UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K/A


Amendment No.
1





R
            ANNUAL REPORT
      UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
              ACT OF
      1934





For
the fiscal year ended December 31, 2008





£
            TRANSITION
      REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
              EXCHANGE ACT
      OF 1934





For
the transition period
from        to





Commission
file number: 001-16781




microHelix,
Inc.


(Exact
Name of Registrant as Specified in Its Charter)





Oregon
            91-1758621(State or Other Jurisdiction of Incorporation or
              Organization)
            (I.R.S. Employer Identification No.)5300 SW Meadows, Suite 400, Lake Oswego,
              Oregon
            97035(Address of Principal Executive Offices)
            (Zip Code)





(Issuer's
Telephone Number, Including Area Code):


(503)
419-3564




Securities
registered under Section 12(g) of the Exchange Act:





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes £No R




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


Yes RNo £




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 of 1934 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.


Yes £No R





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained in this form, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K, or any amendments to this Form 10-K.


þ




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.


Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer    ̈
            Smaller
      reporting company R





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).


Yes RNo £





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates, as of December 31, 2008, was approximately $96,634 based
upon the last sale price reported for such date on the NASDAQ OTC
Market.





There
were 1,973,421 shares of the issuer's Common Stock outstanding as of December
31, 2008.





At a
special meeting of the shareholders on March 19, 2008, the Company's
Amended and Restated Articles of Incorporation, as amended, were amended to
affect a reverse split of the Company's Common Stock in which every 15 shares of
Common Stock held by a shareholder were reduced to one share of Common
Stock.  The consolidated financial statements, notes, and other
references to share and per share data contained in this Annual Report have been
retroactively restated to reflect such reverse stock split for all periods
presented.





Transitional Small Business
Disclosure Format: Yes£NoR












EXPLANATORY
NOTE
 
 We
are filing this Form 10-K/A to amend Part III, Item 12 of our Annual Report on
Form 10-K for the year ended December 31, 2008, which we filed with the
Securities and Exchange Commission on April 16, 2009.  This amendment
is also being filed to correct certain typographical errors.  This
Form 10-K/A does not reflect events occurring after the filing of our Annual
Report on Form 10-K on April 16, 2009 or include, or otherwise modify or update,
the disclosure contained therein in any way except as expressly indicated
above.




PART
I





This
Annual Report on Form 10-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended.  Such statements reflect management's current view and
estimates of future economic and market circumstances, industry conditions,
company performance and financial results.  Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and
variations of such words and similar expressions are intended to identify such
forward-looking statements.  These statements are subject to risks and
uncertainties that could cause our future results to differ materially from the
results discussed herein.  Factors that might cause such a difference
include, but are not limited to, those discussed elsewhere in this Annual Report
on Form 10-K.  We do not intend, and undertake no obligation, to
update any such forward-looking statements to reflect events or circumstances
that occur after the date of this filing.





Item
1.  Business





Overview





microHelix, Inc. ("we," "us," "our,"
"microHelix" or the "Company") began in 1991 in Portland, Oregon as a grant and
private equity funded research company, formed to develop manufacturing
techniques for medical device interconnect systems. In the years that followed
we established a foundation of proprietary processes and intellectual property
in the areas of ultra-thin wall pinhole free wire, micro-interconnect
technology, advanced laser micro-machining, specialty connectors and flex
circuits.  The Company was a manufacturer of complex cable assemblies
for the medical and commercial original equipment manufacturer ("OEM")
markets.  The Company served a segment of the quick turn, high mix,
and low volume cable assembly market generally referred to as the custom cable
assembly market.  Typical cable assemblies included cable, connectors,
flex reliefs, housings and printed circuit boards ("PCBs") and are critical
sub-components of medical devices and commercial electronic
systems.





Continuing
deterioration of the Company's financial condition during April and May 2007
caused the Company to voluntarily surrender its assets to its secured creditors
on May 31, 2007 and wind up its affairs.  In connection with the
windup, the Company stopped paying its unsecured creditors for goods and
services provided prior to May 21, 2007.  The Company and its wholly
owned subsidiary, Moore Electronics, Inc. ("Moore"), operated for the benefit of
the secured creditors until September 2007, at which time it ceased
manufacturing operations and became a shell company.  See Note 1 to
the Consolidated Financial Statements – "Going Concern."





The
Company’s current business objective is to locate appropriate opportunities for
a business combination.  The Company does not currently engage in any
activity that provides cash flow.  The Company anticipates incurring
costs related to the filing of Exchange act reports, officers’ and directors’
salaries and transaction costs related to a business
combination.  There is no assurance that the Company will be able to
raise sufficient capital to cover those expenses.  Until the Company
consummates a business combination, it does not anticipate any future
expenditures for research and development or the purchase or sale of any
property, plant, or equipment.





Certain
types of business combination transactions may be completed without having
to first submit the transaction to our shareholders for approval.  If
a business combination transaction is structured such that approval by the
Company’s shareholders is not required, our shareholders will not be provided
with financial or other information relating to the other party to the business
combination prior to the completion of the transaction.





Because
of the disposition of substantially all of our assets and the subsequent winding
up of business, the Company has no ongoing operations.  Our Board of
Directors has determined to maintain the Company as a public "shell"
corporation, which will seek suitable business combination
opportunities.  Our Board of Directors believes that a business
combination with an operating company has the potential to create value for the
Company's shareholders.





"Shell"
Company Status





Due to
our shell company status, holders of restricted securities issued while we are a
shell company may not re-sell them pursuant to SEC Rule 144 for a period of one
year after we cease to be a shell and have filed the necessary report with the
Securities Exchange Commission to that effect.





Patents
and Intellectual Property





The
Company had no patents or patent applications pending as of the date of this
report.





The
Company currently owns the trademark "MICROHELIX" that is listed on the
principal register of the United States Patent and Trademark
Office.  The Company's intellectual property also includes common law
trademarks, service marks and trade names.





Employees





The
Company had no full-time employees and one part-time employee in the United
States as of April 1, 2009.


2


Where
You Can Find More Information





On June
11, 2007, the Company filed a Form 15 with the Securities and Exchange
Commission terminating is registration under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and suspended its duty to
file reports under Sections 13 and 15(d) of the Exchange Act.  On
March 25, 2009, the Company voluntarily filed its annual and quarterly reports
for 2007 and quarterly reports for 2008 with the Securities and Exchange
Commission.





The
Company is not currently subject to the information requirements of the
Securities Exchange Act of 1934, as amended.  However, we voluntarily
file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission.  You may
inspect and copy any document we file with the SEC at the SEC's public reference
rooms in Washington, D.C. at 100 F Street, N.W., Washington, D.C. 20549, on
official business days from 10:00 a.m. to 3:00 p.m.  You may
obtain information on the operation of the SEC's public reference rooms by
calling (800) SEC-0330.  You may also purchase copies of our SEC
filings by writing to the SEC, Public Reference Section, 100 F Street,
N.W., Washington, D.C. 20549.  Our SEC filings are also available on
the SEC's website at http://www.sec.gov.





Item
1A.  Risk
Factors





Risk
Factors





We are subject to various risks that
could have a negative effect on the Company and its financial condition,
including without limitation the following:





Minimal
assets





The Company has no significant
assets or financial resources.  It is likely the Company will sustain
operating expenses without corresponding revenues until it
consummates a business combination with a target company.  There
is no assurance that we can identify such a target company and consummate such a
business combination.





Adequate
financing may not be available when needed





Additional sources of funding will be
required for us to continue operations.  There is no assurance that
the Company can raise working capital or if any capital will be available at
all.  Failure to obtain financing when needed could result in
curtailing operations, acquisitions or mergers and investors could lose some or
all of their investment.





Speculative
nature of the Company's proposed operations





The success of the Company's proposed
plan of operation will depend to a great extent on the operations, financial
condition and management of the identified target company.  While
management will prefer business combinations with entities having established
operating histories, there can be no assurance that we will be successful in
locating candidates meeting such criteria.  In the event the Company
completes a business combination, of which there can be no assurance, the
success of the Company's operations will be dependent upon management of the
target company and numerous other factors beyond our control.





Scarcity
of and competition for business opportunities and combinations





The Company is and will continue to be
an insignificant participant in the business of seeking mergers with and
acquisitions of business entities.  A large number of established and
well-financed entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be merger or acquisition target
candidates for the Company.  Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than we do.  The Company will therefore be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination.  Moreover, we will also compete
with numerous small public companies in seeking merger or acquisition
candidates.


3





No
agreement for business combination or other transaction – No standards for
business combination





As of this filing, the Company has not
reached any definitive understanding with any person or entity concerning a
merger or acquisition.  There can be no assurance that we will be
successful in identifying and evaluating suitable business opportunities or in
concluding a business combination.  Management has not identified any
particular industry or specific business within an industry for evaluation by
the Company.  There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the
Company.  We have not established a specified level of earnings,
assets, net worth or other criteria that we will require a target company to
have achieved, or that would prevent us from considering a business combination
with such business entity.  Accordingly, the Company may enter into a
business combination with a business entity having no significant operating
history, losses, limited or no potential for immediate earnings, limited assets,
negative net worth or other negative characteristics.





Continued
management control, limited time availability





While seeking a business combination,
our officers anticipate devoting only a limited amount of time per month to our
business.  Our ability to attract and retain key personnel is critical to
our future success.  There is no guarantee that we will be able to
hire and retain qualified officers.





Conflicts
of interest





The Company's officers and directors
participate in other business ventures which may compete directly with the
Company.





Reporting
requirements may delay or preclude acquisitions





Section 13 of the Securities Exchange
Act of 1934 (the "Exchange Act") requires companies subject thereto to provide
certain information about significant acquisitions including certified financial
statements for the company acquired covering one or two years, depending on the
relative size of the acquisition. The time and additional costs that may be
incurred by some target companies to prepare such financial statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company.  Acquisition prospects that do
not have or are unable to obtain the required audited financial statements may
not be appropriate for acquisition if the reporting requirements of the Exchange
Act are applicable to us.





No
public trading market





There
is no public trading market for our securities and there can be no assurance
that a trading market for our securities will develop if we complete a business
combination.  Until such time as our securities are eligible for
quotation on a public market, we will be at a competitive disadvantage with
other companies, including shell companies, who have publicly traded securities,
in attracting suitable candidates to participate in a business combination with
us.





Lack
of diversification





Our activities will be limited to
the operations engaged in by the business entity with which we merge or
acquire.  Our inability to diversify our activities into a number of
areas may subject us to economic fluctuations within a particular business or
industry and therefore increase the risks associated with our
operations.


4


Regulation
under Investment Company Act





Although the Company will be subject to
regulation under the Exchange Act, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940, as amended (the
“1940Act”)  because we will not be engaged in the business of
investing or trading in securities.  In the event the Company engages
in business combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to regulation
under the 1940 Act.  In such event, we would be required to register
as an investment company and could be expected to incur significant registration
and compliance costs.  We have not obtained a formal determination
from the Securities and Exchange Commission as to our status under the 1940
Act.  Consequently, any violation of the 1940 Act could subject the
Company to material adverse consequences.





Possible
change in control and management





A business combination involving the
issuance of the Company's equity securities could result in shareholders of a
target company obtaining a controlling interest in the Company.  Any
such business combination may require our shareholders to sell or transfer
all or a portion of the Company's equity securities held by them.  The
resulting change in control will likely result in removal of the present
officers and directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of the
Company.





Reduction
of percentage share ownership following business combination





The Company's primary plan of operation
is based upon a business combination with a business entity which, in all
likelihood, will result in our issuing securities to shareholders of such
business entity.  The issuance of previously authorized and unissued
equity securities of the Company would result in reduction in percentage of
shares owned by our present shareholders and would most likely result in a
change in control or management of the Company.





Taxation





Federal and state tax consequences
will, in all likelihood, be major considerations in any business combination we
may undertake.  Currently, such transactions may be structured so as
to result in tax-free treatment to both companies, pursuant to various federal
and state tax provisions.  We intend to structure any business
combination so as to minimize the federal and state tax consequences to both the
Company and the target company; however, there can be no assurance that such
business combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free treatment
upon a transfer of stock or assets.  A non-qualifying reorganization
could result in the imposition of both federal and state taxes which may have an
adverse effect on both parties to the transaction.





Item
1B.  Unresolved
Staff Comments.





Not
applicable.





Item
2.  Properties





After the
Company surrendered its assets to its secured creditors and wound up its
affairs, it terminated the lease for the space it previously
occupied.  The Company does not currently maintain an executive
office.





Item
3.  Legal
Proceedings





From time
to time the Company may become involved in ordinary, routine, or regulatory
legal proceedings incidental to the Company's business.





The
Company is not engaged in any other legal proceedings nor is the Company aware
of any pending or threatened legal proceedings that, singly or in the aggregate,
could have a material adverse effect on the Company's business, financial
condition or results of operations.


5


Item
4. Submission of Matters
to a Vote of Security Holders





The
Company held a special meeting of shareholders on March 19, 2009 at which the
shareholders voted to elect two additional individuals as members of the
Company’s board of directors.  The following votes were cast for or
withheld as to the nominee for the position of director:





Director Nominee
                    
                    Votes For
                    
                    
                    Votes WithheldThomas
      Sidley
                    
                    
                    1,249,555
                    
                    
                    
                    0Donald
      Megrath
                    
                    
                    1,249,555
                    
                    
                    
                    0





The
nominees for director were elected by the shareholders. There were no
abstentions or broker non-votes with regard to this matter.


6


PART
II





Item
5. Market for Common Equity
and Related Stockholder Matters and Small Business Issuer Purchases of Equity
Securities





There is
no established public trading market for the Company's securities.  As
of the date of this report the Company's Common Stock trades on the Pink Sheets
under the symbol MHLN.PK.  The table below sets forth for the periods
indicated the high and low bid prices for the Common Stock as reported by the
Pink Sheets from January 1, 2007 through December 31,
2008.  The prices in the table are the high and low bid prices as
reported by the Pink Sheets, adjusted to reflect the impact of the 1 for 15
reverse stock split of the Company's Common Stock, which was not reflected by
the Pink Sheets until the end of 2008. The prices shown represent interdealer
prices without adjustments for retail mark-ups, mark-downs or commissions and
consequently may not represent actual transactions.





Common
Stock "MHLN.PK"





2008 Fiscal Quarters
                    
                    High
                    
                    
                    LowFirst
      Quarter
                    
                    $
                    4.500
                    
                    
                    $
                    1.800Second
      Quarter
                    
                    $
                    3.375
                    
                    
                    $
                    3.375Third
      Quarter
                    
                    $
                    9.000
                    
                    
                    $
                    2.700Fourth
      Quarter
                    
                    $
                    6.750
                    
                    
                    $
                    0.030




2007 Fiscal Quarters
                  
                  High
                  
                  
                  LowFirst
      Quarter
                  
                  $
                  5.250
                  
                  
                  $
                  2.250Second
      Quarter
                  
                  $
                  5.250
                  
                  
                  $
                  7.875Third
      Quarter
                  
                  $
                  15.750
                  
                  
                  $
                  5.625Fourth
      Quarter
                  
                  $
                  11.250
                  
                  
                  $
                  1.575




Holders
of shares of Common Stock are entitled to receive such dividends, if any, as may
be declared by the Company's Board of Directors out of funds legally available
therefor and, upon the Company's liquidation, dissolution or winding up, are
entitled to share ratably in all net assets available for distribution to such
shareholders.  The Company has not, to date, declared or paid any cash
dividends to its Common Stock holders.





Recent
Sales of Unregistered Securities





Other
than as reported in our quarterly reports on Form 10-Q and current reports on
Form 8-K, we did not sell any equity securities that were not registered under
the Securities Act of 1933 during the year ended December 31, 2008.





Shareholders
of Record





As of
December 31, 2008, there were approximately 60 shareholders of record of the
Company's Common Stock.  There is one shareholder of record of the
Company's Series C Preferred Stock.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
Company's Board of Directors determined in 2005 that the cost of maintaining the
equity compensation plans outweighed the perceived benefits received from the
Company's employees under those plans.  Therefore, these equity
compensation plans were terminated.  The Company expects that for the
foreseeable future any equity compensation grants to the employees and directors
will be in the form of grants of shares of Common Stock.  Such grants
may be restricted or unrestricted.


7




Item
6.  Selected
Financial Data








Item
7.  Management's
Discussion and Analysis of Financial Condition and Results of
Operations




All of the references to share and per
share data below have been retroactively restated to reflect the reverse stock
split for all periods presented due to the 1 for 15 reverse stock split approved
by the Company's shareholders at a special meeting of shareholders on March 19,
2008.




Overview





microHelix, Inc. ("we," "us," "our,"
"microHelix" or the "Company") began in 1991 in Portland, Oregon as a grant and
private equity funded research company, formed to develop manufacturing
techniques for medical device interconnect systems. In the years that followed
we established a foundation of proprietary processes and intellectual property
in the areas of ultra-thin wall pinhole free wire, micro-interconnect
technology, advanced laser micro-machining, specialty connectors and flex
circuits.  The Company was a manufacturer of complex cable assemblies
for the medical and commercial original equipment manufacturer ("OEM")
markets.  The Company served a segment of the quick turn, high mix,
and low volume cable assembly market generally referred to as the custom cable
assembly market.  Typical cable assemblies included cable, connectors,
flex reliefs, housings and printed circuit boards ("PCBs") and are critical
sub-components of medical devices and commercial electronic
systems.





Continuing
deterioration of the Company's financial condition during April and May 2007
caused the Company to voluntarily surrender its assets to its secured creditors
on May 31, 2007 and begin winding up its affairs.  In connection
with the windup, the Company stopped paying its unsecured creditors for goods
and services provided prior to May 21, 2007.  The Company and its
wholly owned subsidiary, Moore Electronics, Inc. ("Moore"), operated for the
benefit of the secured creditors until September 2007, at which time it ceased
manufacturing operations and the Company became a shell company.  See
Note 1 to the Consolidated Financial Statements – "Going Concern."





Because
of the disposition of substantially all of our assets and the subsequent winding
up of business, the Company has no ongoing operations.  The Company’s
Board of Directors has determined to maintain the Company as a public "shell"
corporation, which will seek suitable business combination
opportunities.  The Company’s Board of Directors believes that a
business combination with an operating company has the potential to create value
for the Company's shareholders.





The
Company's current business objective is to locate appropriate opportunities for
a business combination.  The Company does not currently engage in any
activity that provides cash flow.  The Company may require additional
funds to cover the costs of investigating and analyzing a business combination
or to fund general and administrative expenses.





The
Company anticipates incurring costs related to the filing of Exchange Act
reports, officer's and director's salaries and transaction costs related to a
business combination in the next 12 months.  There is no assurance
that the Company will be able to raise sufficient capital to cover those
expenses.  Until the Company consummates a business combination, it
does not anticipate any future expenditures for research and development or the
purchase or sale of any property, plant or equipment.


8


Critical
Accounting Policies and Estimates





The
discussion and analysis of the Company’s financial condition and results of
operations is based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States.  The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities.  Because Moore continued to operate
during the windup period, management continued to evaluate its estimates for
Moore on a going concern basis that assumed continued operations, including
those related to product returns, bad debts, inventories, prepaid expenses,
intangible assets, income taxes, warranty obligations and other
contingencies.  The Company's MicroCoax Assembly Division’s assets
were evaluated for impairment and the value of its remaining assets was adjusted
to $17,000, which is the value the Company received from the sale of the
MicroCoax assets to an unrelated third party on July 12,
2007.  The Company based the estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which formed the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources.  The Company believes the following critical accounting
policy and related judgments and estimates affect the preparation of the
Company's consolidated financial statements.  See also Note 1 to the
Consolidated Financial Statements.





Revenue Recognition—The
Company recognized revenue from commercial sales of cables, connectors,
customized cable assemblies, wire harnesses, and mechanical assemblies when
title passed, which was upon shipment.  Commercial sales were made
F.O.B. point of shipment and the products must have been physically shipped from
the factory.  Returns were limited to nonconforming products and the
volume of returns was insignificant.  The Company does not establish
reserves for returns because returns were minimal.





Results
of Operations





The
following table presents the Company's historical operating results for the
periods indicated as a percentage of sales:




Year Ended
                                            December 31,2007Sales
                                          
                                          
                                          100
                                          %Cost
      of sales
                                          
                                          
                                          89Gross
      profit (loss)
                                          
                                          
                                          11Operating
      expenses:Sales
      and marketing
                                          
                                          
                                          3General
      and administrative
                                          
                                          
                                          14Total
      operating expenses
                                          
                                          
                                          17Loss
      from operations
                                          
                                          
                                          (6
                                          )Other
      income (expense)
                                          
                                          
                                          (10)Net
      loss before benefit for income taxes
                                          
                                          
                                          (16
                                          )Income
      tax benefit
                                          
                                          
                                          4Net
      loss
                                          
                                          
                                          (12
                                          )%





Year
ended December 31, 2008 compared with year ended December 31, 2007





One principal event affected the
Company's financial results in 2008 and 2007.   Despite the
Company's efforts to restructure its debts, continuing deterioration of the
Company's financial condition during April and May 2007 caused the Board of
Directors to approve a voluntary surrender of the Company's assets to its
secured creditors and begin winding up its affairs.  See Item 1 –
Overview.


9





Total
sales in 2008 were $0, compared to $8,014,892 in 2007.  Gross profit
in 2008 was $0 compared to gross profit of $850,942 in 2007.  The
decreases in sales and gross profit were due to the loss of the Redmond,
Washington facility of Physio-Control, Inc., a subsidiary of Medtronic, Inc. and
a key customer of the Company, due to regulatory actions taken by the United
States FDA against Physio-Control, Inc. that were unrelated to the Company; the
closure and sale of the MicroCoax Assembly Solutions division and the wind down
of microHelix, Inc., and the wind down and sale of the assets of
Moore.





Total
operating expenses in 2008 were $4,061,564 compared to $1,319,039 in
2007.  The increase was due primarily to warrants issued for financial
advisory services and was offset by head count reductions that reduced salary
and related benefits expenses, reduced consultant expenses, the closure and sale
of the MicroCoax Assembly Solutions division and the wind down of Moore and
microHelix, Inc., and the wind down and sale of the assets of
Moore.





Sales and
marketing expenses for 2008 were $0 compared to $217,379 in
2007.  This decrease is due to head count reductions that reduced
salary and related benefits expenses, reduced consultant expenses, the closure
and sale of the MicroCoax Assembly Solutions division and the wind down of
microHelix, Inc., and the wind down and sale of the assets of
Moore.





General
and administrative expenses for 2008 were $4,061,564 compared to $1,101,660 in
2007.  The increase was due to warrants issued for financial advisory
services and was offset by head count reductions that reduced salary and related
benefits expenses, reduced consultant expenses, the closure and sale of the
MicroCoax Assembly Solutions division and the wind down of the Company and the
wind down and sale of the assets of Moore.





Net other
expense for 2008 was $352,715 compared to net other expense of $781,169 for
2007.  The difference was the higher income in 2007 associated with
debt forgiveness and change in the warrant valuation offset by the higher
amortization of note discount, loan restructuring expenses, higher interest
rates, impairment of intangible assets (including goodwill), and the loss on
disposal of equipment.





Net loss
for 2008 was $4,413,279 compared to a net loss of $951,121 in 2007.





Liquidity
and Capital Resources





As of
December 31, 2008, the Company had $98,433 of cash. Cash used in operating
activities during 2008 was $291,907 compared to cash provided by operating
activities of $3,117,188 in the same period a year ago.  The use of
funds included a net loss of $4,413,279, debt forgiveness of $329,742, and a net
decrease in accounts payable of $57,786, offset by an increase in accrued
liabilities of $289,853, warrants issued for advisory services of $3,598,971,
and amortization of debt discount of $659,981.





For the
twelve-month period ending December 31, 2008 the Company had cash provided by
financing activities of $384,543 as compared to $3,244,071 from financing
activities during the twelve months ended December 31, 2007.  The
primary source of cash from financing activities for the twelve month period
ending December 31, 2008 was advances on notes payable from the Company’s
secured creditor.





During
April and May 2007, the Company's financial condition deteriorated significantly
from the loss of a major customer (due to regulatory actions taken against that
customer by the United States FDA that were unrelated to the Company), loss of
key personnel, and continuing and accelerating operating deficits.  On
May 31, 2007 the Company surrendered its assets to its secured creditors
and began winding up its affairs.  The Company's secured lenders sold
the assets of the MicroCoax Assembly division during July 2007 and the assets of
Moore to an unrelated third party in September 2007.  Proceeds from
these sales and the liquidation of accounts receivable and other assets were
used to partially repay the amounts due under various secured lending
agreements.  At the conclusion of business operations in September
2007, the Company still owed its secured lenders approximately
$365,536.   In connection with the asset surrender, the Company
stopped paying its unsecured creditors for goods and services provided prior to
May 21, 2007.  To ensure an orderly transition, the Company's
customers agreed to a substantial price increase, provided raw materials and
subsidized certain expenses which allowed Moore to fill its backlog, collect its
accounts receivable and cure certain outstanding deficiencies in rent payments
and benefits plans.  On September 28, 2007, Moore and the Company
discontinued all manufacturing operations and sold their remaining assets to an
unrelated third party.


10





The
following description of the Company's principal debt at March 31, 2009
should be read in the context of the foregoing paragraph.  See also
Notes 2, 6 and 12 to the Company's Consolidated Financial
Statements.





On March
12, 2007, the Company obtained an additional loan from MH Financial Associates,
LLC (“MH Financial”) of $750,000.  In connection with the additional
loan, the original note (the "Original Note") evidencing then-existing debt owed
to MH Financial was amended (the "Amended Note") to reflect a revised principal
amount of $1,778,964, which bore interest at a rate of 12% per annum ("Current
Interest").  The Amended Note replaced and superseded the Original
Note.  Additional interest accrued on the Amended Note at a rate of 8%
per annum, which was compounded quarterly and was payable at maturity ("Deferred
Interest").  The Company made separate payments with respect to
$1,006,086 of the principal under the Original Note ("Loan 1") and with respect
to $750,000 of the principal added in the Amended Note ("Loan
2").  Beginning April 19, 2007 and on the same day of each subsequent
month, microHelix was to pay $20,000 per month to be applied to Current Interest
and principal on Loan 1 and $7,500 per month of Current Interest on Loan
2.  On September 30, 2007, the Company was to make an additional
payment of accrued Current Interest through that date with regard to Loan
2.  Beginning on October 31, 2007, and on the last day of each
subsequent month through and including May 31, 2008, the Company was to pay
$87,555 per month to be applied against the Current Interest and principal
balance of Loan 2.  All amounts outstanding under the Amended Note,
including the Deferred Interest, were due and payable on June 30,
2008.





The
Amended Note continues to be secured by a lien against substantially all of the
assets of microHelix and Moore, including all of the outstanding Common Stock of
Moore.   MH Financial may accelerate all amounts due under the
Amended Note in the event of default.  In addition, all amounts
outstanding under the Amended Note are due and payable upon the sale of all or
substantially all of our assets to anyone other than MH Financial, or upon the
transfer of ownership of more than 50% of the stock.





The
Company used $153,698 of the proceeds from Loan 2 of the Amended Note to pay in
full a promissory note previously issued to James M. Williams, one of the
Company's former directors.  The remaining proceeds were used to make
payments to certain vendors and to fund operating costs.  In
connection with Loan 2, microHelix issued warrants to MH Financial to purchase
666,667 shares of Common Stock at an initial exercise price of $0.015 per
share.  All but 13,332 of these warrants were exercised in
2008.  The remaining warrants to purchase 13,332 shares of our Common
Stock expire on March 11, 2010.  In connection with the Amended
Note, the right to convert the Original Note into shares of our Common Stock was
cancelled.





As
additional consideration to MH Financial for extending additional credit to the
Company in connection with the Amended Note, the Board of Directors approved
(subject to approval by the shareholders) the sale (the "Sale") to MH Financial
or its assigns of all of the MicroCoax division's assets, which comprise
substantially all of the operating assets, and all issued and outstanding shares
of Moore.  The closing date for the sale was to be no later than
September 30, 2007, and would be subject to certain terms and conditions,
including approval by microHelix's shareholders.  Shareholder approval
for the Sale was not requested and the Sale did not occur.





The
Company also agreed to use commercially reasonable efforts to obtain shareholder
approval at the 2007 annual meeting for the Sale and for an increase of the
authorized capital stock to 75,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock.  Such approval was obtained at a special
meeting of shareholders on January 15, 2008.


11





On
March 12, 2007 the Company was in default under the Original
Note.  On that date, the Company and MH Financial entered into a
Forbearance and Waiver Agreement (the "Forbearance Agreement") under which MH
Financial agreed to forbear with respect to the  Company’s defaults
and agreed to waive certain of the obligations to register shares of Common
Stock owned by MH Financial pursuant to the Registration Rights Agreement dated
October 19, 2006 between us and MH Financial.   As
consideration for the Forbearance Agreement, we issued warrants to MH Financial
to purchase 193,333 shares of Common Stock at an exercise price of $0.015 per
share.  All of these warrants were exercised in 2008.  As
additional consideration for the Forbearance Agreement, the Company also agreed
to reduce the exercise price to $0.015 per share for warrants to purchase
188,741 shares of our Common Stock issued to MH Financial pursuant to the
Original Note.  After giving effect to the additional warrants issued
in connection with the Amended Note and the Forbearance Agreement, MH Financial
is the beneficial holder of approximately 55% of the Company's voting capital
stock.





On June
27, 2008 the Company refinanced the Amended Note from MH Financial by issuing a
note payable to MH Financial in the amount of $977,743.  The loan
amount included $477,743 that was owed to MH Financial as of June 27, 2008 and
an additional loan of up to $500,000.  The Company was advanced
$200,000 on June 27, 2008, $100,000 on December 31, 2008, $100,000 on February
25, 2009, and has received no additional advances against the $500,000 loan
amount.  Effective as of the date of the loan, interest will accrue on
the outstanding principal balance of the loan at a rate of 20% per
annum.  The original due date of the loan was December 27, 2008 and,
as a condition of the December 31, 2008 advance, the due date was extended to
December 27, 2009.  As an additional consideration for the initial
disbursement on June 30, 2008, the Company also issued warrants to purchase
7,466,666 shares of Common Stock at $0.001 per share to MH
Financial Associates, LLC.  MH Financial Associates, LLC has assigned these
warrants to certain of its investors as follows: (i) Aequitas
Catalyst  Fund LLC: warrants to purchase 1,166,601 shares; (ii)
Thurman Holdings 1, Limited Partnership: warrants to purchase 2,822,867 shares;
(iii) Fiserv Trust Company fbo Robert J. Jesnik: warrants to purchase 59,958
shares and (iv) CTK Capital Corporation, a corporation controlled by James M.
Williams, former Chairman of the Company’s Board of Directors: warrants to
purchase 332,384 shares.  The warrants expire June 27,
2013.





As
additional consideration for the $100,000 advance on December 31, 2008, the
Company issued warrants to purchase 1,066,667 shares of Common Stock at $0.001
per share.





As
additional consideration for the $100,000 advance on February 27, 2009, the
Company issued warrants to purchase 1,066,667 shares of Common Stock at $0.001
per share.





In all of
the above cases, warrants to purchase Common Stock were issued in reliance on
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and we obtained representations from the investors as to
their status as "accredited investors" as that term is defined in
Regulation D.





Off
Balance Sheet Arrangements





The Company does not have any off
balance sheet arrangements.





Item
8.  Financial
Statements and Supplementary Data





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport
      of Peterson Sullivan LLP  - Independent Registered Public
      Accounting Firm
                
                13Consolidated
      Balance Sheets as of December 31, 2007 and 2008
                
                14Consolidated
      Statements of Operations for the Years Ended December 31, 2007 and
      2008
                
                15Consolidated
      Statements of Shareholders' Deficit for the Years Ended December 31, 2007
      and 2008
                
                16Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007 and
      2008
                
                17Notes
      to Consolidated Financial Statements
                
                19




12




REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


microHelix,
Inc.


Lake
Oswego, Oregon





We have
audited the accompanying consolidated balance sheets of microHelix, Inc. and
Subsidiary, ("the Company") as of December 31, 2008 and 2007, and the
related consolidated statements of operations, shareholders' deficit, and cash
flows for the years then ended.  These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  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 has determined that it 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of microHelix, Inc. and
Subsidiary, as of December 31, 2008 and 2007, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern.  As discussed in Note 1
to the consolidated financial statements, the Company has experienced recurring
losses and negative cash flows from operations.  This raises
substantial doubt about the Company's ability to continue as a going
concern.  Management's plans regarding this matter are also described
in Note 1.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.





/S/
PETERSON SULLIVAN LLP





Seattle,
Washington


April 9,
2009


13


microHelix,
Inc.


CONSOLIDATED
BALANCE SHEETS


December
31, 2008 and 2007





2007
                        
                        
                        2008AssetsCurrent
      Assets:Cash
                        
                        $
                        5,797
                        
                        
                        $
                        98,433Prepaid
      expenses
                        
                        
                        22,917
                        
                        
                        
                        —Total
      current assets
                        
                        
                        28,714
                        
                        
                        
                        98,433Total
      assets
                        
                        $
                        28,714
                        
                        
                        $
                        98,433Liabilities
      and Shareholders' DeficitCurrent
      Liabilities:Accounts
      payable
                        
                        $
                        1,068,933
                        
                        
                        $
                        744,542Accrued
      liabilities
                        
                        
                        250,886
                        
                        
                        
                        257,515Current
      maturities of notes payable
                        
                        
                        198,739
                        
                        
                        
                        694,161Common
      stock warrant liability
                        
                        
                        62,822
                        
                        
                        
                        —Total
      current liabilities
                        
                        
                        1,581,380
                        
                        
                        
                        1,696,218Shareholders'
      Deficit:Preferred
      stock, convertible, no par value, 10,000,000 shares authorized, 279,070
      Series C Preferred stock issued and outstanding, liquidation preference of
      $600,000
                        
                        
                        533,000
                        
                        
                        
                        533,000Common
      stock, no par value, 75,000,000 shares authorized, 1,973,421 and 966,339
      shares issued and  outstanding at December 31, 2008 and 2007
      respectively
                        
                        
                        17,462,823
                        
                        
                        
                        17,477,917Additional
      paid-in capital
                        
                        
                        5,989,455
                        
                        
                        
                        10,342,521Accumulated
      deficit
                        
                        
                        (25,537,944
                        )
                        
                        
                        (29,951,223
                        )Total
      shareholders' deficit
                        
                        
                        (1,552,666
                        )
                        
                        
                        (1,597,785
                        )Total
      liabilities and shareholders' deficit
                        
                        $
                        28,714
                        
                        
                        $
                        98,433





The
accompanying notes are an integral part of these consolidated financial
statements.


14




microHelix,
Inc.





CONSOLIDATED
STATEMENTS OF OPERATIONS





Year Ended December31,2007
                    
                    
                    2008Sales,
      net
                    
                    $
                    8,014,892
                    
                    
                    $
                    —Cost
      of Sales
                    
                    
                    7,163,950
                    
                    
                    
                    —Gross
      profit
                    
                    
                    850,942
                    
                    
                    
                    —Operating
      Expenses:Sales
      and marketing
                    
                    
                    217,379
                    
                    
                    
                    —General
      and administrative
                    
                    
                    1,101,660
                    
                    
                    
                    4,061,564Total
      operating expenses
                    
                    
                    1,319,039
                    
                    
                    
                    4,061,564Loss
      from operations
                    
                    
                    (468,097
                    )
                    
                    
                    (4,061,564
                    )Other
      income (expense):Other
      income
                    
                    
                    —
                    
                    
                    
                    30,785Impairment
      expense-intangible assets
                    
                    
                    (242,658
                    )
                    
                    
                    —Loan
      restructuring expense
                    
                    
                    (989,079
                    )
                    
                    
                    —Warrant
      valuation gain
                    
                    
                    1,755,378
                    
                    
                    
                    62,822Debt
      forgiveness
                    
                    
                    1,107,854
                    
                    
                    
                    329,742Impairment
      expense-goodwill
                    
                    
                    (732,365
                    )
                    
                    
                    —Loss
      on disposal of equipment
                    
                    
                    (545,721
                    )
                    
                    
                    —Interest
      expense
                    
                    
                    (1,134,578
                    )
                    
                    
                    (775,064
                    )Total
      other income (expense)
                    
                    
                    (781,169
                    )
                    
                    
                    (351,715
                    )Loss
      before benefit for income taxes
                    
                    
                    (1,249,266
                    )
                    
                    
                    (4,413,279
                    )Benefit
      for Income Taxes
                    
                    
                    298,145
                    
                    
                    
                    —Net
      loss
                    
                    $
                    (951,121
                    )
                    
                    $
                    (4,413,279
                    )Loss
      per common share — basic and diluted
                    
                    $
                    (.98
                    )
                    
                    $
                    (2.42
                    )Weighted
      average number of shares outstanding — basic and diluted
                    
                    
                    966,275
                    
                    
                    
                    1,825,346





The
accompanying notes are an integral part of these consolidated financial
statements.




15




microHelix,
Inc.





CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ DEFICIT


Years
Ended December 31, 2007 and 2008





AdditionalCommon Stock
                        
                        
                        Preferred
                        
                        
                        Paid-in
                        
                        
                        AccumulatedShares
                        
                        
                        Amount
                        
                        
                        Stock Series C
                        
                        
                        Capital
                        
                        
                        Deficit
                        
                        
                        TotalBalance,
      December 31, 2006
                        
                        
                        965,672
                        
                        
                        $
                        17,462,823
                        
                        
                        $
                        533,000
                        
                        
                        $
                        6,292,850
                        
                        
                        $
                        (24,586,823
                        )
                        
                        $
                        (298,150
                        )Common
      stock issued for services
                        
                        
                        667
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,500
                        
                        
                        
                        
                        
                        
                        
                        2,500Warrants
      issued with troubled debt restructuring
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        606,239
                        
                        
                        
                        
                        
                        
                        
                        606,239Change
      in strike price for warrants
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        354,096
                        
                        
                        
                        
                        
                        
                        
                        354,096Warrants
      issued in conjunction with debt
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        551,970
                        
                        
                        
                        
                        
                        
                        
                        551,970Common
      stock warrant liability
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,818,200
                        )
                        
                        
                        
                        
                        
                        
                        (1,818,200
                        )Net
      loss for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (951,121
                        )
                        
                        
                        (951,121
                        )Balance,
      December 31, 2007
                        
                        
                        966,339
                        
                        
                        $
                        17,462,823
                        
                        
                        $
                        533,000
                        
                        
                        $
                        5,989,455
                        
                        
                        $
                        (25,537,944
                        )
                        
                        $
                        (1,552,666
                        )Common
      stock issued for exercise of warrants
                        
                        
                        1,006,229
                        
                        
                        
                        15,094
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        15,094Additional
      shares issued upon final calculation of reverse stock split
                        
                        
                        853Warrants
      issued in conjunction with debt
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        754,095
                        
                        
                        
                        
                        
                        
                        
                        754,095Warrants
      issued for advisory services
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        3,598,971
                        
                        
                        
                        
                        
                        
                        
                        3,598,971Net
      Loss for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (4,413,279
                        )
                        
                        
                        (4,413,279
                        )Balance
      , December 31, 2008
                        
                        
                        1,973,421
                        
                        
                        $
                        17,477,917
                        
                        
                        $
                        533,000
                        
                        
                        $
                        10,342,521
                        
                        
                        $
                        (29,951,223
                        )
                        
                        $
                        (1,597,785
                        )




The
accompanying notes are an integral part of these consolidated financial
statements.


16




microHelix,
Inc.


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Year Ended December 31,2007
                    
                    
                    2008Cash
      Flows Provided By (Used In) Operating Activities:Net
      loss
                    
                    $
                    (951,121
                    )
                    
                    $
                    (4,413,279
                    )Adjustments
      to reconcile net loss to cash provided by (used in) operating
      activities:Depreciation-property
      and equipment
                    
                    
                    266,510
                    
                    
                    
                    —Goodwill
      impairment
                    
                    
                    732,365
                    
                    
                    
                    —Amortization-intangible
      assets
                    
                    
                    107,454
                    
                    
                    
                    —Intangible
      assets impairment
                    
                    
                    242,658
                    
                    
                    
                    —Change
      in provision for doubtful accounts
                    
                    
                    (3,206
                    )
                    
                    
                    —Change
      in provision inventory reserves
                    
                    
                    (404,476
                    )
                    
                    
                    —Common
      stock issued for services
                    
                    
                    2,500
                    
                    
                    
                    —Benefit
      from deferred income taxes
                    
                    
                    (298,145
                    )
                    
                    
                    —Debt
      forgiveness
                    
                    
                    (1,107,854
                    )
                    
                    
                    (329,742
                    )Loan
      restructuring costs
                    
                    
                    992,270
                    
                    
                    
                    —Warrants
      issued for advisory services
                    
                    
                    —
                    
                    
                    
                    3,598,971Warrant
      valuation gain
                    
                    
                    (1,755,378
                    )
                    
                    
                    (62,822
                    )Loss
      on disposal of equipment
                    
                    
                    545,721
                    
                    
                    
                    —Interest
      expense-amortization
                    
                    
                    706,322
                    
                    
                    
                    659,981Change
      in operating assets and liabilities:(Increase)
      Decrease in assets:Accounts
      receivable
                    
                    
                    1,908,866
                    
                    
                    
                    —Inventories
                    
                    
                    2,004,879
                    
                    
                    
                    —Prepaid
      expenses and other current assets
                    
                    
                    20,775
                    
                    
                    
                    22,917Increase
      (Decrease) in liabilities:Accounts
      payable
                    
                    
                    473,993
                    
                    
                    
                    (57,786
                    )Accounts
      payable-related parties
                    
                    
                    (8,232
                    )
                    
                    
                    —Accrued
      liabilities
                    
                    
                    (358,713
                    )
                    
                    
                    289,853Net
      cash provided by (used in) operating activities
                    
                    
                    3,117,188
                    
                    
                    
                    (291,907
                    )Cash
      Flows Provided by Investing Activity:Proceeds
      from sale of equipment
                    
                    
                    92,000
                    
                    
                    
                    —Net
      cash provided by investing activity
                    
                    
                    92,000
                    
                    
                    
                    —Cash
      Flows Provided by (Used in) Financing Activities:Proceeds
      from (repayments of) line of credit , net
                    
                    
                    (1,897,432
                    )
                    
                    
                    —Payments
      on notes payable
                    
                    
                    (1,817,242
                    )
                    
                    
                    —Proceeds
      from exercise of warrants
                    
                    
                    —
                    
                    
                    
                    15,094Payment
      on notes payable to shareholders
                    
                    
                    (150,000
                    )
                    
                    
                    —Checks
      issued in excess of bank balances
                    
                    
                    (129,397
                    )
                    
                    
                    —Proceeds
      from issuance of notes payable to shareholders
                    
                    
                    750,000
                    
                    
                    
                    369,449Net
      cash provided by (used in) financing activities
                    
                    
                    (3,244,071
                    )
                    
                    
                    384,543Change
      in cash
                    
                    
                    (34,883
                    )
                    
                    
                    92,636Cash,
      beginning of year
                    
                    
                    40,680
                    
                    
                    
                    5,797Cash,
      end of year
                    
                    $
                    5,797
                    
                    
                    $
                    98,433





The
accompanying notes are an integral part of these consolidated financial
statements.


17


MICROHELIX,
INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS, (CONTINUED)


Years
Ended December 31, 2007 and 2008





Year Ended December 31,2007
                          
                          
                          2008Supplemental
      disclosure of cash flow information — Cash paid for
    interest
                          
                          $
                          205,089
                          
                          
                          $
                          —Supplemental
      disclosure of non-cash Financing Activities:Common
      stock warrant liability
                          
                          $
                          1,818,200
                          
                          
                          $
                          —Warrants
      issued to lenders-recorded as debt discount
                          
                          $
                          551,970
                          
                          
                          $
                          754,095Reclassification
      of note payable to accounts payable
                          
                          $
                          —
                          
                          
                          $
                          63,137Refinance
      of accrued interest to note payable
                          
                          $
                          —
                          
                          
                          $
                          283,224




The
accompanying notes are an integral part of these consolidated financial
statements.


18


MICROHELIX,
INC.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 1.  Summary
of Significant Accounting Policies
 
 Nature of Operations— Until
September 28, 2007, when microHelix, Inc (“the Company”) suspended
manufacturing operations and concluded the disposition of its assets to its
secured creditors, the Company was a manufacturer of custom cable assemblies and
mechanical assemblies for the medical and commercial original equipment
manufacturer (OEM) markets.  On May 31, 2007, the Company
surrendered substantially all its assets to its secured creditors and concluded
the disposition of all the Company's assets September 28, 2007, after which
microHelix became a shell company (see "Going Concern") that will seek out
suitable business combinations.  Management believes that presentation
of discontinued operations would not be appropriate since substantially all of
the Company’s operations have been discontinued.
 
 On June
27, 2008 the Company entered into an advisory services agreement with Aequitas
Capital Management, Inc. (“Aequitas”) under which Aequitas began to provide
strategy development, strategic planning, marketing, corporate development and
other such advisory services that the Company reasonably requests from time to
time, under direction of the Company’s Board of Directors for a monthly fee of
$10,000 and reimbursement of expenses.  In addition a warrant for
1,066,667 shares of Company stock with an exercise price of $0.001 per share was
issued to Aequitas in 2008 on the inception of Aequitas service on June 27, 2008
(see Note 9).  Under a separate agreement the Company has obligation
to pay Aequitas $5,000 per month for certain services related to occupancy of
Aequitas facilities and information technology support related
thereto.  In addition to advising and servicing the Company, Aequitas
is also manager of MH Financial Associates, LLC and Aequitas Catalyst, LLC which
are two of the Company’s largest shareholders.
 
 Principles of
Consolidation—The consolidated financial statements include the accounts
of microHelix, Inc. (including its MicroCoax Assembly Solutions division) and
its wholly owned subsidiary, Moore Electronics, Inc. (“Moore”).  All
intercompany transactions have been eliminated.
 
 Use of Estimates— The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results
could differ from those estimates.
 
 Going Concern—Despite the Company's efforts
to restructure its debts, continuing deterioration of the Company's financial
condition during April and May 2007 caused the Board of Directors to conclude
that the Company's creditors and shareholders would be best served by allowing
the secured creditors to foreclose on the Company's assets.  The
Company agreed to voluntarily surrender its assets on May 31, 2007 and
began winding up its affairs.  In connection with the windup, the
Company stopped paying its unsecured creditors for goods and services provided
prior to May 21, 2007.  To ensure an orderly transition, the
Company's customers agreed to substantial price increases, provided raw
materials and subsidized certain expenses which allowed Moore to fill its
backlog, collect its receivables and cure outstanding deficiencies in rent
payments and benefits plans.  The Company applied the proceeds from
filling these orders to the outstanding balances due to its secured
creditors.
 
 These
consolidated financial statements reflect the shutdown (discontinuance) of the
MicroCoax Assembly Solutions division which occurred May 23,
2007.  The division's assets were sold to an unrelated third party for
$17,000 during July 2007.  The Company's Moore subsidiary continued to
operate for the benefit of the secured creditors through September 28, 2007
after which its assets were sold to an unrelated third party for
$75,000.  These sales resulted in a $545,721 loss on disposal of
equipment.
  19
  These
consolidated financial statements have been prepared on a going concern basis
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.  The Company has incurred recurring
net losses, had an accumulated deficit of $29,951,223 at December 31, 2008, and
has no current business operations.  These conditions raise
substantial doubt about the Company’s ability to continue as a going concern for
a reasonable period of time.  These consolidated financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities that
may be necessary should the Company be unable to continue as a going
concern.
 
 Cash Equivalents— For the
purpose of the statements of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any debt or obligations.  The Company maintains its
cash in bank accounts which, at times, may exceed federally insured
limits.  The Company has not experienced any losses in such
accounts.
 
 Goodwill and Other Intangible Assets— Goodwill represented the excess of the purchase price over the
estimated fair value of the net identified tangible and intangible assets of the
acquired business.  Goodwill must be tested for impairment at least on
an annual basis, or more frequently when a significant event occurs or
circumstances change.
 
 During
April and May 2007, the Company's financial condition deteriorated significantly
from the loss of a major customer (due to regulatory actions taken against that
customer), loss of personnel, and continuing operating deficits.  On
May 31, 2007 the Company surrendered its assets to its secured creditors
and began winding up its affairs.  In connection with the windup, the
Company determined that its Goodwill was impaired and recorded a charge of
$732,365 as of June 30, 2007, writing down the value of its Goodwill to
$0.
 
 As a
result of the Company's purchase of Moore in April 2005, the Company acquired
identifiable defined life intangible assets such as customer contacts and lists
and manufacturing process technology.  The customer lists and contacts
were amortized on a straight-line basis over a three-year period and the
manufacturing process technology was amortized over a five-year period on a
straight-line basis.  The Company continued to amortize these
identifiable intangible assets over these lives until the quarter ending June
30, 2007 when the Company, for the reasons listed in the previous paragraph,
recorded a charge of $242,658 reducing the value of its intangible assets to
$0.  The impairment was calculated using the discounted cash flows
expected to be derived from the remaining use of the assets in
2007.
 
 Revenue Recognition— The
Company recognized revenues from commercial sales of cable assemblies and
related supplies when title passed (which was upon shipment); persuasive
evidence of an agreement existed, the price was fixed or determinable, and
collectability was probable.  Commercial sales were made F.O.B. point
of shipment. Returns were limited to nonconforming products.  The
Company expensed shipping and handling costs as incurred, which were included in
operating expense.  Shipping costs recovered from customers, if any,
were included in net sales.
 
 Income Taxes— The Company
accounts for income taxes in accordance with Statement of Financial Accounting
Standards, No. 109, Accounting for Income Taxes.  Deferred income
taxes result primarily from temporary differences between financial and tax
reporting.  Deferred tax assets and liabilities are determined based
on the differences between the financial statement bases and tax bases of assets
and liabilities using enacted tax rates.  A valuation allowance is
recorded to reduce a deferred tax asset to that portion of the deferred tax
asset that is expected to more likely than not be realized.
 
 The
Company accounts for unrecognized tax benefits in accordance with FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109” (FIN 48).  The Company has
not recorded any liabilities for uncertain tax positions or any related interest
or penalties.
  20
  Fair Value of Financial Instruments— The carrying value of the Company's accounts payable, other accrued
liabilities, and notes payable approximate their estimated fair values due to
the relatively short maturities of those instruments.
 
 Comprehensive Loss— The
Company has no components of Other Comprehensive Income (Loss) and, accordingly,
no Statement of Comprehensive Income (Loss) has been included in the
accompanying consolidated financial statements.
 
 Net Loss per Share— The
Company uses SFAS No. 128, "Earnings per Share" for calculating the basic and
diluted loss per share.  Basic loss per share is computed by dividing
net loss attributable to common stockholders by the weighted average number of
common shares outstanding.   Because the Company recorded a loss
for the years ended December 31, 2008 and 2007 the issuance of shares from
the conversion of preferred stock or warrants would be
anti-dilutive.  Basic and diluted losses per common share were
identical for these periods.  The Company computed dilutive shares
using the treasury method.
 
 For the
year ended December 31, 2008, the outstanding number of potentially
dilutive common shares totaled 9,843,510 shares of Common Stock, consisting of
Series C Preferred Stock convertible into 186,047 shares of Common Stock, and
warrants to purchase 9,657,464 shares of Common Stock.  At December
31, 2007, the outstanding number of potentially dilutive common shares totaled
1,250,985 shares of Common Stock, consisting of Series C Preferred Stock
convertible into 186,047 shares of Common Stock and warrants to purchase
1,064,938 shares of Common Stock.
 
 Operating Segments and Reporting
Units— The Company operated as a single business segment and reporting
unit.  For the year ended December 31, 2007, substantially all
revenues had been derived from domestic operations.
 
 2.  Terms
of Troubled Debt Modification
 
 At
December 31, 2006, the Company's Original Note payable to MH Financial, with an
outstanding principal balance of $1,006,086 was outstanding.  The
Original Note was due in July 2007.  Effective March 12, 2007 the
Company and MH Financial modified the terms of the Original Note as
follows:
 (a)
              MH
      Financial loaned the Company an additional
  $750,000;
 
 (b)
              The
      due date of the Original Note was extended to June 30,
    2008;
 
 (c)
              MH
      Financial's right to convert the Original Note into shares of Company
      Common Stock was cancelled;
 
 (d)
              The
      Company issued MH Financial a warrant to purchase 666,667 shares of the
      Common Stock with an exercise price of $0.015 per
  share;
 
 (e)
              The
      exercise price on warrants to purchase 153,102 shares of Common Stock
      previously issued to MH Financial was reduced from $4.50 to $0.015 per
      share; and
 
 (f)
              The
      Company issued MH Financial a warrant to purchase 193,333 shares of the
      Company's Common Stock with an exercise price of $0.015 per share, as
      consideration for MH Financial's forbearance of certain defaults under the
      Original Note.
 
 The
foregoing modifications to the Original Note resulted in an effective interest
rate of 54.7% to be applied prospectively to the carrying amount of the debt.
Interest expense through the revised maturity date of June 30, 2008 was
increased accordingly.  For accounting and financial reporting
purposes, this modification is characterized as troubled debt
restructuring.  Accordingly, the costs associated with this
modification have been expensed in the period of the
restructuring.  There was no gain implicit in this restructuring
because total principal and interest payments under the modified debt terms
exceed the net carrying value of the original debt.
  21
  As
additional consideration to, and as a requirement of, MH Financial extending
additional credit to microHelix and modifying the Original Note, the Company’s
Board of Directors approved the Sale (“the Sale”) to MH Financial or its assigns
of all of microHelix’s MicroCoax Assembly Solutions division’s assets, which
comprised substantially all of the Company’s operating assets, and all issued
and outstanding shares of Moore.  The closing date for the Sale was to
be no later than September 30, 2007, and would be subject to certain terms and
conditions, including approval by microHelix's
shareholders.  Shareholder approval for the Sale was not requested and
the Sale did not occur.
 
 3.  Summary
of Recent Accounting Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations", which
replaces SFAS No. 141. SFAS No. 141(R) establishes principles and requirements
for how an acquiror recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any non-controlling
interest in the acquiree and the goodwill acquired.  The Statement
also establishes disclosure requirements which will enable users to evaluate the
nature and financial effects of the business combination.  SFAS 141
(R) is effective for fiscal years beginning after December 15,
2008.  The adoption of SFAS 141(R) will have an impact on accounting
for business combinations once adopted, but the effect is dependent upon the
acquisitions at that time.
 
 In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements-an amendment of Accounting Research Bulletin
No. 51", which establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent, the
amount of consolidated net income attributable to the parent and to the
non-controlling interest, changes in a parent's ownership interest and the
valuation of retained non-controlling equity investments when a subsidiary is
deconsolidated.  The Statement also establishes reporting requirements
that provide sufficient disclosures that clearly identify and distinguish
between the interest of the parent and the interests of the non-controlling
owners.  SFAS No. 160 is effective for fiscal years beginning after
December 15, 2008.  The Company is evaluating the potential
impact of SFAS No. 160 will have on its consolidated financial
statements.
 
 4.
Major Customers
 
 In
2007, sales to four customers represented 49% of the Company’s total
sales.  No other customer in 2007 accounted for more than 10% of
sales.
 
 On
January 16, 2007, one of the Company’s major customers informed the Company that
one of its divisions had temporarily suspended shipments of products
manufactured at its production facility to customers in the United
States.  According to the customer, the decision to suspend U.S.
product shipments was made to address quality system issues in its production
facility that had been identified by the customer and the U.S. Food and Drug
Administration and were unrelated to the Company, the closure and sale of the
MicroCoax Assembly Solutions division, and the wind down of the Moore
Electronics wholly owned subsidiary.
 
 The
Company had no customers in 2008.
 
 5.
Line of Credit
 
 The
Company had a revolving line of credit with an asset-based
lender.  The line of credit was fully secured by accounts receivable
and inventory.  All amounts owing under the line of credit were paid
in 2007.
  22
  6.  Notes
Payable
 A summary
of the Company's notes payable outstanding as of December 31, 2008 and 2007 is
as follows:
 
 2008
                        
                        
                        2007MH
      Financial Associates, LLC
                        
                        $
                        777,743
                        
                        
                        $
                        125,070EPICOR
      Software Corporation
                        
                        
                        —
                        
                        
                        
                        63,137Other
                        
                        
                        10,532
                        
                        
                        
                        10,532Total
      Notes Payable
                        
                        
                        788,275
                        
                        
                        
                        198,739Debt
      discountsWarrants
      issued with MH Financial note
                        
                        
                        ( 94,114
                        )
                        
                        
                        —Notes
      Payable, net
                        
                        
                        694,161
                        
                        
                        
                        198,739Current
      maturities
                        
                        
                        (694,161
                        )
                        
                        
                        (198,739
                        )$
                        —
                        
                        
                        $
                        —
 
 The note
payable to EPICOR Software Corporation at December 31, 2007 was partially
settled and reclassified to accounts payable in 2008.
 
 The
Original MH Financial Note required the Company to make monthly payments of
$20,000 (including interest at 10% until July 19, 2007 and 14%
thereafter).  All principal and unpaid interest was due at maturity on
July 19, 2008.  The Original Note was secured by substantially
all of the Company's assets.  As of December 31, 2006, the
Original Note was convertible into 228,663 shares of Common Stock based on a
stated conversion rate of $4.50.  After giving value to warrants
issued in conjunction with the Original Note (see Note 9), the effective
conversion rate was less than the market price of the common stock at the
commitment date.  The resulting beneficial conversion feature was
valued at $37,729.  The conversion feature of the Original Note was
cancelled in March 2007 (see Note 2).
 
 On
March 12, 2007 the Company modified the Original Note owed to MH Financial
by executing the Amended Note.  See Note 2 - Terms of Troubled Debt
Modification.
 
 On
June 27, 2008 the Company refinanced the Amended Note from MH Financial by
issuing a new note payable in the amount of $977,743.  The loan amount
included $477,743 that was owed to MH Financial as of June 27, 2008 and an
additional loan of up to $500,000.  The Company was advanced $200,000
on June 27, 2008, and $100,000 on December 31, 2008.  Effective as of
the date of this loan, interest will accrue on the outstanding principal balance
of the loan at a rate of 20% per annum on the outstanding principal
balance.  The original due date of the loan was December 27, 2008 and,
as a condition of the December 31, 2008 advance, the due date was extended to
December 27, 2009.
 
 7.
Liability for Potentially Dilutive Securities in Excess of Authorized Number of
Common Shares
 
 In
accordance with EITF 00-19, the Company accounts for potential shares that can
be converted to Common Stock, which are in excess of authorized shares, as a
liability that is recorded at fair value.  Total potential outstanding
Common Stock exceeded the Company’s authorized shares on March 12, 2007 when the
Company restructured its debt with MH Financial.  In this process the
Company issued 860,000 warrants.  At that time total warrants and
convertible preferred stock allowed the holder to purchase approximately 579,867
shares over the current authorized amount.  The fair value of the
warrants in excess of the authorized shares at March 12, 2007 was $1,818,200 and
was recognized as a liability on March 12, 2007.  This liability is
required to be evaluated at each reporting date with any change in value
included in the other income/(expense) until such time as enough shares are
authorized to cover all potentially convertible instruments.  As of
December 31, 2007 the Company had recorded $1,755,378 in income related to the
change in the fair value of its potential liability.  As discussed in
Note 9, the Company increased its authorized shares in 2008 such that the
potentially dilutive securities no longer exceeded the authorized number of
common shares.  As such the Company reversed the remaining $62,822
liability to income.
  23
  8.  Income
Taxes
 
 Deferred
income taxes, reflecting the net tax effects of temporary differences between
the carrying amount of assets and liabilities recognized for financial reporting
purposes and the amounts recognized for income tax purposes, are based on tax
laws currently enacted.
 
 The
components of deferred tax asset are as follows:
 For the year ended
                                    December 31,2007
                                  
                                  
                                  2008Federal
      net operating loss carry forwards
                                  
                                  $
                                  6,674,000
                                  
                                  
                                  $
                                  7,512,000State
      net operating loss carry forwards
                                  
                                  
                                  1,298,000
                                  
                                  
                                  
                                  637,000Deferred tax asset
                                  
                                  
                                  7,972,000
                                  
                                  
                                  
                                  8,149,000Valuation
      allowance
                                  
                                  
                                  (7,972,000
                                  )
                                  
                                  
                                  (8,149,000
                                  )Net deferred tax asset
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —
 
 As of
December 31, 2008 the Company had federal and state net operating loss
carry forwards of approximately $22.1 million and $14.6 million respectively,
expiring during the years 2013 through 2028.
 
 The
utilization of the tax net operating loss carry forwards may be limited due to
ownership changes that have occurred as a result of substantial exercises of
warrants.
 
 The
Company’s tax returns are open to audit for the years ended December 31, 2005 to
2008.
 
 A benefit
for income taxes of $298,145 has been recorded for the year ended December 31,
2007, due to the Company's amortization of its deferred tax liability related to
the acquisition of Moore and in accordance with FASB 109.  The
differences between the benefit for income taxes and income taxes computed using
the U.S. federal income tax rate was as follows:
 
 For the year ended
                              December 31,2007
                            
                            
                            2008Benefit
      computed using statutory rate (34%)
                            
                            $
                            (425,000
                            )
                            
                            $
                            (1,501,000
                            )Change
      in Valuation Allowance
                            
                            
                            632,000
                            
                            
                            
                            177,000Change
      in net operating loss carry forwards based on filed income tax
      returns
                            
                            
                            —
                            
                            
                            
                            1,036,000Goodwill
      and Other Intangibles Impairment (permanent difference)
                            
                            
                            417,000
                            
                            
                            
                            —Common
      Stock Warrant Valuation Gain (permanent difference)
                            
                            
                            (597,000
                            )
                            
                            
                            597,000Other
      Permanent Differences
                            
                            
                            76,000
                            
                            
                            
                            (18,000
                            )Amortization
      of Deferred Tax Liability
                            
                            
                            (298,145
                            )
                            
                            
                            —State
      Income Taxes
                            
                            
                            (103,000
                            )
                            
                            
                            (291,000
                            )Benefit
      for Income Taxes
                            
                            $
                            (298,145
                            )
                            
                            $
                            —
  24
  SFAS No.
109,Accounting for Income
Taxes, requires that the tax benefit of net operating losses, temporary
differences, and credit carry forwards be recorded as an asset to the extent
that management assesses that realization is "more likely than
not."  Realization of the future tax benefits is dependent on the
Company's ability to generate sufficient taxable income within the carry forward
period.  Because of the Company's current operating losses, management
has provided a 100% valuation allowance for its net deferred tax
assets.
 
 9.  Shareholders'
Deficit
 
 Preferred Stock —As of
December 31, 2008 the Company was authorized to issue 10,000,000 shares of
preferred stock, 279,070 of which are designated Series C Preferred Stock,
no par value ("Series C Preferred Stock"), all of which are issued and
outstanding.
 
 The
Series C Preferred Stock is owned by MH Financial.  Each share of
Series C Preferred Stock is initially convertible into 0.66667 shares of
Common Stock.  If the Series C Preferred Stock were
convertedusing the
initial conversion ratio, microHelix would issue 186,047 shares of Common
Stock.
 
 Stock Warrants —Prior to
2007, the Company issued 44,131 warrants which are still exercisable as
follows:
 
 Warrants
                            
                            
                            Exercise Price
                            
                            Expiration Date31,867
                            
                            
                            
                            $
                            3.75
                            
                            
                            April
      20154,861
                            
                            
                            
                            $
                            7.20
                            
                            
                            June
      20166,667
                            
                            
                            
                            $
                            7.50
                            
                            
                            July
      2011736
                            
                            
                            
                            $
                            407.70
                            
                            
                            March
      2012
 
 On
March 12, 2007 the Company modified its note payable owed to MH
Financial.  See Note 2 - Terms of Troubled Debt
Modification.  In connection with such modification, the Company
issued warrants that grant MH Financial the right to purchase 666,667 shares of
Common Stock of the Company at an exercise price of $0.015 per
share.  All but 13,332 of these warrants were exercised in
2008.  The remaining warrants expire on March 11,
2010.  The warrants had a fair value relative to the fair value of the
associated debt of $551,970 calculated using the Black-Scholes option pricing
model with the following assumptions:
 
 Expected
      life (in years)
                              
                              
                              1Expected
      volatility
                              
                              
                              75.94
                              %Risk-free
      interest rate
                              
                              
                              4.96
                              %Expected
      dividend
                              
                              
                              —
 
 Also on
March 12, 2007, the Company issued warrants that grant MH Financial the right to
purchase 193,333 shares of Common Stock with an exercise price of $0.015 per
share as consideration under a forbearance agreement.  All of these
warrants were exercised in 2008.  The warrants had a fair value of
$606,239 (recorded as loan restructure expense) calculated using the
Black-Scholes option pricing model with the following assumptions:
 
 Expected
      life (in years)
                      
                      
                      1Expected
      volatility
                      
                      
                      75.94
                      %Risk-free
      interest rate
                      
                      
                      4.96
                      %Expected
      dividend
                      
                      
                      —
  25
  Also on
March 12, 2007, the Company agreed to reduce the exercise price from $4.50 to
$0.015 on warrants to purchase 153,102 shares of Common Stock previously granted
to MH Financial.  All of these warrants were exercised in 2008. The
change in the fair value of the warrants of $354,096 (recorded as loan
restructure expense) had been calculated using the Black-Scholes option pricing
model with the following assumptions:
 
 Expected
      life (in years)
                    
                    
                    1Expected
      volatility
                    
                    
                    75.94
                    %Risk-free
      interest rate
                    
                    
                    4.96
                    %Expected
      dividend
                    
                    
                    —
 
 As
described in Note 6, on June 27, 2008 the Company refinanced the Amended Note
from MH Financial by issuing a new note payable in the amount of
$977,743.  As a condition of the initial disbursement on June 30,
2008, the Company also issued warrants to purchase 7,466,666 shares of Common
Stock at $0.001 per share.  The warrants expire June 27,
2013.   The warrants have a fair value relative to the fair value
of the associated debt of $659,981 calculated using the Black-Scholes option
pricing model with the following assumptions:
 
 Expected
      life (in years)
                      
                      
                      1Expected
      volatility
                      
                      
                      202.46
                      %Risk-free
      interest rate
                      
                      
                      1.15
                      %Expected
      dividend
                      
                      
                      —
 
 The
Company also issued warrants on June 27, 2008 that grant Aequitas Capital
Management the right to purchase 1,066,667 shares of Common Stock with an
exercise price of $0.001 per share as consideration for financial advisory
services.  The warrants expire on June 27, 2013.  The
warrants have a fair value of $3,598,971 (recorded as general and administrative
expense) calculated using the Black-Scholes option pricing model with the
following assumptions:
 
 Expected
      life (in years)
                    
                    
                    1Expected
      volatility
                    
                    
                    202.46
                    %Risk-free
      interest rate
                    
                    
                    1.15
                    %Expected
      dividend
                    
                    
                    —
 
 On
December 31, 2008 the Company received a $100,000 advance against the loan the
Company obtained from MH Financial on June 27, 2008.  As additional
consideration for this $100,000 disbursement, the Company also issued warrants
to purchase 1,066,667 shares of Common Stock at $0.001 per share.  The
warrants expire December 31, 2013.   The warrants have a fair
value relative to the fair value of the associated debt of $94,114 calculated
using the Black-Scholes option pricing model with the following
assumptions:
 
 Expected
      life (in years)
                    
                    
                    1Expected
      volatility
                    
                    
                    285.29
                    %Risk-free
      interest rate
                    
                    
                    0.37
                    %Expected
      dividend
                    
                    
                    —
 
 Common Stock-During 2007 the
Company issued 667 shares of Common Stock to various members of the Board of
Directors for services rendered valued at $2,500.
 
 During
2008, MH Financial and its affiliates exercised warrants to purchase 1,006,229
shares of Common Stock for $15,094.
 
 On
January 15, 2008 at a special meeting the shareholders, the Company's
shareholders voted to amend the Company’s Amended Articles of Incorporation, as
amended (the “Articles”) to increase the number of shares of Common Stock the
Company is authorized to issue to 75,000,000 and the number of shares of
Preferred Stock the Company is authorized to issue to 10,000,000.
  26
  On
March 19, 2008 at a special meeting of the shareholders the Company's
shareholders voted to amend the Articles to effect a reverse split of the
Company's Common Stock in which every 15 shares of Common Stock held by a
shareholder was reduced to one share of Common Stock.  The
consolidated financial statements, notes, and other references to share and per
share data in this Annual Report on Form 10-K have been retroactively restated
to reflect the reverse stock split for all periods presented.
 
 10.  Related-Party
Transactions
 
 There are
no transactions with the affiliates or related parties that impact
sales.
 
 On June
27, 2008 the Company entered into an advisory services agreement with Aequitas
Capital Management, Inc. (“Aequitas”) under which Aequitas began to provide
strategy development, strategic planning, marketing, corporate development and
other such advisory services that the Company reasonably requests from time to
time, under direction of the Company’s Board of Directors for a monthly fee of
$10,000 and reimbursement of expenses.  During the twelve month period
ending December 31, 2008 the Company recorded $90,000 of expense for advisory
services.  In addition a warrant for 1,066,667 shares of Company stock
with an exercise price of $0.001 per share was issued to Aequitas in 2008 on the
inception of Aequitas service on June 27, 2008 (see Note 9).  Under a
separate agreement the Company has obligation to pay Aequitas $5,000 per month
for certain services related to occupancy of Aequitas facilities and information
technology support related thereto.  During the twelve month period
ending December 31, 2008 the Company recorded $60,000 of expense for office rent
and information technology support. In addition to advising and servicing the
Company, Aequitas is also manager of MH Financial Associates, LLC and Aequitas
Catalyst, LLC which are two of the Company’s largest shareholders. Included in
accounts payable at December 31, 2008 is $90,000 due to Aequitas for advisory
services, facilities occupancy, and information technology
support.
 
 11.  Commitments
and Contingencies
 
 Operating Leases —As of
December 31, 2008 the Company had no long-term leases for office space
and/or equipment.
 
 For the
years ended December 31, 2008 and 2007, the Company incurred rent expense
of $60,000 and $193,962, respectively.
 
 Litigation —From time to
time, the Company is involved as a defendant in litigation in the ordinary
course of business, the outcome of which cannot be predicted with
certainty.  As of December 31, 2008, the Company is not aware of
any legal proceedings or claims against the Company.
 
 12.  Subsequent
Events.
 
 On
February 25, 2009 the Company received a $100,000 advance against the loan the
Company obtained from MH Financial on June 27, 2008. As additional consideration
for this $100,000 disbursement, the Company also issued warrants to purchase
1,066,667 shares of Common Stock at $0.001 per share.
 Item
9.  Changes in and
Disagreement With Accountants on Accounting and Financial
Disclosure
  Item
9T.  Controls and
Procedures
 
 Attached as exhibits to
this Annual Report on Form 10-K are certifications (the "Certifications")
of the Company's principal executive officer and principal financial officer,
which are required pursuant to Rule 13a-14 of the Exchange
Act.  This Item 9(T) of this Annual Report on Form 10-K includes
information concerning the controls and controls evaluation referenced in the
Certifications.  This Item 9(T) of this Annual Report on
Form 10-K should be read in conjunction with the Certifications for a more
complete understanding of the matters presented.
  27
  Evaluation of
disclosure controls and procedures
 The
Company's President and Chief Financial Officer evaluated the effectiveness of
its disclosure controls and procedures pursuant to Rule 13a-15 under the
Securities Exchange Act of 1934 as of December 31, 2008.  Based
on that evaluation, the Company’s President and Chief Financial Officer
concluded that its disclosure controls and procedures are not designed at a
reasonable assurance level nor are they effective to give reasonable assurance
that the information the Company must disclose in reports filed with the
Securities and Exchange Commission are properly recorded, processed, summarized,
and reported as required, and that such information is not accumulated and
communicated to its management, including its President and Chief Financial
Officer, to allow timely decisions regarding required disclosure.
 
 Based on
the evaluation, the Company’s President and Chief Financial Officer, after
evaluating the effectiveness of its “disclosure controls and procedures” (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have concluded
that, subject to the inherent limitations noted below, as of December 31,
2008, the Company’s disclosure controls and procedures were not effective due to
the existence of several material weaknesses in its internal control over
financial reporting, as discussed below.   The Company's
disclosure controls and procedures are subject to material weaknesses resulting
from the Company's loss of key personnel.  Because of the limited
number of personnel available for accounting duties, there is an inadequate
segregation of duties related to accounting controls.  The accounting
department consists only of the Company’s Chief Financial
Officer.  Due to the Company's current lack of financial resources it
has not been reasonable or cost beneficial for the Company to hire extra
accounting personnel who would have no other purpose, duties, or workload than
to provide formal segregation of duties under internal control
principles.
 
 Management’s
annual report on internal control over financial reporting
 Management
is responsible for establishing and maintaining internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). The
Company’s management evaluated, under the supervision and with the participation
of our President and Chief Financial Officer, the effectiveness of the Company’s
internal control over financial reporting as of December 31,
2008.
 Based on
its evaluation under the framework in Internal Control — Integrated
Framework, issued by the Committee of Sponsoring Organizations of the
Treadway Commission, the Company’s management concluded that its internal
control over financial reporting was not effective as of December 31, 2008,
due to the existence of significant deficiencies constituting material
weaknesses, as described in greater detail below. A material weakness is a
control deficiency, or combination of control deficiencies in internal control
over financial reporting, such that there is a reasonable possibility that a
material misstatement of the annual or interim financial statements will not be
prevented or detected on a timely basis.
 This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in
this annual report.
 
 Limitations on
Effectiveness of Controls
 The
Company’s management, including our President and Chief Financial Officer, does
not expect that the Company's disclosure controls or its internal control over
financial reporting will prevent all errors and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of a simple error or mistake.
Additional controls can be circumvented by the individual acts of some persons,
by collusion of two or more people, or by management override of the controls.
The design of any system of controls 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; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
 28
 Material
Weaknesses Identified
 In
connection with the preparation of the Company’s financial statements for the
year ended December 31, 2007, certain significant deficiencies in internal
control became evident to management that, in the aggregate, represent material
weaknesses.  These weaknesses were still present at December 31, 2008,
and include:
 1.
                Insufficient
      segregation of duties in the Company’s finance and accounting functions
      due to limited personnel. During the year ended December 31, 2008,
      the Company had one person on staff that performed nearly all aspects of
      the Company’s financial reporting process, including, but not limited to,
      access to the underlying accounting records and systems, the ability to
      post and record journal entries and responsibility for the preparation of
      the financial statements. This creates certain incompatible duties and a
      lack of review over the financial reporting process that would likely
      result in a failure to detect errors in spreadsheets, calculations, or
      assumptions used to compile the financial statements and related
      disclosures as filed with the SEC. These control deficiencies could result
      in a material misstatement to our interim or annual consolidated financial
      statements that would not be prevented or
  detected.
 
 2.
                Lack
      of financial expertise.  The Company does not have an employee
      with adequate financial expertise properly account for and disclose the
      kinds of complex transactions that occur within the Company such as
      financial instrument issuances and income tax provisions.  This
      lack of financial expertise resulted in material auditor adjustments
      during the quarterly reviews and annual
audit.
  3.
                Insufficient
      corporate governance policies. Although the Company does have a code of
      ethics which provides broad guidelines for corporate governance, its
      corporate governance activities and processes are not always formally
      documented.
 
 4.
                Inadequate
      approval and control over transactions and commitments made on the
      Company’s behalf by related parties. Specifically, during the year certain
      related party transactions were not effectively communicated to all
      internal personnel who needed to be involved to account for and report the
      transaction in a timely manner. This resulted in material adjustments
      during the quarterly reviews and annual audit, respectively, that
      otherwise would have been avoided if effective communication and approval
      processes had been
maintained.
 
 As part
of the communications by Peterson Sullivan, LLP, (“Peterson Sullivan”), with the
Company’s Audit Committee with respect to Peterson Sullivan’s audit procedures
for fiscal 2008, Peterson Sullivan informed the audit committee that these
deficiencies constituted material weaknesses, as defined by Auditing Standard
No. 5, “An Audit of Internal Control Over Financial Reporting that is
Integrated with an Audit of Financial Statements and Related Independence Rule
and Conforming Amendments,” established by the Public Company Accounting
Oversight Board (“PCAOB”).
 
 Plan for
Remediation of Material Weaknesses
 The
Company intends to take appropriate and reasonable steps to make the necessary
improvements to remediate the deficiencies described above. The Company intends
to consider the results of its remediation efforts and related testing as part
of its year-end 2009 assessment of the effectiveness of its internal control
over financial reporting.
 Changes in
Internal Controls over Financial Reporting
 There
were no significant changes in internal control over financial reporting during
the fourth quarter of 2008 that materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financing
reporting.
  29
  Item
9B.  Other
Information
 
 None.
  Part
III
 
 Item
10.  Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Act.
 
 The
following table sets forth the names of the directors and officers of the
Company.  Also set forth is certain information with respect to each
such person's age at December 31, 2008, principal occupation or employment
during at least the past five years, the periods during which he or she has
served as a director of microHelix and positions currently held with
microHelix.
 
 Name
                        
                        Age
                        
                        PositionThomas
      Sidley
                        
                        52
                        
                        Chairman
      of the BoardDonald
      Megrath
                        
                        47
                        
                        DirectorJames
      E. Horswill
                        
                        59
                        
                        President
      and Chief Financial Officer  of microHelix and of Moore,
      Director
 
 Thomas Sidley has an
extensive 20-year background in finance, banking, and asset
securitization.  He has successfully started and built two financial
services companies, as well as managed the sale and divestiture of a large
national mortgage company.  His corporate banking experience includes
senior and subordinated debt facilities, structured finance, and commercial real
estate.  Mr. Sidley is currently a Senior Managing Director at
Aequitas Capital Management, Inc., which is the manager of a shareholder of the
Company.  Mr. Sidley has a B.S. degree in Business Administration from
Portland State University and an M.B.A. with High Honors in Finance from Boston
University.
 
 Donald Megrathis an
experienced financial and operations executive with more than 18 years of
collective consulting experience in media and technology services companies
before his involvement in the investment banking and fund management business
over the last four years.  He has served as VP Finance and CFO in
private and public companies.  Mr. Megrath is currently a Senior
Associate at Aequitas Capital Management, Inc., which is the manager of a
shareholder of the Company.  Mr. Megrath has a B.A. degree in
Telecommunications and an M.B.A. from George Fox University.
 
 James E. Horswillwas
appointed Corporate Controller in July 2005, Chief Financial Officer in February
2007, Secretary in April 2007, and President and Chief Executive Officer in June
2007.  He has been a director since November 2007.  From
1998 through 2003, Mr. Horswill was the Accounting Manager of Komatsu Silicon
America, Inc, where he also served as Controller from 2003 through July
2005.  Mr. Horswill received his Bachelor of Science in Business
Administration from Linfield College and his M.B.A. from George Fox
University.
 
 Officers
serve at the discretion of the Board of Directors.  There are no
family relationships among any of our directors and executive
officers.
 
 Audit
Committee
 
 The
members of the Audit Committee during 2008 were Thomas Sidley and Donald
Megrath.
  30
  Section
16(a) Beneficial Ownership Reporting Compliance
 
 The
Company does not currently have a class of its equity securities registered
pursuant to Section 12 of the Exchange Act.
 
 Code
of Ethics
 
 microHelix
adopted a code of ethics on April 6, 2005 that applies to its directors,
officers and employees.  A copy of the code of ethics is attached as
an exhibit to this Annual Report on Form 10-K.
 
 Nominees
for Board of Directors
 
 During
2008, there were no material changes to the procedures by which security holders
may recommend nominees to the Company’s Board of Directors.
 
 Item
10.  Executive
Compensation.
 
 Summary
Compensation Table
 
 The
following table sets forth certain information regarding compensation paid
during the last two fiscal years to our President and Chief Financial
Officer. No other executive officer received compensation in excess of
$100,000.
 
 Name and Principal Position
                            
                            Year
                            
                            Salary
                              ($)
                            
                            Bonus ($)
                            
                            Stock
                              Awards
                              ($)
                            
                            
                            All Other
                              Compensation
                              ($)
                            
                            
                            Total ($)James
      E. Horswill
                              President
      and Chief Financial Officer
                            
                            2008
                            
                            $
                            0
                            
                            
                            
                            
                            
                            
                            $
                            59,875
                            (1)
                            
                            $
                            59,8752007
                            
                            $
                            81,439
                            
                            
                            
                            
                            
                            
                            $
                            28,300
                            (1)
                            
                            $
                            109,739
 (1)
              Consulting
      fees
 
 Option
Grants in Last Fiscal Year
 
 No
options were granted in 2008 to our named executive officers.
 
 Option
Exercises in Last Fiscal Year and Fiscal Year End Option Values
 
 None of
our named executive officers held any outstanding stock options at
December 31, 2008.  No stock options were exercised by our named
executive officers during 2008.
 
 Director
Compensation
 
 Outside
directors are eligible to be paid a $2,000 annual retainer, $350 for each Board
of Directors meeting attended and $200 for each committee meeting
attended.  The Chairman of the Board, the Compensation Committee Chair
and the Audit Committee Chair each are eligible to be paid an additional $1,000
retainer.  Each of the outside directors received in 2007 a grant of
667 shares of the Company's Common Stock.  Outside directors are
reimbursed for their out-of-pocket expenses incurred on behalf of the
Company.  Employee directors do not receive any compensation for
serving on the Board of Directors.
 
 Due to
the financial condition of the Company, no payments or stock grants were made to
the members of the Board of Directors during 2008.
  31
  Item
12.  Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
 
 The
following table sets forth information, as of March 31, 2009, with respect to
the beneficial ownership of the Common Stock and Series C Preferred Stock
of the Company by:  (i) each shareholder known by us to be the
beneficial owner of more than 5% of the Common Stock and of our Series C
Preferred Stock; (ii) each of our directors; (iii) our President and
Chief Financial Officer and our other executive officers; and (iv) all
executive officers and directors as a group.  Unless otherwise
indicated, the address of each person listed below is: c/o microHelix, Inc.,P.O. Box 1030, Tualatin, OR
97071.  Beneficial ownership is determined in accordance with the
rules of the SEC and generally includes voting or investment power with respect
to securities.  Shares of Common Stock issuable on exercise of
currently exercisable or convertible securities or securities exercisable or
convertible within 60 days of March 31, 2009 are deemed beneficially owned and
outstanding for purposes of computing the percentage owned by the person holding
such securities, but are not considered outstanding for purposes of computing
the percentage of any other person, except with respect to Series C
Preferred. Since each share of Series C Preferred is immediately
convertible into 0.66667 shares of Common Stock it has been assumed for purposes
of calculating a person's total beneficial ownership that all shares of
Series C Preferred have been converted into shares of Common
Stock.  Unless otherwise noted, each shareholder named in the table
has sole voting and investment power with respect to the shares set forth
opposite that shareholder's name.  The shares held have been converted
to account for the 1 for 15 reverse stock split approved by the Company's
shareholders on March 19, 2008.
  Shares Beneficially OwnedName of Beneficial Owner
                            
                            Common
                              Stock
                            
                            
                            Series C
                              Preferred
                            
                            
                            Total
                            
                            
                            PercentMH
      Financial Associates, LLC
                            
                            
                            4,711,085
                            (1)
                            
                            
                            186,047
                            
                            
                            
                            4,897,132
                            
                            
                            
                            93.3
                            %Aequitas
      Catalyst  Fund LLC
                            
                            
                            3,559,355
                            (2)
                            
                            
                            0
                            
                            
                            
                            3,559,355
                            
                            
                            
                            65.2
                            %Thurman
      Holdings 1, Limited Partnership
                            
                            
                            2,976,199
                            (3)
                            
                            
                            0
                            
                            
                            
                            2,976,199
                            
                            
                            
                            59.74
                            %Aequitas
      Capital Management Inc.
                            
                            
                            1,066,667
                            (4)
                            
                            
                            0
                            
                            
                            
                            1,066,667
                            
                            
                            
                            33.06
                            %James
      M. Williams
                            
                            
                            410,245
                            (5)
                            
                            
                            0
                            
                            
                            
                            410,245
                            
                            
                            
                            16.46
                            %Yee
      Ling Hayden(6)
                            
                            
                            148,986
                            
                            
                            
                            0
                            
                            
                            
                            148,986
                            
                            
                            
                            6.9
                            %Paulson
      Investment Company Inc. (7)
                            
                            
                            119,189
                            
                            
                            
                            0
                            
                            
                            
                            119,189
                            
                            
                            
                            5.52
                            %James
      E. Horswill
                            
                            
                            959
                            
                            
                            
                            0
                            
                            
                            
                            959
                            
                            
                            
                            *Thomas
      Sidley
                            
                            
                            0
                            
                            
                            
                            0
                            
                            
                            
                            0
                            
                            
                            
                            *Donald
      Megrath
                            
                            
                            0
                            
                            
                            
                            0
                            
                            
                            
                            0
                            
                            
                            
                            *Directors and Officers as a Group
      (3 Persons)
                            
                            
                            959
                            
                            
                            
                            0
                            
                            
                            
                            959
                            
                            
                            
                            *
 
 *Less
than 1%
 
 (1) Includes
warrants to purchase 3,084,856 shares of Common Stock.
  (2)
Includes warrants to purchase 3,299,935 shares of common stock.
 
 (3)
Includes warrants to purchase 2,822,867 shares of common stock.
 
 (4)
Includes warrants to purchase 1,066,667 shares of common stock.
 
 (5)
Includes 73,915 shares of common stock and warrants to purchase 332,384 shares
of common stock held by CTK Capital Corp., a company controlled by Mr.
Williams.  Mr. Williams is a former director of the
Company.
  (6)
Business address is 7103 S. Revere Parkway, Englewood, Colorado,
30112
  (7)
Business address is 811 SW Naito Parkway, Suite 200, Portland, Oregon,
97204
  There are
no known arrangements the operation of which may at a subsequent date result
in a change in control of the Company.
 Item 13.Certain
Relationships and Related Transactions, and Director
Independence.
 
 On
March 12, 2007, MH Financial loaned an additional $750,000 to the Company
by adding that amount to the Original Note, which was amended to become the
Amended Note, for a total principal amount of $1,778,964.  The Amended
Note bears current interest at a rate of 12% per annum ("Current
Interest").  Additional interest accrues on the Amended Note at a rate
of 8% per annum, which is compounded quarterly and is payable at maturity
("Deferred Interest").  microHelix was to make separate payments with
respect to $1,006,086 of the principal under the Loan 1 and with respect to
$750,000 of the principal added in Loan 2.  Beginning April 19,
2007 and on the same day of each subsequent month, microHelix was to pay $20,000
per month to be applied to Current Interest and principal on Loan 1 and $7,500
per month of Current Interest on Loan 2.  On September 30, 2007,
microHelix was to make an additional payment of accrued Current Interest through
that date with regard to Loan 2. Beginning on October 31, 2007, and on the
last day of each subsequent month through and including May 31, 2008,
microHelix was to pay $87,555 per month to be applied against the Current
Interest and principal balance of Loan 2.  All amounts
outstanding under the Amended Note, including the Deferred Interest, were due
and payable on June 30, 2008.  James M. Williams, who was a
director during these transactions, is an indirect investor in MH Financial
through a retirement plan and a corporation controlled by Mr.
Williams.
  On June
27, 2008 the Company entered into an advisory services agreement with Aequitas
Capital Management, Inc. (“Aequitas”) under which Aequitas began to provide
strategy development, strategic planning, marketing, corporate development and
other such advisory services that the Company reasonably requests from time to
time, under direction of the Company’s Board of Directors for a monthly fee of
$10,000 and reimbursement of expenses.  During the twelve month period
ending December 31, 2008 the Company recorded $90,000 of expense for advisory
services.  In addition a warrant for 1,066,667 shares of Company stock
with an exercise price of $0.001 per share was issued to Aequitas in 2008 on the
inception of Aequitas service on June 27, 2008 (see Note 9).  Under a
separate agreement the Company has obligation to pay Aequitas $5,000 per month
for certain services related to occupancy of Aequitas facilities and information
technology support related thereto.  During the twelve month period
ending December 31, 2008 the Company recorded $60,000 of expense for office rent
and information technology support. In addition to advising and servicing the
Company, Aequitas is also manager of MH Financial Associates, LLC and Aequitas
Catalyst, LLC which are two of the Company’s largest shareholders. Included in
accounts payable at December 31, 2008 is $90,000 due to Aequitas for advisory
services, facilities occupancy, and information technology support. Mr.
Sidley and Mr. Megrath, two of the Company’s directors, are
employees of Aequitas.
  32
  On
December 28, 2006, microHelix issued a note to James M. Williams in
the principal amount of $150,000, together with interest on the unpaid principal
at the rate of 15% per annum.  microHelix used the proceeds from the
note for working capital.  On March 12, 2007, microHelix repaid the
entire principal balance and accrued but unpaid interest.
 
 The terms
of the above transactions were as favorable to us as those generally available
from unaffiliated third parties.  Each transaction was ratified by a
majority of our directors who did not have an interest in the transactions and
who had access, at our expense, to our legal counsel or independent legal
counsel.
  Item
14.  Principal
Accounting Fees and Services.
 
 On
September 25, 2006, the Company approved the engagement of Peterson
Sullivan LLP to serve as the Company's independent registered public accountants
for the fiscal years ending December 31, 2006, 2007, and 2008.  During
the fiscal years ended December 31, 2006 and 2007 and through the date
hereof, the Company did not consult Peterson Sullivan LLP with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, the type of audit opinion that might be rendered on the
Company's consolidated financial statements, or any other matters or
events.
 
 Peterson
Sullivan LLP has been selected as the Company's independent public accountants
for the fiscal year ending December 31, 2007 and 2008.
 
 The
following table shows the fees paid or accrued by the Company for the audit and
other services provided by Peterson Sullivan LLP for 2007 and 2008.
  2007
                            
                            
                            2008Audit
      Fees
                            
                            $
                            52,000
                            
                            
                            $
                            30,000Audit-Related
      Fees
                            
                            
                            -Tax
      Fees
                            
                            
                            -
                            
                            
                            
                            10,000All
      Other Fees
                            
                            
                            -Totals
                            
                            $
                            52,000
                            
                            
                            $
                            40,000
 
 Audit Fees.  Audit
services of Peterson Sullivan LLP for 2008 and 2007 consisted of examination of
the consolidated financial statements of the Company, quarterly reviews of the
financial statements and services related to the filings made with the
SEC.
 
 Tax Fees.  Tax
preparation services were provided in 2008 by Geffen Mesher & Company,
P.C.  Tax fees included in 2008 relate to filing the required tax
reports for the fiscal years ended December 31, 2006 and 2007.
 
 All Other
Fees.  There were no fees billed by Peterson Sullivan LLP for
services other than as described under "Audit Fees" for the years ended December
31, 2007 or December 31, 2008.
  33
  All of
the services described above were approved by the Audit
Committee.  The Audit Committee has not adopted formal pre-approval
policies, but has the sole authority to engage the Company's outside auditing
and tax preparation firms and must approve all tax consulting and auditing
arrangements with the independent accounting firms prior to the performance of
any services.  Approval for such services is evaluated during Audit
Committee meetings and must be documented by signature of an Audit Committee
member on the engagement letter of the independent accounting firm.
 
 Item
15.  Exhibits,
Financial Statement Schedules
 
 Exhibit
                            Number
                          
                          Description3.1(1)
                          
                          Amended
      and Restated Articles of Incorporation of microHelix, Inc., as amended
      November 16, 2001, December 5, 2003, April 8, 2005, October 28, 2005
      and October 17, 2006.3.2(8)
                          
                          Amendments to
      the Company's Amended and Restated Articles of Incorporation as
      amended January 16, 2008 and March 19, 2008.3.3(2)
                          
                          Bylaws
      of microHelix, Inc.10.1(3)
                          
                          Form
      of Warrant dated April 8, 2005 issued by microHelix, Inc. to financial
      advisors.10.2(3)
                          
                          Security
      Agreement dated April 8, 2005 among microHelix, Inc., Moore Electronics,
      Inc. and Marti D. Lundy.10.3(4)
                          
                          Form
      of Warrant dated October 19, 2006 issued by microHelix, Inc. to MH
      Financial Associates, LLC, as amended on March 12,
2007.10.4(4)
                          
                          Registration
      Rights Agreement dated October 19, 2006 between microHelix, Inc. and MH
      Financial Associates, LLC, as amended on March 12,
2007.10.5(5)
                          
                          Form
      of Warrant dated November 2, 2006 issued by microHelix, Inc. to MH
      Financial Associates, LLC, as amended on March 12,
2007.10.6(6)
                          
                          Second
      Agreement Regarding Amendment of Promissory Note dated March 12, 2007
      between microHelix, Inc. and MH Financial Associates,
  LLC.10.7(6)
                          
                          Second
      Amended and Restated Promissory Note dated March 12, 2007 issued by
      microHelix, Inc. to MH Financial Associates, LLC.10.8(6)
                          
                          Form
      of Warrant dated March 12, 2007 issued by microHelix, Inc. to MH Financial
      Associates, LLC.10.9(6)
                          
                          Forbearance
      and Waiver Agreement dated March 12, 2007 between microHelix, Inc. and MH
      Financial Associates, LLC.10.10(6)
                          *
                          Independent
      Contractor Agreement effective February 12, 2007 between Moore
      Electronics, Inc. and Steve Ashton.10.11(8)
                          *
                          Independent
      Contractor Agreement effective September 21, 2007 between microHelix, Inc.
      and James E. Horswill.10.12(8)
                          
                          Third
      Agreement Regarding Amendment of Promissory Note dated December 31, 2008
      between microHelix, Inc. and MH Financial Associates,
  LLC.10.13(8)
                          
                          Third
      Amended and Restated Promissory Note dated December 31, 2008 issued by
      microHelix, Inc. to MH Financial Associates, LLC.10.14(8)
                          
                          Advisory
      Services Agreement dated June 27, 2008 between microHelix, Inc, and
      Aequitus Capital Management, Inc.10.15(8)
                          
                          Warrant
      to Purchase Shares of Common Stock dated June 27, 2008 between microHelix,
      Inc. and MH Financial Associates, LLC.10.16(8)
                          
                          Registration
      Rights Agreement dated June 27, 2008 between microHelix, Inc and MH
      Financial Associates, LLC.10.17(8)
                          
                          Loan
      Modification Agreement dated December 31, 2008 between microHelix, Inc and
      MH Financial Associates, LLC.14.1(7)
                          
                          Policy
      on Business Ethics for Directors, Officers and
  Employees.21.1(7)
                          
                          Subsidiaries.31.1(8)
                          
                          Certification
      of Principal Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1(8)
                          
                          Certification
      of Principal Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002.
  
 (1)
              Incorporated
      by reference to the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 2004, and to the Company's Forms 8-K filed on April 14,
      2005, October 31, 2005 and October 19,
2006.
 (2)
                Incorporated
      by reference to the Company's Form SB-2 filed on July 26,
      2001.
 (3)
                Incorporated
      by reference to the Company's Form 8-K filed on April 14, 2005 and October
      20, 2006.
 (4)
                Incorporated
      by reference to the Company's Forms 8-K filed on October 20, 2006 and
      March 16, 2007.
 (5)
                Incorporated
      by reference to the Company's Form 8-K filed on March 16,
      2007.
  34
 (6)
                Incorporated
      by reference to the Company's Form 8-K filed on March 16,
      2007.
 (7)
                Incorporated
      by reference to the Company’s Annual Report on Form 10-KSB for the year
      ended December 31, 2004.
 (8)
                Incorporated
      by reference to the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2008 filed on April 16,
2009
 
 *
Management contract or compensatory plan or arrangement.
 
 35
  SIGNATURES
  In
accordance with the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
this behalf by the undersigned; thereunto duly authorized, on April 24,
2009.
  MICROHELIX,
      INC.By:
                  /s/ James E.
      HorswillJames
      E. HorswillPrincipal
      Executive and Chief Executive
Officer
  In
accordance with the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
 Signature
                        
                        Title
                        
                        Date/s/
      Thomas
      Sidley
                        
                        Chairman
      and Director
                        
                        April
      24, 2009Thomas
      Sidley/s/
      Donald Megrath
                        
                        Director
                        
                        April
      24, 2009Donald
      Megrath/s/
      James E. Horswill
                        
                        Director
                        
                        April
      24, 2009James
      E. Horswill




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