UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

COMMISSION FILE NUMBER 0-24050

HEMOBIOTECH, INC.

(Exact name of Registrant as Specified in Its Charter)

DELAWARE		33-0995817
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5001 SPRING VALLEY RD, SUITE 1040 - WEST
DALLAS, TEXAS		75244
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (972) 455-8950

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

COMMON STOCK, PAR VALUE $.001 PER SHARE

Indicate by check mark if the registrant is a well-known seasoned issuer. ¨ Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ¨

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 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. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-KB is not contained herein, 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, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes þ No

As of May 26, 2010, 23,693,434 shares of the Registrant's common stock, par value $.001 per share, were outstanding.

On June 30, 2009, the aggregate market value of voting stock (based upon the closing price of the Registrant's common stock on that date) held by nonaffiliates of the Registrant was $4,397,621 (7,995,674 of 20,735,458 shares outstanding at $0.55 per share).

Documents Incorporated By Reference: None.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Except for historical information, the matters discussed in this document may be considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include declarations regarding the intent, belief or current expectations of HemoBioTech, Inc., and its management and are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. Factors that might cause such a difference include, among others, the successful pre-clinical development, the successful completion of clinical trials, the FDA review process and other governmental regulation, pharmaceutical collaborator interest and ability to successfully develop and commercialize drug candidates, competition from other pharmaceutical companies, product pricing and third party reimbursement, and other factors which are included in this report and HemoBioTech, Inc.'s other reports filed with the Securities and Exchange Commission.

PART I

ITEM 1. BUSINESS

We were founded in 2001 as "HemoBioTech, Inc.," a Texas corporation. In 2003, we incorporated a sister corporation named "HemoBioTech, Inc." in the State of Delaware. On December 1, 2003, HemoBioTech, Inc. (Texas) was merged with and into HemoBioTech, Inc. (Delaware) with HemoBioTech, Inc. (Delaware) as the surviving entity. Our principal executive offices are located at 5001 Spring Valley Road, Suite 1040-West, Dallas, TX 75244; our telephone number is (972) 455-8950, and our website is www.hemobiotech.com.

We are a biopharmaceutical company engaged in the research and development of human blood substitute technology exclusively licensed from Texas Tech University Health Sciences Center (“TTUHSC”). After reviewing the blood substitute technology developed by researchers at Texas Tech, in January 2002 we licensed from TTUHSC the exclusive rights to various alternative compositions of what we call “HemoTech,” a human blood substitute that is based on hemoglobin (which is the key protein in red blood cells that carries oxygen) of both bovine (cow) and human origin, as well as methods for its production and use. We believe that what makes HemoTech a novel potential blood substitute product is the fact that it is comprised of hemoglobin that has been isolated from bovine blood and then chemically modified to make the product non-toxic. For HemoTech production, hemoglobin is modified with Adenosine, ATP and Glutathione (GSH). The Adenosine has activities which appear to overcome the toxicities which have prevented other hemoglobin based blood substitutes from gaining U.S. Food and Drug Administration (“FDA”) approval.

Our goal is to address an increasing demand for a safe and inexpensive human blood substitute product in the United States and worldwide through our licensed technology. We believe that certain initial pre-clinical and early stage human trials undertaken outside the U.S. by prior holders of this technology suggest, although there can be no assurance that later stage trials will confirm, that this novel red blood substitute:

can act as a carrier of oxygen;

produces no adverse toxicity of the kidneys, or the nervous system;

produces no adverse inflammatory reactions;

can dilate the blood vessels (which is called vasodilatory activity) and can reduce narrowing of blood vessels (or vasoconstriction) that follows hemorrhage;

has erythropoietic activity (which is the production of red blood cells in the body);

has lower oxygen affinity (which is how tightly oxygen binds to the hemoglobin) than other competing blood substitutes, approximating the oxygen affinity of native human red blood cells;

has the ability to remain in the blood vessels; and can sustain a close-to-normal amount of plasma in the blood.

Dr. Mario Feola and Dr. Jan Simoni, officers of the Company, TTUHSC researchers, and recognized blood substitute authorities, developed HemoTech over 20 years of research. HemoTech has been tested in preclinical studies at ISI St. Antimo in Naples, Italy, and in a European pre-clinical regulatory study conducted at the Research Toxicology Centre S.p.A. in Rome, Italy, in 1990 to 1992 resulting in certain European approvals. The initial human clinical trial of HemoTech, in which patients received HemoTech making up 25% of their blood volume, occurred at the Institute de la Recherche en Sciences de la Sante, Centre de l”Anemie S.S. in Zaire, Africa in 1990. The clinical study showed no toxicity and the HemoTech stimulated the production of red blood cell production in the patients. Subsequent studies on HemoTech have delineated steps in the mechanism of action of HemoTech which supports the positive pre-clinical and initial clinical studies.

We have obtained an exclusive worldwide license from Texas Tech University for the core patents covering certain key markets, including primary markets in North America, Europe and Asia. We also have a strategic partnership with TTUHSC that allows us to utilize research and production facilities at TTUHSC and TTUHSC scientists, surgeons and medical staff. Our relationship with TTUHSC is governed by license and research agreements that, among other things, grant us the exclusive worldwide intellectual property rights to the HemoTech technology in exchange for equity ownership and payment of the fees associated with our use of TTUHSC facilities, materials and personnel. We believe the structure of these license and research agreements could be attractive to potential pharmaceutical company partners and could be positive factors for the commercialization of HemoTech.

In January 2007, the Company entered into a Stage IV Strategic Research Agreement (“SRA”) with TTUHSC beginning January 1, 2007. In connection therewith, the Company made an initial payment of approximately $780,000. This amount will be charged to operations as incurred based on monthly reporting to the Company by TTUHSC. As of December 31, 2009, approximately $15,000 was included in prepaid expenses on the Company’s balance sheet. Additional payments may be made to TTUHSC under the agreement based on mutually agreed upon budgets. The SRA IV activities include maintaining the animal facility which houses a controlled herd of Hereford cows needed for the production of HemoTech and assistance in the implementation of FDA recommendations. The agreement will also involve further research and development with a focus on additional uses of HemoTech and expanded patent protection.

The FDA has cited the Adenosine/ GSH modified hemoglobin strategy used in HemoTech as a viable strategy for a needed new generation red blood cell substitute. The FDA indicted at a meeting on April 29, 2008 the toxicity of previous first generation substitutes and the need for a new generation substitute. Our Adenosine/GSH modified hemoglobin HemoTech, is protected by issued patents in 21 countries.

On May 5, 2008, the Company agreed to license certain technology from TTUHSC titled Orthogonal Method for the Removal of Transmissible Spongiform Encephalopathy Agents from Biological Fluids (“ORTH Technology”). This is a technology that results in the removal and inactivation of infectious agents such as prions (which can cause Mad Cow Disease) and viruses. Such removal and inactivation is critical in the purification of animal products for human use. It can be used not only for HemoTech production but also has the potential for generating sublicensing revenue from pharmaceutical, biotechnology and the cosmetic industries. The term of the agreement extends to the full end of the term or terms for which patent rights have not expired or, if only technology rights are licensed and no patent rights are applicable, for a term of 15 years. The license agreement calls for a nonrefundable license documentation fee of $10,000 and 500,000 shares of the Company’s common stock. The price per share of the Company’s common stock on May 5, 2008 was $1.29 per share. Accordingly, the Company recorded a charge to research and development expense for $655,000. The agreement also contains an annual renewal fee of $10,000 per year and a royalty based on net sales of Licensed Products (as defined by the agreement) sold by the Company that contain the patented ORTH Technology. The royalty percentage will be lower if Licensed Products are not protected by a valid patent. The agreement calls for a minimum royalty beginning six months after approval of a Licensed Product by the FDA. No royalty applies to the embedded ORTH Technology in the sale of our HemoTech product. The Company is permitted to sublicense the ORTH Technology and TTUHSC will receive a portion of both cash and non cash remuneration received by the Company for a sublicense. Additionally, the Company will pay a portion of any royalty received to TTUHSC.

The Company has also agreed to issue up to 275,000 additional shares of the Company’s common stock in the event TTUHSC purchases certain equipment used in the HemoTech process. The equipment will be owned by TTUHSC, which will be used to further the development of HemoTech, among other possible research uses and will be charged to research and development expense when purchased. As of March 24, 2009, no such equipment has been purchased by TTUHSC. The agreement may be terminated by either party by mutual written agreement upon 180 days notice, or by TTUHSC based on certain provisions relating to defaults according to the agreement.

On October 26, 2009, the Company and the Texas Tech University System (TTUS) entered into an agreement where the Company was required to raise a minimum of $3 million prior to February 19, 2010 which did not occur. If the Company is unable to raise $3 million, unless such deadline is extended, of which there can be no assurance, the Company agreed that its Board of Directors “in cooperation with TTUS will replace the management team at HemoBioTech within 30 days and TTUS could decide on other causes of actions related to the license agreements with TTUS.” As of the date of this report, TTUS has not taken any action to enforce its rights. In addition, if we do not fund a $1.5 million major primate study out of the $3 million capital raised, or otherwise, the management team will be replaced under such terms described above and TTUS may pursue all rights and remedies under the 2002 and 2008 license agreements.

Also pursuant to this letter agreement, the Company issued 600,000 shares valued at $174,000 to TTUS for past scientist services and use of TTUS’s facilities for development of HemoTech and the ORTH technologies.

On March 10, 2009, the Company reported results from the testing of its ORTH technology for the clearance of prions and viruses from biological fluids. Since a component of HemoTech is bovine hemoglobin, it is necessary to have a high clearance of prions and viruses. This analysis was one of the recommendations from the FDA. The ORTH technology resulted in the clearance of prions during the purification process of bovine hemoglobin that was 10-10 which is approximately 100,000 times better than required by the FDA. This ORTH technology could also be used for other products from bovine sources and human plasma. The Company is marketing the ORTH technology to potential sub-licensing clients such as contract manufacturing companies and pharmaceutical companies.

During February 2009 the Company announced that R.E. “Corky” Dragoo, Jr. has joined its Board of Directors. Mr. Dragoo is Executive Assistant to the Chancellor of Texas Tech University and is Director of Policy for Texas Tech University. Mr. Dragoo was formerly Ernst and Young National Director for the energy industry and was a Senior Partner of Ernst and Young’s Center for Business Innovation located in Cambridge, Massachusetts.

In February 2009, the Company engaged an advisor who is a major HIV/AIDS advocate to help the company in the development of HemoTech to address the global need for safe blood substitute. About 10% of new HIV/AIDS cases result from HIV contaminated blood. Also, in March 2009, the Company added a new member to its Scientific Advisory Board. The new member is a former U.S. Assistant Surgeon General with experience in national and global medical needs. Both advisors will help the company in advocating congressional leaders in the need for a safe blood substitute and exploring federal and private funding opportunities.

A presentation entitled “Developing Blood substitutes for the prevention of HIV Transmission” was made by HemoBioTech representatives at the “5th International AIDS Society Conference on HIV Prevention and Treatment” held in Cape Town, South Africa during July 2009.

A presentation entitled “Commercial Development Status of HemoTech, the hemoglobin-ATP-adenosine-Glutathione based blood substitute”, was made by HemoBioTech and Texas Tech university representatives at the XII International Symposium on Blood Substitutes held in Parma, Italy during August 2009.

On August 10, 2009, Congressman Edolphus Towns (D- N.Y.) sent a letter to all members of the House of Representatives that there is a need for a blood substitute to prevent 10% of new global HIV-AIDS cases caused by HIV contaminated blood. He indicated that our Adenosine modified hemoglobin is a promising new generation blood substitute to address this need. He recommended financial support from Congress and accelerated development of the technology. The Company’s representatives are working with members of Congress to hold Congressional hearings on our blood substitute during the first half of 2010 addressing the need for a safe blood substitute and funding of HemoTech development.

We have a limited operating history, no customer base and no revenues to date. Our goal is to build on initial clinical studies with further animal studies, human clinical trials in the US, and in other FDA approved studies, although there can be no assurance that later stage trials will confirm these initial findings. Our plan of operations for the next twelve months is focused primarily on the development of our licensed technology and business: production of our product, HemoTech, in association with TTUHSC, for use in cell and animal studies and upon approval of an Investigational New Drug (“IND”) application with the FDA, U.S. Phase I clinical trials; analysis of HemoTech in cell and animal studies to be used in the IND application; progress towards filing an IND; working with TTUHSC on upgrading the production facility based on FDA recommendations; furthering our intellectual property position through the introduction of additional patents including the management of the new pending patent for induction of red blood cell production by HemoTech; preparation of Phase I U.S. clinical studies if the IND is accepted; and continued interaction with members of the U.S. Congress addressing funding opportunities for HemoTech development.

The financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred cumulative losses of $18,032,000 from inception through December 31, 2009, has not generated any revenue, and has been dependent on funding operations through the private sale of convertible debt and equity securities. These conditions indicate that there is substantial doubt upon the Company’s ability to continue as a going concern. Management’s plans include continuing to fund operations through one or more public or private offerings of equity securities, although there is no assurance they will be able to do so in the future, and monitoring and reducing discretionary expenses.

Background

The development of HemoTech is based on the idea that free hemoglobin-based blood substitutes can no longer be considered simply vehicles for transporting oxygen and carbon dioxide. Rather, they should possess properties that diminish the intrinsic toxic effects of hemoglobin and help eliminate the abnormal reactions associated with the loss of blood pressure and the lowering of vital signs resulting from the loss of blood during hemorrhage. We believe we have a purification method necessary for the purity of our hemoglobin solutions. We believe this purification method will allow us to produce HemoTech in a cost-effective manner by avoiding many of the expensive and capital intensive purification methods used by some of our competitors.

We believe the potential market for red blood cell substitutes is large and growing. The Theta Reports indicate that each year in the United States, over four million patients receive transfusions of over 14 million units of red blood cells in HemoBioTech, Inc.'s targeted markets of acute anemia, cancer and ischemia (the inadequate flow of blood due to constriction or obstruction of blood supply).

In addition to peacetime need, emergencies typically add to the demand for blood substitutes. For many years, the U.S. military has had an interest in an effective blood substitute.

There are several critical factors shaping the U.S. blood market. The market is facing increasing demand while the available supply remains stagnant. Banked blood continues to increase in cost and still entails risks related to infection and immune response. A safe, cost effective blood substitute has numerous advantages over the current blood supply:

·	minimize the risk of infections by infectious agents such as hepatitis and HIV (which causes AIDS) and adverse reactions in patients;

·	be compatible with all blood types, allowing earlier administration, increasing survivability for trauma patients and preventing supply shortages related to specific blood types;

·	possess a significantly longer shelf life (six months or greater) than that of donated red blood cells (42 days), allowing a wider range of administration and increased stockpiling; and

·	derived from a potentially large supply, countering the critical shortage of banked human blood worldwide.

HemoBioTech, Inc.'s scientific team has delineated molecular mechanisms to explain both HemoTech's non-toxicity and pharmacological activities. This team first identified the factors that lead to toxicity. They then developed both an isolation method that ensures the purity of Hb solutions and a chemical modification method that results in the lack of intrinsic toxicity. This research led to the development of HemoTech, which, in addition to its physiological properties of Hb, has additional pharmacological activities that effectively eliminate blood vessel constriction, improve the release of oxygen into the body and produce an anti-oxidant and anti-inflammatory effect and induces erythropoiesis production (production of red blood cells).

HemoTech Description

Our product, HemoTech, is an oxygen-carrying solution that performs like red blood cells. It can address an increasing yet unmet demand for safe and inexpensive blood in the US and around the world. It also can address many of the medical, logistical and economical concerns associated with red blood cell transfusion.

HemoTech is created by reacting pure bovine hemoglobin with three chemicals: o-adenosine 5'-triphosphate ("o-ATP"), o-adenosine and reduced glutathione ("GSH"). These chemicals permit chemical modification of the hemoglobin to create the observed beneficial activities of HemoTech and introduce necessary changes to the hemoglobin that control oxygen affinity and other biological activities.

The use of o-adenosine has a number of biological benefits. First, it counteracts the properties of hemoglobin that cause narrowing of the blood vessels. Additionally, the o-adenosine reduces the potential of hemoglobin to cause inflammation in the body. HemoTech also relaxes hemorrhage-induced narrowing of the blood vessels. GSH permits the alteration of the surface charge of HemoTech, which is also an essential feature of our novel hemoglobin modification procedure. GSH also lowers oxygen affinity to a level that is near that of native red blood cells.

Bovine blood isolated and utilized for the commercial production of HemoTech will be taken only from healthy cows from a controlled herd with records over several generations and a controlled diet to protect against "BSE" (bovine spongiform encephalopathy, also known as mad cow disease). Immunological test for special proteins called prions which cause BSE can be utilized to test brain and spinal cord material.

We believe that blood substitutes currently undergoing FDA trials have limited potential for success in the broad human blood use market because they generate various levels of hemoglobin-based toxicity. A number of blood substitute candidates were developed before the intrinsic toxicity of hemoglobin was identified, and few companies have modified their approach to creating blood substitutes based on recent findings related to hemoglobin toxicity because of significant investments already made to advance lead compounds through FDA trials. Based on initial studies, we believe that HemoTech's primary benefits include:

·	non-toxicity:

·	an oxygen affinity that closely mimics that of human red blood cells and does not cause an adverse affect that results from excessive interaction with oxygen;

·	the stimulation of the production of red blood cells in the body, which allows the body to replace its native blood supply in half the time it would otherwise take following a transfusion;

·	a half life of approximately 24 hours, which is desirable given the body's ability to produce red blood cells, which allows the body to replace it with its own supply;

·	high purification, which may eliminate the risk of infection and adverse immune reactions in patients;

·	the ability to be stored at 4ºC (39ºF) for six months or more and for an extended period when frozen (compared to 42 days for banked blood at 4ºC), and the ability to be stockpiled easily;

·	compatibility with all blood types and availability for administration within minutes;

·	the ability to be produced from a ready and vast supply of cow blood; and

·	the potential to be produced at a price competitive with current banked blood and other blood substitute products.

Clinical Status - HemoTech

HemoTech underwent foreign pre-clinical and human clinical testing in the late 1980's and early 1990's. Pre-clinical testing included research performed by TTUHSC at its laboratories in Lubbock, Texas in the mid to late 1980's, at ISI St. Antimo Laboratories in Naples, Italy from 1989 through 1991, and a European IND study conducted from 1990 through 1992 at the Research Toxicology Center S.p.A. (the "RTC") in Rome, Italy. This research was based on the following:

·	in vivo animal studies; and

·	in vitro testing using various human cell lines.

These tests focused on:

toxicity;

·	the way in which the product affects blood vessels;

·	immunological and inflammatory activity, as well as the way in which HemoTech interacts with oxygen (which is called oxidative activity);

·	stability; and

·	therapeutic potential.

We believe the results of these pre-clinical tests support HemoTech's non-toxicity and biological activity, although there can be no assurance that future later stage trials will confirm these findings. These pre-clinical tests generated more than 80 abstracts and papers, and an official European IND report has been issued supporting the pre-clinical non-toxicity results in cell and animal studies.

The human non-FDA clinical trial was performed at the Institut de la Recherche en Sciences de la Sante, Centre de l'Anemie S. S. (Kinshasa, Zaire) in 1990. In that study, nine children suffering from sickle cell anemia received HemoTech in significant volumes (approximately 25% of total blood volume) over a two-hour period. These patients experienced significant near-term improvements as their general condition improved, episodes in which sickle cells block the blood vessels were reduced, pain was quickly relieved, and blood vessel dilatation and better tissue oxygenation were indicated. The patients were monitored over a three-month period. These studies showed no toxicity and an induction of red blood cell production. These studies were published in the medical journal, Surgical Gynecology & Obstetrics, volume 174, number 5, pages 379-386 (1992). In addition to the clinical improvements in the patients, these initial studies indicate that HemoTech:

·	produces no adverse kidney, nervous system, oxidative or inflammatory reactions in humans;

·	can reduce the narrowing of blood vessels that follows hemorrhage;

·	has low oxygen affinity and can work as a physiological oxygen carrier;

·	induces red blood cells production in the body;

·	has prolonged intravascular persistence; and

·	can sustain a close-to-normal level of plasma in the blood.

The results of the HemoTech clinical studies have not demonstrated any negative side effects. Since the results of the HemoTech clinical studies showed that the product promotes vasodilation, rather than narrowing of the blood vessels, and that the product increases red blood cell production, the product has indicated, in such clinical studies, that it is non-toxic. However, the corporation that sponsored the European IND faced financial difficulties that were independent of the HemoTech program and, therefore, was unable to continue to sponsor the program. Accordingly, the HemoTech technology was returned to TTUHSC in 1995. TTUHSC subsequently constructed a production facility for HemoTech and attempted to raise money to support the research, development, testing and commercialization of HemoTech, but these activities were outside the scope of TTUHSC's expertise, so the university then sought to license the HemoTech technology. In 2002, we entered into our license agreement with TTUHSC.

We believe the results of the HemoTech clinical trials are significant because they represent a rare example of a non-toxic administration of a blood substitute product. Furthermore, this trial demonstrated in humans the pharmacological activity of HemoTech. There can be no assurance, however, that future later stage trials will support or confirm these findings.

The HemoBioTech team, under the direction of Dr. Simoni, is currently working on advanced research in the fields of toxicity and efficacy which will be funded by us, and expects to develop innovative modifications of the existing patented technology resulting in new clinical applications for HemoTech in the following areas:

·	trauma and blood disorders;

·	cardiopulmonary bypass surgery including angioplasty;

·	organ and tissue transplantation; and

·	oncology (the treatment of cancer).

One of the chief objectives of the team is to further evaluate the pharmacological effects of HemoTech. The proposed research is aimed at further understanding the vasodilatory and anti-inflammatory action of HemoTech at the molecular level. The team also is developing improved laboratory methods for the evaluation of clinical samples during HemoTech's human trials, which will be licensed by us.

ORTH Technology

Orthogonal Purification Technology makes use of a combination of techniques that include a series of steps to deactivate and clear transmissible spongiform encephalopathies (“TSE”) agents and viruses from animal fluids. This technology has first been applied to the production of bovine hemoglobin. Such a method does not affect the hemoglobin chemical structure and biochemical/physiological functions and preserves its value as a starting material in free hemoglobin-based blood substitute production. This combinational technique could apply towards purification of TSE agents from animal fluids for the production of hemoglobin and various plasma protein fractions of bovine and human origin. The novelty of this technology is to achieve more efficient elimination and inactivation of TSE based agents and viruses from hemoglobin solutions or various plasma protein fractions. This technology has been tested by a nationally recognized independent laboratory and has shown higher elimination rates than other technologies.

The pharmaceutical industry methods for TSE agent removal are based mainly on affinity and ion exchange chromatography and size-exclusion filtration. The existing industry methods are expensive and time consuming and use chemical treatment which is not applicable to unstable proteins like hemoglobin. The heme protein can easily dissociate into unstable dimers and oxidize thereby losing its ability to transport oxygen. Other industrial filtration methods are capable of reducing prion proteins less efficiently, but do not inactivate infectious agents.

The ORTH Technology allows robust and reliable elimination of infectious agents, such as prions and viruses from the final product, using independent clearance steps, inactivation and removal. This is a critical purification process in enhancing the safety that is needed for approval to sell such products. HemoBioTech believes that the orthogonal approach may purify significantly more than the current governmental standard.

The ORTH Technology prevents the spread of transmissible spongiform encephalopathies (“TSE”), also know as prions or mad cow disease, as well as viruses. The Food and Drug Administration (“FDA”) strictly regulates medicinal products and cosmetics that contain ingredients from animals. The technology is being used in the manufacturing of HemoBioTech’s lead product, HemoTech, potentially the first viable substitute for human blood. HemoTech is composed of chemically modified bovine hemoglobin.

The ORTH Technology could allow robust and reliable elimination of infectious agents, such as prions and viruses from the final product, using independent clearance steps, inactivation and removal. This is a critical purification process in enhancing the safety that is needed for approval to sell such products. The market for pharmaceutical and cosmetic products for human use derived from animals (including human sources) is in excess of $7 billion. The ORTH Technology provides a significant improvement in the methods currently available to clear TSE/BSE.

Research and Development Activities

During the years ended December 31, 2009 and 2008, the Company's financial statements reflect, $568,000 and $1,366,000 respectively, charged to expense for research and development activities. These expenses include the acquisition of a new technology, ORTH, that removes and inactivates infectious agents (which can cause Mad Cow disease) and viruses valued at $655,000 (See also Note D of the Company’s Notes to Financial Statements). Spending related to the Stage IV Sponsored Research Agreement with Texas Tech Health Sciences Center was higher in 2009 compared to the same period a year ago due to increased spending related to laboratory upgrades and costs associated with outside laboratory testing. The Company issued 600,000 shares valued at $300,000 to TTUHSC in December 2009 under their agreement.

On January 22, 2002, the Company entered into an exclusive license agreement with TTUHSC with respect to receiving certain patented rights. The Company is committed to the exploitation of such patented rights. In consideration for entering into the agreement, the Company issued 678,820 shares of common stock to TTUHSC (subject to anti-dilution protection). In addition, the Company has agreed to fund, over a four-year period, $1.2 million to support efforts in incubating and commercializing other TTUHSC technologies. The funding of the $1.2 million is subject to the Company obtaining FDA approval of a blood substitute product. Under the agreement, the Company reserves the right of first refusal on licensing and commercializing other technology developed from such funding. The shares issued were valued at approximately $1,000, their estimated fair value, and charged to operations. As of December 31, 2009, such approval had not been obtained. In addition, the Company reimburses TTUHSC for all intellectual property protection costs and patent maintenance fees related to HemoTech. On May 20, 2004, TTUHSC agreed to waive its anti-dilution protection in exchange for 135,765 additional shares of common stock. Such shares were valued at approximately $115,000, their estimated fair value, and charged to operations.

In addition, in July 2002, the Company entered into a Sponsored Research Agreement (“SRA”) with TTUHSC for the period September 1, 2002 through August 31, 2006, subject to a two-year extension to be mutually agreed on by the parties in the second year of the agreement and prior to December 31, 2006. Our Stage III SRA was for the period January 1, 2006 through December 31, 2006. Through the SRA, the Company funds, on a yearly basis, costs associated with the further research of HemoTech conducted at TTUHSC. In December 2004 and January 2006, the Company paid approximately, $231,000 and $287,000 respectively, to fund the ongoing phases of research under the SRA.

In January 2007, the Company entered into a Stage IV SRA with TTUHSC for the period beginning January 1, 2007. In connection therewith, the Company made an initial payment of approximately $780,000. This amount will be charged to operations as incurred based on monthly reporting to the Company by TTUHSC. Additional payments may be made to TTUHSC under the agreement based on mutually agreed upon budgets. The SRA IV activities include maintaining the animal facility which houses a controlled herd of Hereford cows needed for the production of HemoTech and assistance in the implementation of FDA recommendations received at a Pre-IND meeting with the FDA in April 2006. The SRA IV activities also include the manufacture of HemoTech. The product will be made at the production facility at TTUHSC and will be used for pre-clinical and clinical studies upon acceptance of the IND. The agreement will also involve further research and development with a focus on additional uses of HemoTech and expanded patent protection.

At December 31, 2009, approximately $15,000 remained as available funds at TTUHSC and are included in the Company’s prepaid assets.

Intellectual Property

HemoTech

We have licensed from TTUHSC exclusive worldwide rights to HemoTech under a U.S. patent issued in August 1995. The patent, U.S. Patent No. 5,439,882, entitled "Blood Substitute," and its foreign counterparts, claim various alternative compositions of the novel blood substitute based on hemoglobin of both bovine and human origin as well as methods for its production and use. Protection under this U.S. patent expires on August 8, 2012.

Under the terms of the license agreement, in 2002 we issued to TTUHSC in lieu of any royalties, licensing fees, sublicensing fees and any other payments (other than certain patent maintenance costs), 678,820 shares (approximately 5% of our then-authorized common stock) to TTUHSC. These shares initially were subject to anti-dilution protection until such time as we expend at least $15,000,000 on the research, development, testing and commercialization of HemoTech. In connection with the issuance of units in our October 2004 Private Placement, in lieu of receiving the entire number of shares of common stock to which it would have been entitled as a result of our issuance of units, under the terms of a letter agreement with us, dated May 20, 2004, TTUHSC agreed to accept an additional 135,765 shares of our common stock and an aggregate payment of $60,000 (including payment of patent maintenance costs and expenses paid by TTUHSC) in exchange for removing the anti-dilution provision. We have not made any other payments to TTUHSC under the license agreement and we are not required to make any payments under the license agreement except as follows:

·	to reimburse TTUHSC for certain patent maintenance costs of the HemoTech patent and any other patent that becomes covered by the license agreement, within 30 days of receiving notice from TTUHSC that such amounts are due;

·	to pay prosecution costs and costs of foreign counterpart applications on all future "designated inventions," which includes patentable inventions created by TTUHSC's employees under the Sponsored Research Agreement; and

·	costs to maintain our patent position in 21 foreign countries.

In May 2006 TTUHSC filed a new patent application to cover the induction of erythropoiesis (which is the increase of red blood cell production), which is a major activity of HemoTech. We have exercised our option to include this technology in our license agreement with TTUHSC. There can be no assurance that TTUHSC will be granted a new patent prior to expiration in August 2012 or at all. If issued, this new patent, exclusively owned by TTUHSC, could give us additional protection for the commercial use of HemoTech. Under the terms of our license agreement with TTUHSC, title to inventions made solely by inventive contributions of employees of TTUHSC shall be owned by TTUHSC; title to inventions made solely by inventive contributions of employees of HemoBioTech, shall be owned by HemoBioTech; and title to inventions made by joint inventive contributions of employees of both TTUHSC and HemoBioTech shall be jointly owned by TTUHSC and HemoBioTech. In addition to the proposed erythropoiesis patent, the Company, working with TTUHSC, are developing a broad patent strategy that focuses on improvements in production and purification methods used in the manufacturing of HemoTech, use of HemoTech and other potential future product formulations for specific medical indications, formulaic modifications of HemoTech's platform technology and use of the platform technology for other targets.

In addition to our U.S. rights, we enjoy patent protection in several European and Asian nations as well as Australia and Canada. In all, our licensed foreign patents have been issued by or designated (in the case of patents issued by the European Patent Office) in 21 foreign nations. Furthermore, continued testing of HemoTech may, although there can be no assurance, result in refinements that are patentable, thereby extending patent protection for forthcoming HemoTech derivatives.

ORTH Technology

We have obtained an exclusive, worldwide license from Texas Tech University for commercialization of the ORTH technology. Our strategic partnership with TTUHSC allows us to utilize the research facilities at TTUHSC and TTUHSC scientists and research staff. Our relationship with TTUHSC is governed by license agreements that, among other things, grant us the exclusive worldwide intellectual property rights to the ORTH technology in exchange for equity ownership and payment of the fees associated with our use of TTUHSC facilities and personnel.

We believe the structure of these license agreements will assist us in obtaining sublicensing contracts with potential pharmaceutical, biotechnology and cosmetic companies and could be positive factors for the commercialization of the ORTH technology. In connection with our licensing agreement, a patent was filed for the ORTH technology in December 2007 covering the ORTH technology. If issued, this new patent, exclusively owned by TTUHSC could give us protection for the commercial use of the ORTH technology.

Supply and Demand

According to a 2008 World Health Organization (WHO) report, the shortage of safe blood is compounded by the shortage of donors in developing countries where blood is needed the most. Of the estimated 81 million units of blood donated every year around the world, only 39% comes from developing countries, contributing to a global blood shortfall of around 40 million units a year. Despite efforts to rectify this imbalance, the average number of blood donations has not improved significantly in developing countries — it remains around 12 times higher in industrialized countries than in developed countries.

Experts predict hospitals will see a 4 million unit-a-year blood shortage by 2030. Without an ample supply, doctors face tragedy in the operating room and soldiers face death on the battlefield. According to the New York Blood Center, 600,000 pints of blood are used each year in the metropolitan area for one million transfusions. Every day, 1,500 pints of blood must be collected to keep pace with demand. During a blood shortage, deliveries of blood are cut back to local hospitals; a hospital may ask for 100 pints of blood and only receive 75 pints.

Increasing Cost

According to Tissue Link Medical, Technical Brief No. 305, the actual cost of a red blood cell transfusion has increased dramatically in recent years and currently ranges between $500-1,000 per unit of blood. The major factors contributing to this increase include additional costs related to testing, screening, processing, type matching and overhead. In light of recent stricter guidelines to ensure the safety of blood, such as more stringent screening for transmittable diseases and standard leukoreduction (eliminating the white blood cells that can carry infections), the cost of blood is expected to continue to rise.

Blood Supply Safety

Sensitive screening tests in the United States have greatly reduced the risk of infectious disease transmission in the domestic population, but unacceptable risks still remain. According to the American Red Cross, the risk of infection from, or adverse reaction to, a single blood transfusion is:

·	1:1,000 – 3,000 for bacterial infections

·	1:205,000 for Hepatitis B

·	1:935,000 for Hepatitis C

·	1:2,135,000 for HIV

These probabilities compound quickly, however, for major procedures, such as organ transplants and trauma, which require fifty units of blood on average. Even in minor surgeries, which require six to eight units of blood, the probabilities of contracting infections or experiencing adverse reactions are not insignificant.

We believe that our product's initial foreign clinical testing produced data that supported HemoTech's biological activity and non-toxicity in humans. Additionally, the product demonstrated anti-inflammatory and vasodilatory activity, as well as erythropoietic activity. No negative side effects have been seen to date, prompting more than 80 abstracts and papers, and an official European Investigational New Drug Application supporting the preclinical non-toxicity results in cell and animal studies. Subsequent to HemoTech's clinical studies, HemoBioTech's researchers delineated the molecular mechanisms of HemoTech. These data confirm the properties of HemoTech observed during clinical studies and constitute positive support for potential future FDA regulatory filings by HemoBioTech as well as valuable information for future product research and development.

Production and Material Supply

The Company's proprietary production method consists of reacting pure bovine hemoglobin with three chemicals—o-adenosine 5'-triphosphate (o-ATP), o-adenosine, and reduced glutathione (GSH)—chemically modifying the hemoglobin to create beneficial activities and effect changes that control oxygen affinity and other biological activities. A benefit of o-adenosine is that it counteracts the hemoglobin properties that cause the narrowing of blood vessels. It also reduces the potential of hemoglobin to cause inflammation.

The preference for bovine hemoglobin as an erythrocyte substitute, first proposed by the TTUHSC researchers, was based on indications that bovine hemoglobin was more effective than isolated human hemoglobin at transporting oxygen; that bovine erythrocytes were widely available; and that human and bovine diseases transmissible by blood could be avoided by collecting erythrocytes exclusively from select healthy cattle. Bovine blood isolated and utilized for production of HemoTech is taken only from healthy cows, from a controlled herd.

HemoBioTech has the exclusive worldwide license from TTUHSC covering all intellectual property associated with HemoTech. The Company further has access to TTUHSC staff and equipment necessary to produce, test, and certify HemoTech, with access to University laboratory facilities and a blood substitute production facility TTUHSC has constructed on its campus specifically for the production of HemoTech. HemoBioTech has the right to assist in recruiting personnel, including student interns, and obtaining state and federal grants for its research, development, and manufacturing programs.

Business Strategies

We believe the most likely path to commercialization of HemoTech, if ever developed and approved for sale, will involve a partnership with a major pharmaceutical company. Because commercialization of a major pharmaceutical product requires a significant amount of capital, HemoBioTech will seek to identify and enter into partnership agreements with one or more pharmaceutical companies to partner in the late stages of clinical trials.

HemoBioTech's ability to research, develop, and successfully commercialize HemoTech is dependent upon its collaborative relationships with TTUHSC as well as outside consultants. Our outside consultants will collaborate on key projects and are assisting HemoBioTech in their creation and submission of the U.S. IND (Investigational New Drug) application, clinical trials and conducting additional research activities.

In order to achieve its goal, HemoBioTech has determined that it must meet the following objectives:

Upgrade its Current Production Facilities. To produce HemoTech for Phase I U. S. clinical trials, HemoBioTech must complete upgrades to its current production facilities at TTUHSC. The initial phase of this plan was completed at the end of the second quarter of 2005. The second phase was completed during 2006. Financing the initial phase was included in HemoBioTech's Stage II Sponsored Research Agreement payment to TTUHSC in December 2004 and the additional upgrade is part of the Stage III sponsor agreement signed in 2006, as well as additional expenditures if necessary. Our Stage IV SRA includes upgrades to our production facilities based on FDA recommendations.

Preparation and Submission of U.S. IND Application. Under the terms of their Stage II sponsored research agreement, TTUHSC provided HemoBioTech support services for preparation of its U.S. IND application. This included conversion of data from European IND application into electronic format, summarization and analysis of its pre-clinical CMC ("Chemistry Manufacturing and Controls") data and analysis of its proposed Phase I U.S. clinical trial testing procedures and implementing FDA recommendations. The Company expects to complete preparation of its U.S. IND application and is targeting to submit it to the FDA in the first half of 2011. The estimated cost of submitting the application as well as the production of HemoTech is approximately $7,000,000 or greater.

Phase I of our U.S. Clinical Trials. A Phase I U.S. clinical trial for HemoTech will commence subsequent to the acceptance of the IND application. We estimate that our Phase I clinical trials (including costs of doing additional research and development of HemoTech during our Phase I U.S. clinical trials and the operational and overhead costs that we will incur during our Phase I U.S. clinical trials) could cost approximately $10.0 million, although the final cost could be more or less than this estimate.

During June 2007 we engaged a U.S. based Clinical Research Organization to assist the Company in submitting technical information to the Drug Controller General of India (DCGI) for the purpose of obtaining regulatory authority to conduct clinical trials in India. A goal is to establish clinical trials in India and if successful commercialize HemoTech in India.

Competition

If approved for commercial manufacture and marketing, we believe HemoTech will have a unique competitive advantage over other products under testing or under development since we believe HemoTech is the only product that addresses all aspects of the intrinsic toxicity (vasoconstriction, oxidative stress and inflammatory reactions) of hemoglobin. We believe the lack of toxicity in HemoTech, based on studies to date, is due to the chemical modification of the hemoglobin in our product. Furthermore, we believe our bovine-derived red blood cell product provides HemoTech with an additional competitive edge over products developed from outdated human red blood cells or from perfluorochemicals (which are synthetic chemical blood substitutes), because bovine blood is safer, more readily available, more convenient and more cost effective.

Our key competitors include:

Northfield Laboratories has been developing PolyHeme®, which is based on hemoglobin from what we believe to be outdated human blood. Although Northfield completed its Phase III U.S. clinical trials, in 2002 Northfield's product did not receive approval by the FDA for use in elective surgery due to results concerning safety and efficacy. Northfield has completed the PolyHeme(R) Phase III U.S. clinical trial for use in ambulatory trauma cases. Northfield’s application for approval based on the ambulatory trauma trial was turned down by the FDA.

Biopure Corporation has been developing Hemopure®, a bovine hemoglobin-based blood substitute. Although Biopure completed its Phase III U. S. clinical trials, Biopure's product failed to receive a biologic license application clearance from the FDA in 2003. The FDA has asked Biopure to perform additional safety testing on its product.

·	Sangart, Inc. has created a hemoglobin-based blood substitute, Hemospan. The product is in clinical testing for toxicity and effectiveness in Europe.

Synthetic Blood International, Inc. is a development stage company, developing biotechnology products. It specializes in creating pharmaceuticals and medical devices in the fields of liquid ventilation, oxygen therapeutics, implanted glucose sensing, and blood substitutes using flurocarbon-based technology. Prior flurocarbon-based technologies have suffered from toxicity.

Government Regulation

HemoBioTech, Inc.'s product, manufacturing activities, and proposed clinical trial of that product are subject to regulation by the United States Food and Drug Administration ("FDA") and by other federal, state, local and foreign authorities. Pursuant to the Food, Drug, and Cosmetic Act of 1938, as amended ("FD&C Act"), the Public Health Service Act ("PHS Act"), and the regulations promulgated thereunder, the FDA regulates the development, clinical testing, manufacture, packaging, labeling, storage, distribution and promotion of drugs and biologics, including blood and blood substitutes.

The FDA has expansive regulatory authority which may be enforced through product recalls, seizures and other civil and criminal sanctions. The FDA is considering changes to its approach to "follow-on biological" products (which are the biological product equivalent to generic pharmaceutical products). Changes that would facilitate the approval of such products could have an adverse impact on the Company's long term strategy to the extent that its product is deemed to be a biological product.

FDA APPROVAL PROCESS—PRECLINICAL AND CLINICAL TRIALS. A new drug or biologic cannot be distributed in the United States unless approved by the FDA; FDA approval of new drugs and biologics comes at end of a lengthy process and only after the FDA determines that the article at issue is safe and effective for its intended use or uses. Whether FDA approves a product is a function of the agency's discretion.

In order to gather sufficient data to demonstrate the safety and efficacy of a new drug or biologic, the manufacturer is usually required to sponsor clinical trials, i.e., trials in humans, under the jurisdiction of the FDA. In order to conduct or sponsor a clinical trial of a new drug or biologic, the manufacturer must submit an Investigational New Drug ("IND") application. The IND application must contain sufficient and specific animal test data, toxicological, pharmacological and other data to assure FDA that the initial clinical trial will not endanger the health of the patients or subjects involved. The Company has not submitted an IND to clinically test HemoTech but is targeting submitting its IND during the first half of 2011. A Company may not begin clinically testing until its IND has been approved by the FDA or 30 days have elapsed since the filing and the FDA has not objected. However, as a practical matter, few manufacturers will begin clinical testing if the FDA has expressed concern about the proposed study.

The FDA recognizes three clinical trial phases. A Phase I study is typically closely monitored and may be conducted in patients or volunteer subjects. These studies are designed, in part, to determine the metabolic and pharmacologic actions of the drug or biologic, the side effects associated with increasing doses, to gain early evidence, if possible, of its effectiveness, and gather sufficient information to permit the design of well-controlled, scientifically valid Phase II study. Usually, a Phase I study involves between 20 and 80 subjects or patients, as the case may be.

Phase II studies include controlled clinical studies to evaluate the effectiveness of the drug or biologic for a particular indication in patients with a given condition under study to determine the common short-term side effects and risks associated with the drug or biologic. Phase II studies are well controlled, closely monitored, and conducted on a relatively small cohort usually involving no more than several hundred patients.

Phase III studies are expanded, well controlled and closely monitored studies designed to provide sufficient data so that FDA can determine the product's effectiveness and safety and to provide adequate basis for physician labeling. Phase III studies usually include from several hundred to several thousand patients.

Research and development activities are costly, time-consuming, and may not be successful, and there can be no assurance that our product candidate, HemoTech, even if it is approved to enter Phase I clinical trials, will be approved to enter subsequent phases or will be approved for marketing by the FDA. Moreover, even after completion of a Phase III study, FDA may decline to approve the New Drug Application or Biologics License Application, as the case may be.

FDA REGULATION. The FDA closely regulates companies that sponsor clinical trials, that manufacture drugs or biologics that are being clinically tested or that manufacture approved products. The FDA may conduct an inspection of any Company facility and may take regulatory action if it believes that Company has violated the FD&C Act or PHS Act, including by way of example, issuing observational findings (FDA 483), issuing a Warning Letter, seizing products, placing a "hold" on an IND, revoking INDs, revoking approved NDAs or BLAs, or criminally prosecuting the Company or its employees. During clinical testing phases, FDA may inspect to ensure, among other things, that the health and welfare of the patients enrolled in clinical studies are being appropriately protected, that all subjects have executed informed consent forms approved by an Institutional Review Board, and that the product is being manufactured in a way that ensures that it is not adulterated. Post approval surveillance by the FDA is equally rigorous.

FDA GOOD MANUFACTURING PRACTICES AND REPORTING. The FDA requires drug and biologics manufacturers to comply with Good Manufacturing Practices (“GMP”) regulations. The regulations require that manufacturers comply with various quality control requirements pertaining to design controls, purchasing contracts, organization and personnel, including manufacturing process design, buildings, environmental control, cleaning and sanitation; equipment and calibration of equipment; drug or biologics components or raw materials; manufacturing specifications and processes; labeling and packaging; in-process and finished product inspection and acceptance; and record keeping requirements. Generally, GMP status is necessary to manufacture products for human use.

Employees

As of May 20, 2010, the Company has one full-time employee, its Chief Executive Officer, and five employees through a contract with TTUHSC. In addition, Dr. Mario Feola, the Company’s Chief Medical Officer, is working for the Company without salary. Outside consultants are employed as needed to provide various services. We rely heavily on personnel employed by TTUHSC who provide services to us under the Sponsored Research Agreement. In addition, we also employ outside consultants from time to time to provide various services. We have experienced good employee relations and are not and never have been a party to a collective bargaining agreement.

ITEM 1A. RISK FACTORS

You should consider the following matters when reviewing the information contained in this document. You also should consider the other information incorporated by reference in this document.

Risks Related to Our Business

We have a history of losses and our future profitability is uncertain.

Our financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred cumulative losses of approximately $18,032,000 from inception through December 31, 2009, and has not generated any revenue, and has been dependent on funding operations through the private sale of convertible debt and equity securities. These conditions indicate that there is substantial doubt that the Company will be able to continue as a going concern. The auditors have issued a “Going Concern” opinion for our 2009 financial statements contained in this report.

We expect to continue to incur substantial losses and we do not except to generate significant revenue, if any, in the foreseeable future. Our ability to generate revenue is dependent on obtaining additional financing, including, but not limited to, our current financing, for our future operations. We need to raise at least $3 to $4 million in order to complete our planned operations which include implementing certain FDA recommendations. Our immediate planned operations for the next twelve months include the payment of our general and administrative expenses (including salaries, legal and other professional fees, consulting and advisory fees), the costs associated with making certain upgrades to the HemoTech production facility, to begin the production of HemoTech, conduct animal studies, including preparation of our U.S. IND application. At December 31, 2009, we had only $55,000 in unrestricted cash and cash equivalents. The Company significantly reduced its actual and projected expenses and plans to aggressively manage costs which can be reduced at management’s discretion based on the Company’s available cash.

We are a development stage company with no revenues or profits.

We are in the development stage and, through December 31, 2009, have generated no sales revenue and have no prospects for revenue in the foreseeable future. We currently have no source of operating revenue and there can be no assurance that we will be able to develop any revenue source or that our operations will become profitable, even if we are able to commercialize any products. Further, as a development stage company, we have a limited relevant operating history on which an evaluation of our prospects can be made. Such prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a new business in the evolving, heavily regulated biotechnology industry, which is characterized by an increasing number of market entrants, intense competition and a high failure rate. In addition, significant challenges are often encountered by businesses shifting from developmental to commercial activities.

The next stage of our planned operations includes completion of and submission of our U.S. IND application to the FDA, commencement and completion of our Phase I, U.S. clinical trials if and when our application is approved. Additional operations will include further research and development of HemoTech and payment of operational and overhead expenses that we will incur during our Phase I U.S. clinical trials, as well as preparation for Phase II clinical trials, assuming Phase I clinical trials are successful. In order to complete these additional planned operations, we will need to raise additional capital. If we fail to generate enough cash resources, either from future equity or operating debt sales, exercise of our outstanding warrants or from operating revenue, our ability to implement our business plan and complete these planned operations will be materially affected, and you may lose all or substantially all of your investment.

We are reliant on the success of our two products which are in an early stage of product development and may not be successfully developed or, if successfully developed, may never become viable marketable products.

Our products are in early stage development and if we fail to successfully develop these products, we have no other products on which our business can be developed. There can be no assurance that our research and development activities will result in any commercially viable products. The development of our products will be subject to the risks of failure inherent in the development of products based on innovative technologies and the expense and difficulty of obtaining regulatory approvals. One of our products is a human blood substitute which is currently under development and will require significant additional research and development and pre-clinical testing and clinical testing prior to submission of any regulatory application for commercial use. The development of our ORTH Technology will require, among other things, a comprehensive marketing strategy. There can be no assurance that our product development efforts will be successfully completed, that our products currently under development will be successfully transformed into marketable products, that required regulatory approvals can be obtained, that the products can be manufactured at acceptable cost in accordance with regulatory requirements or that any of the approved products can be successfully marketed or achieve customer acceptance.

We depend on key personnel, and the loss of such personnel could significantly impair our ability to further develop HemoTech, implement our business plan or continue operations.

Our success depends on the continued contributions of our executive officers and scientific and technical personnel and consultants. We are particularly dependent on Arthur P. Bollon, Ph.D., our President and Chief Executive Officer, Dr. Mario Feola, our Chief Medical Officer, and Dr. Jan Simoni, our Acting Vice President and Principal Investigator of Research and Development and Advisor. Drs. Feola and Simoni are the two principal TTUHSC researchers who developed HemoTech. Drs. Feola and Simoni continue to be the two main developers of HemoTech. Dr. Simoni is an employee of TTUHSC and his services have been made available to us under our Sponsored Research Agreement with TTUHSC. Dr. Simoni’s activities related to research and development, production, regulatory and clinical testing of HemoTech are covered under the Sponsored Research Agreement with TTUHSC, which may be terminated at any time by either party on 90 days’ prior written notice and is currently subject to ongoing negotiations.

We currently have one full-time employee, our Chief Executive Officer, Dr. Bollon. Although we have entered into employment agreements with both Dr. Bollon and Dr. Feola, the loss of services of either of these key employees could adversely affect our business. We do not maintain “key person” life insurance on the lives of any executive officer and their death or incapacity would have a material adverse effect on us. The competition for qualified personnel is intense, and the loss of services of certain key personnel would be expected to adversely affect our business. See “Management.”

Some provisions of our CEO’s employment agreement contains obligations of the Company to make salary payments.

Certain provisions contained in the employment agreement with Dr. Bollon, our Chairman, President and Chief Executive Officer, obligates us to make certain salary payments including if his employment is terminated without just cause or due to a disability. If Dr. Bollon’s employment is terminated without just cause or as a result of Dr. Bollon’s disability (which means Dr. Bollon’s inability to perform his duties under the agreement for three consecutive months due to injury, illness or disability (mental or physical), as determined by an independent physician selected by Dr. Bollon with our approval), we will be required to pay Dr. Bollon a severance payment equal to his base salary then in effect, payable in monthly installments until the expiration of the remainder of the term of his employment agreement or the expiration of 23 months, whichever is less. Dr. Bollon will be entitled to receive severance payments totaling not less than six months’ of his base salary. Dr. Bollon has agreed to reduce his base salary in an effort to reduce cash expenditures of the Company. The foregoing factors, together with the effective control of our outstanding Common Stock by our officers, directors and principal stockholders, may serve as an incentive for our officers and directors to discourage certain takeover transactions, possibly resulting in the entrenchment of management and consequently reducing the value of our Common Stock.

If our product offerings are not commercially successful, we will be unable to successfully generate revenue.

We expect a significant portion of our revenues will come from the production and distribution of our products. The success of these offerings depends primarily on their acceptance by the public, the medical community, and other third-party consumers and payers, which is difficult to predict. The commercial success of our products depends on the availability of alternative forms of technology and general economic conditions and other tangible and intangible factors, all of which can change quickly. If we fail to produce these products with broad industry appeal, we will be unable to successfully generate revenue.

The market for our products is competitive and we may not be able to compete successfully against competitors that may be having substantially more development, marketing and sales resources than we do.

The market for our products is competitive and there can be no assurance that we will be able to compete successfully in these markets. We cannot be assured that some other competitive technologies have not been, or will not be, developed by either government, academic or private entities. Any competing technologies could make our technologies either obsolete or of lesser value. Many of our competitors have greater financial and other resources than we have, which may limit our ability to compete effectively.

Although the proposed products of our main competitors in the human blood substitute market have either been rejected by the FDA, have been abandoned or are not yet ready to submit their applications to the FDA for approval of their products, many of these competitors are continuing to develop and test their respective products. There can be no assurance that one or all of these products will not be approved by the FDA before our blood substitute product, HemoTech, ever receives FDA approval.

In-addition, our competitors also may generally be able to respond more quickly to new or emerging technologies or changes in the regulatory requirements. These competitors may also:

•

benefit from greater economies of scale;

•

offer more aggressive pricing;

•

devote greater resources to the promotion of their products; and

•

be better positioned to develop future technologies.

Our failure to complete the current financing may result in a change of our management and defaults under our license agreements with TTUHSC

Pursuant to a letter agreement dated October 26, 2009, by and between the Company and TTUHSC, the Company is required to raise a minimum of $3 million prior to February 19, 2010 which did not occur. If the Company is unable to raise $3 million, unless such deadline is extended, of which there can be no assurance, the Company agreed that its Board of Directors “in cooperation with TTUHSC will replace the management team at HemoBioTech within 30 days and TTUS could decide on other causes of action related to the license agreements” with TTUS.” As of the date of this report, TTUHSC has not taken any action to enforce its rights. In addition, if we do not fund a $1.5 million major primate study out of the $3 million capital raised, or otherwise, the management team will be replaced under such terms described above and TTUS may pursue all rights and remedies under the 2002 and 2008 license agreements.

In either event described above the Company could be forced to cease or substantially curtail its operations which would be expected to result in a loss of your investment.

We depend on, and will continue to depend on, collaboration with and licenses from third parties, and if we are not able to enter into and/or continue such collaborations or licenses, we may not be able to further develop our products without substantial additional expenditures and delays, if at all.

In addition to maintaining our collaborative relationship with TTUHSC, our strategy for the development, clinical testing, manufacturing and commercialization of our proposed products includes entering into various collaborations with corporate partners, licensors, licensees and other third parties in the future, and is dependent on the subsequent success of these third parties in performing their responsibilities. We intend to seek to enter into additional arrangements with other collaborators, although there can be no assurance that we will be able to enter into such collaborations and licenses, or, to the extent that we do, that such collaborations will be successful. Further, there can be no assurance that any future arrangements we may enter into will lead to the development of our products with commercial potential, that we will be able to obtain proprietary rights or licenses for proprietary rights with respect to any technology developed in connection with these arrangements or that we will be able to insure the confidentiality of any proprietary rights and information developed in such collaborative arrangements or prevent the public disclosure thereof.

In general, collaborative agreements provide that they may be terminated under certain circumstances. There can be no assurance that we will be able to extend any of our product collaborative agreements on their termination or expiration, or that we will be able to enter into new collaborative agreements with existing or new partners in the future. To the extent we choose not to or are unable to establish any additional collaborative arrangements, it would require substantially greater capital to undertake research, development and marketing of our proposed products into certain markets or find that the development, manufacture or sale of our proposed products in such markets is adversely affected by the absence of such collaborative agreements.

The FDA regulatory process is costly, lengthy and requires specific expertise, and even if we invest the time and money and other resources required to advance through the FDA approval process, we may never receive FDA approval for our products.

We will rely initially on consultants with prior experience working with the FDA. We expect to hire experienced employees and consultants to analyze, prepare and present and IND application to the FDA for our blood substitute product. The process of obtaining regulatory approvals can be extremely costly and time consuming and there is no guarantee of success. If we do not receive approval of our IND application, we will not be able to proceed with Phase I U.S. clinical testing. In addition, clinical testing is not predictable. Even if the FDA approves the IND application, we cannot guarantee that the FDA will approve our Phase I U.S. clinical results. Our failure to obtain required regulatory approvals would have a material adverse effect on our business, financial condition and results of operations and could require us to curtail or cease our operations.

Our licensed technology from TTUHSC titled Orthogonal Method for the Removal of Transmissible Spongiform Encephalopathy Agents from Biological Fluids (“ORTH Technology”) helps in the clearance and inactivation of infectious agents such as prions (which can cause Mad Cow Disease) and viruses. Such removal and inactivation is critical in the purification of animal products for human use. It can be used not only for HemoTech production, but also has the potential for generating sublicensing revenue from pharmaceutical, biotechnology and the cosmetic industries. We will rely on internal personnel and external consultants to analyze and present this product for appropriate approval in order to market this product. There can be no assurance that regulatory approval for this product will be obtained on a timely basis. In addition, our competitors also may generally be able to respond more quickly to similar and new or emerging technologies or changes in the regulatory requirements and get an approval before us.

The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic and diagnostic pharmaceutical and biological products through lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Satisfaction of these requirements typically takes several years or more and varies substantially based on the type, complexity and novelty of the product. The regulatory review may result in extensive delay in the regulatory approval process. Regulatory requirements ultimately imposed could adversely affect our ability to clinically test, manufacture or market potential products. Government regulation also applies to the manufacture and marketing of pharmaceutical and biological products. The effect of government regulation may be to delay marketing of new products for a considerable period of time, to impose costly procedures on our activities and to furnish a competitive advantage to larger companies that compete with us.

There can be no assurance that FDA or other regulatory approval for any products developed by us will be granted on a timely basis or at all. Any such delay in obtaining, or failure to obtain, such approvals would adversely affect the marketing of any contemplated products and the ability to earn product revenue. Further, regulation of manufacturing facilities by state, local and other authorities is subject to change. Any additional regulation could result in limitations or restrictions on our ability to utilize any of our technologies, thereby adversely affecting our operations.

We have no marketing experience, are dependent on third parties for marketing services, and we may never be able to successfully market HemoTech, even if it receives FDA approval.

We have no marketing and sales personnel and no experience with respect to marketing biochemical or pharmaceutical products. Significant additional expenditures and management resources would be required to develop an internal sales force, and there can be no assurance that such funds would be available. Further, there can be no assurance that, with such a sales force, we would be successful in penetrating the markets for any products developed. We will seek to enter a partnership to develop and market our product. Under certain of these agreements, our marketing partner may have the responsibility for all or a significant portion of the development and regulatory approval. In the event that the marketing and development partner fails to develop a marketable product or fails to market a product successfully, our business may be adversely affected. The sale of certain products outside the United States will also be dependent on the successful completion of arrangements with future partners, licensees or distributors in each territory. There can be no assurance that we will be successful in establishing any additional collaborative arrangements, or that, if established, such future partners will be successful in commercializing products.

We may be sued for product liability in the future, and since we currently maintain no product liability insurance, in the event of a successful suit against us, we may not be able to pay any awarded damages or, if we are able to do so, payment of any such awarded damages could significantly deplete our financial resources.

The use of our proposed HemoTech blood substitute product in clinical trials and the marketing of any product may expose us to product liability claims. We currently have no product liability insurance, however, will attempt to obtain such insurance prior to commencement of such trials, if any. We are required by our license agreement with TTUHSC to obtain such insurance. There can be no assurance that we will be able to obtain such insurance or, if obtainable, that such insurance can be acquired at a reasonable cost or will be sufficient to cover all possible liabilities. In the event of a successful suit against us, lack or insufficiency of insurance coverage could have a material adverse effect on us. Furthermore, certain distributors of pharmaceutical and biological products require minimum product liability insurance coverage as a condition precedent to purchasing or accepting products for distribution. Failure to satisfy such insurance requirements could impede our ability to achieve broad distribution of our proposed product, which would have a material adverse effect on our business and financial condition.

We currently use labs, equipment, personnel, research and development facilities and production facilities at TTUHSC, and if we ever seek to or need to find or build alternate facilities, we may not be able to do so at all or, if we are, it will be costly and may cause significant delays in the development and commercialization of HemoTech, which could materially impair our operations.

We do not currently own, lease or operate any laboratory, research and development or manufacturing facilities. Our current plans include using labs, equipment, personnel and an upgraded blood substitute production facility located at TTUHSC for the production of HemoTech under our Sponsored Research Agreement. After the completion of Phase I or Phase II U.S. clinical trials for HemoTech, the Company will consider establishing independent manufacturing facilities either alone, with TTUHSC, or through partnering. Establishing our own facilities would result in significant additional expenses and may result in potential delays in testing and production. Building and operating our own production facilities would require substantial additional funds and other resources of which there can be no assurance that we will be able to secure nor can there be any assurance that we would be able to enter into any arrangement with third parties to manufacture our product, if any, on acceptable terms or at all. Certain products outside the United States will also be dependent on the successful completion of arrangements with future partners, licensees or distributors in each territory. There can be no assurance that we will be successful in establishing any additional collaborative arrangements, or that, if established, such future partners will be successful in commercializing products.

Uncertainty over proposed health care reforms and whether the costs of using our proposed product will be reimbursed to consumer health insurance companies could cause our product to become unmarketable, which would result in our inability to generate revenue.

Our success in generating revenue from sales of our proposed HemoTech blood substitute product may depend, in part, on the extent to which reimbursements for the costs of such a product and related treatments will be available from government health administration authorities, private health insurers and other organizations. Significant uncertainty exists as to the reimbursement status of newly-approved health care products. There can be no assurance that adequate third-party insurance coverage will be available for us to establish and maintain price levels sufficient for realization of an appropriate return on our investment in developing new products. Government and other third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new therapeutic and diagnostic products approved for marketing by the FDA and by refusing, in some cases, to provide any coverage of uses of approved products for disease indications for which the FDA has not granted marketing approval. If adequate coverage and reimbursement levels are not provided by government and third-party payors for uses of our product, then market acceptance of these products would be adversely affected.

Current worldwide economic conditions could materially adversely affect the Company.

The Company’s operations and performance depend on worldwide economic conditions. Uncertainty about current global economic conditions poses a risk as businesses have postponed spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for the Company’s products and services. Demand could also differ materially from the Company’s expectations. These and other economic factors could have a material adverse effect on demand for the Company’s products and services and on the Company’s financial condition and operating results.

The current financial turmoil affecting the banking system and financial markets and the possibility that financial institutions may consolidate and more may go out of business have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crises on the Company’s business, including insolvency of clients and/or their inability to obtain credit to finance purchases of the Company’s products.

Risks Related to Our Intellectual Property

Our success depends on our ability to protect our intellectual property.

We intend to protect our intellectual property through patents and trademarks. The patent positions of biotechnology companies generally are highly uncertain and involve complex legal and factual questions that will determine who has the right to develop a particular product or process. As a result, we cannot predict which of our patent applications will result in the granting of patents or the timing of the granting of the patents. Additionally, many of our competitors have significantly greater capital with which to pursue patent litigation. As of the date of this report, we have no threatened or pending intellectual property-related litigations, legal actions, investigations, court challenges, negotiations or similar activities. There can be no assurance that we would have the resources to defend any potential patents in the face of a lawsuit. Further, we rely on trade secrets, know-how and other proprietary information. We seek to protect this information, in part, through the use of confidentiality agreements with employees, consultants, advisors and others. Nonetheless, there can be no assurance that those agreements will provide adequate protection for our trade secrets, know-how or other proprietary information and prevent their unauthorized use or disclosure. There is also the risk that our employees, consultants, advisors or others will not maintain confidentiality of our trade secrets or proprietary information, or that this information may become known in some other way or be independently developed by our competitors. We may also be exposed to future litigation by third parties based on claims that our patents, products or activities infringe on the intellectual property rights of others or that we have misappropriated the trade secrets of others. Any litigation or claims against us, whether or not valid, could result in substantial costs, could place a significant strain on our financial and managerial resources, and could harm our reputation. In addition, intellectual property litigation or claims could force us to do one or more of the following, any of which could have a material adverse effect on us or cause us to curtail or cease our operations:

•

cease testing, developing, using and commercializing HemoTech;

•

obtain a license from the holder of the infringed intellectual property right, which could also be costly or may not be available on reasonable terms; or

•

reformulate HemoTech, which may be impossible or too costly.

The patents underlying our products, may expire prior to our receipt, if ever, of FDA or foreign approval.

We have obtained from TTUHSC exclusive worldwide rights to HemoTech under a U.S. patent issued in August 1995, as well as various foreign patents. The patent, U.S. Patent No. 5,439,882, entitled “Blood Substitute” and its foregoing counterparts claims various alternative compositions of the novel blood substitute based on hemoglobin of both bovine and human origin, as well as methods for its production and use. Protection under the U.S. patent expires on August 8, 2012, which may precede our receipt of FDA approval of HemoTech, to the extent FDA approval is granted at all. The Japanese patent and certain of the European patents may also expire on or after August 8, 2012. If the U.S. patent expires before we are able to commercialize our proposed HemoTech product, we may be able to utilize new potential patents related to HemoTech, such as the pending erythropoiesis (production of red blood cells) patent (US 2007/0270333A1) which was filed in 2006 and is actively being pursued, seek commercial exclusivity for a defined time with the FDA and utilize our trade secrets for manufacturing and use of HemoTech. If we are unable to obtain additional patent coverage in advance of the time the existing patent expires or at all, and we fail to receive additional patents, then our competitive position and our ability to successfully commercialize or generate revenues from sales of HemoTech would be materially and adversely affected. A favorable response from the U.S. Patent Office for the pending erythropoiesis 2006 pending patent has been received.

We have filed for a patent for our newly licensed ORTH Technology from TTUHSC, although there can be no assurance that the patent will be obtained. Our failure to obtain the patent would adversely affect the marketing of any contemplated products and the ability to earn product revenue. In addition, our competitors also may generally be able to get a patent approval before us for comparable technologies.

Risks Related to Our Common Stock

The public market for our Common Stock is thin and subject to manipulation.

The market price of our Common Stock, which is traded on the OTC Bulletin Board, may fluctuate significantly in response to the following factors, most of which are beyond our control:

•

variations in our quarterly operating results;

•

changes in general economic conditions and in the healthcare industry;

•

changes in market valuations of similar companies;

•

announcements by us or our competitors of significant new contracts, acquisitions, strategic partnerships or joint ventures, or capital commitments;

•

loss of a major customer, partner or joint venture participant; and

•

the addition or loss of key managerial and collaborative personnel.

The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies’ securities and that have often been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our Common Stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

Obtaining additional capital through the future sale of Common Stock and derivative securities will result in dilution of stockholder interests.

We plan to raise additional funds in the future by issuing additional shares of Common Stock or securities such as convertible notes, options, warrants or preferred stock that are convertible into Common Stock. Any such sale of Common Stock or other securities will lead to further dilution of the equity ownership of existing holders of our Common Stock.

We do not intend to pay cash dividends to our stockholders, so you will not receive any return on your investment in our Company prior to selling your interest in HemoBioTech.

We have never paid any dividends to our stockholders. We currently intend to retain any future earnings for funding growth and, therefore, do not expect to pay any cash dividends in the foreseeable future. As a result, you will not receive any return on your investment prior to selling your shares in our Company and, for the other reasons discussed in this “Risk Factors” section, you may not receive any return on your investment even when you sell your shares in our Company.

We have agreed to indemnify our officers and directors and, if an indemnification claim is successfully made, we may be forced to use our working capital to pay our indemnification obligations, which could result in our inability to use such working capital for our operations.

Our certificate of incorporation includes certain provisions permitted under Delaware law allowing our officers and directors to be indemnified against certain liabilities. Our certificate of incorporation also limits, to the fullest extent permitted by Delaware law, a director’s liability for monetary damages for breach of fiduciary duty, including gross negligence, except liability for the following:

•

breach of the director’s duty of loyalty;

•

acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;

•

the unlawful payment of a dividend or unlawful stock purchase or redemption; and

•

any transaction from which the director derives an improper personal benefit.

Delaware law does not eliminate a director’s duty of care and this provision has no effect on the availability of equitable remedies such as an injunction or rescission based on a director’s breach of the duty of care. In December 2004, we purchased a $5.0 million insurance policy providing coverage for certain liabilities of our officers and directors. In addition, we have entered into separate director and officer indemnification agreements with each of Arthur Bollon, Ghassan Nino, Robert Baron, Bernhard Mittemeyer, Mark Rosenblum (our former CFO) and Robert Comer, under which we agreed to indemnify and advance expenses to each of these directors and officers, as the case may be, against any losses arising out of or relating to any actual, alleged or suspected act or failure to act by such person in his capacity as a director, officer, employee or agent of HemoBioTech or any affiliated company, trust, joint venture, corporation, limited liability company or partnership for which such person was acting or had acted as a director, officer, employee or agent at HemoBioTech’s request. Further, in connection with Ghassan Nino’s resignation as an officer of HemoBioTech under an employment separation and release agreement dated as of July 15, 2004, we agreed to indemnify Mr. Nino and his heirs, executors, administrators and assigns, against all losses arising out of any claim made by a third party against Mr. Nino or HemoBioTech as a result of an action taken or not taken by Mr. Nino as an officer of HemoBioTech, so long as such actions or inactions were taken or not taken by Mr. Nino in good faith within the scope of his employment.

Our Common Stock is considered a “penny stock” and is subject to regulations that limit or restrict the potential market for our stock.

Our Common Stock is deemed to be “penny stock” (as that term is defined under the Securities Exchange Act of 1934, as amended) resulting in increased risk to our investors and certain requirements being imposed on some brokers who execute transactions in our Common Stock. In general, a penny stock is an equity security that:

•

is priced under $5.00;

•

is not traded on a national securities exchange;

•

may be listed in the “Pink Sheets” or the OTC Bulletin Board;

•

is issued by a company that has less than $5.0 million in net tangible assets (if it has been in business less than three years) or has less than $2.0 million in net tangible assets (if it has been in business at least three years); and

•

is issued by a company that has average revenues of less than $6.0 million for the past three years.

At any time the Common Stock qualifies as a penny stock, the following requirements, among others, will generally apply:

•

certain broker-dealers who recommend penny stock to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale.

•

Prior to executing any transaction involving a penny stock, certain broker-dealers must deliver to certain purchasers a disclosure schedule explaining the risks involved in owning penny stock, the broker-dealer’s duties to the customer, a toll-free telephone number for inquiries about the broker-dealer’s disciplinary history and the customer’s rights and remedies in case of fraud or abuse in the sale.

•

In connection with the execution of any transaction involving a penny stock, certain broker-dealers must deliver to certain purchasers the following:

•

bid and offer price quotes and volume information;

•

the broker-dealer’s compensation for the trade;

•

the compensation received by certain salespersons for the trade;

•

monthly accounts statements; and

•

a written statement of the customer’s financial situation and investment goals.

Should a broker-dealer required to provide the above disclosure or fail to deliver such disclosure on the execution of any transaction involving a penny stock in violation of federal or state securities laws, you may be able to cancel your purchase and get your money back. In addition, if the stocks are sold in a fraudulent manner, you may be able to sue the persons and firms that caused the fraud for damages. If you have signed an arbitration agreement, however, you may have to pursue your claim through arbitration. These requirements significantly add to the burden of the broker-dealer and limit the market for penny stocks. These regulatory burdens may severely affect our ability to create a market for our stock and the liquidity and market price for our Common Stock.

A significant number of our shares will be eligible for sale and their sale or potential sale may depress the market price of our Common Stock.

Sales of a significant number of shares of our Common Stock in the public market could harm the market price of our Common Stock. As of May 26, 2010, 23,693,434 shares of our Common Stock were issued and outstanding. In addition, as of the date of this report, an aggregate of 4,833,589 shares of our Common Stock may be issued in the future upon exercise of currently outstanding warrants, and 2,223,115 shares of our Common Stock may be issued in the future upon exercise of stock options or other awards granted under our 2003 Stock Option/Stock Issuance Plan and an additional 120,916 shares were available for grant under such plan. As additional shares of our Common Stock become available for resale in the public market, the supply of our Common Stock will increase, which could decrease its price. Some or all of the shares of Common Stock may be offered from time to time in the open market under Rule 144, and these sales may have a depressive effect on the market for our shares of Common Stock. In general, a non-affiliates who have held restricted shares for a period of six months may sell our Common Stock into the market.

Our management and principal stockholders own a substantial amount of our Common Stock and have effective control of HemoBioTech, which may not always be in the best interests of all of our stockholders.

Our officers, directors and principal stockholders control approximately 59% of our outstanding Common Stock as of December 31, 2009. If these stockholders act together, they will be capable of controlling our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our Common Stock. This concentration of ownership may not be in the best interests of all our stockholders.

Anti-Takeover, Limited Liability and Indemnification Provisions

Certificate of Incorporation and By-laws.

Under our certificate of incorporation, our Board of Directors may issue additional shares of common or preferred stock. Any additional issuance of Common Stock could have the effect of impeding or discouraging the acquisition of control of us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders would receive a premium over the market price for their shares, and thereby protects the continuity of our management. Specifically, if in the due exercise of its fiduciary obligations, the Board of Directors were to determine that a takeover proposal was not in our best interest, shares could be issued by our Board of Directors without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover by:

•

diluting the voting or other rights of the proposed acquirer or insurgent stockholder group,

•

putting a substantial voting block in institutional or other hands that might undertake to support the incumbent Board of Directors, or

•

effecting an acquisition that might complicate or preclude the takeover.

Our certificate of incorporation also allows our Board of Directors to fix the number of directors in the bylaws. Cumulative voting in the election of directors is specifically denied in our certificate of incorporation. The effect of these provisions may be to delay or prevent a tender offer or takeover attempt that a stockholder may determine to be in his or its best interest, including attempts that might result in a premium over the market price for the shares held by the stockholders.

Delaware Anti- Takeover Law.

We are subject to the provisions of Section 203 of the Delaware General Corporation Law concerning corporate takeovers. This section prevents many Delaware corporations from engaging in a business combination with any interested stockholder, under specified circumstances. For these purposes, a business combination includes a merger or sale of more than 10% of our assets, and an interested stockholder includes a stockholder who owns 15% or more of our outstanding voting stock, as well as affiliates and associates of these persons. Under these provisions, this type of business combination is prohibited for three years following the date that the stockholder became an interested stockholder unless:

•

the transaction in which the stockholder became an interested stockholder is approved by the Board of directors prior to the date the interested stockholder attained that status;

•

on consummation of the transaction that resulted in the stockholder’s becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction was commenced, excluding those shares owned by persons who are directors and also officers; or

•

on or subsequent to that date, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

This statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.

ITEM 2. PROPERTIES

We currently do not own any property. We currently operate out of an approximately 4,000 square foot facility provided to us by Texas Tech under the sponsored research agreement. This facility is located in Lubbock, Texas. In June 2007, we signed a five year lease, which is renewable for approximately 2,000 square feet of office space in Dallas, Texas at the Providence Towers, 5001 Spring Valley Road, Suite 1040 West, Dallas, Texas 75244, which we use as our corporate headquarters.

ITEM 3. LEGAL PROCEEDINGS

As of May 20, 2010, we are not a party to any material litigation or threatened litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.

PRICE RANGE OF COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Bulletin Board under the symbol “HMBT.OB.”

The range is high and low bid quotations for our common stock during each quarter of the fiscal years ended December 31, 2009 and 2008 is shown below. Prices are inter-dealer quotations as reported by the FINRA and do not necessarily reflect transactions, retail markups, mark downs, or commissions. The closing price of our Common Stock on April 30, 2010 was $0.70 per share.

	Years Ended December 31,
	2009				2008
	High		Low		High		Low

First	$	1.00	$	0.24	$	1.40	$	0.85

Second	$	0.70	$	0.30	$	1.40	$	1.00

Third	$	1.01	$	0.15	$	1.00	$	0.70

Fourth	$	0.75	$	0.18	$	1.03	$	0.21

HOLDERS OF RECORD

As of April 23, 2010, there were approximately 100 holders of record of our common stock.

DIVIDEND POLICY

We have never declared or paid dividends on our shares of common stock. We currently intend to retain future earnings for use in our business and, therefore, do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future. Any future determination as to the payment of cash dividends on our common stock will be at the discretion of our Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our Board of Directors including the General Corporation Law of the State of Delaware, which provides that cash dividends are only payable out of retained earnings or if certain minimum rations of assets to liabilities are satisfied. The declaration of cash dividends on our common stock also may be restricted by the provisions of credit agreements that we may enter into from time to time.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information regarding the status of our existing equity compensation plans at December 31, 2009.

Plan category	Number of shares of common stock to be issued on 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 the previous columns)
Equity compensation plans approved by security holders (1)		2,344,031	$	0.74		120,916

Equity compensation plans not approved by security holders		—		—		—

Total		2,344,031	$	0.74		120,916

(1) Consists of our 2003 Stock Option/Stock Issuance Plan.

RECENT SALES OF UNREGISTERED SECURITIES

Bridge Financing

Between October 28 and November 25, 2009, the Company completed a bridge financing (the “Bridge Offering”) of $385,000 of Bridge Offering units (the “Bridge Unit”). The Bridge Units consist of $385,000 principal amount of 10% Promissory Notes (“Bridge Notes”), and 1,540,000 shares of Common Stock, which were offered on a “best efforts” basis. Meyers Associates, the Placement agent of this Offering and a principal stockholder of the Company, received approximately $55,000 in fees and expenses coincident with the Bridge Notes and Warrants to purchase an aggregate of 539,000 Shares of Common Stock from the Offering. The Company received net proceeds of approximately $305,000 which are being used for working capital, including expenses of this Offering. The Bridge Notes (but not the shares of Common Stock included in the Bridge Units) mature in one year from their dates of issuance, however, upon the sale of at least the minimum $1,500,000 in the Company’s current offering, the Bridge Notes shall be converted by the Company into Units at the Purchase Price.

The net proceeds from the Bridge Offering are being used by the Company for working capital purposes.

The Bridge Units were offered and sold in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, based on information provided in the investors’ subscription agreements.

STOCK OPTION GRANTS

The Company granted 676,000 stock options for the year ended December 31, 2009 under its Stock Option/Stock Issuance Plan at a weighted average exercise price of $0.40 per share. Information pertaining to these options is set forth in Note F(6) to the accompanying financial statements.

OPTIONS GRANTED IN 2009
MONTH	SHARES	OPTION PRICE / RANGE	TERM (IN YEARS)
JAN	15,000	$0.73	5 TO 10 YEARS
FEB	-	-	-
MAR	135,000	$0.30 - $0.51	5 TO 10 YEARS
APR	-	-	-
MAY	-	-	-
JUN	35,000	$0.55	5 TO 10 YEARS
JUL	-	-	-
AUG	-	-	-
SEP	-	-	-
OCT	280,000	$0.25	5 TO 10 YEARS
NOV	80,000	$0.40 - $0.44	5 TO 10 YEARS
DEC	131,000	$0.50 - $0.55	5 TO 10 YEARS

TOTAL	676,000

ITEM 6. SELECTED FINANCIAL DATA.

Not required.

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

PLAN OF OPERATIONS

We are primarily engaged in the research and development of human blood substitute technology exclusively licensed from Texas Tech University Health Sciences Center (“TTUHSC”). Since October 27, 2004 most of our working capital was used to pay for general and administrative costs, salaries, legal and accounting fees and the cost of raising money. After reviewing the blood substitute technology developed by researchers at Texas Tech, in January 2002 we licensed from Texas Tech the exclusive rights to various alternative compositions of HemoTech, a novel blood substitute that is based on hemoglobin (which is the key protein in red blood cells that carries oxygen) of both bovine (cow) and human origin, as well as methods for its production and use. What makes HemoTech a novel potential blood substitute product is the fact that it is comprised of hemoglobin that has been isolated from bovine blood and then chemically modified to make the product non-toxic. For HemoTech production, hemoglobin is modified with ATP. Adenosine and Glutathione(GSH).We also have an agreement with Texas Tech that any patent issued from its patent application relating to the induction of erythropoiesis (which is the production of red blood cells by the body) will be included under our exclusive license with Texas Tech. In addition to our license and patent agreement with Texas Tech, beginning in July 2002, we have entered into a series of Sponsored Research Agreements (“SRA”) with TTUHSC under which we are entitled to use certain of Texas Tech's production and research and development facilities in Lubbock, Texas.

In January 2007, the Company entered into a Stage IV SRA with TTUHSC for the period beginning January 1, 2007. In connection therewith, the Company made an initial payment of approximately $780,000. This amount will be charged to operations over the period of the research (see Note D to the Condensed Financial Statements). Additional payments may be made to TTUHSC under the agreement based on mutually agreed upon budgets. The SRA IV activities include maintaining the animal facility which houses a controlled herd of Hereford cows needed for the production of HemoTech and assistance in the implementation of FDA recommendations received at a Pre-IND meeting with the FDA in April 2006. The SRA IV activities also include the manufacture of HemoTech. The product will be made at the production facility at TTUHSC and will be used for pre-clinical and clinical studies upon acceptance of the IND. The agreement will also involve further research and development with a focus on additional uses of HemoTech and expanded patent protection.

At December 31, 2009, approximately $15,000 remained as available funds at TTUHSC and are included in the Company’s prepaid assets.

Our goal is to address an increasing demand for a safe and inexpensive human blood substitute product in the United States and around the world through our licensed technology. We believe that certain initial pre-clinical and early stage human trials undertaken outside the U.S. by prior holders of this technology suggest that our licensed technology may possess properties that diminish the intrinsic toxic effects of hemoglobin and help reduce or eliminate the abnormal reaction associated with hemorrhagic shock (which is the loss of blood pressure and the lowering of vital signs resulting from the loss of blood).

The FDA has cited the Adenosine/GSH modified hemoglobin strategy used in HemoTech as a viable strategy for a needed new generation red blood cell substitute. The FDA indicated at a meeting on April 29, 2008 the toxicity of previous first generation substitutes and the need for a new generation substitute. Our Adenosine/GSH modified hemoglobin, HemoTech, is protected by issued patents in 21 countries.

We have a limited operating history, no customer base and no revenues to date. Our plan of operations for the next twelve months is focused primarily on the development of our licensed technology and business, production of our product, HemoTech, for use in Phase I U.S. clinical trials, filing of an IND with the FDA, continuing and enlarging the animal facility at Texas Tech University, upgrading our existing production facility based on FDA recommendations and furthering our intellectual property position through the introduction of additional patents and initiation of Phase I U.S. clinical studies if the IND is accepted.

Management believes our cash available of $55,000 at December 31, 2009, will not be sufficient to fund our immediate current operations. In April 2010, the Company completed a $50,000 bridge loan with one investor on the same terms as the Bridge Offering described above in Item 6, except there is no mandatory conversion of the notes. This cash position will not be sufficient to carry on current operations beyond the immediate future.

The Company recently significantly reduced its actual and projected expenses and plans to aggressively manage cash costs. Management's plans include continuing to finance operations through one or more private or public offerings of equity or debt securities and monitoring and reducing discretionary expenditures. In order to complete our planned operations which includes implementing certain FDA recommendations including upgrading the production facility, and performing complementary toxicology studies; collectively at a cost ranging from $3,000,000 to $4,000,000, we will need to raise at least $3 million in the near term, although there can be no assurance that we can raise these funds. If we fail to generate enough working capital, either from future debt or equity offerings, we will have to further curtail our planned operations.

The financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred cumulative losses of $18,032,000 from inception through December 31, 2009, has not generated any revenue, and has been dependent on funding operations through the private sale of convertible debt and equity securities. These conditions indicate that there is substantial doubt upon the company’s ability to continue as a going concern. Management’s plans include continuing to fund operations through one or more public or private offerings of equity securities, although there is no assurance they will be able to do so in the future, and monitoring and reducing discretionary expenses.

RESEARCH AND DEVELOPMENT

We currently have two licensed technologies, “HemoTech” and “ORTH”. We expect that the remaining production, development, testing and FDA approval of HemoTech, could occur over a period of approximately four years. Our ORTH technology is essentially ready for commercialization during 2009 and requires minimal additional research and development.

HemoTech must undergo several major stages of production, development, and clinical testing before being in a position to submit its New Drug Application (“NDA”) to the FDA, as follows:

PRODUCTION OF HEMOTECH. In order to produce HemoTech for Phase I U.S. clinical trials, we must complete certain upgrades of the current HemoTech production facilities located at TTUHSC. A portion of these upgrades have been completed during 2006 and through 2007 and were based on recommendations from the FDA.

PREPARATION AND SUBMISSION OF U.S. IND APPLICATION. We started preparing material for our U.S. IND application on December 13, 2004, when we entered into our Stage II Sponsored Research Agreement with TTUHSC. We are

actively planning and implementing the FDA recommendations including upgrading the production facility, preparing for clinical trials and the production of HemoTech, collectively at a cost estimated to range from $5,000,000 to $8,000,000, which are necessary for submission of our U.S. IND application and production of the product, although there can be no assurance that we will be able to meet a specified timetable or budgeted amount. We currently do not have sufficient funds available to pay this amount. We will need to raise at least $7,000,000 in order to complete the above mentioned activities.

INDIA STRATEGY. During June 2007 we engaged a U.S. based clinical research organization to assist the Company in submitting technical information to the Drug Controller General of India (DCGI) for the purpose of obtaining regulatory authority to conduct clinical trials in India. A goal is to establish clinical trials in India and if successful commercialize HemoTech in India.

PHASE I OF OUR U.S. CLINICAL TRIALS. Once our U.S. IND application has been accepted by the FDA, we expect to be able to commence our Phase I U.S. clinical trials of HemoTech. Depending on whether the FDA accepts our U.S. IND application, we believe that we could begin Phase I U.S. clinical trials soon thereafter although there is no guarantee that we can meet this goal. We estimate that our Phase I U. S. clinical trials (including the costs of doing additional research and development of HemoTech during our Phase I U.S. clinical trials and the operational and overhead costs that we will incur during our Phase I U. S. clinical trials) could cost approximately $10.0 million, although the final cost could be more or less than this estimate, which includes the following:

approximately $1.4 million for the production of HemoTech;

approximately $1.6 million for the testing of HemoTech on humans;

approximately $1.9 million for personnel, administrative, and operational expenses that we expect to incur during our Phase I U. S. clinical trials;

approximately $1.7 million for legal, accounting, consulting, technical and other professional fees that we expect to incur during our Phase I U. S. clinical trials;

approximately $1.6 million for research and development costs that we expect to incur during our Phase I U. S. clinical trials; and

approximately $2.0 million for preparation of Phase II clinical trials.

We expect that our Phase I U. S. clinical trials would take approximately six to nine months to complete from the date we start such trials, though such trials could take significantly longer to complete, depending on, and among other things, the rate of production of HemoTech and the availability of patients. We estimate that we will be required to raise additional capital (although there can be no assurance that we can meet this timeframe) in order to fund our Phase I U.S. clinical trials, as well as preparation for Phase II clinical trials from start to finish and to cover the related expenses described above. If submission or acceptance of our U.S. IND application is delayed for any reason and if we are unable to raise such additional capital in a timely manner, commencement of our Phase I U. S. clinical trials would also be delayed.

PHASE II OF OUR U.S. CLINICAL TRIALS. A Phase II clinical trial could commence subsequent to a successful Phase I trial. We estimate that our Phase II

U.S. clinical trials (including the costs of doing additional research and development of HemoTech during our Phase II U.S. clinical trials and the operational and overhead costs that we will incur during our Phase II U.S. clinical trials) will cost approximately $20.0 million, which includes the following:

further production of HemoTech;

further testing of HemoTech and related activities;

personnel, administrative, and operational expenses that we expect to incur during our Phase II U. S. clinical trials;

legal, accounting, consulting, technical and other professional fees that we expect to incur during our Phase II U. S. clinical trials; and

research and development costs that we expect to incur during our Phase II U. S. clinical trials.

The exact cost of each step will be determined in the future and will depend on various factors including FDA regulatory guidance and the availability of resources of TTUHSC.

We expect that our Phase II U.S. clinical trials could be completed within approximately one year from the date we start such trials, though such trials could take significantly longer to finish, depending on, among other things, the timely completion of necessary upgrades to the HemoTech production facility and the availability of patients. If commencement or completion of our Phase I U.S. clinical trials are delayed for any reason, or if we are unable to raise sufficient funds to begin our Phase II U.S. clinical trials immediately following completion of our Phase I U.S. clinical trials, our Phase II U.S. clinical trials will be delayed.

PHASE III OF OUR U.S. CLINICAL TRIALS. If we are able to complete our Phase II U.S. clinical trials, we will seek approval from the FDA for our Phase III U. S. clinical trials soon thereafter.

At such time, and in order to cut the costs of conducting and completing our Phase III U.S. clinical trials, we anticipate that we will seek to enter into a partnership with a biopharmaceutical company that has expertise in the production and marketing of biological products, although there can be no assurance that we will be able to do so.

Alternatively, if we are not able to enter into such a partnership, we may seek to enter into a manufacturing arrangement with an experienced pharmaceutical manufacturer, under which such manufacturer would produce HemoTech, which would significantly reduce the costs of our Phase III U.S. clinical trials by eliminating the need to build a production facility that meets the FDA's standards for Phase III U.S. clinical trials.

If we are not able to enter into a partnership or find a manufacturer that is willing to manufacture HemoTech for us, we may be required to perform all aspects of the Phase III U. S. clinical trials independently. In this case, we estimate that our Phase III U.S. clinical trials (including the costs of doing additional research and development of HemoTech during our Phase III U.S. clinical trials and the operational and overhead costs that we will incur during our Phase III U.S. clinical trials) could cost approximately $195.0 million, which includes the following: approximately $100.0 million to build a production facility for HemoTech that is suitable for such advanced testing and that meets the standards of the FDA as a product testing facility;

approximately $70.0 million for the further testing and production of HemoTech;

approximately $10.0 million for personnel, administrative, and operational expenses that we expect to incur during our Phase III U.S. clinical trials;

approximately $5.0 million for legal, accounting, consulting , technical and other professional fees that we expect to incur during our Phase III U.S. clinical trials; and

approximately $5.0 million for research and development costs that we expect to incur during our Phase III U.S. clinical trials.

We expect that our Phase III U.S. clinical trials could be finished within fifteen to eighteen months from the date we start such trials, though such trials could take significantly longer to complete, depending on, among other things, the timely completion of a suitable production facility for HemoTech and the availability of patients. If we are unable to partner with a pharmaceutical company, we estimate that we will be required to raise the approximately $200 million (or such lesser amount as may be required if we are successfully able to enter into a partnership) that we will need in order to fund our Phase III U.S. clinical trials from start to finish and to cover the related expenses described above. If commencement or completion of our Phase II U.S. clinical trials are delayed for any reason, or if we are unable to raise sufficient funds to begin our Phase III U.S. clinical trials immediately following completion of our Phase II U.S. clinical trials, our Phase III U.S. clinical trials will be delayed.

The estimated costs of each of the phases of our clinical trials set forth above represent our best estimate of such expenses based on, among other things, current economic conditions and availability of materials and personnel. Since many of these phases will not even be commenced by us for another two to three years, we cannot offer any assurance that such estimates will reflect the actual amounts that we may be required to incur during each phase of our clinical trials based on, among other things, then-current economic conditions, availability of materials and personnel, and other factors that may be relevant at the time. The amounts we may actually be required to expend during any phase of our clinical trials may be significantly more than the amounts estimated by us above.

If our clinical trials are successful and we are able to meet the timelines set forth above, it is possible that an NDA could be approved by the FDA as early as late-2010, although there can be no assurance that an NDA would be approved by such time, if ever. There can also be no assurance that we will be able to complete our clinical trials under the schedule described above, or ever, or that we will be able to develop a viable and marketable human blood substitute, even if we are able to complete our clinical trials.

Further, we do not expect to generate any revenues until after such time as HemoTech has received FDA approval, if ever.

Our ORTH technology can be used not only for HemoTech production but also has the potential for generating sublicensing revenue from pharmaceutical, biotechnology and the cosmetic industries. There can be no assurance that regulatory approval, if required, for this product will be obtained on a timely basis.

RESULTS OF OPERATIONS

We are a development stage company and have not generated any revenue from inception through December 31, 2009. To date, our efforts have been principally devoted to evaluating the HemoTech technology, negotiating and entering into our license agreement and Sponsored Research Agreements with TTUHSC, hiring employees and consultants, establishing our Board of Advisors, raising capital, and engaging in other organizational and infrastructure development. In addition, during 2007 the Company upgraded the production facility at Texas Tech University and maintained an animal donor facility.

Total expenses, and thus our losses, totaled $18,032,000 from October 3, 2001 (inception) through December 31, 2009.

YEAR ENDED DECEMBER 31, 2009 COMPARED TO YEAR ENDED DECEMBER 31, 2008

Total expenses, and thus our losses, for the year ended December 31, 2009 were $2,329,000 compared with $3,832,000 for the same period a year ago resulting from both significantly lower research and development costs and general and administrative expenses.

Research and Development expenses were $442,000 for the 2009 period, decreasing $1,098,000, or 71.3% from the $1,540,000 in the same period in 2008 resulting from the acquisition of a new TSE technology that removes and inactivates infectious agents (which can cause Mad Cow disease) and viruses valued at $655,000 (See also Note D of the Company’s Notes to Condensed Financial Statements) in 2008; and from significantly lower cash spending to outside laboratories and consultants and lower costs related to our Stage IV Sponsored Research Agreement with Texas Tech Health Sciences Center. However, during December 2009, the Company issued 600,000 shares valued at $174,000 to Texas Tech. Charges related to the Sponsored Research Agreement with TTUHSC were approximately $180,000 lower resulting from increased spending on laboratory upgrades in 2008 which did not repeat in the current period. Additionally, approximately $400,000 of costs associated with outside laboratories incurred in 2008 did not repeat in the current period due somewhat to the Company’s weakened cash position.

General and Administrative costs were $1,855,000 for the year ended December 31, 2009, a decrease of $472,000, or 20.2% from the prior year amount of $2,327,000 resulting from significantly lower compensation costs of approximately $295,000 and lower professional fees of approximately $46,000. Lower compensation costs included both non cash stock-based compensation of $115,000 and reduced salary spending of $180,000.

Interest expense was $47,000 during 2009 compared to zero in 2008 based on the issuance of new debt during 2009.

Interest income decreased to $5,000 in the 2009 period compared to $35,000 in the prior period due to lower cash balances in the current year.

Liquidity and Capital Resources

During the year ended December 31, 2009, net cash used in operating activities was $1,028,000 compared to $1,984,000 in the same period during 2008. This 48% reduction in operating cash spending resulted primarily from lower cash spending related to outside research laboratories, cash compensation costs and reduced professional fees. During May 2008, the Company purchased the TSE technology from TTUHSC at a cost of 500,000 shares of the Company’s common stock valued at $1.29 per share and a $10,000 cash cost, a total of $655,000. At December 31, 2009 and 2008, approximately $15,000 and $214,000 of the TTUHSC 2007 Payment is included in prepaid expenses and reflected on our balance sheet. On December 31, 2009, the Company had approximately $55,000 in unrestricted cash and cash equivalents. This cash position will not be sufficient to carry on current operations beyond two to three months.

During 2009, the Company had net cash provided by financing activities of $640,000 from the issuance of common stock and debt as compared with $412,000 provided in 2008.

As a result of the foregoing, the Company’s cash position decreased by $388,000 during 2009.

During October and through November 30, 2009, the Company received $385,000 in gross proceeds, coincident with a short term bridge financing (“Bridge Notes”). In exchange for this amount, the Company issued 10% Promissory Notes that may convert into shares of the Company’s common stock at the earlier of one year from the date of issue or upon the Company’s issuance of at least $1,500,000 in a Private Placement financing. The Bridge Notes are payable in either cash or the Company’s common stock, at the Company’s discretion. Additionally the Bridge Note investors received four shares of the Company’s common stock for each $1.00 invested in the Bridge Notes or an aggregate of 1,540,000 shares of common stock. The net proceeds from the Bridge Notes was approximately $305,000. The value associated with the 1,540,000 common shares was approximately $447,000 and was charged to operations during 2009.

The Placement Agent in the Bridge Notes is also a financial advisor to the Company and a significant shareholder of the Company (Note F(2). The Placement Agent received approximately $48,000 in fees and expenses coincident with the Bridge Notes and warrants to purchase an aggregate of 539,000 shares of Common Stock.

The Bridge Notes will convert to common stock at a price determined by a contemplated $3,000,000 Private Placement financing. The Private Placement terms include a conversion price of the Bridge Notes to the company’s common stock at the lower of $.25 or a 25% discount to the 10 day trading weighted average of the closing price of the Company’s common stock prior to the first closing.

In April 2010, the Company received $50,000 in gross proceeds in exchange for 10% promissory notes issued on the same term as the Bridge Note described above. This one investor received 200,000 shares of Common Stock in consideration of his investment. The placement agent received $8,500 in fees and expenses and warrants to purchase 70,000 shares of Common Stock.

The Company recently significantly reduced its actual and projected expenses and plans to aggressively manage cash costs. While the Company has been able to obtain funding in the past, there can be no assurance that they will be able to do so in the future. Management's plans include continuing to finance operations through one or more private or public offerings of equity securities and monitoring and reducing discretionary expenditures. In order to complete our planned operations which includes implementing FDA recommendations necessary for submitting our IND to the FDA, upgrading the production facility, preparing for a toxicology study on primates, the production of HemoTech; collectively at a cost ranging from $2,000,000 to $4,000,000, we will need to raise at least $3 million in the near term, although there can be no assurance that we can raise these funds. If we fail to generate enough working capital, either from future debt or equity offerings, we will have to further curtail our planned operations.

The financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred cumulative losses of $18,032,000 from inception through December 31, 2009, has not generated any revenue, and has been dependent on funding operations through the private sale of convertible debt and equity securities. These conditions indicate that the Company may not be able to continue as a going concern. Management’s plans include continuing to fund operations through one or more public or private offerings of equity securities, although there is no assurance they will be able to do so in the future, and monitoring and reducing discretionary expenses. See Note B of Notes to Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, our financial position is routinely subject to a variety of risks, including market risk associated with interest rate movement. We regularly assess these risks and have established policies and business practices intended to protect against these and other exposures. As a result, we do not anticipate material potential losses in these areas.

As of December 31, 2009, we had cash and cash equivalents of $55,000. Declines of interest rates over time will, however, reduce our interest income.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Index to Financial Statements appears on page F-1, the Report of the Independent Registered Public Accounting Firm appears on page F-2, and the Financial Statements and Notes to Financial Statements appear on pages F-3 to F-22.

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

The disclosures concerning the Company’s change in accountants were reported on a Form 8-K filed on April 13, 2010. There were no disagreements or reportable events reported.

ITEM 9A(T). CONTROLS AND PROCEDURES

The chief executive officer and the chief financial officer, after evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e); collectively, "Disclosure Controls") as of the end of the period covered by this annual report (the "Evaluation Date") have concluded that as of the Evaluation Date, our Disclosure Controls were not effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the SEC, and that material information relating to our company and any consolidated subsidiaries is made known to management, including the chief executive officer and chief financial officer, particularly during the period when our periodic reports are being prepared to allow timely decisions regarding required disclosure.

Management assessed the effectiveness of our internal control over financial reporting as of the Evaluation Date based on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has determined that as of the Evaluation Date, there were material weaknesses in our internal control over financial reporting. The material weaknesses identified during management’s assessment were (i) a lack of sufficient internal accounting resources; and (ii) a lack of segregation of duties to ensure adequate review of financial statement preparation. In light of these material weaknesses, management has concluded that we did not maintain effective internal control over financial reporting at the Evaluation Date.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. As defined by the Public Company Accounting Oversight Board Auditing Standard No. 5, a material weakness is a deficiency or a combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected. A clear and concise segregation of duties is important to maximize checks and balances so that no single individual has control over two or more phases of a transaction or operation. A strong segregation of duty also is critical to reduce effectively the risk of mistakes and inappropriate actions preventing fraud and discourages collusion. It can be difficult for small businesses to always have a clear separation of duties because there simply are not enough personnel to cover each and every process and procedure. Ultimately, checks and balances need to be in place as a supportive measure to the business operations, but also as a fraud prevention measure as well. Because we have limited financial personnel, and limited resources, compliance with segregation of duties and proper oversight of control requirements is extremely difficult In connection with the evaluation referred to in the foregoing paragraph, we have identified no change in our internal control of financial reporting that occurred during the quarter ended December 31, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are a non-accelerated filer and are required to comply with the internal control reporting and disclosure requirements of Section 404 of the Sarbanes-Oxley Act for fiscal years ending December 31, 2009. Although we are working to comply with these requirements, we have limited financial personnel, making compliance with Section 404 – especially with segregation of duty control requirements – very difficult and cost ineffective, if not impossible. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

ITEM 9B. OTHER INFORMATION

During October and through November 30, 2009, the Company received $385,000 in gross proceeds, coincident with a short term bridge financing (“Bridge Notes”). In exchange for this amount, the Company issued 10% Promissory Notes that may convert into shares of the Company’s common stock at the earlier of one year from the date of issue or upon the Company’s issuance of at least $1,500,000 in a Private Placement financing. The Bridge Notes are payable in either cash or the Company’s common stock, at the Company’s discretion. Additionally the Bridge Note investors will receive four shares of the Company’s common stock for each $1.00 invested in the Bridge Notes. Accordingly, during the fourth quarter, the Company will issue 1,540,000 shares of common stock. The net proceeds from the Bridge Notes was approximately $305,000. The value associated with the 1,540,000 common shares was approximately $447,000 and was charged to operations during 2009.

The Placement Agent in the Bridge Notes is also a financial advisor to the Company and a significant shareholder of the Company (Note G(2). The Placement Agent received approximately $48,000 in fees and expenses coincident with the Bridge Notes.

The beneficial conversion feature from the conversion of the Bridge Notes to common stock and the debt discount, which is valued at $132,000 based on the effective conversion price and the market price on the date of issuance, will be amortized to interest expense using the effective interest method over the life of the Bridge Notes.

Effective as of April 9, 2010, upon the authorization and approval of the Audit Committee of its Board of Directors, the Registrant engaged M&K CPAs, PLLC as its independent registered public accounting firm. M&K CPAs, PLLC was engaged to also re-audit the Registrant’s financial statements for the year ended December 31, 2008.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following descriptions provide information covering each executive officer and director of the Company as of the date of this Report.

Name	Age	Position
Robert Baron	70	Chairman of the Board
Arthur P. Bollon, Ph.D.	67	President, CEO and Director
Robert Comer, CPA, MBA	77	Interim Chief Financial Officer and Secretary and Director
Mario Feola, M.D.	83	Chief Medical Officer
Jan Simoni, Ph.D., DVM	59	Acting Vice President and Principal Investigator of Research and Development and Advisor
Ghassan Nino, CPA, CMA	42	Director
Robert E. Dragoo, Jr.	70	Director
Lt. General Bernhard Mittemeyer, M.D. (U.S. Army, retired)	79	Director

Robert Baron has served on the board of directors of the Company since November 2004, and as Chairman of the board since October 26, 2009. Currently, Mr. Baron is a director of Opko Health, Inc., a publicly traded clinical stage biopharmaceutical company, Andover Medical, Inc., a publicly traded durable medical equipment distributor. Previously, Mr. Baron served as the President of Cash City, Inc. from 1999 to 2003. Cash City is a payday advance and check cashing business. From 1997 to 1999 Mr. Baron was the President of East Coast Operations for CSS/TSC, Inc., a distributor of blank t-shirts and fleece and accessories and a subsidiary of Tultex, Inc., a publicly held company. From 1986 to 1997, Mr. Baron was the chairman of T Shirt City, Inc., a privately held company.

Arthur P. Bollon has served on a full-time basis as our President and Chief Executive Officer since April 8, 2003. Until October 2009, he also served as Chairman of the Board. Dr. Bollon has over 25 years of experience in biotechnology as an executive, scientist and entrepreneur. In 2003 he co-founded Biogress, LLC, a biotechnology service company. Between 1991 and 2002, Dr. Bollon was Chairman, President and Chief Executive Officer of Cytoclonal Pharmaceutics, a publicly traded biotechnology company which he co-founded in 1991. Cytoclonal Pharmaceutics completed an initial public offering in 1995. In 1987, Dr. Bollon was a founder of Wadley Biosciences Inc./Lymphokine Partners, a partnership between Wadley Cancer Center and Philips Petroleum. Between 1987 and 1990, Dr. Bollon was Chairman and CEO of the Wadley Biosciences Inc. Between 1979 and 1987, Dr. Bollon served as Chairman of the Department of Molecular Genetics and Director of Genetic Engineering at the Wadley Cancer Center. Between 1972 and 1979, Dr. Bollon served as an Assistant Professor at the University of Texas Health Science Center in Dallas. He has also served as Adjunct Professor at the University of Texas at Dallas. He received his Ph.D. in Molecular Genetics from Rutgers University and was a Post Doctorate Fellow at Yale University.

Robert Comer has served as Interim Chief Financial Officer and Secretary since January 1, 2010 and as a director since April 6, 2005. Mr. Comer served as Chairman of the Audit Committee and is a member of the Nominating and Corporate Governance Committee. From 1994 to the present, Mr. Comer has been involved in contract consulting and served as our Acting Chief Financial Officer between November 18, 2004 and April 1, 2005. From 1991 to 1994, he served as Chief Financial Officer of Banc One Management and Consulting Corporation. From 1987 to 1991, Mr. Comer was Managing Partner of Robert W. Comer & Associates. From 1985 to 1987, Mr. Comer was a Director of Financial Management Services of InterFirst Corporation. From 1969 to 1981, Mr. Comer was an audit partner with Arthur Andersen & Co. Mr. Comer received his B.S. and M.B.A. degrees from Indiana University.

Mario Feola is a co-inventor of HemoTech and has been our full-time Chief Medical Officer since November 1,2004. From December 14, 2003 through October 31,2004, Dr. Feola served as our Chief Medical Officer on a part-time basis. Between 1994 and 2004, Dr. Feola served as the Chief of Surgery at the Veteran's Affairs Hospital in Amarillo, Texas and since 1977, Dr. Feola has served as a Professor of Surgery at Texas Tech. Dr. Feola has authored or co-authored more than 100 papers, book chapters and research abstracts. Dr. Feola has been a speaker at many national and international blood substitute conferences and is a member of numerous scientific and professional organizations. He received his M.D. degree from the University of Naples, Italy.

Jan Simoni is a co-inventor of HemoTech and has served as our Acting Vice President and Principal Investigator of Research and Development since 2002. On July 13, 2005, the Company entered into an advisory agreement with Dr. Simoni to receive advisory services on technical, medical and market issues related to HemoBioTech, including its second-generation blood substitute, HemoTech. Since 1993, Dr. Simoni has also served as the Blood Substitute Group Leader and now as Research Professor in the Department of Surgery at Texas Tech, where he co-invented HemoTech. Since 2004, he holds a joint appointment as Research Associate Professor in the Department of Internal Medicine, being involved in the cardiology and nephrology fellows education process. Between 1990 and 2002, Dr. Simoni served as Assistant Research Professor and from 2002 to 2007 as Associate Research Professor of Surgery at Texas Tech. Between 1985 and 1990, Dr. Simoni was a Research Instructor in the Department of Surgery at Texas Tech. Previously, Dr. Simoni served as a Research Scientist and Senior Lecturer in the Department of Pathophysiology at Wroclaw University of Environmental and Life Sciences. Dr. Simoni is the author or co-author of more than 250 scientific publications including 86 papers and book chapters, 156 abstracts and several patents. He was an invited speaker at many national and international blood substitute conferences and has organized and chaired many blood substitute sessions. Dr. Simoni is a member of a number of scientific and professional organizations, including the National Research Honor Society, the American Society for Artificial Internal Organs (ASAIO), the International Society for Artificial Cells, Blood Substitutes and Immobilization Biotechnology and the American Veterinary Medical Association. Dr. Simoni is an Editorial Board member of the ASAIO Journal and a reviewer for the Journal of Pharmacology and Experimental Therapeutics, Pharmacological Biochemistry, ASAIO Journal, Artificial Organs, Nature Biotechnology, Medicinal Research Reviews and Oncogene. Dr. Simoni received his veterinary medical degree (D.V.M.) and doctoral degree (Ph.D.) from Wroclaw University of Environmental and Life Sciences. Dr. Simoni is compensated directly by Texas Tech in accordance with the terms of our sponsored research agreement with Texas Tech, for which the Company reimburses Texas Tech.

Ghassan Nino has served as our Vice Chairman of the Board since October 6, 2003. Mr. Nino founded our predecessor-in-interest, HemoBioTech, Inc., a Texas corporation, in December 2001. Between October 6, 2003 and July 15, 2004, Mr. Nino served as our Vice Chairman and Acting Chief Financial Officer. Mr. Nino resigned as an employee and officer of the Company, effective as of July 15, 2004, and continues to serve as our non-executive Vice Chairman of the Board. In April 2003, Mr. Nino co-founded Biogress LLC, a biotech service company, and has served as its managing director since that time. In April 2002, Mr. Nino founded Pave Systems Inc., a technology software company, and has served as its managing director since that time. In August 1998, Mr. Nino founded Ascend Mobility, Inc., a business and technology advisory company, and served as a director of Ascend until March 2004. Mr. Nino expects to continue devoting time to these and other ventures during his tenure with us. Between 1997 and 1998, Mr. Nino was a Practice Development Director at Deloitte Touche Tohmatsu. Mr. Nino received his M.B.A. degree from California State, Fullerton.

Robert E. Dragoo, Jr. has served as a director since January 28, 2009. Mr. Dragoo currently serves as the Chief Operating Officer and Senior Vice President for Administration and Finance at Texas Tech University which is a significant shareholder of the Company. Prior to Texas Tech, Mr. Dragoo was a Senior Vice President for Temple Inland Corporation and is a former Senior Partner of Ernst and Young’s Center for Business Innovation located in Cambridge Mass. Mr. Dragoo has over 35 years experience in business management and business performance improvement. He holds a B.S. in Mechanical Engineering from Texas Tech University, and completed an Executive MBA program at Harvard University.

Lt. General Bernhard Mittemeyer, M.D. (U.S. Army, retired) has served as a member of our Board of Directors since December 10, 2004, and currently serves on each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Dr. Mittemeyer served as our Advisory Board Chairman from November 5, 2003 to December 9, 2004. Dr. Bernhard T. Mittemeyer currently serves as Professor of Urological Surgery in the Department of Urology of the School of Medicine at the Texas Tech University Health Sciences Center. During his 21 years at Texas Tech, Dr. Mittemeyer served the institution in several positions; most recently as Interim President of the Health Sciences Center, Interim Dean of the School of Medicine and as Chief of the Division of Urology. Before joining Texas Tech in 1986, Dr. Mittemeyer served 28 years in the Army, rising to the rank of Lieutenant General and retiring in 1985 as Army Surgeon General, the highest position open to Army physicians. As Surgeon General of the Army from 1981 to 1985, he was Chief Executive Officer of the Army Medical Department and Senior Medical Staff Advisor to the Chief of Staff of the Army and the Secretary of the Army. Prior to his assignment as the Army Surgeon General, Dr. Mittemeyer served as Commander and Chief Executive Officer of Walter Reed Army Medical Center, the military’s largest tertiary care, research and teaching hospital. Other key Army assignments have included: Chief of the Army Medical Corps and Chief of Professional Services; Commander of the U.S. Army Medical Command in Korea; Army Division Surgeon and Medical Battalion Commander of the 101st Airborne Division in Vietnam. Dr. Mittemeyer holds numerous military decorations and citations, including the Distinguished Service Medal, the Army’s highest peacetime award, as well as the Distinguished Flying Cross and Bronze Star Medal for valor in combat. Non-military honors include an honorary Doctor of Law from Movarian College, an honorary Doctor of Science from William Jewell College and the Alumni Achievement Award in Health Policy from Temple University School of Medicine. Dr. Mittemeyer received his Doctor of Medicine Degree from the Temple University School of Medicine in Philadelphia. He has authored or co-authored more than 40 publications and has made numerous presentations in the areas of Urology, Surgery, Health Care Administration and Leadership over his more than 50 year career in medicine.

All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified. There are no family relationships among our directors or executive officers. No director has been a general partner or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it. No director has been convicted of a criminal offense or is the subject of a pending criminal proceeding. No director has been the subject of any order, judgment, or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. No director has been found by a court to have violated a federal or state securities or commodities law.

Under the terms of the Company’s Sponsored Research Agreement, dated July 18, 2002, with Texas Tech University Health Sciences Center, pursuant to which Texas Tech agreed to assist the Company in continuing to develop the Company’s HemoTech product as a potential viable human blood substitute, Texas Tech has the right to designate to our Nominating and Corporate and Governance Committee one person for consideration by the committee for nomination as a director of our Board. Dr. Mittemeyer is Texas Tech’s Board designee. Texas Tech’s right to designate a Board nominee candidate terminated on October 13, 2006.

Under the terms of our October 2004 private placement, Meyers Associates, L.P. has the right to designate to our Nominating and Corporate and Governance Committee one person for consideration by the committee for nomination as a director of our Board or alternatively, at its option, to designate one person to attend all meetings of the Board. Robert Baron is Meyers Associates, L.P.’s Board designee. Meyers Associates’, L.P. right to designate a Board nominee candidate was to terminate when Meyers Associates, L.P. no longer owned at least 10% of our outstanding capital stock, however, that right will continue upon completion of the pending Offering.

Board Committees

The Company has a standing Audit Committee, which was formed in April, 2005, a standing Compensation Committee, which was formed in April, 2005, and a standing Nominating and Corporate Governance Committee, which was formed in May 2006.

The Audit Committee currently consists of Bernhard Mittemeyer, Robert Baron and Robert E. Dragoo, Jr. (Chairman) who joined the committee on January 28, 2009. The Audit Committee has adopted a formal written charter, which is available on the Company’s website at www.hemobiotech.com. Each of Messrs. Mittemeyer, Baron and Dragoo is “independent” under Rule 10A-3(b)(1)(ii) under the Exchange Act, and Messrs. Mittemeyer, Baron and Dragoo are “independent” under Rule 4200(a)(15) of the Financial Industry Regulating Authority (“FINRA”). In addition, the Board of Directors has determined that Mr. Dragoo qualifies as an “audit committee financial expert” within the meaning of the SEC rules.

The Compensation Committee currently consists of Bernhard Mittemeyer, Robert Baron (Chairman) and [Robert Comer]. The Compensation Committee has adopted a formal written charter, a copy of which is available on the Company’s website at www.hemobiotech.com. Dr. Mittemeyer is independent under Rule 4200(a)(15) of the FINRA.

The Nominating and Corporate Governance Committee consists of Bernhard Mittemeyer, Robert Baron (Chairman), Robert Comer and Robert E. Dragoo, Jr. who joined the committee on January 28, 2009. The Nominating and Corporate Governance Committee has adopted a formal written charter, a copy of which is available on the Company’s website at www.hemobiotech.com. Dr. Mittemeyer is independent under Rule 4200(a)(15) of the FINRA.

The membership of and information about each of our Board committees is shown below.

Committee/Current Members

Audit Committee

Dr. Mittemeyer

Mr. Baron

Mr. Dragoo (Chairman)

Committee Functions

·	Oversees financial and operational matters involving accounting, corporate finance, internal and independent auditing, internal control over financial reporting, compliance, and business ethics.

·	Oversees other financial audit and compliance functions as assigned by the Board.

·	Reviews areas of potential significant financial risk to the Company.

·	Has the sole authority to select, evaluate, replace and oversee the Company’s independent registered public accounting firm.

·	Has the sole authority to approve non-audit services to be performed by the independent registered public accounting firm.

·	Monitors the independence and performance of the independent registered public accounting firm.

·	Provides an avenue of communications among the independent registered public accounting firm, management and the Board of Directors.

·	Determines whether “related party transactions” are permissible.

Compensation Committee

Mr. Baron (Chairman)

Dr. Mittemeyer

Robert Comer

Committee Functions

·	Reviews the performance of Company officers and establishes overall executive compensation policies and programs.

·	Reviews and approves compensation elements such as base salary, bonus awards, stock option grants and other forms of long–term incentives for Company officers (no member of the committee may be a member of management or eligible for compensation other than as a director).

·	Reviews succession plans for Company officers.

·	Reviews Board compensation and stock ownership matters.

Nominating and Corporate Governance Committee

Mr. Baron (Chairman)

Dr. Mittemeyer

Mr. Comer

Mr. Dragoo

Committee Functions

·	Develops criteria to determine the qualifications and appropriate tenure of directors.

·	Reviews such qualifications and makes recommendations to the Board regarding the nomination of current directors for re-election to the Board as well as new nominees to fill vacancies on the Board.

·	Considers stockholder recommendations for Board nominees, as described below.

·	Recommends to the Board the chairmanship and membership of each Board committee.

·	Considers applicable social and ethical issues and other matters of significance in areas related to corporate public affairs.

Nominating and Corporate Governance Committee Matters

The Nominating and Corporate Governance Committee expects, as minimum qualifications, that nominees to the Board (including incumbent directors) will enhance the Board’s management, finance and/or scientific expertise, will not have a conflict of interest and will have a high ethical standard and, with respect to new members of the Board, a willingness to serve at least an initial three-year term for the committee to recommend them to the Board of Directors. A director nominee’s knowledge and/or experience in areas such as, but not limited to, the medical, pharmaceutical, biotechnology, biopharmaceutical or life sciences industry, equity and debt capital markets and financial accounting are likely to be considered both in relation to the individual’s qualification to serve on our Board of Directors and the needs of the Board as a whole. Other characteristics, including, but not limited to, the director nominee’s material relationships with the Company, time availability, service on other boards of directors and their committees, or any other characteristics which may prove relevant at any given time as determined by the Nominating and Corporate Governance Committee shall be reviewed for purposes of determining a director nominee’s qualification.

Candidates for director nominees are evaluated by the Nominating and Corporate Governance Committee in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s stockholders. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee would be considered “independent” under Rule 4200(a)(15) of the NASD, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors’ independence. The Nominating and Corporate Governance Committee meets to discuss and consider such candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether the candidate was recommended by a stockholder or not. To date, the Nominating and Corporate Governance Committee has not paid a fee to any third party to assist in the process of identifying or evaluating director candidates.

The Nominating and Corporate Governance Committee will evaluate and recommend each of the directors currently standing for re-election at the next Annual Meeting.

The Board of Directors does not impose term limits or a mandatory retirement age for directors. While it is believed that a director’s knowledge and/or experience can continue to provide benefit to the Board of Directors following a director’s retirement from his or her primary work affiliation, it is recognized that a director’s knowledge of and involvement in ever changing business environments can weaken, and therefore his or her ability to continue to be an active contributor to the Board of Directors shall be reviewed. Upon a director’s change in employment status, he or she is required to notify the Chairman of the Board of Directors and the Chair of the Nominating and Corporate Governance Committee of such change and to offer his or her resignation for review.

Stockholder Nomination Policy

It is our policy to review and consider all candidates for nomination and election as directors who may be suggested by any director or executive officer of the Company. Our policy is also to refer to the Nominating and Corporate Governance Committee for consideration any director candidate recommended by any stockholder if made in accordance with the Company’s charter, bylaws and applicable law. To be considered, a recommendation for director nomination should be submitted in writing to: HemoBioTech, Inc., Nominating and Corporate Governance Committee, Attention: Chief Financial Officer, 5001 Spring Valley Road, Suite 1040 - West, Dallas, Texas 75244.

Code of Business Conduct and Ethics and Guidelines on Governance Issues

Our Board has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, a copy of which is available on the Company’s website at www.hemobiotech.com. The Company will provide a copy of this code to any person, without charge, upon request, by writing to the Company at HemoBioTech, Inc., Attention: Chief Financial Officer, 5001 Spring Valley Road, Suite 1040 - West, Dallas, Texas 75244. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on our website at the address specified above.

Communications with the Board

Stockholders may communicate in writing with our Board of Directors, any of its committees, or with any of its non-management directors by sending written communications addressed to: HemoBioTech, Inc., Attention: Chief Financial Officer, 5001 Spring Valley Road, Suite 1040 - West, Dallas, Texas 75244. Our Chief Financial Officer will review each communication and will forward such communication to the Board or to any individual director to whom the communication is addressed unless the communication is unduly hostile, threatening or similarly inappropriate, in which case, the Chief Financial Officer shall discard the communication.

Policies on Reporting Certain Concerns Regarding Accounting and Other Matters

We have adopted policies on the reporting of concerns regarding accounting, internal accounting controls or auditing matters to the Audit Committee. Any person who has a concern regarding accounting, internal accounting controls and auditing controls and auditing matters may submit that concern to: HemoBioTech, Inc., Attention: Chief Financial Officer, 5001 Spring Valley Road, Suite 1040 - West, Dallas, Texas 75244. Employees may communicate all concerns regarding accounting, internal accounting controls and auditing matters to the Audit Committee on a confidential and anonymous basis through the Company’s compliance officer: complianceofficer@hemobiotech.com. This e-mail address is checked routinely and any information is recorded and reported to the Audit Committee Chairman.

Board Compensation and Benefits

Retainer, Fees and Expenses. Non-employee directors are entitled to receive retainers in quarterly increments based on an annualized rate of $15,000 a year. Cash compensation of $7,500 was paid during the year ended December 31, 2009 to each non-employee director.

Further, we will reimburse our directors for reasonable accommodations, coach travel and other miscellaneous and customary expenses relating to such director’s attendance of Board meetings, payable promptly on submission of actual receipts for such expenses.

No directors currently receive consulting fees from the Company. Directors who are also employees of the Company (currently, only Dr. Bollon and Mr. Comer) receive no additional compensation for service on the Board.

Stock Options. On joining the Board, each non-employee director receives an option to purchase 15,000 shares of common stock, which will vest immediately, and will become eligible to receive, at the end of each calendar quarter, an additional option to purchase 7,000 shares of common stock, all of which will vest immediately. The exercise price of these options for our directors owning less than 5% of our common stock will be the fair market value of our common stock as of the last Friday of each quarter and have a term of ten years. For all directors with a 5% or greater ownership in our common stock, the exercise price shall be 110% of the fair market value at the date of grant and the option term will be five years.

Director Compensation Table

During the year ended December 31, 2009, our Directors each received $7,500 cash compensation. Our non-employee directors earned option grants to purchase 28,000 shares of common stock and options granted at fair market value to purchase $15,000 of Common Stock. The financial statement compensation cost for stock option awards granted to five non-employee directors during 2009 was $110,685 and was recognized in our statement of operations for the year 2009. The compensation cost is based on the fair value of the stock option grants as estimated using the Black-Scholes option pricing model. The assumptions used to estimate fair value are discussed in Note F(6) to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009.

As of December 31, 2009, the non-employee Directors held (or were entitled to receive) options to purchase the following numbers of shares of our common stock: Mr. Baron: 154,000; Mr. Comer: 149,000; Dr. Mittemeyer: 186,582; Mr. Nino: 136,000 and Mr. Dragoo: 78,000.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain summary information for the two years ended December 31, 2009, indicated with respect to the compensation awarded to, earned by, or paid to our Chief Executive Officer and each of the other most highly compensated executive officers of HemoBioTech whose total annual salary and bonus exceeded $100,000. We refer to these executive officers in this proxy statement as the “Named Executive Officers.”

Name and Principal Position	Year	Salary ($)		Bonus ($)	Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($)(2)		All Other Compensation ($)		Total ($)
Arthur P. Bollon, Ph.D.,
Chairman of the Board, Chief Executive Officer & President	2009	$	136,241			23,751		—		0		159,992
	2008		230,957			54,707		—		0		285,664

Mark J. Rosenblum, C.P.A.,
Chief Financial Officer & Secretary	2009	$	101,104			47,305		—		0		148,409
	2008		161,360			97,929		—		0		259,289

Mario Feola, M.D.,
Chief Medical Officer	2009	$	-			0		—		0		-0-
	2008		58,461			0		—		0		58,461

Jan Simoni, Ph.D., DVM,
Acting Vice President and Principal Investigator of Research and Development	2009	$	-			39,787		—		0		39,787
	2008		54,575			71,443		—		0		126,018

Footnotes

(1)

The amounts in this column equal the financial statement compensation cost for stock option awards as recognized in our statement of operations for the year 2008 and 2009. The compensation cost is based on the fair value of the stock option grants as estimated using the Black-Scholes option pricing model. The assumptions used to estimate fair value are discussed in Note F(6) to our consolidated financial statements included in our Annual Report on Form 10-K for the years ended December 31, 2009 and 2008.

(2)	We awarded bonuses to the Named Executive Officers based on our achievement of certain performance targets and the Executive Officers’ employment agreements. Accordingly, bonus amounts are reported in the Non-Equity Incentive Plan Compensation column.

Stock Option Grants and Exercises

The Company may grant options to its executive officers under the Amended and Restated 2003 Stock Option/Stock Issuance Plan (the “Plan”). As of December 31, 2009, options to purchase a total of 2,223,115 shares were outstanding under the Plan and options to purchase 120,916 shares remained available for grant under the Plan. Generally, the exercise price per share for the options granted under the Plan will not be less than the fair market value of the stock on the date of grant.

Our Compensation Committee administers the Plan. Subject to the terms of the Plan, the Compensation Committee determines the recipients, the number and type of stock options to be granted, the exercise price and the terms and conditions of the stock options.

Outstanding Equity Awards at Fiscal Year End

The following table shows information regarding grants of stock options held by our Named Executive Officers at December 31, 2009. We have never granted any stock appreciation rights.

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
Arthur P. Bollon, Ph.D.		80,558		30,554		1.25	April 24, 2013
Mario Feola, M.D.		271,528		0		.18	December 15, 2013
Jan Simoni, Ph.D., DVM		271,528		0		.18	July 13, 2015

Other Benefits

We offer medical insurance for all of our employees. The cost to the Company for providing these benefits in 2009 for our Named Executive Officers was approximately $42,202.

The Company does not presently sponsor a defined contribution 401(k) savings plan for its employees and does not maintain any other retirement or pension plan for its employees.

Change in Control Arrangements

Our 2003 Plan provides that each grant may provide for the earlier exercise of an option right in the event of a "Change-in-Control" or similar event. For this purpose, a "Change-in-Control" includes (1) a stockholder-approved merger, consolidation or other reorganization in which securities representing more than 50% of the total combined voting power of the Company's outstanding securities are beneficially owned, directly or indirectly, by a person or persons different from the person or persons who beneficially owned those securities immediately prior to such transaction; (2) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Company's assets; or (3) the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities from a person or persons other than the Company. Following specified Change-in-Control transactions, the vesting and exercise of specified equity awards generally will be accelerated only if the awardee's award agreement so specifies. The standard form of stock option agreement provides for the option to become fully vested and exercisable immediately prior to the effective date of a Change-in-Control; provided that the option will not become exercisable on an accelerated basis if and to the extent: (i) the option is to be assumed by the successor corporation (or parent thereof) or is otherwise to be continued in full force and effect pursuant to the terms of the Change-in-Control transaction or (ii) the option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the option shares covered by the option at the time of the Change-in-Control and provides for the subsequent payout of that spread no later than the time the option shares would have otherwise become exercisable.

Our employment agreements with our Named Executive Officers contain provisions triggered by a change in control. See "Employment Agreements and Other Arrangements" below.

Employment Agreements and Other Arrangements

Employment Agreement with Arthur P. Bollon. On October 6, 2003, we entered into an amended employment agreement with Dr. Bollon, under which Dr. Bollon agreed to serve as our Chairman of the Board, President and Chief Executive Officer for an initial term of three years, automatically renewable for one-year periods unless otherwise terminated by either party on at least 90 days' prior written notice. In exchange for his services, we agreed to pay Dr. Bollon an annual base salary of $265,000 plus annual cost-of-living increases and health benefits. The parties agreed that payment of Dr. Bollon's base salary and benefits would be deferred until such time as the Company raised at least $4.0 million. On July 15, 2004, Dr. Bollon agreed to forgive all deferred compensation and benefits accrued and owing as of October 13, 2004, the date of the closing of the minimum offering of our private placement financing. Commencing as of October 13, 2004 and through such time as we complete a subsequent financing of $10.0 million, Dr. Bollon has agreed to an adjusted base salary at the rate of $150,000 per annum, payable in accordance with his employment agreement. In addition to Dr. Bollon's base salary and benefits package agreed to in October 2003, we granted to Dr. Bollon an option to purchase 651,668 shares of our common stock at an exercise price of $.20, all of which were fully vested and exercisable as of April 23, 2007.

On January 3, 2005, the Company and Dr. Bollon agreed to extend the term of his employment to October 6, 2007. Under an amendment to Dr. Bollon's employment agreement, dated April 6, 2005, we agreed that following our consummation of equity and bank financings having gross proceeds to us of at least $10.0 million, Dr. Bollon's base salary will be increased and Dr. Bollon will be entitled to receive an annual bonus equal to 25% of his then-effective base salary. In the event Dr. Bollon's employment with us is terminated other than voluntarily by Dr. Bollon or for "just cause", Dr. Bollon will be entitled to receive a pro rated portion of the bonus that would otherwise have been due. Further, we agreed that, on the consummation of such a $10.0 million financing, Dr. Bollon will be entitled to receive a onetime bonus in the amount of $52,500 and the term of his employment will be extended to the three-year anniversary of the closing date of such $10.0 million financing. Effective November 17, 2005, the agreement was further amended to provide an increased current base salary and extension of the employment agreement to October 6, 2008. On April 23, 2008, Dr. Bollon’s employment agreement was extended through October 31, 2010.

Dr. Bollon's employment agreement will terminate on the earlier of (1) its expiration, (2) the mutual agreement of the parties, (3) the voluntary termination of Dr. Bollon other than as a result of a Constructive Termination Event (as defined below), (4) Dr. Bollon's death or disability, and (5) termination of Dr. Bollon for cause. In the event of Dr. Bollon's voluntary termination or on termination for cause, Dr. Bollon will not be entitled to receive any Severance Payment (as defined in the employment agreement) and will be entitled to receive only his base salary through the effective date of termination. In the event of Dr. Bollon's termination without cause (i.e., following a Constructive Termination Event, as defined in the employment agreement, or on Dr. Bollon's death) or as a result of a disability, Dr. Bollon will be entitled to receive severance payments of equal monthly installments of his then base salary for a minimum of six and a maximum of twelve months salary.

As partial consideration for his base salary, Dr. Bollon agreed that he would not, during the term of his employment agreement, directly or indirectly invest or engage in any business that competes with our business or accept any employment or render services to any business that competes with our business, except that Dr. Bollon would be permitted to own up to 5% of any outstanding class of securities of any public company. In addition, Dr. Bollon agreed that, for a period of one year following termination of his employment agreement, he would not engage, hire, employ or solicit the employment of any employee of ours. Further, under the terms of Dr. Bollon's employment agreement and a Technology Assignment Agreement dated October 31, 2003, Dr. Bollon agreed to assign to us all of his right, title and interest in and to any and all inventions, discoveries, developments, improvements, techniques, designs and data related to blood substitutes. Finally, under the terms of Dr. Bollon's employment agreement and a confidentiality, proprietary information and inventions agreement, dated October 31, 2003, Dr. Bollon agreed not to use or disclose any of our confidential information or trade secrets at any time.

During April 2008, we granted Dr. Bollon 100,000 stock options and in October 2008, Dr. Bollon exercised 651,668 options and received a like amount of our common stock.

Employment Agreement with Mario Feola. On December 14, 2003, we entered into an employment agreement, under which Dr. Feola agreed to serve as our Chief Medical Officer. Dr. Feola is a co-inventor of our product, HemoTech. The agreement called for an initial base salary and included an option grant in the amount of 271,528 options. The agreement was amended on July 15, 2004 to state that Dr. Feola would act as a part-time Chief Medical Officer until such time as the private placement was consummated. Dr. Feola has been our full-time Chief Medical Officer since October 27, 2004. Dr. Feola or the Company may terminate the employment relationship with or without cause at any time.

Arrangement with Dr. Jan Simoni. Dr. Simoni has served as our Acting Vice President and Principal Investigator of Research and development since 2002, through a Sponsored Research Agreement with Texas Tech Health Sciences Center, where he is employed, and an Advisor since July, 2005. Since 1993, Dr. Simoni has served as the Blood Substitute Group Leader at Texas Tech and is an Associate Professor of Research in the Department of Surgery at Texas Tech, where Dr. Simoni co-invented HemoTech. Dr. Simoni’s advisory agreement may be terminated by himself or the Company upon sixty days written notice.

On July 13, 2005, the Company entered into an advisory agreement with Dr. Simoni to receive advisory services on technical, medical and market issues related to HemoBioTech, including its second generation blood substitute, HemoTech. The agreement provides for 271,528 non-qualified stock options to purchase shares of our common stock.

Confidentiality and Indemnification Agreements

In connection with their respective employment, consulting and advisory agreements, each of the foregoing individuals have either entered into separate confidentiality, proprietary information and inventions agreements or else such confidentiality provisions were contained in each individual's employment, consulting or advisory agreement. In addition, we have entered into indemnification agreements with each of Mr. Nino, Dr. Bollon, Mr. Baron, Dr. Mittemeyer and Mr. Comer under which we have agreed to indemnify each of such individuals from and against all claims that may be brought against them as a result of their position as an executive officer or member of our Board of Directors.

Limitation of Liability and Indemnification Matters

Our certificate of incorporation eliminates the personal liability of our directors for monetary damages arising from a breach of their fiduciary duty as directors to the fullest extent permitted by Delaware law. This limitation does not affect the availability of equitable remedies, such as injunctive relief or rescission damages. Our certificate of incorporation requires us to indemnify and advance expenses to our directors to the fullest extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delaware law. Our certificate of incorporation provides that we may indemnify and advance expenses to any officer, employee or agent of the Company or any other person that we are permitted to indemnify under Delaware law.

Under Delaware law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:

·	conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and

·	in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

These persons may be indemnified against expenses, including attorneys fees, judgments, fines, including excise taxes, and amounts paid in settlement, actually and reasonably incurred, by the person in connection with the proceeding. If the person is found liable to the corporation, no indemnification will be made unless the court in which the action was brought determines that the person is fairly and reasonably entitled to indemnity in an amount that the court will establish.

Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us under the above provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

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

The following table sets forth information as of December 31, 2009 (except as noted) regarding the beneficial ownership of our Common Stock by:

each person, or group of affiliated persons, who is known by us to own beneficially 5% or more of our Common Stock;

each of our directors and Named Executive Officers; and

all our directors and executive officers as a group.

The number of shares owned and percentage ownership in the following table is based on 23,493,434 shares of Common Stock outstanding on December 31, 2009. Except as otherwise indicated below, the address of each officer; director and 5% stockholder listed below is c/o HemoBioTech, Inc., 5001 Spring Valley Road, Suite 1040 - West, Dallas, Texas 75244.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to per ns who possess sole shared voting power or investment power with respect to those securities. In addition, the rules include issues of Common Stock issuable pursuant to the exercise of stock options that are either immediately exercisable or exercisable within 60 days of December 31, 2009. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, we believe that the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.

Name and Address of Beneficial Owner	Number of Shares			Percentage of Shares Beneficially Owned
5% Stockholders:
Nino Partners, LLC		1,851,047	(1)		7.8	%
15889 Preston Road, Ste. 2006 Dallas, Texas 75248
Russell Cleveland		2,955,999	(2)		12.6	%
c/o Renn Capital Group, Inc. 8080 N. Central Expressway, Suite 210, LB-59 Dallas, TX 75206
Renn Capital Group, Inc.		2,955,999	(2)		12.6	%
8080 N. Central Expressway, Suite 210, LB-59 Dallas, TX 75206
Renaissance US Growth Investment Trust PLC		1,710,000	(2)		7.3	%
c/o Renn Capital Group, Inc. 8080 N. Central Expressway, Suite 210, LB-59 Dallas, TX 75206
US Special Opportunities Trust PLC		1,245,999	(2)		5.3	%
c/o Renn Capital Group, Inc. 8080 N. Central Expressway, Suite 210, LB-59 Dallas, TX 75206
Renaissance Capital Growth & Income Fund III, Inc.		1,200,000	(3)		5.1	%
8080 N. Central Expressway, Suite 210, LB-59 Dallas, TX 75206
Texas Tech University System		1,914,585	(4)		8.1	%
3601 4th Street, BA 112 Lubbock, TX 79430-6206
Meyers Associates, L.P.		1,683,500	(5)		7.2	%
45 Broadway, 2nd Floor New York, NY 10006
Bruce Meyers		1,683,500	(6)		7.2	%
45 Broadway, 2nd Floor New York, NY 10006
Management:
Robert Baron		243,254	(7)		1.0	%
Arthur P. Bollon, Ph.D.		1,822,617	(8)		7.7	%
Robert Comer, CPA, MBA		149,000	(9)		*
Mario Feola, M.D.		271,528	(10)		1.1	%
Jan Simoni, Ph.D., DVM		271,528	(11)		1.1	%
Ghassan Nino, CPA, CMA		3,293,387	(12)		13.9	%
Robert E. Dragoo, Jr.		78,000	(13)		*
Bernhard Mittemeyer, M.D.		186,582	(14)		*
All Directors and Executive Officers as a group (8 persons)		6,315,896	(15)		25.6	%

* Represents less than 1 % of the outstanding shares of our Common Stock.

(1)

The indicated ownership is based solely on a Schedule 13G/A filed with the SEC by the beneficial owners on February 14, 2009. The Schedule 13G/A was filed on behalf of Ghassan Nino, the Vice Chairman of our Board of Directors, Nino Partners, LLC, a Texas limited liability company (“Nino Partners”). Mr. Nino is the Managing Member of Nino Partners and, as such, has sole voting and dispositive power with respect to the 1,851,047 shares of Common Stock owned of record by Nino Partners.

(2)

The indicated ownership is based solely on a Schedule 13G filed with the SEC by the beneficial owners on February 14, 2008. The Schedule 13G was filed on behalf of US Special Opportunities Trust PLC (“BFS”), Renaissance US Growth Investment Trust PLC (“R US”), RENN Capital Group, Inc. (“Renn”) and Russell Cleveland. Renn is the investment adviser to BFS and the investment manager to R US. Mr. Cleveland is the President and Chief Executive Officer of Renn. As of February 14, 2008, each of BFS and R US was the owner of record and beneficial owner of 1,245,999 and 1,710,000 shares of Common Stock, respectively. Each of BFS and R US share voting and dispositive power over their respective shares with Renn. Mr. Cleveland may be deemed to be the beneficial owner of the shares of Common Stock beneficially owned by Renn.

(3)	The indicated ownership is based solely on a Schedule 13G filed with the SEC by Renaissance Capital Growth & Income Fund III, Inc. (“RCG”) on February 14, 2007. RCG has sole voting and dispositive power over 1,200,000 shares of Common Stock.

(4)

Under the terms of the license agreement with Texas Tech, in lieu of receiving royalty payments under the license agreement, we agreed to issue to Texas Tech a payment equal to 5% of our then-authorized capital stock (678,820 shares), subject to anti-dilution protection. In May 2004, TTU agreed to waive its anti-dilution protection in exchange of 135,765 shares of Common Stock. The Chancellor of Texas Tech University System has sole voting and dispositive power with respect to the shares of our Common Stock owned by Texas Tech. On May 5, 2008, the Company agreed to license certain technology from TTUHSC titled Orthogonal Method for the Removal of Transmissible Spongiform Encephalopathy Agents from Biological Fluids (“ORTH Technology”). Under the terms of this new license agreement, we issued Texas Tech 500,000 shares of the Company’s Common Stock. In December 2009, the Company issued 600,000 additional shares of the Company’s Common Stock for past services conducted by TTU.

(5)

The indicated ownership is based solely on a Schedule 13G filed with the SEC by Bruce Meyers on September 2, 2009. The number of shares of Common Stock that Meyers Associates, L.P. could be deemed to beneficially own includes: (a) 1,158,500 shares of our Common Stock, issued to Meyers Associates, L.P. including 437,500 shares in connection with our October 2004 private placement and 721,000 shares pursuant to the financial consulting services agreement dated September 12, 2006 and (b) 525,000 shares issued to Bruce Meyers as president of Meyers Associates, L.P. There are 779,000 restricted shares issued and outstanding under the 2006 financial consulting services agreement which are subject to forfeiture upon the failure of the consultant to achieve certain performance criteria, including assisting the Company in raising additional capital, as set forth in the agreement.

The foregoing does not include the following warrants beneficially owned by Meyers Associates, L.P. because of an agreement by the holders of such warrants to not exercise such warrants until six months after the effectiveness of a registration statement registering the shares underlying such warrants: (i) a warrant to purchase 787,960 shares of our Common Stock; (ii) a warrant to purchase 690,888 shares of our Common Stock issued to Bruce Meyers, the President of Meyers Associates, L.P., which were issued to Mr. Meyers on the consummation of our October 2004 private placement; (iii) warrants to purchase an aggregate of 539,000 shares of Common Stock issued to Meyers Associates upon completion of our 2009 Bridge Offering; (iv) warrants to purchase 70,000 shares of Common Stock issued to Meyers Associates upon completion of our 2010 Bridge Offering, and (v) a warrant to purchase 441,180 shares to Imtiaz Khan, Meyers Associates’, L.P. Managing Partner. In accordance with the terms of our December 2007 Private Placement Offering, Meyers Associates, L.P. received 30% of all warrants issued to investors. Accordingly, Meyers Associates, L.P. was issued a warrant to purchase 212,136 shares of our Common Stock on December 31, 2008, a warrant to purchase 90,535 shares of our Common Stock in March, 2008 and a warrant to purchase 52,500 shares of our Common Stock in June, 2008.

(6)

The number of shares of Common Stock that Meyers Associates, L.P. could be deemed to beneficially own includes: (a) 1,158,500 shares of our Common Stock, issued to Meyers Associates, L.P. including 437,500 shares in connection with our October 2004 private placement and 721,000 shares pursuant to the financial consulting services agreement dated September 12, 2006 and (b) 525,000 shares issued to Bruce Meyers as president of Meyers Associates, L.P. There are 779,000 restricted shares issued and outstanding under the 2006 financial consulting services agreement which are subject to forfeiture upon the failure of the consultant to achieve certain performance criteria, including assisting the Company in raising additional capital, as set forth in the agreement.

The foregoing does not include the following warrants beneficially owned by Bruce Meyers because of an agreement by the holders of such warrants to not exercise such warrants until six months after the effectiveness of a registration statement registering the shares underlying such warrants: (i) a warrant to purchase an aggregate of 690,888 shares of our Common Stock allocated to Mr. Meyers by Meyers Associates, L.P. out of the 2,382,372 warrants that we issued to Meyers Associates, L.P. in connection with our October 2004 private placement; (ii) warrants to purchase 787,960 shares of our Common Stock issued to Meyers Associates, L.P. in connection with our October, 2004 private placement; (iii) warrants to purchase an aggregate of 539,000 shares of Common Stock issued to Meyers Associates upon completion of our 2009 Bridge Offering, and (iv) warrants to purchase 70,000 shares of Common Stock issued to Meyers Associates upon completion of our 2010 Bridge Offering. In accordance with the terms of our December 2007 Private Placement Offering, Meyers Associates, L.P. received 30% of all warrants issued to investors. Accordingly, Meyers Associates, L.P. was issued a warrant to purchase 212,136 shares of our Common Stock on December 31, 2008, a warrant to purchase 90,535 shares of our Common Stock in March, 2008 and a warrant to purchase 52,500 shares of our Common Stock in June, 2008.

(7)

Mr. Baron is our Chairman of the Board. The number of shares of Common Stock Mr. Baron may be deemed to beneficially own includes: (a) 89,254 shares of Common Stock; (b) options to purchase 154,000 shares of Common Stock granted to Mr. Baron between November 11, 2004 and December 31, 2009, all of which vested immediately upon issuance. All option grants to Mr. Baron have a ten-year term.

(8)

Dr. Bollon is our President and Chief Executive Officer. The number of shares of Common Stock that Dr. Bollon may be deemed to beneficially own includes: (a)1,381,836 shares of Common Stock owned of record by Dr. Bollon; (b) 217,223 shares of Common Stock owned of record by Biogress LLC, of which Dr. Bollon is a principal member and founding partner and has 50% voting and dispositive power; (c) options to purchase 80,558 shares of Common Stock granted to Dr. Bollon on April 23, 2008. The number of shares of Common Stock that Dr. Bollon may be deemed to beneficially own does not include unvested options to purchase 79,442 shares of Common Stock granted in 2008. All option grants to Dr. Bollon have a five-year term.

(9)

Mr. Comer is Interim Chief Financial Officer and Secretary and a director. The number of shares of Common Stock that Mr. Comer may be deemed to beneficially own includes: (a) options to purchase 149,000 shares of Common Stock granted to Mr. Comer between April 6, 2005 through December 31, 2009 (which were fully vested and immediately exercisable on issuance). All option grants to Mr. Comer have a ten-year term.

(10)

Dr. Feola is a co-inventor of HemoTech and is our Chief Medical Officer. The number of shares of Common Stock that Dr. Feola may be deemed to beneficially own includes options to purchase 271,528 shares of Common Stock granted to Dr. Feola on December 15, 2003, all of which are fully vested and immediately exercisable. The options will expire on December 14, 2013.

(11)

Dr. Simoni is a co-inventor of HemoTech and is our Acting Vice President and Principal Investigator of Research and Development since November, 2002. On July 13, 2005, the Company entered into an Advisory agreement with Dr. Simoni. The agreement provides for non-qualified stock options to purchase 271,528 shares of Common Stock, all of which are fully vested and exercisable. The option grant to Dr. Simoni has a ten year term.

(12)

Ghassan Nino is the founder and Vice-Chairman of the Board. The number of shares of Common Stock that Mr. Nino may be deemed to beneficially owned includes: (a) 217,223 shares of Common Stock owned of record by Biogress, of which Mr. Nino is a principal member and founding partner and has 50% voting and dispositive power; (b) 1,851,047 shares of Common Stock owned of record by Nino Partners, of which Mr. Nino is Managing Member; (c) 1,086,113 shares of Common Stock owned of record by Mr. Nino; and (d) options to purchase 139,000 shares of Common Stock, granted to Mr. Nino between December 29, 2004 and December 31, 2009 (all of which vested immediately on issuance). Mr. Nino’s options have a five-year term and were issued at a price 110% above the fair market value of the share price on the date of grant.

(13)

Mr. Dragoo is a director. The number of shares of Common Stock that Mr. Comer may be deemed to beneficially own includes: (a) options to purchase 78,000 shares of Common Stock granted to Mr. Dragoo between January 28, 2009 through December 31, 2009 (which were fully vested and immediately exercisable on issuance). All option grants to Mr. Dragoo have a ten-year term.

(14)

Dr. Mittemeyer is a Director of the Company. The number of shares of Common Stock Dr. Mittemeyer may be deemed to beneficially own includes: (a) options to purchase 27,152 shares of Common Stock granted to Dr. Mittemeyer on October 31, 2003; (b) options to purchase 5,430 shares of Common Stock, granted to Dr. Mittemeyer on November 4, 2004; (c) options to purchase 154,000 shares of Common Stock, granted to Dr. Mittemeyer between December 29, 2004 through December 31, 2009. All option grants to Dr. Mittemeyer are fully vested and immediately exercisable and have a ten-year term.

(15)	For purposes of determining the number of shares beneficially owned by directors and executive officers as a group, any shares beneficially owned by more than one director or officer are counted only once.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors and the holders of greater than 10% of our Common Stock to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers and directors are required by SEC regulations to furnish us with copies of these reports. Based solely on a review of the copies of these reports furnished to us and written representations from such executive officers, directors and stockholders with respect to the period from January 1, 2008 through December 31, 2008, we are not aware of any required Section 16(a) reports that were not filed on a timely basis.

Robert Baron, Chairman of the Board and then a director, filed a Form 5 reporting one late filing for the issuance of 40,000 shares of Common Stock on October 26, 2009.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Stockholders Agreement

On October 31, 2003, we entered into a stockholders’ agreement with each of Texas Tech, Dr. Bollon, Mr. Nino, Biogress and Nino Partners, under which we granted to each of such stockholders a right of first offer with respect to all future sales of any shares of our common stock or our convertible securities. Each of these stockholders waived their right of first offer with respect to our October 2004 private placement. In addition, we granted each such stockholder “piggyback registration rights” in connection with any proposed registration of shares of our common stock (other than in an initial public offering).

2009 Bridge Offering

On November 30, 2009, the Company completed the 2009 Bridge Financing consisting of gross proceeds of $385,000. As a result of this closing $385,000 of 10% promissory notes that may convert into common stock at the earlier of one year from the date of issuance, or the Company’s completion of at least a $1,500,000 equity financing. The bridge investors received four (4) shares of our common stock for each $1.00 of bridge notes purchased, or a total of 1,540,000 shares of common stock. In addition, 539,000 warrants were issued to our placement agent with essentially the same terms as our investor warrants; however, these warrants are only callable when the Company provides a notice of redemption and a registration statement for the underlying shares is effective. Our placement agent, who is also a principal shareholder of the Company also received approximately $48,000 in fees and expenses.

Other Transactions

On October 31, 2008, Dr. Arthur Bollon, the Company’s Chief Executive Officer, exercised his options to acquire 651,668 shares of the Company’s common stock at an exercise price of $0.20 per share or $130,334. In lieu of cash payment, the chief executive officer returned 130,334 shares of common stock to the Company for the exercise price of the options. The shares were valued at $130,334 based on the closing price per share on the date of issuance. No compensation expense was recorded as a result of this cashless transaction.

Robert Baron, Chairman of the Board, loaned the Company $10,000 during 2009 for which he received 40,000 shares of common stock. The loan was due on October 31, 2009 and has been paid back with ten (10%) percent interest.

Audit Committee Related Party Transaction Policy

Our Audit Committee adopted a Related Party Transactions Policy on May 3, 2006. Under such policy, any proposed transaction between the Company and (i) any person who is an officer or director of the Company or (ii) any person or entity that is a “Related Party” to a person who is an officer or director of the Company shall be prohibited, unless the Audit Committee shall determine in advance of the Company entering into any such transaction that there is a compelling business reason to enter into such a transaction, in accordance with the guidance set forth in the policy.

For these purposes, a “Related Party” is (i) a person who is an immediate family member of an officer or director or a spouse of an officer or director or someone else who is related by blood to either an officer or director or spouse of an officer or director; or (ii) an entity which is owned or controlled by an officer or director or a spouse or other immediate family member of an officer or director or an entity in which an officer or director, any spouse of an officer or director or any other immediate family of an officer or director or spouse of an officer or director is deemed to have a substantial ownership interest or control of such entity by virtue of such person owning more than 20% of such entity. Additionally, a “Related Party” may be a person or entity that proposes to enter into a transaction with the Company if the Audit Committee finds that such transaction would violate Item 404 of Regulation S-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees paid or accrued by the Company for audit and other services provided by M&K CPAs, PLLC, the Company’s independent registered public accounting firm, for the years ended December 31, 2009 and 2008 and by Eisner LLP, the Company’s independent registered public accounting firm for the year ended December 31, 2008. All of the services listed below were approved by the Audit Committee.

Year	Audit Fees (1)		Audit–Related Fees(2)		Tax Fees		All Other Fees		Total Fees
2009	$	25,000	$	0	$	0	$	0	$	25,000
2008	$	85,000	$	17,500	$	0	$	2,500	$	105,000	(3)

(1)

“Audit Fees” consist of fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements. The audit fees paid and/or accrued by the Company to M&K CPAs, were combined for both the year ended December 31, 2009 and to re-audit the year ended December 31, 2008.

(2)

Audit services provided in connection with other statutory or regulatory filings.

(3)

Of this amount $94,000 was paid in 2009 towards payment of 2008 fees to Eisner LLP. No fees have been paid or accrued to Eisner for services rendered in 2009.

Pre–Approval Policies and Procedures

Applicable SEC rules require the Audit Committee to pre-approve audit and non-audit services provided by our independent registered public accounting firm.

The Audit Committee pre-approves all audit and non-audit services to be performed for the Company by its independent registered public accounting firm. The Audit Committee does not delegate the Audit Committee’s responsibilities under the Exchange Act to the Company’s management. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to grant pre-approvals of audit services of up to $25,000; provided that any such pre–approvals are required to be presented to the full Audit Committee for ratification at its next scheduled meeting. The Audit Committee has determined that the rendering of the services other than audit services by Eisner LLP is compatible with maintaining Eisner’s independence.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT NO.		DESCRIPTION OF EXHIBIT

3.1		Certificate of Incorporation of HemoBioTech, Inc. (1)

3.2		Certificate of Amendment of the Certificate of Incorporation of HemoBioTech, Inc. (1)

3.3		By-Laws of HemoBioTech, Inc. (1)

4.1		Form of Warrant to Purchase Common Stock. (1)

4.2		Form of 10% Convertible Unsecured Promissory Note. (1)

*4.3		Form of 10% Bridge Note.

9.1		Voting Agreement, dated as of July 15, 2004, by and among Ghassan Nino, Nino Partners, LLC and Biogress LLC, as acknowledged by HemoBioTech, Inc. and Arthur Bollon. (1)

10.1		2003 Stock Option/Stock Issuance Plan. (1)

10.2		Registration Rights Agreement, dated as of October 27, 2004, between HemoBioTech, Inc. and Meyers Associates, L.P., as agent for the purchasers named therein. (1)

* Filed with this report.

10.3		Employment Agreement, dated as of October 6, 2003, by and between Arthur Bollon and HemoBioTech, Inc., as amended by Letter Agreements, dated as of July 15, 2004, January 3, 2005, and April 6, 2005, by and between Arthur Bollon and HemoBioTech, Inc. (2)

10.4		Employment Agreement, dated as of December 14, 2003, by and between Mario Feola and HemoBioTech, Inc., as amended by a Letter Agreement, dated as of July 15, 2004, by and between Mario Feola and HemoBioTech, Inc. (1)

EXHIBIT NO.		DESCRIPTION OF EXHIBIT

10.5		Employment Separation and Release Agreement, dated as of July 15, 2004, by and between HemoBioTech, Inc. and Ghassan Nino. (1)

10.6		Form of Director and Officer Indemnification Agreements with each of Arthur Bollon, Ghassan Nino, Walter Haeussler, Robert Baron, Bernhard Mittemeyer, Mark Rosenblum and Robert Comer. (1)

10.7		Stockholders Agreement, dated as of October 31, 2003, by and among HemoBioTech, Inc., Arthur Bollon, Ghassan Nino, Nino Partners, LLC and the other stockholders named therein. (1)

10.8		Service Agreements, dated November 23, 2004, by and between HemoBioTech, Inc. and JPM-CEO Partners, Ltd. (1)

10.9		Sponsored Research Agreement, dated July 18, 2002, by and between HemoBioTech, Inc. and Texas Tech University Health Sciences Center. (3)

+10.10		Stage II Sponsored Research Agreement, dated December 13, 2004, by and between HemoBioTech, Inc. and Texas Tech University Health Sciences Center. (3)

10.11		License Agreement, dated January 22, 2002, by and between HemoBioTech, Inc. and Texas Tech University System. (3)

+10.12		Letter Agreement, dated May 14, 2004, by and between HemoBioTech, Inc. and Texas Tech University Health Sciences Center. (3)

10.13		Consulting Agreement, dated October 14, 2004, by and between HemoBioTech, Inc. and Larry Helson. (1)

10.14		Service Agreement, dated as of May 25, 2004, by and between HemoBioTech, Inc. and BioLink Life Sciences, Inc. (1)

10.15		Employment Agreement, dated April 1, 2005, by and between HemoBioTech, Inc. and Mark J. Rosenblum. (2)

++10.16		Stage III Sponsored Research Agreement, effective as of January 1, 2006, by and between HemoBioTech, Inc. and Texas Tech University Health Sciences Center. (5)

++10.17		Advisory agreement dated July 13, 2005 by and between HemoBioTech and Dr. Jan Simoni. (4)

++10.18		Stage IV Sponsored Research Agreement, effective as of January 1, 2007, by and between HemoBioTech, Inc. and Texas Tech University Health Sciences Center.

10.19		Form of Subscription Agreement (7)

10.20		Form of Registration Rights Agreement (7)

10.21		Modification, Settlement and Release Agreement dated March 4, 2009 by and between Mark J. Rosenblum and HemoBioTech, Inc.(6)

EXHIBIT

NO.

DESCRIPTION OF EXHIBIT


*10.22		Form of January 2010 Stock and Note Purchase Agreement

10.23		Modification, Settlement and Release Agreement, dated March 4, 2009, by and between Mark J. Rosenblum and HemoBioTech, Inc.(6)

21.1		Subsidiaries of HemoBioTech, Inc. (1)

*31.1		Certification of Principal Executive Officer

*31.2		Certification of Principal Financial Officer

*32.1		Section 1350 Certification of Principal Executive Officer

*32.2		Section 1350 Certification of Principal Financial Officer

__________________________

*filed with this report

+ Portions of this document have been omitted pursuant to an order granting confidential treatment issued by the Commission on May 11, 2005, under Rule 406 of the Securities Act of 1933, as amended.

++ Portions of this document have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

(1) Incorporated by reference to the Registrant's Registration Statement on Form SB-2 (Commission File No. 333-122097) filed with the Commission on January 18, 2005.

(2) Incorporated by reference to Amendment No. 1 to the Registrant's Registration Statement on Form SB-2 (Commission File No. 333-122097) filed with the Commission on April 15, 2005.

(3) Incorporated by reference to Amendment No. 2 to the Registrant's Registration Statement on Form SB-2 (Commission File No. 333-122097) filed with the Commission on May 13, 2005.

(4) Incorporated by reference to the Registrant’s Form 10-KSB for the year ended December 31, 2005.

(5) Incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on January 20, 2006.

(6) Incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on March 9, 2009.

(7) Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2008.

ITEM 8. FINANCIAL STATEMENTS

The following financial statements and schedules that constitute Item 8 are filed as a part of this annual report.

Report of Independent Registered Public Accounting Firm	F-2

Balance Sheets as of December 31, 2009 and 2008 (restated)	F-3

Statements of Operations for the years ended December 31, 2009 and 2008 (restated), and the cumulative period from October 3, 2001 (inception) through December 31, 2009	F-4

Statements of Stockholders' Equity for the years ended December 31, 2009 and 2008 (restated)	F-5

Statements of Cash Flows for the years ended December 31, 2009 and 2008 (restated), and the cumulative period from October 3, 2001 (inception) through December 31, 2009	F-7

Notes to Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

HemoBioTech, Inc.

Dallas, Texas

We have audited the accompanying balance sheets of HemoBioTech, Inc. as of December 31, 2009 and 2008, and the related statements of operations, stockholders' deficiency and cash flows for the years then ended. 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 audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of HemoBioTech, Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

May 26, 2010

F-2

HemoBioTech. Inc.

(A Development Stage Company)

Balance Sheets

(Rounded to the nearest thousand)

	December 31,
	2009			2008
				(Restated)

ASSETS

Current assets:
Cash and cash equivalents	$	55,000		$	443,000
Prepaid and other assets		83,000			269,000
Total current assets		138,000			712,000
Equipment, net		25,000			41,000
Restricted cash		55,000			55,000

Total Assets	$	218,000		$	808,000

LIABILITIES

Current Liabilities
Accounts payable and accrued expenses	$	529,000		$	538,000
Notes Payable		270,000			-
Total current liabilities		799,000			538,000
Deferred rent		37,000			38,000

Total Liabilities		836,000			576,000

STOCKHOLDERS' EQUITY

Common Stock —— $.001 par value
23,493,434 in 2009 and 20,642,125 in 2008 shares issued and outstanding		24,000			21,000
Additional paid-in capital		17,169,000			15,683,000
Deficit accumulated during the development stage		(18,032,000	)		(15,693,000	)
Common stock payable		221,000			221,000
		(618,000	)		232,000

Total Equity	$	218,000		$	808,000

F-3

HemoBioTech. Inc.

(A Development Stage Company)

Statements of Operations

(Rounded to the nearest thousand)

	Years ended December 31,						(Unaudited) Cumulative from October 3, 2001 Through December 31,
	2009			2008			2009
				(Restated)
Revenue	$	-		$	-		$	-

Operating expenses:
Research and development		442,000			1,540,000			4,053,000
General and administrative		1,855,000			2,327,000			12,184,000

Other (income) expenses:

Interest expense		47,000			-			2,158,000
Interest income		(5,000	)		(35,000	)		(363,000	)

Net Loss	$	(2,339,000	)	$	(3,832,000	)	$	(18,032,000	)

Basic and diluted loss per share common share	$	(0.11	)	$	(0.19	)

Shares outstanding — basic and diluted		21,441,059			19,953,543

F-4

HemoBioTech. Inc.

(A Development Stage Company)

Statements of Changes in Stockholders' Equity (Capital Deficiency)

(Rounded to the nearest thousand)

(Unaudited)

																Deficit
									Note							Accumulated
							Additional		Receivable			Common				During the
	Common						Paid-In		Placement			Stock	Unearned			Development
	Shares			Amount			Capital		Agreement			Payable	Compensation			Stage			Total

Issuance of shares to Texas Tech University Health Service Center (January 22, 2002) ($.001)		678,820		$	1,000		$		$			$	$			$			$	1,000

Issuance of shares to Ghassan Nino (January 30, 2002 ($.001)		1,086,113			1,000			1,000												2,000

Estimated fair value of stock granted for services (January 30, 2002) ($.001)		217,223						1,000												1,000

Issuance of shares to Ghassan Nino (January 31, 2002) ($.001)		2,715,280			3,000			2,000												5,000

Issuance of shares to Marlin and Evilene Nino (February 07, 2002) ($.001)		678,820			1,000															1,000

Net loss for the year																	(235,000	)		(235,000	)

Balance- December 31, 2002		5,376,256			6,000			4,000									(235,000	)		(225,000	)

Issuance of shares to Munir Nino (January 20, 2003) ($.001)		217,224

Estimated fair value of stock granted for compensation (April 8, 2003) ($.001)		977,502			1,000			1,000												2,000

Estimated fair value of stock granted for services (April 14, 2003) ($.001)		217,223						1,000												1,000

Issuance of shares to Evilene Nino (October 31, 2003) ($.001)		108,613

Expenses paid by stockholder								10,000												10,000

Net loss for the year																	(617,000	)		(617,000	)

Balance – December 31, 2003		6,896,818			7,000			16,000									(852,000	)		(829,000	)

Contribution of note and related interest (July 15, 2004)								155,000												155,000

Contribution of deferred salary (July 15, 2004)								564,000												564,000

Expenses paid by stockholder								4,000												4,000

Estimated fair value of shares to Texas Tech University Health Service Center (May 22, 2004) ($.85)		135,765						115,000												115,000

Return of shares (July 15, 2004) Note F[4]		(1,086,113	)		(1,000	)		1,000

Shares issued to placement agent (August 19, 2004) (Note H)		1,500,000			2,000			13,000		(15,000	)

Issuance of shares and warrants in Private Placement net of expenses of $528,000 (October 13, 2004 and October 27, 2004)		2,647,080			2,000			2,575,000												2,577,000

Contribution of Salary (October 13, 2004)								11,000												11,000

Contribution of notes and related interest (October 13, 2004)								125,000												125,000

Unearned compensation								13,000						(13,000	)

Estimated fair value of vested options granted to Board of Advisors								22,000												22,000

Collection of note (October 13, 2004)										15,000										15,000

Valuation of placement agent’s warrants and shares attributable to debt (see F[3])								803,000												803,000

Net loss for the year																	(1,259,000	)		(1,259,000	)

Balance – December 31, 2004		10,093,550			10,000			4,417,000						(13,000	)		(2,111,000	)		2,303,000

Amortization														6,000						6,000

Estimated fair value of options vested issued to Board of Advisors								25,000												25,000

Estimated fair value of options issued to Advisor – July 13, 2005								109,000												109,000

Estimated fair value of warrants issued to consultant – July 28, 2005								27,000												27,000

Estimated fair value of warrants issued to consultant – September 13, 2005								7,000												7,000

Conversion of promissory notes into Common Stock net of unamortized discount of $58,000 (at a conversion price of $1.06 per share) – August 17, 2005		765,132			1,000			752,000												753,000

Conversion of promissory notes into Common Stock net of unamortized discount of $7,000 (at a conversion price of $1.06 per share) – September 16, 2005		205,451						211,000												211,000

Conversion of promissory notes into Common Stock net of unamortized discount of $1,000 (at a conversion price of $1.06 per share) – October 21, 2005		66,122						69,000												69,000

Conversion of promissory notes into Common Stock (at a conversion price of $1.06 per share) – October 27, 2005		507,785			1,000			538,000												539,000

HEMOBIOTECH, INC. 10-K