Unassociated Document

ORGANETIX, INC.

AUDITED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006

ORGANETIX, INC.

A Development Stage Company

Report of Independent Registered Public Accounting Firm	F-1

Balance Sheets as of December 31, 2007 and 2006	F-2

Statements of Operations for the Years Ended December 31, 2007 and
2006 and for the Period May 28, 2003 (Inception) to December 31, 2007	F-3

Consolidated Statement of Shareholders' Equity (Deficit) for the Period from Inception
(May 28, 2003) to December 31, 2007	F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2007
and 2006 and for the Period May 28, 2003 (Inception) to December 31, 2007	F-6

Notes to Financial Statements	F-8

MEYLER & COMPANY, LLC

ONE ARIN PARK

1715 HIGHWAY 35

MIDDLETOWN, NJ 07748

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders

Organetix, Inc.

New York, New York

We have audited the accompanying balance sheets of Organetix, Inc. (a Development Stage Company) as of December 31, 2007 and 2006, the related statements of operations, shareholders' equity (deficit) and cash flows for each of the two years then ended and for the cumulative period May 28, 2003 (Inception) to December 31, 2007. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Organetix, Inc. (a Development Stage Company) as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2007 and for the cumulative period May 28, 2003 (Inception) to December 31, 2007, 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 1, to the financial statements, the Company has accumulated net losses since inception of $6,595,174 at December 31, 2007 and there are existing uncertain conditions the Company faces relative to its ability to obtain capital and operate successfully. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also discussed in Note 1 . The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Meyler & Company, LLC

Middletown, NJ

April 11, 2008

F-1

ORGANETIX, INC.

(A Development Stage Company)

BALANCE SHEETS

	December 31,			December 31,
	2007			2006
ASSETS

CURRENT ASSETS
Prepaid expenses	$	45,074		$
Total Current Assets		45,074

Total Assets	$	45,074		$


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Convertible note payable	$	75,000		$
Accounts payable		11,487
Accrued expenses		57,775
Total Current Liabilities		144,262

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, par value $0.0001, authorized
150,000,000 shares, issued and outstanding
97,932,411 and 62,882,447 at December 31, 2007
and December 31, 2006, respectively		9,793		$	6,288
Additional paid-in capital		6,486,193			4,012,449
Deficit accumulated during development stage		(6,595,174	)		(4,018,737	)
Total Stockholders’ Equity (Deficit)		(99,188	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	45,074		$

See accompanying notes to financial statements.

F-2

ORGANETIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

							For the Period
	Year Ended						From Inception
	December 31,						(May 28, 2003) to
	2007			2006			December 31, 2007

REVENUES

COSTS AND EXPENSES
Officers’ compensation	$	364,750					$	364,750
Operating expenses-research facility				$	36,600			247,659
Research and development expenses		298,998			147,139			1,563,154
Consulting fees		1,272,926			150,000			1,801,454
Professional fees		253,021			55,296			618,817
Commissions		26,000						26,000
Filing fees		2,000						2,000
Investor relations		30,000						30,000
Lock up fee		25,000						25,000
Website expense		14,200						14,200
State political contributions		10,000						10,000
Travel and accommodations		42,268			9,654			172,632
Telephone		2,720			3,056			38,248
Interest expense		1,375			14,280			54,045
Insurance					22,816			104,188
Rent					9,345			42,410
Shipping expense					41			6,184
Office and other expense		73,888			32,137			241,663
Marketing and public relations		159,849			676			431,748
Depreciation and amortization expense					40,469			208,719
Loss on disposition of assets					592,861			592,861

Total Costs and Expenses		2,576,995			1,114,370			6,595,732

OTHER INCOME
Interest income		558						558

NET LOSS	$	(2,576,437	)	$	(1,114,370	)	$	(6,595,174	)

NET LOSS PER COMMONS
SHARE (Basic and Diluted)		($0.03	)		($0.01	)		($0.08	)

WEIGHTED AVERAGE SHARES
OUTSTANDING		84,544,058			74,600,255			80,695,664

See accompanying notes to financial statements.

F-3

ORGANETIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

									Deficit
									Accumulated
					Additional				During			Stockholders’
	Common Stock				Paid-in		Subscription		Development			Equity
	Shares		Amount		Capital		Receivable		Stage			(Deficit)
At inception (May 28, 2003)	12,362,056	$	1,236	$	298,764						$	300,000
Issuance at inception to founders	7,200,000		720		71,280		(6,240	)				65,760
Issuance pursuant to private
placement	640,000		64		159,936							160,000
Assignment of license agreement	8,160,000		816		2,039,184							2,040,000
Additional shares issued pursuant
to merger	48,000,000				4,800		(4,800	)
Net loss from inception to
December 31, 2003									(394,682	)		(394,682	)
Balance, December 31, 2003	76,362,056		7,636		2,564,364		(6,240	)	(394,682	)		2,171,078

10% stock dividend	3,017,584		302		(302	)
Issuance of shares for cash	1,000,000		100		124,900							125,000
Regulation S offering	855,400		86		97,971							98,057
Issuance of shares for cash	203,038		20		20,084							20,104
Issuance of cash for cash	3,381,552		338		236,367							236,705
Shares issued in lieu of payment
for legal services	142,857		14		9,986							10,000
Additional cash contributions
received by per agreement					500,000							500,000
Stock subscription received							6,240					6,240
Services received by Company-
paid for by common shares
previously issued and held in
escrow					131,970							131,970
Net loss for year ended
December 31, 2004									(1,240,326	)		(1,240,326	)
Balance, December 31, 2004	84,962,487		8,496		3,685,340				(1,635,008	)		2,058,828

See accompanying notes to financial statements.

F-4

ORGANETIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

											Deficit
											Accumulated
							Additional				During			Stockholders’
	Common Stock						Paid-in		Subscription		Development			Equity
	Shares			Amount			Capital		Receivable		Stage			(Deficit)
Balance, December 31, 2004	84,962,487		$	8,496		$	3,685,340			$	$(1,635,008	)	$	2,058,828
Additional cash contributions
received by the Company
per agreement							124,000							124,000
Issuance of shares as additional
consideration for convertible
loan	150,000			15			22,485							22,500
Services received by Company-
paid for by common shares
previously issued and held
in escrow	1,270,000			127			153,274							153,401
Net loss for year ended
December 31, 2005											(1,269,359	)		(1,269,359	)
Balance, December 31, 2005	86,382,487			8,638			3,985,099				(2,904,367	)		1,089,370

Cancellation of common stock	(23,500,040	)		(2,350	)		2,350
Contribution of services							25,000							25,000
Net loss for year ended
December 31, 2006											(1,114,370	)		(1,114,370	)
Balance December 31, 2006	62,882,447			6,288			4,012,449				(4,018,737	)

Issuance of shares in private
Placement	23,799,964			2,380			901,619							903,999
Issuance of shares for consulting
services	11,250,000			1,125			1,572,125							1,573,250
Net loss for year ended
December 31, 2007	(2,576,437	)									(2,576,437	)
Balance, December 31, 2007	97,932,411		$	9,793		$	6,486,193	$		$	(6,595,174	)	$	(99,188	)

See accompanying notes to financial statements.

F-5

ORGANETIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							For the Period
	Year Ended						From Inception
	December 31,						(May 28, 2003) to
	2007			2006			December 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,576,437	)	$	(1,114,370	)	$	(6,595,174	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization					40,469			208,719
Loss on disposition of assets					592,861			592,861
Compensatory shares		324,111
Stock based compensation		1,493,250						1,493,250
Amortization of prepaid consulting		34,926						34,926
Changes in assets and liabilities:
Decrease in prepaid expenses					(24,555	)		(43,414	)
Increase in accounts payable		11,487			197,004			365,643
Increase in accrued salaries to officers					225,000			708,966
Increase in accrued expenses		57,775						57,775
Increase in due to shareholders					42,793
Increase in accrued interest					12,519			28,239
Increase in due to related parties								204,273
Net cash used in operating activities		(978,999	)		(28,279	)		(2,619,825	)

CASH FLOWS FROM INVESTING ACTIVITIES
Payment regarding license								(150,000	)
Capital expenditures								(30,000	)
Net cash used in investing activities								(180,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock to founders								65,760
Issuance of common stock in private placement		903,999						903,999
Additional contribution of capital					25,000			1,288,866
Cash received in merger								300,000
Convertible note payable								150,000
Note payable to individual		75,000						91,200
Net cash provided by financing activities		978,999			25,000			2,799,825

DECREASE IN CASH					(3,279	)

CASH AT BEGINNING OF YEAR					3,279

CASH AT END OF YEAR	$			$			$

See accompanying notes to financial statements.

F-6

ORGANETIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

				For the Period
	For the Year Ended			From Inception
	December 31,			(May 28, 2003) to
	2007	2006		December 31, 2007
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION

NON-CASH FINANCING ACTIVITIES
Cancellation of common stock			2,350

See accompanying notes to financial statements.

F-7

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 1 - DESCRIPTION OF COMPANY/OPERATIONS, GOING CONCERN AND CHANGE OF CONTROL

Organetix, Inc. ("the Company" or "Organetix"), a Delaware Corporation, was incorporated on May 28, 2003.

Organetix was a biotechnology company with an exclusive worldwide license for the formula of a proprietary medical discovery relating to the liver referred to as A4+L.

On November 7, 2003 (the "Effective Date"), pursuant to a Share Exchange Agreement ("Agreement") between Diamond International Group, Inc. ("Diamond"), a Delaware corporation and Organetix, Inc. ("Organetix"), a Delaware corporation and all of the shareholders of Organetix, Diamond acquired all of the shares of Organetix as consideration for the issuance of 64,000,000 restricted shares of Diamond to the Organetix shareholders. As a result of this Agreement, Diamond International Group, Inc. (the legal acquirer) received 100% of the issued and outstanding common stock of Organetix, Inc. in exchange for 64,000,000 shares of common stock of Diamond. Pursuant to the Agreement, Organetix became a wholly owned subsidiary of Diamond which entity filed a Certificate of Amendment with the State of Delaware changing its name to Organetix, Inc. This reverse merger transaction was treated retroactively as a recapitalization with Organetix, Inc. being treated as the accounting acquirer.

Previously, the Company devoted its time towards establishing its business and no revenues have been generated to date. As such, the Company is considered as being in the development stage, since its inception, in accordance with Statement of Financial Accounting Standards No. 7, and its year-end is December 31.

Change in Control

On August 18, 2006, AMMA Corporation and other shareholders entered into a stock purchase agreement with Lusierna Asset Management, as agent for various purchasers ("Stock Purchase Agreement"), whereby AMMA Corporation shall sold 51,546,000 shares of the Company's common stock. The closing of the Stock Purchase Agreement resulted in a change of control. As consideration for the shares and the assumption of all liabilities of the Company, AMMA Corporation received (i) cash and (ii) an assignment of certain assets of the Company. The Company did not receive any sales proceeds or other consideration in connection with this transaction. As a result of this change of control, the Company cancelled 23,500,040 shares of its common stock. The Company also released or paid in cash its outstanding liabilities in exchange for the rights to the Company’s licensing agreement. Accordingly, a $592,861 loss was recorded on the disposition of these assets and liabilities.

Change in Management

On May 30, 2007, the Board of Directors appointed Seth Shaw as Interim President and Chief Executive Officer.

On July 1, 2007, the Company appointed Edward Caravalho as Interim Chief Financial Officer. The consulting agreement is effective thru December 31, 2007 and renews automatically for three month intervals unless terminated by either party. The agreement calls for the issuance of 1,600,000 shares upon inception and 250,000 shares per month over the life of the agreement. Subsequently, Mr. Caravalho and the Company have agreed that Mr. Caravalho shall serve in a consulting capacity and not as Interim Chief Financial Officer. Thus, Mr. Shaw is serving as the Company’s Chief Financial Officer until further notice.

F-8

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 1 - DESCRIPTION OF COMPANY/OPERATIONS, GOING CONCERN AND CHANGE OF CONTROL (CONTINUED)

Going Concern

As shown in the accompanying financial statements, the Company has incurred net losses of $6,595,174 since inception. Management's plans include raising of capital through the equity markets to fund operations, and the generating of revenue through its business. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company's accounting policies are in accordance with accounting principles generally accepted in the United States of America. Outlined below are those policies considered particularly significant.

Use of Estimates

In preparing financial statements in accordance with accounting principles generally accepted in the United States of America, management makes certain estimates and assumptions, where applicable, that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. While actual results could differ from those estimates, management does not expect such variances, if any, to have a material effect on the financial statements.

Statements of Cash Flows

For purposes of the statement of cash flows the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash equivalents and accounts payable. The recorded values of cash and cash equivalents and accounts payable approximate their fair values based on their short-term nature.

Research and Development Expenses

Research and development costs are charged to expense when incurred and aggregated $298,998 and $147,139 for the years ended December 31, 2007 and 2006, respectively.

F-9

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized.

Net Loss per Share

Basic and diluted earnings (loss) per common share are computed using the weighted average number of shares of common stock outstanding for the period.

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation 48, “Accounting for Income Tax Uncertainties” (“FIN 48”). FIN 48 defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. Recently issued literature also provides guidance on the derecognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. FIN 48 also includes guidance concerning accounting for income tax uncertainties in interim periods and increases the level of disclosures associated with any recorded income tax uncertainties. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently in the process of determining the impact, if any, of adopting the provisions of FIN 48 on its financial position, results of operations and liquidity.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under other accounting pronouncements that permit or require fair value measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effect of certain of the measurements on earnings (or changes in net assets). SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption, as of the beginning of an entity’s fiscal year, is also permitted, provided interim financial statements have not yet been issued. The Company expects to adopt the provisions of FIN 48 beginning in the first quarter of 2008. The Company is currently evaluating the potential impact, if any, that the adoption of SFAS No. 157 will have on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 allows entities to measure at fair value many financial instruments and certain other assets and liabilities that are not otherwise required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We have not determined what impact, if any, that adoption will have on our results of operations, cash flows or financial position.

F-10

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 3 - CONVERTIBLE NOTE PAYABLE

On July 6, 2005 the Company entered into three convertible promissory notes with three individuals who are also shareholders of the Company for an aggregate of $150,000. The notes were to bridge the Company for 90 days while it closed a proposed private placement memorandum with an investment banker in New Jersey, which did not materialize due to a significant drop in the Company's share price in the second quarter of 2005. The notes bear interest at the rate of 20% per annum and were due within 90 days of the note date. These notes are currently in default. Additionally, these individuals received 150,000 shares of the Company's restricted common stock as additional consideration for making an unsecured loans to the Company.

The terms of the conversion were based upon the proposed private placement memorandum which did not materialize and thus the Company does not have definitive conversion terms. The Company plans to reach amicable terms with the note holders relating to the terms of conversion or the Company will re-pay the $150,000 plus accrued interest.

As part of the stock purchase agreement discussed under Change of Control in Note 1, this convertible note payable was assumed and repaid by AMMA Corporation.

NOTE 4 - CONVERTIBLE NOTE PAYABLE

On October 31 2007, the Company borrowed $75,000 under convertible notes from an individual who is also a shareholder of the Company for working capital in order to continue operations. The loan bears interest at 11%, is convertible into common stock at $0.07 per share and matures on October 31, 2008.

On January 15, 2008, the convertible notes and accrued interest were converted into common stock.

NOTE 5 - RELATED PARTY TRANSACTIONS

At December 31, 2005 the Company was indebted to the President, Chief Executive Officer and Director through his related companies for $161,480. This amount represented advances for working capital in order to continue operations. These advances were non-interest bearing, had no specific maturity date and were unsecured. As part of the stock purchase agreement discussed under Change of Control in Note 1, these liabilities were assumed by AMMA Corporation.

NOTE 6 - INCOME TAXES

Deferred tax assets and liabilities consist of the following:

		December 31,			December 31,
		2007			2006
Deferred tax asset - net operating loss carry forwards	$	1,657,000		$	985,000
Less: valuation allowance		(1,657,000	)		(985,000	)

Net deferred tax asset

F-11

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 6 - INCOME TAXES (CONTINUED)

At December 31, 2007 and 2006, the Company had approximately $6,375,000 and $3,800,000 respectively of net operating loss carry forwards available, expiring in years beginning in 2021. The Company has provided a 100% valuation allowance on the deferred tax assets at December 31, 2007 and 2006 to reduce such asset to zero, since there is no assurance that the Company will generate future taxable income to utilize such asset. Management reviews this valuation allowance requirement periodically and makes adjustments as warranted.

NOTE 7 - ASSIGNMENT OF LICENSE AND CONSULTING AGREEMENTS

License Agreement

On July 15, 2003, Amma Corporation, a privately held entity domiciled in Alberta, Canada, assigned all of its rights, title and interest in and to the A4+L compound as defined in a License Agreement, dated June 5, 2003, between Amma Corporation and Dr. Jose Cabanillas Coral, a Canadian resident and citizen of Peru, to the Company in exchange for 8,160,000 shares of Company common stock.

The A4+L compound (the "technology"), is a multiple plant formulation used for the relief of certain medical symptoms associated with Hepatitis C. This license granted the Company the exclusive right to use and sublicense the technology, and any improvements, and to research, manufacture, distribute and sell products throughout the world excluding Peru.

This 40-year license also required that the Company pay a royalty equal to 3% of gross sales and sublicensing revenues to Dr. Cabanillas.

As part of the stock purchase agreement discussed under Change of Control in Note 1, this licensing agreement was exchanged with Amma Corporation as part of the change of control.

Consulting Agreement

Concurrently with the assignment of the license agreement described above, Amma Corporation also assigned its consulting agreement, dated June 1, 2001, with Dr. Cabanillas to the Company.

This agreement, which expired on June 1, 2006, required that Dr. Cabanillas provide general and research duties as requested, in exchange for a monthly fee of $12,000.

NOTE 8 - SHAREHOLDERS' EQUITY (DEFICIT)

The Company has authorized 150 million shares of common stock, par value $.0001 per share.

The following shares, aggregating 64,000,000, were issued in connection with the share exchange agreement described in Note 1: (i) in May 2003, the Company issued 7,200,000 shares of common stock to its founders, at a per share price of $.01, for aggregate proceeds of $72,000, (ii) in June 2003, the Company began offering its common stock in a private offering of such securities and, generated proceeds of $160,000, for the sale of 640,000 shares of its common stock at a per share price of $.25; (iii) in July 2003, the Company issued 8,160,000 shares of its common stock in connection with the assignment of a license agreement (see Note 9). These shares were deemed to have a fair value of $.25 per share at the time of issuance, and in November 2003, the Company issued an additional 48 million shares pursuant to the share exchange agreement.

F-12

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 8 - SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)

In 2004, the Company declared and paid a 10% stock dividend to all shareholders, excluding the majority shareholder, AMMA Corporation, issuing 3,017,584 shares of its common stock in connection therewith. The Company also received $479,866 in proceeds from the sales of 5,439,990 shares of its common stock. In partial payment for legal services received, the Company issued 142,857 shares of common stock valued at $10,000. In connection with the reverse merger with Diamond International, Inc., Sylvio Martini, the majority shareholder at the time, agreed to pay certain expenses of the Company from the shares retained by him. Such shares were placed in escrow and during the year, 2,500,000 shares were sold and transferred to 20 persons generating $500,000 of proceeds, which were then contributed to the Company as additional paid-in capital. Mr. Martini also transferred certain escrowed shares to consultants as payment for services provided to the Company. The value of these shares, $131,970, was recorded as additional paid-in capital.

On January 2, 2004, the majority shareholder approved the adoption of the 2004 Omnibus Stock Option Plan under which 5,000,000 shares of Company common stock were reserved for issuance. To date, no options have been granted under this plan.

During the year ended December 31, 2005, in connection with the reverse merger with Diamond International, Inc. in 2003, Sylvio Martini, the majority shareholder at the time, agreed to pay certain expenses of the Company from the shares retained by him. Such shares were placed in escrow and during the twelve months ending December 31, 2005, 620,000 shares were issued to 7 persons for services rendered for a total of $124,000 of proceeds, which were then contributed to the Company as additional paid-in capital.

In July 2005, 150,000 shares of common stock valued at $22,485 were issued in connection with a bridge note (see Note 3). In August 2005, 470,000 shares of common stock valued at $65,853 were issued for services rendered to the Company. In November 2005, 800,000 shares of common stock value at $39,920 were issued for services rendered to the Company.

As part of the stock purchase agreement discussed under Change of Control in Note 1, the Company cancelled 23,400,040 shares of common stock.

During 2006, the Company received $25,000 in contributed legal services.

During 2007, the Company sold 17,466,630 shares of its common stock at $0.03 in a private placement and received proceeds of $523,999 and 6,333,335 shares of its common stock at $0.06 in a private placement and received proceeds of $380,000.

On February 15, 2007, the Company entered into non-exclusive agreements with Mr. David Lewis and Mr. Aaron Foley to serve on the Corporation’s Board of Advisors. Messrs. Lewis and Foley shall serve as Advisors until the earlier of February 15, 2009 or the date that any Advisor is removed from the Board. As compensation for participation on the Board of Advisors, Messrs. Lewis and Foley each received 500,000 shares of the Corporation’s common stock. Such shares were recorded at their fair value of $0.08 per share and are being amortized over the life of the agreements.

During the year ended December 31, 2007, the Company authorized 11,250,000 shares of common stock as compensation and for services rendered. These shares were recorded at their fair market value of $ 1,573,250.

F-13

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 8 - SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)

Included in shares of common stock issued and outstanding at December 31, 2007 are 2,766,664 shares authorized for issuance by the Directors of the Company which have not been issued by the Company.

NOTE 9 - COMMITMENTS

Lease

Office space is also provided in New York by the Company's attorneys, at no cost.

Employment Agreements

On January 2, 2004, the Company entered into an Employment Agreement with Mr. L. B. (Brad) Clarke as a "senior executive" (the "Employment Agreement"). The Employment Agreement was for a 3-year term and provided for annual salaries of $120,000 for 2004, $180,000 for 2005 and $240,000 for 2006. Other remuneration under the Employment Agreement is a $700 per month automobile allowance and 30 days paid vacation. The Employment Agreement may be terminated for "cause". All salaries and automobile allowance have been accrued as payable but not paid. As part of the stock purchase agreement discussed under Change of Control in Note 1, these liabilities were assumed by AMMA Corporation.

As discussed in Note 1, on May 30, 2007, the Company entered into an employment agreement with Seth Shaw as its Interim President and Chief Executive Officer. The employment agreement calls for montly payments of $7,500 and extends through May 30, 2008.

Consulting Agreement

On September 1, 2007, the Company entered into a 12 month agreement with Safier Enterprises LLC for $5,000 per month in cash plus a commitment of up to 3,000,000 shares to be earned based on performance. No shares have been issued to date.

NOTE 10 - LOAN TO UNIPIXEL

In January of 2007, the Company loaned $100,000 to Unipixel. This loan plus accrued interest was repaid on February 15, 2007.

NOTE 11- AGREEMENT WITH VOLIUS, INC.

On September 26, 2006, the Company entered into a letter of intent with Volius, Inc. ("Volius") to acquire all of Volius' assets in exchange for 50.5% of the company's shares of common stock or approximately 63,511,270 shares. Contemporaneous with the effectiveness of the merger, the Company was required to raise between $4,000,000 and $6,000,000 to fund the operations of the newly merged company on mutually agreeable terms.

On January 18, 2007, the Company terminated its Letter of Intent to merge with Volius because the Company and Volius could not agree on the amount of capital to be raised, the valuation of Volius, and the timing of the ultimate transaction.

F-14

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 12 - AGREEMENT WITH ADAO TELECOM, INC.

On January 24, 2007, Organetix executed a definitive agreement to acquire ADAO. ADAO is a telephony engineering and design firm specializing in the development of cellular technologies that target the low-end user market segment. Under the terms of the agreement, the Company was required to invest an aggregate of $300,000 in ADAO prior to the closing, which was to be used specifically to develop a prototype to be owned by the Company. Upon successful completion of the prototype and other conditions in the proposed exchange transaction, at Closing, the Company would issue 73,500,000 ($.0001 par value per share) restricted shares of common stock of the Company equal to 53.5% of the outstanding shares of common stock to the shareholders of ADAO. As further consideration, the Company has agreed that, subsequent to Closing, itwould increase its authorized number of shares of common stock from 150,000,000 to 300,000,000 and change its name to ADAO Wireless, Inc. ADAO would then receive an additional 17,000,000 shares of the Company’s common stock.

During the six months ended June 30, 2007, the Company transferred $213,999 to ADAO as part of the agreement. This payment is included with Research and Development Expenses in the Consolidated Statement of Operations.

On July 3, 2007, the Company and ADAO terminated the Exchange Agreement and executed a Mutual Termination Agreement. As part of such termination, the Company received a 7.5% convertible promissory note for $279,000 with interest accruing beginning on August 1, 2007. In the event ADAO is unable to pay back any principal and interest pursuant to the terms of the Note within 12 months, the Note will convert into 12.5% of the outstanding shares of Common Stock of ADAO. The Company and ADAO mutually agreed to terminate the ADAO Exchange Agreement because of the difficulty in agreeing on the amount of capital to be raised, the valuation of ADAO and the timing of the ultimate transaction.

NOTE 13 - AGREEMENT WITH KIDFITNESS, INC.

On August 13, 2007, the Company entered into a Definitive Exchange Agreement with KidFitness, Inc. (“KidFitness”) to acquire all of KidFitness’s shares in exchange for 64% of the Company’s shares of common stock prior to the Financing as defined below (“Exchange”). Upon completion of the Exchange, KidFitness will be a wholly-owned subsidiary of the Company and will be the Company’s sole business focus.

The Company and KidFitness must agree on the final terms and documentation related to a financing of $7,000,000 to $12,000,000 through the sale of the Company’s common stock in a private placement (“Financing”) and the Financing minimum must close contemporaneous with the closing of the Exchange. The proceeds of the Financing will be used for the operation and continued growth of the combined company as well as to pay off existing debts of KidFitness.

·	Messrs. Paul Neville and Anthony Barrasso must be appointed to the Board of Directors of the Company.
·	The Company must enter into employment contracts with KidFitness management, the terms of which shall be mutually acceptable to all parties.

On October 5, 2007, the Company and KidFitness, Inc. terminated the Share Exchange Agreement and executed a Mutual Termination Agreement (“Termination Agreement”). Pursuant to the Termination Agreement, the parties thereto agreed to mutually release each other from any and all liabilities related to the Exchange Agreement. The Company and KidFitness, Inc. agreed to terminate the Exchange Agreement

F-15

ORGANETIX, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

NOTE 13 - AGREEMENT WITH KIDFITNESS, INC. (Continued)

because of the difficulty, if not impossibility, of satisfying the necessary conditions in the Exchange Agreement.

On November 5, 2007, the Company borrowed $100,000 in exchange for a convertible promissory note (“Note”) pursuant to which the holder may convert the principal and interest under the Note into shares of common stock of the Company at a price of $.07 per share. The Note carries an interest rate of 11% and matures on November 5, 2008. The proceeds of the above loan will be used for working capital purposes including expenses related to finding a suitable business or asset to acquire. The Company may borrow additional capital on similar terms if we deem such a capital raise necessary to continue the operations of the Company.

NOTE 14 - AGREEMENT WITH SEAFARER EXPLORATION, INC.

On January 23, 2008, the Company announced that it completed a $310,000 equity private placement financing. Proceeds from this private placement will be used to complete the pending transaction with Florida based Seafarer Exploration, Inc. ("Seafarer"). Under terms of the previously executed Memorandum of Understanding ("MOU") with Seafarer, Organetix is required to contribute a minimum of $150,000 and a maximum of $600,000 to the Combined Company. The final percentage ownerships of the Combined Company, will vary based upon the amount of cash contributed by Organetix shareholders. The terms of this private placement were as follows: Restricted shares were purchased from the Company at a price of 0.075 cents per share, with 1/2 warrant (50% coverage) at a strike price of 15 cents per share. The warrants expire after 12 months, at close of business on January 31, 2009. There have been no registration rights offered in conjunction with this private placement.

NOTE 15 - SUBSEQUENT EVENT

During the first quarter of 2008, the Company completed a $310,000 equity private placement at 7.5 cents per share with 50% warrant coverage at 15 cents. This private placement consisted of accredited individual investors and one institutional investor. Part of this private placement was the conversion of the $75,000 bridge loan into $90,000 of equity, which strengthened the Company's balance sheet. Of this capital secured in the private placement, $93,500 was wired to Seafarer Exploration, Inc,, the Company that Organetix entered into a Letter of Intent to acquire in December of 2007. The Company will likely require additional capital in order to complete the proposed transaction with Seafarer Exploration, Inc. There is no guarantee that the Company will be able to secure additional capital.

F-16

ITEM8A(T).

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of December 31, 2007, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Evaluation on Internal Control over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is under the supervision of the Company’s principal executive and principal financial officer and attempts to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP to provide reasonable assurances that:

Maintenance of records is in reasonable detail and accurately and fairly reflect our transactions and dispositions of our assets;

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

The Company can detect on a timely basis any unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

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

Under the supervision and with the participation of our management, including our President, Chief Executive Officer, Chief Financial Officer and financial consultant, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria publicly available in “Internal Control-Integrated Framework Executive Summary” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of December 31, 2007.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at December 31, 2007:

Due to the Company’s limited resources, the Company has insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in the Company’s financial transactions. The Company relies on an outside consultant to enter all of the Company’s financial transactions in the Company’s books and accounts, and a separate outside accountant to prepare its quarterly financial statements. Additionally, the Company does not have a formal audit committee, and the Board does not have a financial expert, thus the Company lacks the board oversight role within the financial reporting process.

The Company’s small size and “one-person” office prohibits the segregation of duties and the timely review of accounts payable, expense reporting and inventory management and banking information.

As a result of these material weaknesses described above, management has concluded that, as of December 31, 2007, our internal control over financial reporting was not effective based on the publicly available criteria in “Internal Control-Integrated Framework” issued by COSO.

Our President, Chief Executive Officer, Chief Financial Officer and financial consultant are in the process of determining how best to change our current system and implement a more effective system of controls, procedures to insure that information required to be disclosed in this annual report on Form 10-KSB has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. However, since inception, the Company has experienced cash flow problems and as a result has not had the resources to address fully the certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented. Failure to develop adequate internal control and hiring of qualified accounting personnel may result in a “material weakness” in the Company’s internal control relating to the above activities.

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

Changes in Internal Controls.

During the three months ended December 31, 2007, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Delaware	73-1556428
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

	Name of Each Exchange
Title of Each Class	on Which Registered
NONE	NONE


	High Close		Low Close
2007
First Quarter		0.07		0.01
Second Quarter		0.13		0.03
Third Quarter		0.20		0.06
Fourth Quarter		0.128		0.045

2008
First Quarter		0.114		0.05
Second Quarter to April 14		0.95		0.07

			Long-Term Compensation Awards				Securities Underlying Options		All Other
Name and Principal Position	Year		Salary		Bonus		(#) /SARS		Compensation
Seth Shaw - President and Chief Executive Officer		2007	$	45,000		0		0		$	45,000

L. B. (Brad) Clarke - Chairman of the Board, Chief Executive Officer, President, Chief Executive Officer and Secretary ¹		2005		180,000							7,000

Robert C. Howell - Executive Vice President & Chief Financial Officer ¹		2005		60,000		0		0			0

Dr. Jose Cabanillas - Executive Vice President - Research & Development ¹		2005		144,000		0		0			0

John Garcia - Executive Vice President Corporate Development ¹		2005		60,000		0		0

Dr. David F Hostelley - Chairman of the Board and President²		2006		0		0		0			0

Title of Class	Name of Beneficial Owner		Shares of Common Stock		Percent of Class

Common		Seth Shaw		4,093,000		3.71	%

All directors and executive officers as a group				4,093,000		3.71	%

For the fiscal year ended December 31, 2007	Commission File
	Number 000-29461

ORGANETIX, INC.


/s/ Seth Shaw
Name: Seth Shaw
Title: President and Chief Executive Officer
Date: April 15, 2008