, 2011 the consolidated financial statements includes only SurgLine from March 15, 2011(their date of inception) to July 31, 2011. All of the intercompany accounts have been eliminated in consolidation. Certain reclassifications to amounts reported in the July 31, 2011 consolidated financial statements have been made to conform to the July 31, 2012 presentation. The balance sheet as of July 31, 2011 is derived from SurgLine’s audited financial statements.

For SEC reporting purposes, SurgLine is treated as the continuing reporting entity that acquired China Nuvo (the historic registrant, now known as SurgLine International, Inc.). The reports filed after the transaction have been prepared as if SurgLine (accounting acquirer) were the legal successor to the Company’s reporting obligation as of the date of the acquisition. Therefore, all financial statements filed subsequent to the transaction reflect the historical financial condition, results of operations and cash flows of SurgLine for all periods prior to the share exchange and consolidated with the Company from the date of the share Exchange. SurgLine previously had a June 30 fiscal year end, but has now assumed the fiscal year end of the Company (July 31), the legal acquirer. Since SurgLine was formed in March 2011, the prior year comparative results are from inception of SurgLine (March 15, 2011) to July 31, 2011. All share and per share amounts of SurgLine have been retroactively adjusted to reflect the legal capital structure of the Company pursuant to FASB ASC 805-40-45-1.

SurgLine, Inc. (“SurgLine”) was incorporated on March 15, 2011 under the laws of the state of Nevada. The Company provides its customers with the highest quality medical and surgical products at the lowest possible cost by eliminating the “historical brand premium.” The Company’s founders saw the need to help reduce costs in the acute care healthcare system, and particularly that of the Operating Rooms. The Company’s core business strategy is simply: Source and sell the highest quality medical and surgical products for substantially less, thereby reducing the “historical brand premium” that has historically been absorbed by healthcare end users, including hospitals, outpatient surgery centers, medical clinics, self-insured employers, managed care organizations, commercial insurance carriers and state and federal governmental payers.

F-7

Significant accounting policies:

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results will differ from those estimates.

Intellectual Property

The Company records intangible assets in accordance with Statement of Financial Accounting Standard (SFAS) Number 142, “Goodwill and Other Intangible Assets.” Goodwill and other intangible assets deemed to have indefinite lives are not subject to annual amortization. Intangible assets which have finite lives are amortized on a straight line basis over their remaining useful life; they are also subject to annual impairment reviews.

Revenue recognition

The Company recognizes revenue in accordance with FASB ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Inventory

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. At July 31, 2012, $13,159 of finished goods inventory was on hand. During the year ended July 31, 2012, the Company wrote off $16,095 of inventory.

Concentration on credit risks

The Company is subject to concentrations of credit risk primarily from cash and assets from discontinued operations.

The Company minimizes its credit risks associated with cash, including cash classified as assets from discontinued operations, by periodically evaluating the credit quality of its primary financial institutions.

Stock-based compensation

The Company accounts for stock awards issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete. Stock awards granted to non-employees are valued at their respective measurement dates based on the trading price of the Company’s common stock and recognized as expense during the period in which services are provided. There are 16,500,000 stock options outstanding at July 31, 2012.

F-8

Fair value of financial instruments

Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”).

Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly.

The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The three hierarchy levels are defined as follows:

Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market.

The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.

F-9

Income taxes

The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties.

Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.

Loss per common share

Earnings (loss) per share are computed in accordance with ASC 260, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities, if any, outstanding during the period. Stock options, warrants and common stock underlying convertible promissory notes at July 31, 2012 was 995,221,305 and are not considered in the calculation as the impact of the potential common shares would be to decrease loss per share and therefore no diluted loss per share figures are presented.

Recent accounting pronouncements

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” The guidance improves the comparability of financial reporting and facilitates the convergence of U.S. GAAP and IFRS by amending the guidance in ASC 220, Comprehensive Income. Under the amended guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. This guidance is effective retrospectively for annual and interim periods beginning after December 15, 2011. The adoption of the guidance is not expected to have a material impact on the Company's Consolidated Financial Statements or the Notes thereto.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Accrued liabilities, related parties:

Accrued liabilities, related parties at July 31, 2012 are as follows:

		2012
Management fees	$	324,791
Accrued interest		8,370
Affiliated Companies		8,824
	$	341,985

F-10

Convertible debentures payable:

Current Year Convertible Notes

During the year ended July 31, 2012, the Company entered into note agreements with Asher Enterprises, Inc., an unaffiliated investor, for the issuance of convertible promissory notes of $166,000, in the aggregate (together referred to as the “CY Convertible Notes”) as follows:

September 13, 2011	$	28,000
November 25, 2011		30,000
December 28, 2011		25,000
February 3, 2012		27,500
March 16, 2012		28,000
June 25, 2012	$	27,500

Among other terms, the CY Convertible Notes mature on their nine month anniversary (the “Maturity Date”), unless prepayment of any of the CY Convertible Notes is required in certain events, as called for in the agreement. The CY Convertible Notes are convertible at a conversion price (the “Conversion Price”) for each share of common stock equal to 50% of the average of the lowest three trading prices per share of the Company’s common stock for the ten (10) trading days immediately preceding the date

of conversion. In addition, the CY Convertible Notes provide for adjustments for dividends payable other than in shares of common stock, for reclassification, exchange or substitution of the common stock for another security or securities of the Company or pursuant to a reorganization, merger, consolidation, or sale of assets, where there is a change in control of the Company.

The CY Convertible Notes bears interest at eight percent (8%) per annum, payable in cash or shares of our common stock at the Conversion Price. Upon the occurrence of an Event of Default (as defined in the CY Convertible Notes), the Company is required to pay interest to the Holder of each outstanding note at twenty-two percent (22%) per annum and the Holders may at their option declare the CY Convertible Notes, together with all accrued and unpaid interest, to be immediately due and payable.

The Company may at its option prepay the CY Convertible Notes in full during the first ninety days following their issuance in an amount equal to 150% of the outstanding principal and interest, and during the 91^st to 180^th days following the Note in an amount equal to 175% of the outstanding principal and interest. Further terms call for the Company to maintain shares reserved for issuance as stated in the CY Convertible Note.

We received net proceeds from the CY Convertible Notes of $151,000 after debt issuance costs of $15,000 paid for lender legal fees. These debt issuance costs will be amortized over the term of the CY Convertible Note or such shorter period as the CY Convertible Note may be outstanding. Accordingly, as the CY Convertible Note is converted to common stock prior to their expiration date, that amount of debt issuance costs attributable to the amounts converted will be accelerated and expensed as of the applicable conversion dates. For the year ended July 31, 2012, $18,630 of these costs had been expensed as debt issuance costs and included in interest expense in the accompanying financial statements.

We have determined that the conversion feature of the CY Convertible Notes represents an embedded derivative since the CY Convertible Note is convertible into a variable number of shares upon conversion. Accordingly, the CY Convertible Notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. The Company believes that the aforementioned embedded derivatives meet the criteria of ASC 815 (formerly SFAS 133 and EITF 00-19), and should be accounted separately as derivatives with a corresponding value recorded as a liability. Accordingly, the fair value of these derivative instruments have been recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount to the CY Convertible Notes. Such discount will be accreted from the date of issuance to the maturity dates of the CY Convertible Notes. The change in the fair value of the liability for derivative contracts will be credited to other income (expense) in the consolidated statements of operations at the end of each quarter. The $166,000 face amount of the CY Convertible Notes were stripped of its’ conversion feature due to the accounting for the conversion feature as a derivative, which was recorded using the residual proceeds to the conversion option attributed to the debt. The beneficial conversion feature (an embedded derivative) included in the CY Convertible Notes resulted in an initial debt discount of $166,000 and an initial loss on the valuation of derivative liabilities of $130,687 for a derivative liability balance of $296,687 at issuance.

F-11

The fair values of the CY Convertible Notes were calculated at issue date utilizing the following assumptions:

Issuance Date	Fair Value	Term	Assumed Conversion Price	Market Price on Issue Date	Volatility Percentage	Interest Rate
9/13/11	$46,667	9 months	$0.0012	$0.0026	187%	1.4%
11/25/11	40,909	9 months	0.00073	0.0015	193%	.02
12/28/11	35,714	9 months	0.0007	0.0014	194%	.02
2/3/12	51,546	9 months	0.00053	0.0016	209%	.06
3/16/12	31,933	9 months	0.00041	0.0007	213%	.07
6/25/12	89,918	9 months	0.00018	0.0007	265%	.15

During the year ended July 31, 2012 the Company issued 442,326,373 shares of common stock upon the conversion of $83,000 face value of the CY Convertible notes and $3,320 of accrued and unpaid interest. As of July 31, 2012 there was a balance of $83,000 of CY Convertible Notes. At July 31, 2012, the Company revalued the derivative liability balance of the CY Convertible Notes.

The fair value of the CY Convertible Notes was calculated at July 31, 2012 utilizing the following assumptions:

Fair Value

Term

Assumed

Conversion Price

Volatility Percentage

Interest Rate

$165,940

1-8 months

$0.00018

290%

.07-0.14

Pursuant to the Share Exchange Agreement, the Company assumed a derivative liability of $253,333 related to the face value of $123,000 of Convertible Notes (the “Assumed Convertible Notes”). The Assumed Convertible Notes have terms similar to the CY Convertible Notes. Subsequent to the Share Exchange Agreement, the Company issued 205,587,669 shares of common stock upon the conversion of $123,000 face value of the Assumed Convertible Notes, $5,405 of accrued and unpaid interest and $1,500 of fees on the Assumed Convertible Notes. The Assumed Convertible Notes had a zero balance at July 31, 2012.The Company reduced the derivative liability by $299,571 as a result of the redeemed Assumed Convertible Notes. Prior to the redemption of the Assumed Convertible Notes, the Company revalued the remaining face value of the Assumed Convertible Notes and recorded a credit to expenses of $46,238. Since the Assumed Convertible Notes have a zero balance as of July 31, 2012 there is no derivative liability related to the Assumed Convertible Notes.

Also pursuant to the Share Exchange Agreement, the Company assumed $128,500 of face value of 2007 Debentures (the “2007 Debentures”) and a derivative liability of $222,456 associated with the 2007 Debentures. The 2007 Debentures are convertible at a conversion price (the “Conversion Price”) for each share of common stock equal to 75% of the lowest closing bid price per share (as reported by Bloomberg, LP) of the Corporation’s common stock for the twenty (20) trading days immediately preceding the date of conversion. In addition, the Debentures provide for adjustments for dividends payable other than in shares of common stock, for reclassification, exchange or substitution of the common stock for another security or securities of the Corporation or pursuant to a reorganization, merger, consolidation, or sale of assets, where there is a change in control of the Corporation.

Subsequent to the Share Exchange Agreement, the Company issued 92,603,239 shares of common stock upon the conversion of $63,000 of face value of the 2007 Debentures and $10,511 of accrued and unpaid interest. The Company reduced the derivative liability of the 2007 Debenture by $123,872 as a result of the redeemed 2007 Debentures. The Company revalued the remaining face value of $65,500 of the 2007 Debentures as of July 31, 2012 and reduced the derivative liability of the 2007 Debentures by $25,806 and recorded a credit to expense of $25,806; resulting in a derivative liability balance of $72,778 as of July 31, 2012 related to the 2007 Debentures.

A summary of the derivative liability balance activity and balance as of July 31, 2012 is as follows:

Fair Value	Derivative Liability Balance 9/1/11		Initial Derivative Liability			Redeemed convertible notes			Fair value change- period ended 7/31/12			Derivative Liability Balance 7/31/12
2007 Debentures	$	222,456	$	—		$	(123,872	)	$	(25,806	)	$	72,778
Cy Conv. Notes		—		296,687			(110,000	)		(20,747	)		165,940
Assumed Conv. Notes		253,333		—			(299,571	)		46,238			—
Total	$	475,789	$	296,687	*	$	(533,443	)	$	(315	)	$	238,718

*Comprised of $166,000, the discount on the face value of the convertible note and the initial derivative liability expense of $130,687 which is included in the derivative liability expense of $130,372 on the condensed statement of operations for the year ended July 31, 2012, included herein.

The following table summarizes the balance sheet amounts as of July 31, 2012, as well as the amounts included in the consolidated statement of operations for the year ended July 31, 2012.

Balance Sheet

Debentures		Debt issuance costs		Derivative liability		Face value of Debentures		Discount on Debentures
2007 Debenture	$	-	$	72,778	$	65,500	$	-
CY Conv Note		4,288		165,940		133,000		47,407
Assumed Conv Note		-		-		-		-
	$	4,288	$	238,718	$	198,500	$	47,407

Operating Statement

Debentures		Debt issuance costs (interest expense)		Fair value adjustment of derivative liability
2007 Debenture	$	-	$	(25,806)
CY Conv Note		7,917		109,940
Assumed Conv Note		10,713		46,238
	$	18,630	$	130,372

F-12

Convertible and other promissory notes and long-term debt, including related parties:

Convertible and other promissory notes and long-term debt, including related parties at July 31, 2012 consist of the following:

		July 31, 2012
Notes payable	$	375,759
Notes payable, related parties [A]		46,543
Convertible debentures, net of discount of $47,407		151,093
		573,395
Less current portion		573,395
Long-term debt, net of current portion	$	-

[A] Includes notes of $8,500 due to Mr. Fong, a member of our Board of Directors, as well as $38,043 due to various companies that Mr. Fong is affiliated with.

Stockholders’ deficit:

Preferred Stock

Series A Preferred Stock

As of July 31, 2012 there are 160,000 shares of Series A Preferred stock outstanding. Pursuant to the Certificate of Designation for Series A Preferred Stock, as amended, holders of the Series A Preferred Stock can convert the shares of preferred stock to common stock. The conversion price is equal to 50% of the average of the three lowest closing bid prices of our common stock in the 10 days immediately preceding the conversion. Additionally Series A holders are entitled to vote their stock on an as if converted to common stock basis on each matter submitted to vote at a meeting of stockholders. In the event of the Corporation’s liquidation, the Series A Preferred Stock shall rank senior to any class or series of the Corporation’s capital stock created after the Series A Preferred Stock; pari passu with any class or series of the Corporation’s capital stock created after the series A Preferred Stock that ranks on parity with the Series A Preferred Stock; and junior to any class or series of the Corporation’s capital stock created after the Series A Preferred Stock that ranks senior to the Series A Preferred Stock. The Series A Preferred Stock shall be senior to the Corporation’s common stock. Stockholders do not have any preemptive rights or other similar rights to acquire additional shares of common stock or other securities. As of July 31, 2012 and pursuant to the terms and conditions of the Certificate of Designation the 160,000 shares of Series A Preferred Stock is convertible into 1,046,321,526 shares of common stock.

Series B Preferred Stock

Pursuant to the Share Exchange Agreement (see Note 1), the Company agreed to acquire all of the outstanding capital stock of SurgLine in exchange (the “Share Exchange”) for the original issuance of an aggregate of 857,143 shares (the “Exchange Shares”) of the Registrant’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). The Exchange Shares were issued on a pro rata basis, on the basis of the shares held by such security holders of SurgLine at the time of the Exchange. Further in accordance with the Agreement, and following an amendment of the Registrant’s Articles of Incorporation, the Exchange Shares were converted into 3,817,554,433 shares of the Registrant’s common stock, par value $0.001 per share (the “Common Stock”) equal to 70% of the issued and outstanding Common Stock of the Registrant.

Additionally, pursuant to the agreement, the Company issued 142,857 shares of its Series B Preferred Stock to Abod Partners, LLC. (“Abod”). Abod has acted as a consultant in facilitating the Agreement by and among the Company and SurgLine. Upon the effectiveness of the increase in the authorized shares of capital stock of the Registrant, the 142,857 shares of Series B Preferred Stock were exchanged for 545,364,919 shares of our Common Stock. As of July 31, 2012 there were no shares of Series B Preferred Stock outstanding.

F-13

Common Stock

On September 1, 2011, as a covenant to the Share Exchange Agreement, holders of a majority of the Registrant’s outstanding Common Stock voted to amend the Registrant’s Articles of Incorporation to increase the number of its authorized shares of capital stock from 1,500,000,000 shares to 6,500,000,000 par value $0.001 shares (the “Amendment”) of which (a) 6,475,000,000 shares were designated as Common Stock and (b) 25,000,000 shares were designated as blank check preferred stock.

Return of shares of common stock

On March 7, 2012 management, founders and consultants of SurgLine, Inc. returned in the aggregate 1,041,488,059 shares of common stock to the Company. The shares can be utilized for future issuances.

Stock options and warrants

In March 2002, the Company adopted the 2002 Stock Option Plan, covering up to 1,000,000 shares of the Company's common stock, and in July 2003, the Company adopted the 2003 Stock Option Plan covering up to 2,500,000 shares of the Company's common stock. There are currently no options outstanding under the 2002 stock Option Plan and 300,000 under the 2003 Stock Option Plans. In August 2007, the Company adopted the 2007 Stock Option Plan covering up to 18,000,000 shares of the Company’s common

stock. There are currently 10,000,000 shares of the Company’s common stock under the 2007 Plan. As of July 31, 2012 there were options to purchase 16,500,000 shares of the Company’s common stock outstanding under the 2007 Stock Option Plan.

A summary of the activity of the Company’s outstanding options and warrants for the year ended ended July 31, 2012 is as follows:

	Options and warrants		Weighted average exercise price
Outstanding August 1, 2011	17,500,000	$	0.04
Granted	-		-
Exercised	-		-
Expired	1,000,000		0.12
Outstanding, July 31, 2012	16,500,000	$	0.03

Range of exercise

prices

Warrants outstanding

and exercisable

Weighted average remaining contractual

Life

Weighted average

exercise price

$.01

10,000,000

4.2

$0.01

0.07

6,500,000

2.1

0.07

The weighted average remaining contractual life of the terms of the warrants and options is 6.3 years.

F-14

6. Income taxes:

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the net deferred taxes, as of July 31, 2012, are as follows:

Deferred tax assets:
Net operating loss carryforward	$	590,000
Less valuation allowance		(590,000)
Total net deferred tax assets		-

The Company may have had a change of ownership as defined by the Internal Revenue Code Section 382. As a result, a substantial annual limitation may be imposed upon the future utilization of its net operating loss carryforwards. At this point, the Company has not completed a change in ownership study and the exact impact of such limitations is unknown. The company has no accrued tax liability, as the income was derived from the sale of a subsidiary and the liabilities were alleviated through formal bankruptcy proceedings.

The federal statutory tax rate reconciled to the effective tax rate during the three months ended July 31, 2012, is as follows:

		2012
Tax at U.S. Statutory Rate		35.0%
State tax rate, net of federal benefits		5.0%
Change in valuation allowance		(40.0)
		0.0%

Recent events:

Eden Acquisition

On May 14, 2012, the Company entered into and consummated the Agreement Concerning that Exchange of Securities (the “Agreement”) with Eden Surgical Technologies, LLC (“Eden”), a Texas limited liability company and the equity holders of Eden.

Pursuant to the Agreement, the Registrant agreed to acquire all of the outstanding membership interests of Eden in exchange (the “Exchange”) for the issuance of an aggregate of 50,000,000 shares (the “Exchange Shares”) of the Company’s common stock (the “Common Stock”). The shares were valued at $25,000 (the market price of the common stock o the date the parties agreed to the acquisition). As a result of the Exchange, Eden became a wholly-owned subsidiary of the Company.

Eden, formed on September 10, 2010, as an importer and distributor of trauma surgical products. As of the date of the acquisition Eden did not had any revenues. Subsequent to the acquisition, Eden has not had any activity, and accordingly, the Company has recorded an impairment of their investment of $25,000 included in other expenses for the year ended July, 31, 2012.

Subsequent events:

Suspension of trading

On September 17, 2012 the Securities and Exchange Commission (“SEC”) issued an Order of Suspension of Trading of our common stock. In the order the SEC stated that it appeared that there is a lack of current and accurate information concerning the securities of the issuers named in the order, including the Company. Further to the order the SEC has requested the Company to voluntarily provide and preserve certain documents. The confidential and voluntary document request is substantially related to items disclosed in the Company’s Form 10-K/A for the year ended July 31, 2011. The suspension ended on September 28, 2012. However, in order for our common stock to resume quotations, the SEC requires that a broker-dealer must file Form 211 with the Financial Industry Regulatory Authority (“FINRA”), representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432. We have no agreement with any broker dealer to file Form 15c-211. Accordingly, our securities may be worthless and we may be forced to curtail or abandon our business plan. The Company has provided most of the material requested and anticipates filing the remaining items to the SEC shortly after the filing of this annual report.

Management performed an evaluation of the Company’s activity through the date these financials were issued to determine if they must be reported. The Management of the Company determined that there were no other reportable subsequent events to be disclosed.

F-15