UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington
      D.C. 20549





FORM
      10-KSB




(Mark
      One)




x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      fiscal year ended: December 31, 2006





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period from_________to__________





Commission
      file Number 333-137545





LAB123,
      INC.


(Name
      of
      small business issuer in its charter)





Delaware
            45-0542515(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)








100
                Field Drive, Suite 240, Lake Forest, Illinois
            60045(Address
                of principal executive offices)
            (Zip
                Code)




Issuer's
      telephone number: (847) 234-8111





Securities
      registered pursuant to Section 12(b) of the Exchange Act:





Name
                of exchange onTitle
                  of each class
            
            which
                registeredNone
            
            None





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













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





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2)  has
      been
      subject to such filing requirements for the past 90 days.


Yes
o
      No x




Check if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will 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-KSB
      or any amendment to this Form 10-KSB x




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





State
      issuer's revenues for its most recent fiscal year: $255,857





The
      aggregate market value of the voting stock held by non-affiliates of the
      Company, was $150,000 as of June 15, 2007. For purposes of the computation
      we
      consider all directors and holders of 10% or more of our common stock to be
      affiliates. The determination of affiliate status is not a conclusive
      determination for other purposes. Therefore, the number of shares of our common
      stock held by non-affiliates as of June 15, 2007 was 125,000. Since there is
      no
      trading market for our common stock we have assumed that the per share market
      price of our common stock was $1.20 per share which is the price at which
      selling stockholders may sell our common stock pursuant our Registration
      Statement on Form SB-2 (File No. 333-137545) covering such sales.





As of
      June 15, 2007, there were 6,175,000 shares of common stock, $0.001 par value,
      issued and outstanding.





Transmittal
      Small Business Disclosure Format (check one) Yes o No x





**Lab123,
      Inc.**


**Form
      10-KSB**




Table
      of Contents




PageForward
                Looking Statements
            
            3PART
                IItem
                1. Description of Business
            
            3Item
                2. Description of Property
            
            31Item
                3. Legal Proceedings
            
            31Item
                4. Submission of Matters to a Vote of Security Holders
            
            31PART
                IIItem
                5. Market for Common Equity, Related Stockholder Matters and
                Small Business Issuer Purchases of Equity Securities
            
            31Item
                6. Management's Discussion and Analysis or Plan of
                Operation
            
            33Item
                7. Financial Statements
            
            41Item
                8. Changes in and Disagreements with Accountants
                on Accounting and  Financial
                Disclosure
            
            42Item
                8A. Controls and Procedures
            
            42Item
                8B. Other Information
            
            43PART
                IIIItem
                9. Directors, Executive Officers, Promoters, Control Persons and
                Corporate Governance; Compliance with Section 16(a) of
                the Exchange Act
            
            43Item
                10. Executive Compensation
            
            44Item
                11. Security Ownership of Certain Beneficial Owners
                and Management and Related Stockholder
                Matters
            
            45Item
                12. Certain Relationships and Related Transactions, and Director
                Independence
            
            46Item
                13. Exhibits
            
            47Item
                14. Principal Accountant Fees and Services
            
            48Signatures
            
            50Financial
                Statements
            
            F-1





2




Forward
      Looking Statements




Statements
      in this Annual Report on Form 10-KSB may be "forward-looking statements."
      Forward-looking statements include, but are not limited to, statements that
      express our intentions, beliefs, expectations, strategies, predictions or any
      other statements relating to our future activities or other future events or
      conditions. These statements are based on current expectations, estimates and
      projections about our business based, in part, on assumptions made by
      management. These statements are not guarantees of future performance and
      involve risks, uncertainties and assumptions that are difficult to predict.
      Therefore, actual outcomes and results may, and are likely to, differ materially
      from what is expressed or forecasted in the forward-looking statements due
      to
      numerous factors, including those described in this Report, including the risks
      described under "Risk Factors," in this Report and in other documents which
      we
      file with the Securities and Exchange Commission (the “SEC”). In addition, such
      statements could be affected by risks and uncertainties related to product
      demand, our ability to develop, obtain rights to or acquire new products and
      successfully market the products, market and customer acceptance, our ability
      to
      raise any financing which we may require for our operations, competition,
      government regulations and requirements, pricing and development difficulties,
      our ability to make acquisitions and successfully integrate those acquisitions
      with our business, as well as general industry and market conditions and growth
      rates, and general economic conditions. Any forward-looking statements speak
      only as of the date on which they are made, and we do not undertake any
      obligation to update any forward-looking statement to reflect events or
      circumstances after the date of this Report.





PART
      I





Item
      1.
      Description of Business.




Summary
      of Business





We
      (we
      also sometimes refer to ourselves herein as “Lab123” or the “Company”) are
      engaged in the marketing of clinical diagnostic products for use in disease
      detection and prevention. We were founded by Biosafe Laboratories, Inc.
      (“Biosafe”) to enable Biosafe to exploit certain of its technology by entering
      into a license agreement with us pertaining to 5 diagnostic products (the
“Diagnostic Products”). Under the license agreement with Biosafe we sell
      Diagnostic Products to retail drug stores, retail drug mass merchandisers,
      and
      the distributors, marketers, brokers and group buyers who supply medical
      products to retail drug stores, retail drug mass merchandisers in the United
      States and to internet-based retail drug companies (the “Market”). The terms of
      our license agreement with Biosafe are discussed in the “Our License Agreement
      with Biosafe” subsection of this Item 1. Our products specialize in the use of
      micro-sample blood transportation devices and unique, scientific procedures
      for
      the clinical testing of these micro-blood samples. From time to time we may
      obtain terms that are beneficial to us that we may not normally obtain if we
      would seek the same terms from an outside vendor.




3




The
      products we currently license from Biosafe and market are:





o
            **Cholesterol
                Panel**(a
                lipid profile consisting of total cholesterol, high density cholesterol,
                low density cholesterol and triglycerides). This Cholesterol Panel
                is the
                first self-collected lipid profile for dried blood sample analysis
                that
                satisfies the National Cholesterol Education Program’s rigorous
                performance standards. It is used in the management and determination
                of
                coronary heart disease.o
            **Hemoglobin
                A1c**(a
                test that meets the certification standards of the National
                Glycohemoglobin Standardization Program). This test is critical for
                proper
                blood sugar monitoring and regulation by persons affected with
                diabetes.o
            **Prostate
                Screen**(a
                test to determine blood levels of prostate specific antigen). This
                test is
                used to help determine abnormal prostate conditions, such as prostate
                cancer.o
            **Thyroid
                Test**(a
                test to determine blood levels of thyroid stimulating hormone). This
                test
                is used to help determine thyroid dysfunction and to successfully
                manage
                treatment regimens.o
            **Anemia
                Test**(a
                rapid response test - like a home pregnancy test, the results are
                available to the user immediately - for low hemoglobin levels). This
                test
                is used to monitor and identify the onset or change in hemoglobin
                levels,
                which is a common side effect for many disease states including HIV,
                chronic kidney disease and cancer.




Our
      licensor, Biosafe, has been developing and marketing new clinical diagnostic
      products for more than 10 years. Biosafe’s products, including those that we
      license the right to market, consist of a blood collection kit that contains
      everything needed for the consumer to self-collect his or her own blood sample
      (several drops from a single finger-nick, in contrast to a vial at the
      laboratory). The specimen is then mailed**to
      Biosafe’s laboratory for analysis. The results are mailed back to the consumer
      in a clear and easy-to- read, consumer-friendly laboratory report. The licensed
      products received FDA clearance for sale during the period from 1999 to 2004.
      During this period, Biosafe marketed the licensed products only to large
      pharmaceutical companies in specialty programs in support of drug marketing
      activities and, to a limited extent, to consumers over the
      internet.





We
      were
      incorporated in Delaware on August 25, 2006. Our principal office is located
      at
      100 Field Drive, Suite 240, Lake Forest, Illinois 60045 and our telephone number
      is 847-234-8111.





Since
      we
      have only recently been formed, as a company we do not have experience in
      marketing diagnostic products, although one of our directors does have such
      experience. We had revenues of only $255,857 from inception to December 31,
      2006
      and had a net loss of $122,302 from inception through December 31, 2006. We
      believe that we will have sufficient working capital to sustain our operations
      until at least the end of the current fiscal year. For further information
      concerning our business operations see the “Description of Business” subsection
      of this Item 1.




4





Risk
      Factors





An
      investment in Lab123 entails certain risks that should be carefully considered.
      In addition, these risk factors could cause actual results to differ materially
      from those expected include the following:




*We
      have only recently been organized and have very little operating
      history.*





The
      Company is a start-up, having been formed in August, 2006.  Accordingly, we
      have practically no operating history nor any revenues on which you may evaluate
      our performance.





*Rapid
      screening and diagnostic at-home testing devices may not be accepted in the
      consumer marketplace.*





We are currently licensed to sell our five clinical diagnostic products for
      use
      in disease detection and prevention through internet-based companies and through
      retail drug outlets located in the United States. We are not licensed to sell
      our products in other markets such as the healthcare professional market.
      Because of the lack of sales history, there can be no assurance that our
      products will be accepted in the consumer market or in any market. Even if
      our
      products are accepted in our targeted markets, our actual sales may be much
      less
      than our estimate of our products’ market potential.




*We
      have been the subject of a going concern opinion*  *by
      our independent auditors who have raised substantial doubt as to our ability
      to
      continue as a going concern* *.*




Our
      Independent Registered Public Accountants have added an explanatory paragraph
      to
      their audit opinion issued in connection with our financial statements which
      states that our financial statements raise substantial doubt as to our ability
      to continue as a going
      concern. We have generated only $255,857 in revenues from inception to December
      31, 2006 and have accumulated losses of $122,302 from inception through December
      31, 2006. These factors raise substantial doubt regarding our ability to
      continue as a going concern. The continuation of the Company as a going concern
      is dependent upon the continued financial support from our stockholders, our
      ability to obtain necessary equity financing to continue operations and/or
      the
      attainment of profitable operations. Management has plans in place to address
      these concerns and expects that the Company will be able to obtain additional
      funds by equity financing and/or related party advances, if necessary. However,
      the existence of a going concern opinion may make it more difficult for us
      to
      raise capital or raise capital on terms satisfactory to us. If we do need
      additional financing, there is no assurance that additional funding will be
      available to the extent required.





*We
      may continue to incur losses and are likely to require additional
      financing.*




We
      have
      incurred operating losses and negative cash flow from operations since our
      recent inception. Losses incurred since our inception have aggregated $122,302
      as of December 31, 2006. There can be no assurance that we will be able to
      generate positive cash flows to fund our operations in the future or to pursue
      our strategic objectives. Assuming no significant changes from our plan, we
      believe that we will have sufficient cash to satisfy our needs for at least
      the
      next twelve months. If we are not able to operate profitably and generate
      positive cash flows, we will undoubtedly need to raise additional capital,
      most
      likely via the sale of equity securities, to fund our operations. If we do
      in
      fact need additional financing to meet our requirements, there can be no
      assurance that we will be able to obtain such financing on terms satisfactory
      to
      us, if at all. Alternatively, any additional equity financing may be
      dilutive to existing stockholders, and debt financing, if available,
      may include restrictive covenants. If adequate funds are not available, we
      might be required to limit or completely curtail our selling, marketing and
      administrative activities, and such curtailment could have a material adverse
      effect on the future of our business as a going concern.




5




*We
      depend upon third parties for product development and
      commercialization;*  *there
      can be no assurance of successful or timely development of additional
      products.*





Our
      business strategy includes the development of additional diagnostic products
      for
      the diagnostic business. We plan to rely on third parties for the development
      of
      products and technologies. There can be no assurance that we will be able to
      negotiate new product acquisitions on acceptable terms, if at all, or that
      our
      current business or future acquisitions, if made, will be successful. To the
      extent that we are not able to acquire ownership of or license new products,
      we
      could be forced to undertake such product development at our own expense. In
      such event, our success in developing new products will depend on our ability
      to
      achieve scientific and technological advances and to translate these advances
      into commercially competitive products on a timely basis. Development of new
      products requires significant research, development and testing efforts. We
      have
      limited resources to devote to the development of products and, consequently,
      a
      delay in the development of one product or the use of resources for product
      development efforts that prove unsuccessful may delay or jeopardize the
      development of other products. Any delay in the development, introduction and
      marketing of future products could result in such products being marketed at
      a
      time when their cost and performance characteristics would not enable them
      to
      compete effectively in their respective markets. If we are unable, for
      technological or other reasons, to complete the development and introduction
      of
      any new product or if any new product is not approved or cleared for marketing
      or does not achieve a significant level of market acceptance, our ability to
      remain competitive in our product niches would be impaired.





*We
      depend upon third parties for product manufacturing and clinical laboratory
      service.*




We
      plan
      to rely on others for the production of products and technologies. Currently,
      Biosafe manufactures all of our Diagnostic Products and performs clinical
      laboratory services on all of our Diagnostic Products which require such
      laboratory services. There can be no assurance that we will be able to negotiate
      new product manufacturing on acceptable terms, if at all, or that current or
      future manufacturing arrangements will be successful. To the extent that we
      are
      not able to outsource product manufacturing or laboratory services, we could
      be
      forced to undertake such activities at our own expense. The amount and timing
      of
      resources that any of these manufacturers devote to our product manufacturing
      activities may be outside of our control. With respect to any products
      manufactured by third parties, there can be no assurance that any third-party
      manufacturer will perform acceptably or that failures by third parties will
      not delay or impair our ability to deliver products on a timely
      basis.




6





*If
      we
      fail to achieve certain financial results, we will be required to issue more
      shares of our common stock upon conversion of the Series A Preferred Stock
      and
      the exercise price of warrants to purchase common stock we issued shall be
      reduced.*





Both the
      Series A Preferred Stock (“Series A Stock”) and the warrants we issued in a
      September 6, 2006 private placement to Barron Partners, L.P. (“Barron”) have
      anti-dilution provisions which increase the number of shares issuable upon
      conversion of the Series A Stock and reduce the exercise price of the warrants
      if we fail to meet pre-tax fully diluted income per share targets for the three
      months ending December 31, 2006 and the fiscal year ending December 31, 2007.





The
      target for pre-tax fully diluted income for the three months ended December
      31,
      2006 was $.0306 per share. For such period we suffered a loss of approximately
      $.02 per share on a pre-tax fully diluted basis. Therefore, the conversion
      value
      of our Series A Stock and the exercise price of the warrants we issued to Barron
      will be reduced by 40% and we will be required to issue 40% more shares of
      our
      common stock upon conversion of our Series A Stock and exercise of such
      warrants. The adjustment will result in (a) the issuance of 2,476,000 additional
      shares of common stock upon conversion of all outstanding Series A Stock) ,
      thereby increasing the total number of shares of common stock issuable upon
      such
      conversion from 3,774,000 shares to 6,250,000 shares, (b) a reduction of the
      exercise price of our warrants to purchase common stock with an original
      exercise price of $.80 per share from $.80 to $.48 per share, and (iii) a
      reduction in the exercise price of our warrants to purchase common stock with
      an
      original exercise price of $1.10 per share from $1.10 to $.66 per share.





The
      target for pre-tax fully diluted income for the fiscal year ending December
      31,
      2007 is $.19 per share. The exercise price of the warrants and the conversion
      value of the Series A Stock shall be reduced proportionately up to a maximum
      additional 25% reduction in the exercise price if the income per share is $.1446
      or less computed as provided in the purchase agreement. If either the foregoing
      adjustment is triggered, the holders of the Series A Stock would receive, on
      conversion of such Series A Stock, a larger number of shares of common stock,
      which will increase their percentage interest in our stock. We cannot assure
      you
      that there will not be such an adjustment. The maximum adjustment (assuming
      an
      additional 25% reduction in the conversion value of the Series A Stock and
      the
      exercise price of the Warrants as a result of a failures to meet income target
      for the fiscal year ending December 31, 2007 would result in (i) the issuance
      of
      2,083,333 additional shares of common stock upon conversion of the Series A
      Stock, thereby increasing the total number of shares of common stock issuable
      upon such conversion from 6,250,000 shares to 8,333,333 shares, (ii) a reduction
      of the exercise price of our warrants to purchase common stock with an original
      exercise price of $.80 per share from $.48 to $.36 per share, and (iii) a
      reduction in the exercise price of our warrants to purchase common stock with
      an
      original exercise price of $1.10 per share from $.66 to $.495 per share.





We
      will
      recognize an additional deemed dividend for the conversion price reduction
      of
      approximately $788,000 during the second quarter ended June 30, 2007. We will
      not recognize an additional charge for the reduction of the 3,774,000 warrants
      from $0.80 to $0.48 for 1,887,000 shares and from $1.10 to $0.66 for the
      remaining 1,887,000 shares during the second quarter ended June 30, 2007. We
      entered into a registration rights agreement with Barron whereby we were
      required to file a registration statement with the SEC, to register the resale
      of the shares of common stock that will be issued upon conversion of the
      convertible preferred stock and exercise of warrants. Under the liquidated
      damages provision, if we failed to meet the effectiveness deadline for the
      registration statement, we would have been required to issue 2,491 additional
      shares of the Series A Stock as liquidated damages for each day that the
      registration is not effective after the deadline until September 6, 2008. The
      registration statement we filed was declared effective in January
      2007.




7





In
      the
      second quarter of 2007, the Company verbally agreed to cease its business
      partnership with Barron. The Company is currently in negotiations and plans
      to
      close on this arrangement on or around June 30, 2007. However, there can be
      no
      assurance that the Company will be successful in completing this
      transaction.





*Under
      the terms of the Series A Stock and warrants we issued in our September 6,
      2006
      Private Placement the conversion value of the Series A Stock and the exercise
      price of the warrants would be reduced if we issue stock, warrants or
      convertible securities at a price below the conversion value of the Series
      A
      Stock and exercise price of the warrants.*





Section
      6.15 of the Preferred Stock and Warrant Purchase Agreement we entered into
      with
      Barron on September 6, 2006 provides that until the expiration of 48 months
      after the closing date of that agreement (September 6, 2010) or until Barron
      owns less than 5% of the Series A Stock purchased by Barron, whichever occurs
      first, if we close on the sale of a note or notes, shares of common stock,
      or
      shares of any class of preferred stock at a price per share of common stock,
      or
      with a conversion right to acquire common stock at a price per share of common
      stock, that is less than the conversion value of the Series A Stock, the
      conversion value shall be reduced to the price per share of the common stock
      or
      conversion price of the securities sold. The warrants contain a similar
      provision regarding a reduction in the exercise price of the warrant in such
      circumstances, except the condition is not limited to any time period.





In
      the
      second quarter of 2007, the Company verbally agreed to cease its business
      partnership with Barron. The Company is currently in negotiations and plans
      to
      close on this arrangement on or around June 30, 2007. However, there can be
      no
      assurance that the Company will be successful in completing this
      transaction.





*Because
      Biosafe owns approximately 98.0% of our outstanding common stock and effectively
      controls our activities, it may block or deter actions that you might otherwise
      desire that we take and may cause us to act in a manner that is most beneficial
      to it and not to outside stockholders.*





Biosafe
      owns approximately 98.0% of our outstanding common stock. As a result, although
      we are contractually required to, and do currently, maintain a Board of
      Directors comprised of a majority of independent directors, Biosafe effectively
      controls all matters requiring stockholder approval, including the election
      and
      removal of directors. Biosafe’s concentration of stock ownership could have the
      effect of delaying, deterring or preventing a change in control of our company
      that you might view favorably and may cause us to act in a manner that is most
      beneficial to Biosafe and not to outside stockholders.




8





*We
      may be required to pay liquidated damages if our Board does not consist of
      a
      majority of independent directors.*




Sections
      6.11 and 6.12 of the Preferred Stock and Warrant Purchase Agreement we entered
      into with Barron on September 6, 2006 require us to appoint and maintain such
      number of independent directors that would result in a majority of our directors
      and a majority of the members of the audit and compensation committees of our
      Board of Directors being independent directors. Our failure to meet either
      of
      these requirements would result in the payment of liquidated damages at a rate
      of $560,000 (28% of the $2 million purchase price) per annum. On September
      29,
      2006 three independent directors were elected to the Board of Directors and
      the
      Board established audit and compensation committees comprised solely by such
      independent directors.





In
      the
      second quarter of 2007, the Company verbally agreed to cease its business
      partnership with Barron. The Company is currently in negotiations and plans
      to
      close on this arrangement on or around June 30, 2007. However, there can be
      no
      assurance that the Company will be successful in completing this
      transaction.


*Competition
      in the human medical diagnostics industry is, and is expected to remain,
      significant.*




Our
      competitors and potential competitors range from development stage diagnostics
      companies to major domestic and international pharmaceutical and biotechnology
      companies. Many of these companies have financial, technical, marketing, sales,
      manufacturing, distribution and other resources significantly greater than
      ours.
      Quest Diagnostics, Inc., a national diagnostic laboratory service company,
      has
      attempted to sell products in the retail market, but to our knowledge, is
      currently not making retail sales of any competitive products. Bayer Corporation
      offers a Hemoglobin A1c instant test (our test requires laboratory analysis).
      Accutech, LLC markets a total cholesterol qualitative test under the product
      name “Cholestrak.” Flexsite Diagnostics also markets a Hemoglobin A1c “send in”
laboratory kit. Many of our competitors have name recognition, established
      positions in the market and long standing relationships with customers and
      distributors. They also have greater marketing experience and access to sources
      of capital than us. Moreover, the diagnostics industry continues to show a
      significant amount of consolidation whereby large domestic and international
      pharmaceutical companies are acquiring mid-sized diagnostics companies, further
      increasing the concentration of resources. There can be no assurance that
      technologies will not be introduced that could be directly competitive with
      or
      superior to our technologies.





*Rapid
      technological change may make our products obsolete or
      uncompetitive.*





The
      markets in which our rapid testing devices will compete are characterized by
      technological change, frequent new products and changes in consumer
      demand.  The introduction of a new product embodying new technology can
      render existing products obsolete and unmarketable.  Even if our products
      are successfully marketed, a newer product may be introduced that renders one
      or
      all of our products obsolete.




9




*Our
      products and activities are subject to regulation by various governments and
      government agencies.*




The
      testing, manufacture and sale of our products is subject to regulation by
      numerous governmental authorities, principally the United States Food and Drug
      Administration (the “FDA”). Pursuant to the Federal Food, Drug, and Cosmetic
      Act, and the regulations promulgated thereunder, the FDA regulates the
      preclinical and clinical testing, manufacture, labeling, distribution and
      promotion of medical devices. We are limited in our ability to commence
      marketing or commercial sales in the United States of new products under
      development until we receive clearance from the FDA. The testing for,
      preparation of and subsequent FDA regulatory review of required filings can
      be a
      lengthy, expensive and uncertain process. Noncompliance with applicable
      requirements can result in, among other consequences, fines, injunctions, civil
      penalties, recall or seizure of products, repair, replacement or refund of
      the
      cost of products, total or partial suspension of production, failure of the
      government to grant pre-market clearance or pre-market approval for devices,
      withdrawal of marketing clearances or approvals and criminal
      prosecution.




There
      can
      be no assurance that we will be able to obtain necessary regulatory approvals
      or
      clearances for our products on a timely basis, if at all, and delays in receipt
      of or failure to receive such approvals or clearances, the loss of previously
      received approvals or clearances, limitations on intended use imposed as a
      condition of such approvals or clearances or failure to comply with existing
      or
      future regulatory requirements could negatively impact our sales and thus have
      a
      material adverse effect on our business.




We
      currently do not manufacture the medical devices we distribute. However, under
      our license agreement with Biosafe for the products we intend to distribute,
      we
      have the right to source such products from another manufacturer and may do
      so
      in the future. As a manufacturer of medical devices for marketing in the United
      States we would be required to adhere to applicable regulations setting forth
      detailed good manufacturing practice requirements, which include testing,
      control and documentation requirements. We would also be required to comply
      with
      Medical Device Report (“MDR”) requirements, which require that a
      manufacturer reports to the FDA any incident in which its product may have
      caused or contributed to a death or serious injury, or in which its product
      malfunctioned and, if the malfunction were to recur, it would be likely to
      cause
      or contribute to a death or serious injury. Manufacturers are also subject
      to
      routine inspection by the FDA for compliance with Quality System Regulations
      (“QSR”) requirements, MDR requirements and other applicable regulations.
      Labeling and promotional activities are subject to scrutiny by the FDA and,
      in
      certain circumstances, by the Federal Trade Commission. We may incur
      significant costs to comply with laws and regulations in the future, which
      would
      decrease our net income or increase our net loss and thus have a potentially
      material adverse effect upon our business, financial conditions and results
      of
      operations.




Distribution
      of diagnostic products outside the United States is subject to extensive foreign
      government regulation. These regulations, including the requirements for
      approvals or clearance to market, the time required for regulatory review and
      the sanctions imposed for violations, vary from country to country. We
      may be required to incur significant costs in obtaining or maintaining
      foreign regulatory approvals. In addition, the export of certain of our products
      that have not yet been cleared for domestic commercial distribution may be
      subject to FDA export restrictions. Failure to obtain necessary regulatory
      approval or the failure to comply with regulatory requirements could reduce
      our
      product sales and thus have a potentially material adverse effect on our
      business, financial condition and results of operations.




10





*Our
      success depends, in part, on our ability, or the ability of our partners, to
      obtain patents and license patent rights, to maintain trade secret protection
      and to operate without infringing on the proprietary rights of
      others.*




There
      can
      be no assurance that our owned or licensed patents will afford meaningful
      protection against a competitor, or that patents issued or licensed to us will
      not be infringed upon or designed around by others, or that others will not
      obtain patents that we would need to license or design around. We could also
      incur substantial costs in defending the Company in litigation brought by
      others. The potential for reduced sales and increased legal expenses would
      have
      a negative impact on our cash flow and thus our overall business could be
      adversely affected. Currently, we do not own any patents.   Patents or
      patent applications may exist which contain claims covering our products,
      technology or methods. Because of the number of patents issued and patent
      applications filed in our field, we believe there is a risk that third parties
      may allege they have patent rights encompassing the products, technology or
      methods we own or license. Third parties may sue us and/or our licensor for
      infringing their patent rights or file nullity, opposition or interference
      proceedings against our patents, even if such claims lack merit, which would
      similarly harm our business. If any third party is successful in bringing a
      case
      of patent infringement against us or our licensor, we may be unable to sell
      the
      affected products.





*We
      may not be able to successfully implement our plans to acquire other
      companies or technologies.*




Our
      growth strategy may include the acquisition of complementary companies,
      products or technologies. There is no assurance that we will be able to identify
      appropriate companies or technologies to be acquired, to negotiate satisfactory
      terms for such an acquisition, or to obtain sufficient capital to make such
      acquisitions. Moreover, because of limited cash resources, we will be unable
      to
      acquire any significant companies or technologies for cash and our ability
      to
      effect acquisitions in exchange for our capital stock may depend upon the
      market prices for our common stock, which could result in significant dilution
      to its existing stockholders. If we do complete one or more acquisitions, a
      number of risks arise, such as disruption of our existing business, short-term
      negative effects on our reported operating results, diversion of management’s
      attention, unanticipated problems or legal liabilities, and difficulties in
      the
      integration of potentially dissimilar operations. Any of these factors could
      materially harm our business or our operating results.




*We
      depend on Biosafe and its suppliers for our products’
components.*




Biosafe
      currently manufactures all the medical devices we distribute. However, under
      our
      license agreement with Biosafe for the Diagnostic Products, we have the right
      to
      source such products from another manufacturer and may do so in the future.
      The
      components of our products include chemical, biological and packaging supplies
      that are generally available from several suppliers. We mitigate the risk of
      a
      loss of supply by maintaining a sufficient supply of finished goods to ensure
      an
      uninterrupted supply for at least three months. If, for any reason, we Biosafe
      ceases to be the manufacturer of one or more of the Diagnostic Products or
      if in
      the future we source such products from other vendors and we lose our main
      supplier for a given material, there can be no assurance that we will be able
      to
      substitute a new supplier in a timely manner. Failure to do so could impair
      the
      manufacturing of certain of our products and thus have a material adverse effect
      on our business, financial condition and results of operations.




11




*We
      have only limited manufacturing experience with certain
      products.*




Although
      Biosafe is experienced in the manufacturing and packaging of our current
      products, certain of our diagnostic products which we may consider for future
      development, incorporate technologies with which we have little manufacturing
      experience. Assuming successful development and receipt of required regulatory
      approvals, significant work may be required to scale up production for each
      new product prior to such product’s commercialization. There can be no assurance
      that such work can be completed in a timely manner and that such new products
      can be manufactured cost-effectively, to regulatory standards or in sufficient
      volume.




*Due
      to the specialized nature of our business, our success will be highly dependent
      upon our ability to attract and retain qualified scientific and executive
      personnel.*




We
      believe our success will depend to a significant extent on the efforts and
      abilities of our senior management. We are currently operating with only one
      full time executive and seeking the services of a chief executive officer and
      a
      chief financial officer. There can be no assurance that we will be successful
      in
      attracting and retaining skilled personnel, who are generally in high demand
      by
      other companies. The loss of, inability to attract, or poor performance by
      key
      scientific and executive personnel may have a material adverse effect on
      our business, financial condition and results of operations.




*The
      testing, manufacturing and marketing of medical diagnostic devices entails
      an
      inherent risk of product liability claims.*




To
      date,
      we have experienced no product liability claims, but any such claims arising
      in
      the future could have a material adverse effect on our business, financial
      condition and results of operations. We currently maintain product liability
      insurance with limits of $1,000,000 per occurrence and $3,000,000 in the
      aggregate for all claims made under the policy. Potential product liability
      claims may exceed the amount of our insurance coverage or may be
      excluded from coverage under the terms of our policy or limited by other claims
      under our umbrella insurance policy. Additionally, there can be no assurance
      that our existing insurance can be renewed by us at a cost and level of coverage
      comparable to that presently in effect, if at all. In the event that we are
      held
      liable for a claim against which we are not insured or for damages exceeding
      the
      limits of our insurance coverage, such claim could have a material adverse
      effect on our cash flow and thus potentially a materially adverse effect on
      our
      business, financial condition and results of operations.




12





*We
      do
      not have a CFO or Controller, the lack of which our auditors have advised us
      is
      a material weakness in our internal controls.*





As
      of
      December 2006 our independent auditors, Marcum & Kliegman, LLP, advised us
      that they had identified a material weakness in our internal controls because
      we
      have only one employee and such person has not been trained as a Chief Financial
      Officer or a Controller. Therefore, our accounting department presently may
      not
      have the sophistication to design and implement a system of internal controls
      or
      to critically evaluate and implement new accounting pronouncements.
      Additionally, since our accounting staff consists of only one person, there
      is a
      lack of segregation of duties of our personnel, which also constitutes a
      material weakness in financial reporting. We have implemented certain procedures
      to help minimize the risks associated with this material weakness, including
      using the services of Biosafe’s accounting staff to act as an interim financial
      and accounting consultant to review, compile and consolidate our financial
      statements on a quarterly and annual basis. When resources permit, we do intend
      to hire a chief financial officer with appropriate public company experience
      to
      relieve the sole employee of his current chief financial officer
      duties.





*Our
      quarterly operating results are likely to fluctuate, which may affect our stock
      price.*




Our
      quarterly revenues, expenses, operating results and gross profit margins may
      vary significantly from quarter to quarter, which could result in volatility
      in
      the market price of our common stock. This may be particularly true if in the
      future (as is not the case currently) analysts follow our stock and create
      expectations concerning our financial performance. The reasons our quarterly
      results may fluctuate include:





·
            variations
                in profit margins attributable to product
                mix;





·
            changes
                in the general competitive and economic
                conditions;





·
            delays
                in, or uneven timing in the delivery of, customer orders;
                and





·
            the
                introduction of new products by us or our
                competitors.





Period
      to
      period comparisons of such items should not be relied on as indications of
      future performance.





*The
      registration and sale by our stockholders of a significant number of shares
      could depress our stock price and encourage short sales by third
      parties.*





Because
      there is no public market for our stock, there may be significant downward
      pressure on our stock price caused by the sale or potential sale of a
      significant number of shares pursuant to our Registration Statement on Form
      SB-2
      that was declared effective in January 2007. This could allow short sellers
      of
      our stock an opportunity to take advantage of any decrease in the value of
      our
      stock. The presence of short sellers in our common stock may further depress
      the
      price of our common stock. If the selling stockholders under such registration
      statement sell a significant number of shares of common stock, the market price
      of our common stock may decline. Furthermore, the sale or potential sale the
      offered shares and the depressive effect of such sales or potential sales could
      make it difficult for us to raise funds from other sources.




13





*There
      has, to date, been no active public market for our Common Stock, and there
      can
      be no assurance that an active public market will develop or be
      sustained.*




We
      were
      only recently incorporated in August 2006 and as of June 15, 2007 had only
      3
      stockholders and there has never been a trading market in our common stock.
      We
      cannot give any assurance that there will ever be a market for our common stock.
      If a market for our common stock develops, there is a significant risk that
      our
      stock price may fluctuate dramatically in the future in response to any of
      the
      following factors, some of which are beyond our control:





·
            variations
                in our quarterly operating results as described in the preceding
                risk
                factor;





·
            announcements
                that our revenue or income are below expectations;·
            general
                economic slowdowns;·
            changes
                in market valuations of similar companies;·
            sales
                of large blocks of our common stock as described in a preceding risk
                factor;·
            announcements
                by us or our competitors of significant contracts, acquisitions,
                strategic
                partnerships, joint ventures or capital commitments;·
            fluctuations
                in stock market prices and volumes generally;·
            concern
                by potential investors that the large number of shares of common
                stock
                which may be sold pursuant to our effective registration statement
                may
                have a downward effect upon the market price of the stock as described
                in
                a preceding risk factor.·
            the
                effect of sales pursuant to our Registration Statement on Form SB-2
                on the
                trading volume of our common stock.




*Because
      we are subject to the "penny stock" rules, you may have difficulty in selling
      our common stock.*





If
      a
      public market develops for our common stock and if our stock price is less
      than
      $5.00 per share, our stock will be subject to the “penny”
      stock regulation of Rule 15g-9 of the Securities Exchange Act of 1934 (the
“Exchange Act”). Rule 15g-9 of the Exchange Act is commonly referred to as
      the “penny stock” rule and imposes special sales practice requirements upon
      broker-dealers who sell such securities to persons other than established
      customers or accredited investors. A penny stock is any equity security with
      a
      market price less than $5.00 per share, subject to certain exceptions.
      Rule 3a51-1 of the Exchange Act provides that any equity security is
      considered a penny stock unless that security is: registered and traded on
      a
      national securities exchange and meets specified criteria set forth by the
      Securities and Exchange Commission (the “SEC”); authorized for quotation in the
      National Association of Securities Dealers’ Automated Quotation System; issued
      by a registered investment company; issued with a price of five dollars or
      more;
      or issued by an issuer with net tangible assets in excess of $2,000,000. This
      rule may affect the ability of broker-dealers to sell the Company’s
      securities.




14




For
      transactions covered by Rule 15g-9, a broker-dealer must furnish to all
      investors in penny stocks a risk disclosure document, make a special suitability
      determination of the purchaser, and receive the purchaser’s written agreement to
      the transaction prior to the sale. In order to approve a person’s account for
      transactions in penny stocks, the broker-dealer must (i) obtain information
      concerning the person’s financial situation, investment experience, and
      investment objectives; (ii) reasonably determine, based on that information
      that transactions in penny stocks are suitable for the person and that the
      person has sufficient knowledge and experience in financial matters to
      reasonably be expected to evaluate the transactions in penny stocks; and
      (iii) deliver to the person a written statement setting forth the basis on
      which the broker-dealer made the determination of suitability stating that
      it is
      unlawful to effect a transaction in a designated security subject to the
      provisions of Rule 15g-9(a)(2) unless the broker-dealer has received a
      written agreement from the person prior to the transaction. Such written
      statement from the broker-dealer must also set forth, in highlighted format
      immediately preceding the customer signature line, that the broker-dealer is
      required to provide the person with the written statement and the person should
      sign and return the written statement to the broker-dealer only if it accurately
      reflects the person’s financial situation, investment experience and investment
      objectives.




*The
      rights of the holders of common stock may be impaired by the potential issuance
      of preferred stock.*





Our
      certificate of incorporation gives our board of directors the right to create
      new series of preferred stock. As a result, the board of directors has and
      in
      the future may, without stockholder approval, issue preferred stock with voting,
      dividend, conversion, liquidation or other rights which could adversely affect
      the voting power and equity interest of the holders of common stock. Preferred
      stock, which could be issued with the right to more than one vote per share,
      could be utilized as a method of discouraging, delaying or preventing a change
      of control. The possible impact on takeover attempts could adversely affect
      the
      price of our common stock. Although we have no present intention to issue any
      additional shares of preferred stock or to create any new series of preferred
      stock and the Certificate of Designations relating to the Series A Stock
      restricts our ability to issue additional series of preferred stock, we may
      issue such shares in the future.





*Because
      we are not subject to compliance with rules requiring the adoption of certain
      corporate governance measures, our stockholders have limited protections against
      interested director transactions, conflicts of interest and similar
      matters.*





The
      Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by
      the
      SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market
      as a
      result of Sarbanes-Oxley require the implementation of various measures relating
      to corporate governance. These measures are designed to enhance the integrity
      of
      corporate management and the securities markets and apply to securities which
      are listed on those exchanges or the Nasdaq Stock Market. Because we are not
      presently required to comply with many of the corporate governance provisions
      and because we chose to avoid incurring the substantial additional costs
      associated with such compliance any sooner than necessary, we have not yet
      adopted all of these measures. We also are not in compliance with requirements
      relating to the distribution of annual and interim reports, the holding of
      stockholders meetings and solicitation of proxies for such meeting and
      requirements for stockholder approval for certain corporate actions. Until
      we
      comply with such corporate governance measures, regardless of whether such
      compliance is required, the absence of such standards of corporate governance
      may leave our stockholders without protections against interested director
      transactions, conflicts of interest and similar matters and investors may be
      reluctant to provide us with funds necessary to expand our
      operations.




15





*Failure
      to achieve and maintain effective internal controls in accordance with Section
      404 of the Sarbanes-Oxley Act could have a material adverse effect on our
      business and operating results and stockholders could lose confidence in our
      financial reporting.*





Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. If we cannot provide reliable financial reports
      or
      prevent fraud, our operating results could be harmed. We will be required to
      document and test our internal control procedures in order to satisfy the
      requirements of Section 404 of the Sarbanes-Oxley Act, which requires increased
      control over financial reporting requirements, including annual management
      assessments of the effectiveness of such internal controls and a report by
      our
      independent certified public accounting firm addressing these assessments.
      Failure to achieve and maintain an effective internal control environment,
      regardless of whether we are required to maintain such controls, could also
      cause investors to lose confidence in our reported financial information, which
      could have a material adverse effect on our stock price.




*Because
      the purchaser of our Series A Stock has a right of first refusal for future
      offering of our stock, we may have difficulty in raising additional funds if
      required for our business.*




Barron,
      which purchased its securities in a September 2006 private placement, has the
      right until September 2008 to participate in any future funding. These
      provisions may impair our ability raising additional funds during the next
      two
      years because it may be difficult for us to obtain financing proposals from
      third parties if they believe that Barron would likely or possibly match the
      terms of any offer made to us.





*Because
      the holder of our warrants has cashless exercise rights, we may not receive
      proceeds from the exercise of the outstanding warrants if the underlying shares
      are not registered.*





The
      holder of our warrants has cashless exercise rights, which provide it with
      the
      ability to receive common stock with a value equal to the appreciation in the
      stock price over the exercise price of the warrants being exercised. This right
      is not exercisable during the first six months that the warrants are outstanding
      and thereafter if the underlying shares are subject to an effective registration
      statement. To the extent that the holder of the warrants exercises this right,
      we will not receive proceeds from such exercise. Therefore, stockholders could
      experience substantial dilution
      of their investment as a result of our issuance of shares of our common stock
      upon a cashless exercise of warrants.




16




*The
      issuance and sale of the registered common stock could result in a change of
      control.*





As
      of
      June 15, 2007 there were 6,175,000 shares of our common stock outstanding.
      If we
      issue all of the 10,024,000 shares issuable upon conversion of our outstanding
      Series A Stock and exercise all of our outstanding warrants (which number gives
      effect to an increase of 2,476,000 in the number of shares issuable upon
      conversion of our outstanding Series A Stock as a result of an adjustment which
      is required under the terms of our Securities Purchase Agreement with Barron
      as
      a result of our failure to achieve certain pre-tax fully diluted earnings per
      share targets for the three months ended December 31, 2006), the 10,024,000
      shares of common stock would constitute approximately 62% of our outstanding
      common stock. The percentage would increase to the extent that we are required
      to issue any additional shares of common stock upon conversion of the Series
      A
      Stock or exercise of the warrants pursuant to the anti-dilution and adjustment
      provisions of the Series A Stock and warrants as a result of a failure to
      achieve certain pre-tax fully diluted earnings per share targets for the year
      ending December 31, 2007. No holder of the Series A Stock or warrants may
      convert such stock or exercise the warrants to the extent that such conversion
      or exercise would result in beneficial ownership by such holder of more than
      4.9% of the then outstanding number of shares of our common stock. However,
      any
      successive conversions of Series A Stock and/or exercises of warrants by the
      holder followed by sales by such holder to third parties of all or a significant
      percentage of those shares to a person or group could result in a change of
      control.





Description
      of Business





We
      were
      incorporated in Delaware on August 25, 2006 and engaged in the marketing of
      clinical diagnostic products for use in disease detection and prevention. Under
      an exclusive license agreement with Biosafe we sell 5 such diagnostic products
      (the “Diagnostic Products”) to retail drug stores, retail drug mass
      merchandisers, and the distributors, marketers, brokers and group buyers who
      supply medical products to retail drug stores, retail drug mass merchandisers
      in
      the United States and to internet-based retail drug companies (the
“Market”).




The
      products we currently license from Biosafe and market are:





·
            BIOSAFE
                Cholesterol Panel including Total Cholesterol, HDL, LDL and
                Triglycerides;




·
            BIOSAFE
                Anemia Meter, a rapid result quantitative hemoglobin-measuring
                device;




·
            BIOSAFE
                Prostate Specific Antigen (PSA)
                test;





·
            BIOSAFE
                Thyroid Stimulating Hormone (TSH) test;
                and




17




·
            BIOSAFE
                Hemoglobin A1c (Diabetes) test




Our
      Diagnostics Products Business




In
      vitro
      diagnostic testing is the process of analyzing the components of a wide variety
      of body fluids outside of the body to identify the presence of markers for
      diseases or other human health conditions. The human health in vitro diagnostic
      testing market consists of reference laboratory and hospital laboratory testing,
      testing in physician offices and the emerging over-the-counter market, in which
      testing is done at home by the consumer. Traditional laboratory testing for
      conditions in human subjects requires an individual to visit a lab, clinic,
      hospital or a doctor’s office where a vial of blood is drawn from a vein. Based
      upon customer surveys conducted by Biosafe in 2000 and 2001 involving in excess
      of 100 participants, this form of testing is often inconvenient (involving
      a
      significant time commitment) and is often accompanied by severe nervous
      apprehension, since more people are “afraid” of needles than care to admit it.
      Consequently, individuals who need testing often avoid it because of the
“hassle” and fear factors. We believe that our self-collected at-home tests
      provide an easy to use and convenient alternative to the traditional laboratory
      testing method and as such will be readily accepted by consumers.




Our
      licensor, Biosafe, has been developing and marketing new clinical diagnostic
      products for more than 10 years. Biosafe’s products, including those that we
      license the right to market, consist of a blood collection kit that contains
      everything needed for the consumer to self-collect his or her own blood sample
      (several drops from a single finger-nick, in contrast to a vial at the
      laboratory). The specimen is then mailed ** to
      Biosafe’s laboratory for analysis. The results are mailed back to the consumer
      in a clear and easy-to- read, consumer-friendly laboratory report. The major
      obstacles of time and inconvenience (and possibly the fear of a venipuncture
      blood draw) have been removed. Free of location constraints, this
      consumer-friendly testing method brings with it a new and convenient way to
      better manage one’s own health.




Biosafe
      owns and operates its own laboratory, which is certified under the Clinical
      Laboratory Information Act of 1988 (“CLIA”) and accredited by the College of
      American Pathologists (“CAP”). CAP accreditation is the highest accreditation
      available to a clinical laboratory. In addition, there are levels of CAP
      accreditation. Biosafe has received the highest level of CAP
      accreditation-Accreditation with Distinction. Biosafe has the capability to
      process samples from almost anywhere in the world and is centrally located
      in
      Chicago, Illinois.




Strategy




Our
      primary objective is to commercialize at home diagnostic testing products for
      use by consumers. Our strategies for achieving this objective include the
      following:




·
            To
                utilize master distributors where ever possible;·
            To
                market large retail drug chains;·
            To
                market to mass merchandiser with retail drug divisions;
                and·
            To
                license other products for all sources available appropriate to our
                customers and our markets.





18


Our
      Products





Our
      products specialize in the use of micro-sample blood transportation devices
      and
      unique, scientific procedures for the clinical testing of these micro-blood
      samples. These products are based on tried and true platforms for micro-blood
      sample technologies that provide accurate and convenient clinical laboratory
      tests. These platforms allow an individual to safely and conveniently collect,
      in a non-clinical setting, such as in one’s home or office, a small blood sample
      (a couple of drops from a finger nick) and send it to a laboratory where tests
      can be performed under exacting clinical standards. The blood transportation
      devices (a patented telfa-card and patented plastic collection device) and
      technologies for the collection, transportation, stabilization and processing
      of
      micro-blood samples make it possible to gather and manage bio-medical data
      on
      large populations without the impediment of a venous blood draw and a visit
      to
      the lab, clinic or physician’s office. There is no difference between the
      results obtained from our product’s micro-sample analysis and those obtained
      from a traditional venous blood draw. In fact, the FDA has found our
      micro-sample analysis to be substantially equivalent to that obtained from
      a
      traditional venous blood draw.





As
      the
      trend toward health consciousness increases and time constraints grow, it seems
      that people either do not have time for (or make excuses not to take) routine
      screening or diagnostic tests. In addition, some tests involve embarrassment
      or
      discomfort, so people avoid them. This, coupled with the growing trend toward
      self-administered at-home tests has resulted in expanding markets for our
      products.





Our
      products have been developed as a unique set of blood sample collection kits.
      Each kit is a complete blood collection “system” designed for a specific test
      that offers easy and convenient access to accurate and quantitative diagnostic
      testing for consumer markets. Everything needed to collect the micro-sample
      specimen is included in each kit. The collection process is quick and virtually
      painless. Using the included finger lancet, a couple of drops of blood are
      taken
      from a nick of the finger, placed in a small, proprietary micro-sample blood
      collection device and sent postage paid to Biosafe for analysis. A laboratory
      report is then mailed to the customer, physician and/or the disease management
      company in an easy-to-understand format. This report provides a numerical
      (quantitative) test value, not just a simple “yes” or “no” answer, which merely
      indicates the presence of a condition, not the severity (as the quantitative
      result does). Since all our tests provide quantitative results, the report
      can
      be used to identify and track shifts in the condition over time. This is very
      significant since comparing the results of an initial test to the results of
      subsequent tests can determine the degree of effectiveness of treatment or
      the
      onset of side effects from drug usage.





Our
      current products consist of the following:





·
            **Cholesterol
                Panel**(a
                lipid profile consisting of total cholesterol, high density cholesterol
                (“HDL”), low density cholesterol (“LDL”) and triglycerides). This
                Cholesterol Panel is the first self-collected lipid profile for dried
                blood sample analysis that satisfies the National Cholesterol Education
                Program’s rigorous performance standards. It is used in the management and
                determination of coronary heart
                disease.




19




·
            **Hemoglobin
                A1c**(a
                test that meets the certification standards of the National
                Glycohemoglobin Standardization Program). This test is critical for
                proper
                blood sugar monitoring and regulation by persons affected with
                diabetes.·
            **Prostate
                Screen**(a
                test to determine blood levels of prostate specific antigen “PSA”)). This
                test is used to help determine abnormal prostate conditions, such
                as
                prostate cancer.·
            **Thyroid
                Test**(a
                test to determine blood levels of thyroid stimulating hormone (“TSH”)).
                This test is used to help determine thyroid dysfunction and to
                successfully manage treatment regimens.·
            **Anemia
                Test**(a
                rapid response test - like a home pregnancy test, the results are
                available to the user immediately - for low hemoglobin levels). This
                test
                is used to monitor and identify the onset or change in hemoglobin
                levels,
                which is a common side effect for many disease states including HIV,
                chronic kidney disease and cancer.





We
      believe that that our tests provide the following benefits to
      consumers:





·
            Easy
                and convenient to use-
              low cost- administered in
              private- takes only
              seconds




·
            Ease
                of use leads to the test being taken, as opposed to being
                avoided.·
            Test
                results are*quantitative*,
                as opposed to*qualitative*.
                The significance is that instead of merely indicating the existence
                of a
                condition (qualitative result), the quantitative result indicates
                the
                severity of the condition.·
            Use
                leads to early detection of abnormal conditions.·
            Early
                detection leads to early treatment, which increases the odds for
                a
                cure.·
            Changes
                in the condition and the effectiveness of treatment can be identified
                and
                tracked over time by comparing the quantitative test
                results.




Technology
      Platforms





The
      technology for our products was developed by Biosafe which has been engaged
      since 1994 in developing technologies and products meeting the needs of,
      originally, their pharmaceutical customer base, and, increasingly, retail market
      opportunities.





Traditional
      blood tests have involved a venous blood draw of a vial of the patient’s blood,
      performed in a physician’s office (often by a nurse or phlebotomist); a hospital
      setting; or at the drawing station of a traditional laboratory. Often unpleasant
      and often inconvenient, this process effectively reduces testing compliance
      when
      a doctor instructs a patient to make a separate visit to a lab for a
      test.





Our
      tests
      have been proven to produce equivalent results (via double blind trials and
      other FDA and CLIA required testing with much smaller blood samples, allowing
      for, as appropriate, self collection in the home or in a professional setting.
      The testing with microsamples is possible because of the collection procedure
      on
      the one end, the sample transportation and the specialized analysis of the
      smaller sized samples in the laboratory.




20





Using
      proprietary systems, patients provide blood samples consisting of a few drops
      of
      blood (from a lancet nick on the finger) on a specially treated paper card.
      Variations of this system are used for the cholesterol test, the hemoglobin
      A1c,
      and the PSA test.





The
      patented Enhanced Blood Collection Card used in the cholesterol panel includes
      a
      filter card with a Telfa® overlay which evenly distributes a capillary blood
      drop for accurate total cholesterol, HDL and triglyceride measurement. Dried
      blood samples have stability of 14 -28 days depending on the storage and the
      card treatment for a given test.




The
      cholesterol panel is the first and only self-collected lipid profile for dried
      blood sample analysis that satisfies the National Cholesterol Education Program
      (“NCEP”) rigorous performance standards. Proprietary methods to stabilize dried
      samples to serve as reference materials and standardized calibrators has
      attracted a positive interest from the Centers for Disease Control, which
      oversees the NCEP, Cholesterol Reference Method Laboratory Network, and the
      administration of public health testing initiatives for the World Health
      Organization (WHO).













*Biosafe
      Enhanced Blood Collection Card*





The
      patented Blood Transport System (“BTS”) is a device for collecting a specific
      amount of whole blood and combining it with the correct diluent for a given
      test, again in specific amounts. The diluent stabilizes the critical analyte
      (PSA or TSH, for example) for transportation, and the diluted whole blood sample
      is used for analysis in the lab. The BTS has the unique ability to keep blood
      from clotting during collection and delivery; there is a patent pending on
      the
      diluent stabilizing solution for hormones.





The
      primary significances of the BTS are threefold:





·
            **Necessity
                and Versatility of Liquid Blood Transportation Modes**-
                Certain analytes cannot be transported in a dried blood spot form
                or any
                other form other than liquid·
            **Ease
                of Use**-
                The easy to use BTS plastic device accurately measures 80 uL of blood
                (about three drops, again from a finger prick) and the view port
                changes
                color to indicate when the correct amount of blood has been
                drawn.·
            **Maintaining
                Clinical Stability -**The BTS preserves a stable specimen as it transported, without any
                special
                considerations, other than the leak proof foil pouch noted below,
                through
                the standard USPS mail service and between virtually any climate
                extremes
                (Alaska to Arizona to the Delta region of the South). Additionally,
                samples have stability of 21 days.





21










*Blood
      Transport System*




The
      unique blood collection methods developed by Biosafe are complemented by the
      packaging in which samples are transported to the Biosafe lab in Chicago,
      Illinois. The patented solution ensuring sample integrity is the Biological
      Sample Storage Package - a desiccated foil bag that maintains the quality and
      stability of the blood sample during delivery to the laboratory and also extends
      the shelf life of the product when it is maintained in inventory. The kits
      also
      include a postage paid first class mailing envelope.










*Biosafe
      Foil Bag*




Blood
      collection and transportation expertise eliminates the need for a phlebotomist
      and courier and, as such, gives it a unique competitive advantage to all
      traditional laboratories. A patient/customer no longer has to endure the
      inconvenient and unpleasant venous blood draw required to obtain an accurate
      diagnostic result.





The
      U.S.
      Post Office and Canada Post have also approved the packaging for blood transport
      through the mail (leak proof, waterproof, safe from heat and cold, crush proof
      and unaffected by irradiation).





Biosafe’s
      laboratory has received the highest certification available from the CAP, as
      well as a series of other commendations and state certifications (necessary
      because the sample mail-in process attracts patients from all over the country
      and certain states require state licensing in order to serve patients from
      that
      state).




22





The
      scientists at Biosafe have demonstrated their research and development
      capabilities and ingenuity in modifying standard laboratory assays to work
      with
      the small blood samples collected; the results of these modifications have
      been
      tested and approved as equally effective in delivering accurate results. The
      methodology is proprietary in that a Biosafe sample sent to another CLIA or
      CAP
      lab whose staff has not been trained with Biosafe’s standard operating
      procedures will be unable to process the microsample and achieve accurate
      results.





For
      example, Biosafe worked with the Nichols Institute, designer of the gold
      standard of TSH analysis (Nichols Institute Diagnostics Third Generation
      Chemiluminescence Assay) to modify the process to accommodate a diluted
      capillary whole blood sample.





For
      the
      PSA test, a serum sample is traditionally used, but Biosafe developed (and
      tested and proved accurate) a modified Hybritech Tandem-MP PSA Assay using
      capillary whole blood. The Company also developed a dried blood testing process
      for PSA, validated against the Hybritech method. For the cholesterol (total
      cholesterol and panel of HDL, LDL and triglycerides), the dried blood tests
      were
      validated against the typical serum-based sampling methods. Biosafe’s patent to
      correct for blood volume in a serum analyte enables accurate measurement of
      analytes even in a dried blood sample ***.***





Technology
      platforms in blood collections, transportation and analysis have simplified
      the
      process of conducting diagnostic, screening and monitoring tests by eliminating
      the venous blood draw and often reducing or eliminating physician appointments.





Since
      the
      blood collection methods are all simple for patients to complete on their own,
      the rapid test platform enables the possibility of at-home, real time tests.
      Alternatively, the delivery of results in a healthcare setting in real time
      can
      aid a physician in getting a treatment plan underway without a wait, or the
      necessity of a second visit. Many physician specialty practices do not regularly
      have a phlebotomist in the office, and the self collection approach removes
      that
      potential hurdle from point-of-care testing.





The
      challenge for rapid test technology is for it to deliver the same accuracy
      level
      of results as a comparable process in the laboratory. This was achieved this
      with the Rapid Test product for detection of anemia.





Developed
      in concert with Johnson & Johnson’s Ortho Biotech subsidiary (but with all
      intellectual property ownership staying with Biosafe), the test provides
      quantitative results showing a reading of the proportion of red blood cells
      in
      the sample. A similar product is available which provides a qualitative guide
      (a
      yes/no as opposed to a numerical reading).





The
      test
      instructions are a critical component of all of our tests. It is vitally
      important that the blood collection and transportation process be executed
      without error - otherwise the test has no value for anyone concerned. In
      addition, the FDA is concerned about patients being informed regarding the
      disease or condition related to the test, and that the results are communicated
      appropriately and in a way that avoids any adverse events.




23





A
      significant amount of study and testing has been devoted to perfecting the
      instruction set (available in English and Spanish) and, as a result, our
      products have experienced a very low level (averaging less than 5% per product)
      of improperly collected samples based on the laboratory processing of such
      samples by Biosafe. In addition, the FDA collects comments from the public
      regarding complaints and adverse effects of products it approves. None of
      Biosafe’s products, include those licensed to us, have ever received an adverse
      FDA notice.





The
      kits
      in our products are simple, with about eight components. All the kits include
      standard-type components (e.g., plastic bandages, gauze pad, alcohol pad and
      lancets) as well as a specimen collection device and printed materials. Kits
      using treated paper for collection will include the paper component (different
      for each test type) and a foil bag for transportation. Kits using the patented
      BTS plastic collection device will include a special plastic bag to hold the
      plastic BTS.





All
      kits
      contain a postage paid mailing envelope for shipping the sample to the
      laboratory, a pre-numbered patient information and consent form, and the
“placemat” of clear, step-by-step, easy to follow instructions, specific for
      each test as needed.





Each
      of
      our products includes the lab processing (except for the rapid tests),
      notification and customer service or follow-up. The patient sample is returned
      to the CLIA-certified, CAP accredited lab and, following standardized clinical
      laboratory protocols, processed with state of the art equipment and computer
      technology. Every test provides quantitative data on a laboratory result report
      including comparisons to norms and the patient’s prior test results, if any. All
      the laboratory’s medical technologists are specifically trained in microsample
      analysis and are directly supervised by the laboratory director.





Reporting
      of results, tracking of data and patient privacy are critical components of
      the
      service model. All kits are bar coded and tracked from manufacture through
      return of results to the patient and/or doctor. A kit labeling and tracking
      system ensures that patient data privacy is always maintained and that third
      parties receiving results, such as healthcare providers, insurance companies,
      disease managers, etc., are properly authorized to receive that patient’s
      results.





Biosafe’s
      proprietary tracking and information management system offers additional
      features beyond accuracy and sample integrity. The patient results are provided
      to the patient in customer-friendly, easy to understand language and with
      exclusive TestTracker charting.





In
      late
      2004, a simpler, less expensive, readily customizable patient authorization
      form
      was developed. This new customized form allows us to offer/accomplish the
      following:





·Incorporation
                of a customer’s logo (retail store) on the form·Customized
                messages to patients·Automated
                linkage to customized patient letters introducing the customer, the
                program process and/or the Biosafe test·Automated
                individual patient shipments using the patient demographics as a
“see
                thru” address on the form·Highly
                tailored linkage of the compliance results to doctors, sales
                representatives, specific customer territories,
                etc.





24


Under
      our
      license agreement with Biosafe, customer service is provided through their
      team
      of customer service representatives supported by medical professionals. They
      are
      available on call during business hours to answer questions about how to use
      the
      kits, the printed instructions, and the patient results reports. If there is
      an
      extremely abnormal test result the customer service representative will contact
      the patient directly to explain the test result in person.





Competition




Competition
      in the human medical diagnostics industry is significant. Our competitors range
      from development stage diagnostics companies to major domestic and international
      pharmaceutical and biotechnology companies. Many of these companies have
      financial, technical, marketing, sales, manufacturing, distribution and other
      resources significantly greater than we do. In addition, many of these companies
      have name recognition, established positions in the market and long standing
      relationships with customers and distributors. The diagnostics industry
      continues to experience significant consolidation in which many of the large
      domestic and international healthcare companies have been acquiring mid-sized
      diagnostics companies, further increasing the concentration of resources.
      However, competition in diagnostic medicine is highly fragmented, with no
      company holding a dominant position in autoimmune or vascular diseases. There
      can be no assurance that new, superior technologies will not be introduced
      that
      could be directly competitive with or superior to our technologies.





Our
      competitors include Bayer Corporation, Flexsite Diagnostics, Inc. and AccuTech,
      LLC. We compete against these companies on the basis of product performance,
      customer service, and to a smaller extent, price.





Markets
      for our products





We
      currently have plans to market and distribute only proprietary medical
      diagnostic products developed and licensed to us by Biosafe. Our licensed
      markets are the retail drug outlets in the United States and internet based
      retail drug companies. The core technology in our products involves an
      integrated set of patented blood collection, transportation and diagnostic
      platforms which together provide an individual with a highly accurate diagnostic
      test result through the use of microsamples that can be easily self-collected
      outside a clinical environment and analyzed without the use of specialized
      equipment.





Beginning
      in 2004, Biosafe products have been used in specialty programs by certain drug
      stores in limited purpose consignment projects. Lab123 will bring these products
      to retail drug outlets for the first time in traditional, on the shelf,
      marketing programs. Biosafe has also sold products on a limited basis over
      the
      internet since 2001.





Our
      products are FDA cleared and/or CLIA validated diagnostic tests. Our products
      test for conditions such as thyroid activity (TSH), anemia (Hb), cholesterol
      concerns (full lipid profile), diabetes monitoring (HbA1c), and prostate screens
      (PSA) and are sufficiently unique that they are currently for sale in retail
      chains such as Albertson’s, CVS and Walgreens and on the internet at Amazon.com
      and Drugstore.com.




25





Our
      licensed technology provides our retail drug company customers with several
      distinct competitive advantages.





·Virtually
                every major diagnostic laboratory continues to base its business
                model on
                the assumption that the testing process begins with three vials of
                blood
                obtained in the offices of its customer base: doctors and clinics.
                Our
                products, however, totally disrupt this model by empowering the major
                distributors/retailers to bypass the clinic and go direct-to-the-consumer
                with a wide range of well understood and widely accepted diagnostics.
                (Our
                licensor and laboratory operator, Biosafe, retains a contract staff
                of
                medical technicians who contact anyone with “out of range” results to be
                sure those patients are specifically urged to seek counsel from their
                healthcare professionals.)





·Some
                of our diagnostic products were originally created through the funding
                and
                support of world class research laboratories and pharmaceutical companies.
                As part of our license for these products, we have obtained the ability
                to
                utilize all the intellectual property associated with its technology
                platforms and products.





·The
                technology on which our products are based is in a broad platform
                form
                from which additional tests might be quickly derived. For example,
                an
                entire new platform of rapid diagnostics leveraging the technology
                behind
                our recently FDA certified anemia test may now be
                feasible.





·The
                accuracy and ease of availability of our diagnostic systems greatly
                increases the addressable market for each test. It is now possible
                to
                service difficult to reach populations and to significantly improve
                compliance rates within existing ones. The reason is that no lab
                visit is
                required and collection of small blood samples (a finger nick as
                opposed
                to a venous draw of a vial of blood) is done at home or point-of-care.
                Sample kits can thus be mailed to anyone, anywhere with results are
                either
                learned at that time or within, on average, two days of receipt by
                our
                licensed lab. Results from rapid tests are available within
                minutes.





·The
                retail cost of our tests is, in most cases, less than half the amount
                charged by traditional laboratories and the opportunity cost of the
                hassle
                and expense of missing work just for a blood draw is
                eliminated.





Presently,
      there are more than 50,000 retail drug outlets in the United State s.





Warranties





We
      will
      offer warranty coverage for all of our products, although we do not have a
      standard warranty program. The terms and conditions of our warranty coverage
      depend on our purchase orders with customers. Generally, we guarantee our
      customers' satisfaction with our products. If a customer has a complaint about
      a
      product, we will replace it. We may also refund the purchase price regardless
      of
      where the product was purchased.




26





Our
      License Agreement with Biosafe





On
      September 7, 2006, we entered into a distributor and license agreement with
      our
      principal supplier Biosafe for five diagnostic products (which are identified
      under the caption “Our Products” above) and the performance of Biosafe of
      services relating to four of such products. The agreement grants to us the
      territorial exclusive right to distribute and sell the products to the Market.
      The Market means retail drug stores, retail drug mass merchandisers, and the
      distributors, marketers, brokers and group buyers who supply medical products
      to
      retail drug stores and retail drug mass merchandisers in the United States
      and
      internet-based retail drug companies, wherever they are located. To retain
      exclusivity we are required to sell and collect payment on 250,000 units of
      the
      licensed products by December 31, 2007 and 300,000 units each calendar year
      thereafter. If we fail to achieve the minimum for any period, Biosafe can
      convert the foregoing license to a non-exclusive license.





The
      license agreement, also grants us a non-exclusive, non-transferable and
      non-assignable intellectual property license to use Biosafe’s patents,
      trademarks and technology rights relating to the licensed products and the
      processing and reporting of laboratory analyses of samples collected using
      the
      products.





The
      term
      of the license is 25 years.





As
      part
      of our license, Biosafe is obligated throughout the entire term of the license
      agreement to manufacture the products and provide laboratory testing services
      for the products for us based in each case on a cost plus 20% formula. We have
      the option of manufacturing the products ourselves and/or opening a clinical
      laboratory to process the test results. Whether we do so or not, the license
      agreement provides that we are required to pay to Biosafe an 8% royalty on
      our
      collections of sales of licensed products (the gross sales amount received
      less
      freight, taxes and returns borne by us). Biosafe has agreed to waive all
      royalties payable to them on our product sales from the commencement of the
      license through December 2012 on the condition that we purchase our entire
      supply of such products from Biosafe and not outsource the production of such
      products or produce such products internally. Under the license agreement we
      also must conform to all packaging and manufacturing requirements imposed on
      Biosafe or any other manufacturer by the FDA or other regulatory body. To date
      Biosafe has been our sole supplier.





To
      acquire the license to the five products, we were required to pay to Biosafe
      a
      one time fee of $1,000,000 in cash and issue to Biosafe 6,050,000 shares of
      our
      common stock.. We have the right, but not the obligation, to acquire an
      exclusive license to distribute new products developed by Biosafe throughout
      the
      term of the license at an agreed upon price up to but not more than $1,000,000
      per product plus royalties (to the extent not waived).




Under
      our
      license, Biosafe must maintain and fulfill all regulatory requirements
      appropriate to the products. This includes manufacturing under Good
      Manufacturing Practices, as modified, updated or changed. The laboratory where
      our samples are processed must be CLIA certified or accredited by the College
      of
      American Pathology. Presently, Biosafe’s laboratory is both CLIA certified and
      CAP accredited.




27





Biosafe
      must maintain all FDA clearances or other approvals as may be required for
      the
      products to be legally sold in the United State. Presently, all products meet
      these requirements.





Patents,
      Trade Secrets and Trademarks




Under
      our
      license agreement with Biosafe, we have been granted a non-exclusive,
      non-transferable and non-assignable license to use without additional cost
      all
      of Biosafe’s patents and trademarks relating to the products we license from
      Biosafe. Biosafe has the obligation to maintain these patents and trademarks.
      We
      do not acquire any ownership rights in the patents or trademarks Biosafe has
      associated with the products but we may repackage the products using a trademark
      of our selection and design.




We
      do not
      own any intellectual property rights. Set forth below is information on the
      patents Biosafe licenses to us under the license agreement:





***Biosafe
      Patents Issued:***




·**Method
                for Correcting for Blood Volume in a Serum Analyte Determination
                (#6,040,135 expires March 20, 2017;6,187,531 expires February 12,
                2018)**
              
              This
                patented process is the mathematical conversion from blood to serum
                based
                upon the red cell mass. It is the means by which the results of the
                test
                can be interpreted.·**Biological
                Sample Storage Package and Method for Making Same (#6,176,371 expires
                January 22, 2018)**
              
              This
                is a desiccated foil bag that maintains the quality and stability
                of the
                blood sample during delivery to the laboratory and also extends the
                shelf
                life of the product when it is maintained in inventory.·**Whole
                Blood Collection Device and Method (#6,406,919 expires June 17, 2010;
                6,673,627 expires January 5, 2021)**
              
              A
                blood transport system and coating solution which keeps blood from
                clotting during the collection and delivery
                processes.





·**A
                Method for Stabilizing Amino Transferase Activity in a Biological
                Fluid
                (#6,465,202 expires October 14, 2019)**
              
              This
                is a test that measures liver enzymes to test liver function and
                detect
                early complications of liver damage due to adverse effects of therapeutic
                drugs.·**Device
                for Collecting and Drying a Body Fluid (#6,524,533 expires February
                24,
                2020)**
              
              This
                device, which is used in conjunction with the liver enzyme test,
                collects
                and separates whole blood and dries the
                serum.






·**Anemia
                Meter (#7,115,421 expires October 2, 2023)**
              
              An
                immediate response device for qualitative and quantitative
                anemia testing.




***Biosafe
      Patents Pending:***




28





·**Body
                Fluid Collection Device (10/135,654, filed April 30,
                2002)**


This
      is a
      method to enhance the filter paper onto which the blood sample is deposited.
      A
      spreading layer is placed on the filter paper which helps maintain a consistent
      flow of blood across surface of the filter paper. The even distribution of
      the
      blood improves the precision and accuracy of the test results and prevents
      rejection of the test due to poor sample quality.





Patent
      applications in the United States are maintained in secrecy until patents are
      issued. There can be no assurance that any patents that may be issued to us
      in the future, will afford protection against competitors with similar
      technology. In addition, no assurances can be given that the patents issued
      to
      us will not be infringed upon or designed around by others or that others will
      not obtain patents that we would need to license or design around. If the courts
      uphold existing or future patents containing broad claims over technology used
      by us, the holders of such patents could require us to obtain licenses to use
      such technology.




Where
      appropriate, Biosafe intends to obtain patent protection for its products and
      processes. Biosafe also relies on trade secrets and proprietary know-how in
      its
      manufacturing processes. We will require each of our employees, consultants
      and
      advisors to execute a confidentiality agreement upon the commencement of any
      employment, consulting or advisory relationship with us. Each agreement will
      provide that all confidential information developed or made known to the
      individual during the course of the relationship will be kept confidential
      and
      not be disclosed to third parties except in specified circumstances. In the
      case
      of employees, the agreements will provide that all inventions conceived of
      by an
      employee shall be the exclusive property of the Company.




Regulation




The
      testing, manufacturing and sale of our products are subject to regulation by
      numerous governmental authorities, principally the FDA. The FDA regulates the
      clinical testing, manufacture, labeling, distribution and promotion of medical
      devices, which includes diagnostic products. We are limited in our ability
      to
      commence marketing or selling diagnostic products in the United States until
      clearance is received from the FDA. In addition, various foreign countries
      in
      which our products may be sold impose local regulatory requirements. The
      preparation and filing of documentation for FDA and foreign regulatory review
      can be a lengthy, expensive and uncertain process. Biosafe bears the risks
      of
      costs associated with regulatory requirements.




In
      the
      United States, medical devices are classified by the FDA into one of three
      classes (Class I, II or III) on the basis of the controls deemed
      necessary by the FDA to ensure their safety and effectiveness in a reasonable
      manner. Class I devices are subject to general controls (e.g., labeling,
      pre-market notification and adherence to QSR requirements). Class II
      devices are subject to general and special controls (e.g., performance
      standards, post-market surveillance, patient registries and FDA guidelines).
      Generally, Class III devices are those that must receive pre-market
      approval by the FDA to ensure their safety and effectiveness (e.g.,
      life-sustaining, life-supporting and implantable devices or new devices that
      have been found not to be substantially equivalent to legally marketed devices).
      All of the current products and products under development are or are expected
      to be classified as Class II devices.




29




Before
      a
      new device can be introduced in the market FDA clearance or approval must be
      obtained through either clearance of a 510(k) pre-market notification or
      approval of a pre market approval (“PMA”) application, which is a more extensive
      and costly application. All of our products have been cleared using a 510(k)
      application and we expect that most future products will also qualify for
      clearance using a 510(k) application (as described in Section 510(k) of the
      Medical Device Amendments to the Food, Drug & Cosmetic Act of
      1938).




It
      generally takes up to 90 days from submission to obtain 510(k) pre-market
      clearance but may take longer. The FDA may determine that a proposed
      device is not substantially equivalent to a legally marketed device or that
      additional information is needed before a substantial equivalence determination
      can be made. A “not substantially equivalent” determination, or a request for
      additional information, could prevent or delay the market introduction of new
      products that fall into this category. For any devices that are cleared through
      the 510(k) process, modifications or enhancements that could significantly
      affect safety or effectiveness, or constitute a major change in the intended
      use
      of the device, will require new 510(k) submissions. There can be no assurance
      that we will be able to obtain necessary regulatory approvals or clearances
      for
      our products on a timely basis, if at all, and delays in receipt of or failure
      to receive such approvals or clearances, the loss of previously received
      approvals or clearances, limitations on intended use imposed as a condition
      of
      such approvals or clearances, or failure to comply with existing or future
      regulatory requirements could have a material adverse effect on our business,
      financial condition and results of operations. See “Risk Factors.”





Our
      customers using diagnostic tests for clinical purposes in the United States
      are
      also regulated under the Clinical Laboratory Information Act of 1988, or CLIA.
      The CLIA is intended to ensure the quality and reliability of all medical
      testing in laboratories in the United States by requiring that any health care
      facility in which testing is performed meets specified standards in the areas
      of
      personnel qualification, administration, participation in proficiency testing,
      patient test management, quality control, quality assurance and inspections.
      The
      regulations have established three levels of regulatory control based on test
      complexity: “waived,” “moderately complex” and “highly complex.”  Under the
      CLIA regulations, all laboratories performing high or moderately complex tests
      are required to obtain either a registration certificate or certification of
      accreditation from the “Centers for Medicare and Medicaid Services” (“CMS”),
      formerly the United States Health Care Financing Administration. There can
      be no
      assurance that the CLIA regulations and future administrative interpretations
      of
      CLIA will not have an adverse impact on the potential market for our future
      products.





We
      are
      subject to numerous federal, state and local laws relating to such matters
      as
      safe working conditions, manufacturing practices, environmental protection,
      fire
      hazard control and disposal of hazardous or potentially hazardous substances.
      There can be no assurance that we will not incur significant costs to comply
      with laws and regulations in the future or that such laws or regulations will
      not have a material adverse effect upon our business, financial condition and
      results of operations.





Customers




30





From
      our
      inception to December 31, 2006 sales to Supervalu, Inc. (formerly, Albertsons)
      constituted more than 10% of our sales during such period. . While we may
      continue to rely on larger customers, these significant customers will probably
      be different customers from period to period.




Employees




As
      of
      June 15, 2007, we had one full time employee, our Executive Vice President,
      Ernest Azua. Mr. Azua is conducting a search to hire a Chief Executive Officer.
      During the next twelve months the Company plans to hire at least three
      additional new employees, including a Chief Financial Officer, a sales executive
      and an administrative assistant, and depending on future strategies, sales
      successes and any other employee intensive strategies, it is possible that
      the
      Company may need to hire or retain additional employees or
      consultants.




Item
      2.
      Properties.




We
      do not
      own any real estate or office equipment. Our headquarters are located
      temporarily in an office provided to the Company by Biosafe at 100 Field Drive,
      Suite 240, Lake Forest, Illinois 60045. The Company does not pay rent to Biosafe
      for such space, but since October the Company has been paying to Biosafe under
      an oral agreement which is subject to termination by either party at any time,
      $15,000 per month for office space, management services, insurance and
      utilities. This arrangement is intended to be temporary until the Company
      locates its permanent office location within the next six months.





Item
      3.
      Legal Proceedings.





No
      legal
      proceedings to which we are a party or to which any of our property is the
      subject are pending, or to our knowledge, threatened or contemplated.





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





There
      were no matters submitted during the fourth quarter of the fiscal year covered
      by this report to a vote of security holders, through the solicitation of
      proxies or otherwise.





PART
      II





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





There
      is
      no market for our common stock.





As
      of
      June 15, 2007, we had two record holders of our common stock.





We
      have
      not paid dividends on our common stock, and the terms of Certificate of
      Designations relating to the creation of the Series A Stock prohibit us from
      paying dividends. We plan to retain future earnings, if any, for use in our
      business. We do not anticipate paying dividends on our common stock in the
      foreseeable future.




31





As
      of
      June 15, 2007, there were reserved for issuance a total of 7,548,000 shares,
      of
      which 3,774,000 were issuable upon conversion of the Series A Stock and
      3,774,000 shares were reserved for issuance upon exercise of the warrants.
      No
      shares are available for sale pursuant to Rule 144 as of the date of this
      Report.





Issuances
      of Securities Without Registration Since Our Inception





On
      August
      30, 2006, we issued 1,500,000 shares of common stock to Michael Sosnowik, our
      former Chief Executive Officer, under an employment agreement with Mr. Sosnowik.
      Under an agreement dated December 28, 2006 between Mr. Sosnowik and us, Mr.
      Sosnowik returned all of such shares to us and renounced any interest in such
      shares.




Pursuant
      to a Distributor and License Agreement entered into on September 7, 2006 we
      issued 6,050,000 shares of common stock to Biosafe, as partial consideration
      of
      a grant to us of an exclusive license to sell the Diagnostic Products in the
      Market.




On
      September 6, 2006, we issued to Barron for a total purchase price of $2 million,
      3,774,000 shares of our Series A Stock, five year warrants to purchase an
      aggregate of 1,887,000 shares of our common stock at an exercise price of $.80
      per share and five year warrants to purchase an aggregate of 1,887,000 shares
      of
      our common stock at an exercise price of $1.10 per share. The Series A Stock
      is
      convertible into 6,250,000 shares of common stock (which number gives effect
      an
      increase of 2,476,000 in the number of shares issuable upon conversion of our
      outstanding Series A Stock as a result of an adjustment which is required under
      the terms of our Securities Purchase Agreement with Barron as a result of our
      failure to achieve certain pre-tax fully diluted earnings per share targets
      for
      the three months ended December 31, 2006). The warrants and Series A Stock
      are
      all currently exercisable and convertible in full. The Series A Stock has a
      liquidation value of $2,000,000.





In
      the
      second quarter of 2007, the Company verbally agreed to cease its business
      partnership with Barron. The Company is currently in negotiations and plans
      to
      close on this arrangement on or around June 30, 2007. However, there can be
      no
      assurance that the Company will be successful in completing this
      transaction.





On
      September 6, 2006 we issued to Leonardo and Kathleen Zangani an aggregate of
      125,000 shares of our common stock for services in connection with the formation
      of our company.





In
      connection with all of these transactions, the Company relied upon the
      exemptions from registration provided by Section 4(2) of the
      Securities Act and Rule 506 of Regulation D thereunder as each of the
      purchasers was an “accredited investor” as defined in Rule 501(a) of
      Regulation D. There were no placement agents or underwriters in any of the
      foregoing transactions.





Equity
      Compensation Plan Information




32





The
      Company does not have any equity compensation plans.




Transfer
      Agent




The
      Company currently acts as its own transfer agent, but plans to engage a transfer
      agent when, and if, a trading market for its common stock develops.





Item
      6.
      Management’s Discussion and Analysis or Plan of Operation





The
      following should be read in conjunction with our audited financial statements
      and related notes included elsewhere in this Form 10-KSB. The following
      discussion contains forward-looking statements. Please see the Introductory
      Statement preceding Part I for further information relating to such forward
      looking statements.




Plan
      of
      Operation





As
      of
      December 31, 2006, the Company’s net cash available was approximately $409,257.
      The Company does not have any plans for capital expenditure or research and
      development projects that would cumulatively exceed $100,000 within the next
      twelve months. The Company also does not have, nor does it plan to have, any
      significant debt or off balance commitments that could consume material amounts
      of cash during the next twelve months.




During
      the next twelve months the Company plans to fill at least four new positions,
      including a Chief Executive Officer (“CEO”) a Chief Financial Officer, a sales
      executive and an administrative assistant, and depending on future strategies,
      sales successes and any other employee intensive strategies, it is possible
      that
      the Company may need to hire or retain additional employees or consultants.





One
      of
      the Company’s current strategies is to concentrate on developing relationships
      with customers that offer the best combination of profitability and payment
      terms. Management believes that with this strategy and its relatively
      conservative plan for future general cash commitments, cash resources and cash
      flows for the next twelve months will be sufficient to adequately sustain
      operations. However, such strategy and plans are dependent on (1) the Company’s
      ability to recruit and retain a sales focused CEO and (2) the timeliness of
      the
      hiring of the CEO.





While
      acquisitions may be considered during the next twelve months, the primary focus
      of the Company will be to develop or acquire new products that can be sold
      via a
      sales representative or contractual joint venture. A purchase of an additional
      product line in the next year is possible, but not likely.





The
      Company does not expect to incur significant charges from research and
      development in the near term.




33




During
      the fourth quarter of 2006 the Company established contact with new large
      retailing organizations to whom we have provided samples of our test kits and
      started exploratory conversations about possible sales opportunities. While
      we
      do not know the scope of any opportunity, we have found these retailers quite
      interested and we expect to strengthen these relationships during 2007. However
      there is no assurance that these opportunities will generate substantial sales
      in the near term.





The
      Company also has taken some initial steps to identify and interview possible
      sales representatives and accounting staff to act upon when the need is
      clearer.





Results
      of Operations





The
      Company was formed on August 25, 2006. The Company’s net loss from inception
      through December 31, 2006 was $122,302 and included operational and formational
      expenses. The formation expenses as well as professional fees incurred from
      inception aggregated approximately $140,000.





We
      generated $255,857 in revenues from inception to December 31, 2006, with a
      gross
      margin of $98,803. We had an accumulated loss of $122,302 from inception to
      December 31, 2006 and as of December 31, 2006 have a working capital position
      of
      $785,838 which we believe will be sufficient to sustain our operations for
      the
      fiscal year ending December 31, 2007 depending on sales. The continuation of
      the
      Company as a going concern is dependent upon the continued financial support
      from its shareholders, the ability of the Company to obtain necessary equity
      financing to continue operations and the attainment of profitable operations.
      If
      necessary, we expect that we will be able to obtain additional funds by equity
      financing and/or related party advances; however, there is no assurance that
      additional funding will be available to the extent required to address
      particular needs.





Our
      license for the retail marketing rights of five products from Biosafe Medical
      Technologies, Inc., required us to pay a $1,000,000 initial cash payment. This
      payment was the main cash outflow for during 2006. Our only other large
      expenditure during the period ended December 31, 2006 was a 50% deposit for
      the
      purchase of 100,000 Anemia Meters from Biosafe Laboratories, Inc. for $300,000.
      The balance sheet includes accounts receivable of $204,608 of which $189,605
      was
      from one customer and of which $173,103 was collected in February
      2007.





Liquidity
      and Capital Resources





We
      believe that our primary sources of liquidity are cash flows from operations
      and
      existing cash. We intend to use our available funds as working capital and
      to
      develop our current lines of business. We anticipate that cash flow provided
      by
      operating activities will provide the necessary funds on a short - and long-term
      basis to meet our operating cash requirements. In the event that we do not
      generate sufficient cash from operations to meet our operating requirements
      our
      management expects that we will be able to obtain additional funds by equity
      financing and/or related party advances, although no assurance can be given
      that
      any such financing will be available on terms acceptable to us or at
      all.





34





Except
      as
      noted above, as of December 31, 2006:


·
            There
                  are not any known trends, events or uncertainties that have or
                  are
                  reasonably likely to have a material impact on the Company’s short-term or
                  long-term liquidity, its net sales, revenues or income from continuing
                  operations.


·
            The
                  Company has not incurred any material commitments for capital
                  expenditures.


·
              Other
                    than the Company’s formation, registration and compensation expenses, the
                    Company has not experienced any significant elements of income
                    or loss
                    that do not arise from its continuing
                    operations.
 ·
                A
                    Method for Stabilizing Amino Transferase Activity in a Biological
                    Fluid
                    (#6,465,202 expires October 14,
                    2019)


Off
      Balance Sheet Arrangements





The
      Company is not party to nor has it any plans to become a party to any off
      balance sheet arrangements.





Our
      Critical Accounting Policies





Our
      financial statements and the notes to our financial statements contain
      information that is pertinent to management’s discussion and analysis. The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosures of contingent assets and liabilities. Management bases its estimates
      on historical experience and on various other assumptions that are believed
      to
      be reasonable under the circumstances, the results of which form the basis
      for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. On a continual basis, management
      reviews its estimates utilizing currently available information, changes in
      facts and circumstances, historical experience and reasonable assumptions.
      After
      such reviews, and if deemed appropriate, those estimates are adjusted
      accordingly. Actual results may vary from these estimates and assumptions under
      different and/or future circumstances. Management considers an accounting
      estimate to be critical if: 1) it requires assumptions to be made that were
      uncertain at the time the estimate was made; and 2) changes in the estimate,
      or
      the use of different estimating methods that could have been selected, could
      have a material impact on the Company’s results of operations or financial
      condition.





The
      following critical accounting policies have been identified that affect the
      more
      significant judgments and estimates used in the preparation of the consolidated
      financial statements. In addition to the recording and presentation of our
      convertible preferred stock, we believe that the following are some of the
      more
      critical judgment areas in the application of our accounting policies that
      affect our financial condition and results of operations. The following critical
      accounting policies are not intended to be a comprehensive list of all the
      Company’s accounting polices or estimates.




35





Revenue
      Recognition - Revenue is recognized when persuasive evidence of an arrangement
      exists, the price is fixed or determinable, the collectibility is reasonable
      assured, and the delivery and acceptance of the product has occurred. Management
      exercises judgment in evaluating these factors in light of the terms and
      conditions of its customer contracts and other existing facts and circumstances
      to determine the appropriate revenue recognition. Due to limited commercial
      sales history, the Company’s ability to evaluate the collectibility of customer
      accounts requires significant judgment. Sales discounts and allowances are
      recorded at the time product sales are recognized and are offset against sales
      revenue. Consignment sales or “pay-on-scan” sales are recorded as revenue when
      the sale at the retail store level has occurred. If a sale occurs that has
      a
      right-of-return, a reserve for returns will be created using Company and
      industry experience as to rates of return. Service revenue is recognized in
      the
      period in which the service was performed.





Accounts
      Receivable - We are required to estimate the collectibility of our trade
      receivables. Judgment is required in assessing the realization of these
      receivables, including the current creditworthiness of each customer and related
      aging of the past due balances. We evaluate specific accounts when we become
      aware of a situation where a customer may not be able to meet its financial
      obligations due to a deterioration of its financial viability, credit ratings
      or
      bankruptcy. The reserve requirements are based on the best facts available
      to us
      and are reevaluated and adjusted as additional information is received. Our
      reserves are also determined by analyzing certain aged receivable categories.
      At
      December 31, 2006, our allowance for doubtful accounts was $15,000.





Inventory
      - We are required to state our inventories at the lower of cost or market.
      In
      assessing the ultimate realization of inventories, we are required to make
      considerable judgments as to future demand requirements and compare that with
      our current inventory levels. Our reserve requirements generally increase as
      our
      projected demand requirements decrease due to market conditions, technological
      and product life cycle changes as well as longer than previously expected usage
      periods. We have evaluated the current levels of inventories, considering
      historical net revenues and other factors and, based on this evaluation,
      recorded adjustments to cost of revenues to adjust inventories to net realizable
      value. Inventories of $33,487 at December 31, 2006 are net of reserves of
      $72,972. It is possible that additional charges to inventory may occur in the
      future if there are further declines in market conditions, or if additional
      restructuring actions are taken.





Long
      Lived Assets - Statement of Financial Accounting Standards (“SFAS”), No. 144
“Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS 144”)
      requires management judgments regarding the future operating and disposition
      plans for marginally performing assets, and estimates of expected realizable
      values for assets to be sold. LAB123 accounts for its long-lived assets in
      accordance with FAS 144 for purposes of determining and measuring impairment
      of
      its other intangible assets. LAB123’s policy is to periodically review the value
      assigned to its long lived assets to determine if they have been permanently
      impaired by adverse conditions which may affect it. If required, an impairment
      charge would be recorded based on an estimate of future discounted cash flows.
      In order to test for recoverability, LAB123 compared the sum of an undiscounted
      cash flow projections (gross margin dollars from product sales) of the License
      Agreement to the carrying value of that Agreement. Considerable management
      judgment is necessary to estimate undiscounted future operating cash flows
      and
      fair values and, accordingly, actual results could vary significantly from
      such
      estimates. No impairment charges were recognized during the year ended December
      31, 2006.




36





Deferred
      Tax Assets - We currently have significant deferred tax assets. SFAS No. 109,
      “Accounting for Income Taxes”(“FAS 109”), requires a valuation allowance be
      established when it is more likely than not that all or a portion of deferred
      tax assets will not be realized. Furthermore, FAS 109 provides that it is
      difficult to conclude that a valuation allowance is not needed when there is
      negative evidence such as cumulative losses in recent years. Therefore,
      cumulative losses weigh heavily in the overall assessment. Accordingly, and
      after considering changes in previously existing positive evidence, we recorded
      a full valuation allowance. In addition, we expect to provide a full valuation
      allowance on future tax benefits until we can sustain a level of profitability
      that demonstrates our ability to utilize the assets, or other significant
      positive evidence arises that suggests our ability to utilize such assets.
      We
      will continue to re-assess our reserves on deferred income tax assets in future
      periods on a quarterly basis.





Accounting
      for Preferred Stock and Related Warrants - The Series A Stock will be accounted
      for in accordance with Emerging Issues Task Force ("EITF") No. 98-5 "Accounting
      for Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios" ("EITF 98-5"), EITF No. 00-27 "Application of
      Issue No. 98-5 to Certain Convertible Instruments". Upon issuance of the Series
      A Stock the Company recognized an effective beneficial conversion feature of
      approximately $524,000 based upon the relative fair values of the underlying
      securities issued. This beneficial conversion feature will be recorded as a
      deemed preferred stock dividend. Fair value is determined using the
      Black-Scholes option valuation model. Key assumptions used in the model include
      stock price, applicable volatility rates, remaining contractual life and period
      close risk free interest rate.





The
      warrants and conversion option will be accounted for under EITF No. 00-19
      "Accounting for Derivative Financial Instruments Indexed to, and Potentially
      Settled in, a Company's Own Stock" ("EITF 00-19"). The warrants and conversion
      option were not deemed to be a derivative liability in accordance with SFAS
      No.
      133 (par 1la) as the contracts were indexed to the Company's own stock and
      qualified as equity in the balance sheet.





Contingencies
      - We are subject to proceedings, lawsuits and other claims, including
      proceedings under laws and government regulations related to securities,
      environmental, labor, product and other matters. We are required to assess
      the
      likelihood of any adverse judgments or outcomes to these matters, as well as
      potential ranges of probable losses. A determination of the amount of reserves
      required, if any, for these contingencies is based on an analysis of each
      individual issue with the assistance of legal counsel. As of December 31, 2006,
      there is no reserve, however, this may change in the future.





Inflation
      - Inflation should not have a significant impact on our operating
      results.




37





Recent
      Accounting Pronouncements





In
      June
      2006,  the Financial Accounting Standards Board (the “FASB”) 
issued  FASB  Interpretation  No. 48,  "Accounting  for
      Uncertainty in Income Taxes - an  interpretation  of FASB Statement
      No. 109" ("FIN48"),  which  clarifies the accounting  for 
uncertainty  in tax positions.  This interpretation 
requires  that the Company recognize  in its financial 
statements,  the impact of a tax  position,  if that 
position  is more  likely than not of being sustained  on 
audit,  based  on  the  technical  merits  of
      the  position.  The provisions of FIN 48 are effective as of the
      beginning of the Company's 2007 fiscal year and are to be applied to all
      open tax years as of the date of effectiveness with the cumulative effect of
      the
      change in accounting principle recorded as an adjustment to opening
      retained earnings.  The Company is in the process of evaluating the
      impact of the application of FIN 48 to its financial statements and is currently
      not yet in a position to determine such effects.





In
      September 2006, the staff of the Securities and Exchange Commission issued
      Staff
      Accounting Bulletin No. 108 (“SAB 108”) which provides interpretive guidance on
      how the effects of the carryover or reversal of prior year misstatements should
      be considered in quantifying a current year misstatement. SAB 108 is effective
      for fiscal years ending on or after November 15, 2006. The adoption of SAB
      108
      did not have a material impact on the Company’s financial position, results of
      operations or cash flows.




In
      September 2006, the FASB issued SFAS No. 157, "Accounting for Fair Value
      Measurements." SFAS No. 157 defines fair value, and establishes a framework
      for
      measuring fair value in generally accepted accounting principles and expands
      disclosure about fair value measurements. SFAS No. 157 is effective for
      financial statements issued subsequent to November 15, 2007. The Company does
      not expect the new standard to have any material impact on the financial
      position, results of operations and cash flows.




In
      December 2006, the FASB approved FASB Staff Position (FSP) No. EITF 00-19-2,
      "Accounting for Registration Payment Arrangements" ("FSP EITF 00-19-2"), which
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement, whether issued
      as a separate agreement or included as a provision of a financial instrument
      or
      other agreement, should be separately recognized and measured in accordance
      with
      SFAS No. 5, "Accounting for Contingencies". FSP EITF 00-19-2 also requires
      additional disclosure regarding the nature of any registration payment
      arrangements, alternative settlement methods, the maximum potential amount
      of
      consideration and the current carrying amount of the liability, if any. The
      guidance in FSP EITF 00-19-2 amends FASB Statements No. 133, "Accounting for
      Derivative Instruments and Hedging Activities", and No. 150, "Accounting for
      Certain Financial Instruments with Characteristics of both Liabilities and
      Equity", and FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others", to include scope exceptions for registration payment arrangements.
      FSP
      EITF 00-19-2 is effective immediately for registration payment arrangements
      and
      the financial instruments subject to those arrangements that are entered into
      or
      modified subsequent to the issuance date of this FSP, or for financial
      statements issued for fiscal years beginning after December 15, 2006, and
      interim periods within those fiscal years, for registration payment arrangements
      entered into prior to the issuance date of this FSP. The adoption of this
      pronouncement is not expected to have an impact on the Company's financial
      position, results of operations or cash flows.




38




In
      October 2005, the FASB issued FSP FAS 123(R)-2, "Practical Accommodation to
      the
      Application of Grant Date as Defined in FASB Statement No. 123(R)", which
      provides clarification of the concept of mutual understanding between employer
      and employee with respect to the grant date of a share-based payment award.
      This
      FSP provides that a mutual understanding of the key terms and conditions of
      an
      award shall be presumed to exist on the date the award is approved by management
      if the recipient does not have the ability to negotiate the key terms and
      conditions of the award and those key terms and conditions will be communicated
      to the individual recipient within a relatively short time period after the
      date
      of approval. This guidance was applicable upon the initial adoption of SFAS
      123(R). The adoption of this pronouncement did not have an impact on the
      Company's financial position, results of operations or cash flows.




In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 provides
      companies with an option to report selected financial assets and liabilities
      at
      fair value. The objective of SFAS 159 is to reduce both complexity in accounting
      for financial instruments and the volatility in earnings caused by measuring
      related assets and liabilities differently. Generally accepted accounting
      principles have required different measurement attributes for different assets
      and liabilities that can create artificial volatility in earnings. The FASB
      has
      indicated it believes that SFAS 159 helps to mitigate this type of
      accounting-induced volatility by enabling companies to report related assets
      and
      liabilities at fair value, which would likely reduce the need for companies
      to
      comply with detailed rules for hedge accounting. SFAS 159 also establishes
      presentation and disclosure requirements designed to facilitate comparisons
      between companies that choose different measurement attributes for similar
      types
      of assets and liabilities. SFAS 159 does not eliminate disclosure requirements
      included in other accounting standards, including requirements for disclosures
      about fair value measurements included in SFAS 157 and SFAS No. 107,
      "Disclosures about Fair Value of Financial Instruments." SFAS 159 is effective
      for the Company as of the beginning of an entity’s first fiscal year that begins
      after November 15, 2007. The adoption of this pronouncement is not expected
      to
      have an impact on the Company's financial position, results of operations or
      cash flows.





Recent
      Financing




On
      September 6, 2006 we entered into agreements with Barron Partners, L.P., a
      New
      York based private partnership (“Barron”), which is an accredited investor,
      regarding a $2 million private placement equity financing of the
      Company. The financing consisted of the sale to Barron of 3,774,000 shares
      of our Series A Stock. Each share of preferred stock is convertible
      initially into one share of the Company’s common stock. In addition, we issued
      warrants to Barron to acquire up to an additional 3,774,000 shares of our common
      stock, of which 1,887,000 are exercisable at $0.80 per share and 1,877,000
      are
      exercisable at $1.10 per share. The warrants are exercisable for five years
      from
      the date of issuance, which was September 6, 2006.





The
      exercise prices of the warrants, and the conversion rate, are subject to
      adjustment upon the occurrence of certain specified events, including issuance
      of additional shares of common stock or subdivision or combining of shares
      of
      common stock.




39




The
      conversion right as contained in the preferred stock certificate of designations
      and the exercise rights contained in the warrants provide that a holder will
      not
      convert an amount of preferred stock or exercise warrants to the extent that the
      number of shares held by the holder, when added to the number of shares of
      common stock beneficially owned by such holder or issuable if the holder
      exercised one or more of its warrants immediately prior to conversion, would
      exceed 4.9% of the Company’s issued and outstanding common stock.




The
      transaction with Barron also included a Registration Rights Agreement in which
      the Company agreed to file a registration statement on Form SB-2 covering
      the shares of common stock issuable upon the exercise of the warrants and the
      conversion of the preferred stock. Such registration statement was declared
      effective by the SEC on January 10, 2007.





The
      Company has used some of the proceeds and plans to use the remaining net
      proceeds, of the financing, for key strategic initiatives, working capital
      and
      other general corporate purposes.




As
      part
      of the September 6, 2006 private placement the Company granted to Barron the
      right for a two year period ending September 6, 2008 to participate in any
      subsequent equity financings by the Company on a pro rata basis on the same
      terms and conditions as offered by the Company to other investors.




The
      agreements with Barron state that if the Company’s earnings before interest,
      taxes, depreciation and amortization ("EBITDA") for the three months ending
      December 31, 2006 and the fiscal year ending December 31, 2007 are less than
      certain targeted amounts, then the conversion rate of the preferred stock and
      the exercise price of the warrants issued to Barron shall be reduced in
      accordance with certain formulas. We failed to meet these earnings requirements
      and, accordingly, Barron will be entitled to receive approximately 2,476,000
      additional shares of our common stock upon conversion of all of the Series
      A
      Stock it holds. In addition, the exercise prices of all of the warrants held
      by
      Barron will be reduced by 40%.




The
      Company has agreed to ensure that a majority of the compensation and audit
      committees of the Board of Directors of the Company are qualified independent
      directors within 30 days after September 6, 2006. If the Board fails to meet
      either of such majority committee requirements, then the Company is obligated
      to
      pay to Barron liquidated damages at the rate of $36,667 per month for each
      month
      during which this requirement has not been met. As of May 16, 2007 we have
      met
      this requirement.





In
      the
      second quarter of 2007, the Company reached a verbal
      agreement to redeem the  Series A  Stock and related
      Warrants from Barron for $2,000,000. The Company expects to complete
      this transaction on or around June 30, 2007.





40




Going
      Concern





These
      Company’s financial statements as of December 31, 2006 and for the period from
      August 25, 2006 (Inception) to December 31, 2006 have been prepared in
      accordance with generally accepted accounting principles applicable to a going
      concern, which implies the Company will continue to meets its obligations and
      continue its operations for the next fiscal year. Realization values may be
      substantially different from carrying values as shown and the financial
      statements do not include any adjustments to the recoverability and
      classification of recorded asset amounts and classification of liabilities
      that
      might be necessary should the Company be unable to continue as a going concern.
      The Company has accumulated losses of $122,302 since inception and may not
      have
      sufficient working capital to sustain its operations for the next fiscal year.
      These factors raise substantial doubt regarding the Company’s ability to
      continue as a going concern.





The
      continuation of the Company as a going concern is dependent upon the continued
      financial support from its shareholders, the ability of the Company to obtain
      additional necessary equity financing to continue operations, and the attainment
      of profitable operations. Management has plans in place to address this concern
      and expects that the Company will be able to obtain additional funds by equity
      financing and/or related party advances. However, there can be no assurance
      that
      the Company can continue to raise additional funds on terms that are acceptable
      or available at all. The inability to raise necessary funds can have a material
      adverse effect on the Company's financial position, results of operations and
      cash flows.





Item
      7.  Financial Statements.





Index
      to
      Financial Statements





**INDEX
      TO FINANCIAL STATEMENTS**




**Financial
                Statements****As
                of December 31, 2006 and from August 25, 2006 (Inception) to December
                31,
                2006**Report
                of Independent Registered Public Accounting Firm
            F-1Balance
                Sheet
            F-2Statement
                of Operations
            F-3Statement
                of Changes in Stockholders’ Equity
            F-4Statement
                of Cash Flows
            F-5Notes
                to Financial Statements
            F-6




41


**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders of Lab123, Inc.
 Lake
        Forest, Illinois
 
 We
        have
        audited the accompanying balance sheet of Lab123, Inc., (a development stage
        company) as of December 31, 2006 and the related statements of operations,
        stockholders’ equity and cash flows for the period from August 25, 2006 (date of
        inception) to December 31, 2006. These financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audit.
 
 We
        conducted our audit 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 misstatements. The Company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Lab123, Inc., (a development
        stage
        company) as of December 31, 2006 and the results of its operations and its
        cash
        flows for the period from August 25, 2006 (date of inception) to December
        31,
        2006 in conformity with accounting principles generally accepted in the United
        States of America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Note 2 to the financial statements,
        the Company has a net loss, is in the development stage, and has limited
        operations and revenues generated to date. These conditions raise substantial
        doubt about its ability to continue as a going concern. Management’s plans in
        regard to these matters are also described in Note 2. The financial statements
        do not include any adjustments that might result from the outcome of this
        uncertainty.
 */s/
                  Marcum & Kliegman LLP**Marcum
&
Kliegman
                  LLP**New York, New York**June 13,
                  2007*
 
 F-1
  Lab123,
        Inc.
 (A
        Development Stage Company)
 Balance
        Sheet
 December
        31, 2006
 
 ASSETSCurrent
                  AssetsCash
              
              $
              409,257Accounts
                  receivable, net of allowance for doubtful accounts of
                  $15,000
              
              
              189,608Inventory,
                  net of inventory reserve of $72,972
              
              
              33,487Inventory
                  deposit with Biosafe - related party
              
              
              300,000Total
                  Current Assets
              
              
              932,352Property
                  and Equipment, net of accumulated depreciation of $136
              
              
              2,312License
                  Agreement, net of accumulated amortization of $25,000
              
              
              975,000TOTAL
                  ASSETS
              
              $
              1,909,664LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  Liabilities:Accounts
                  payable
              
              $
              103,032Accrued
                  expenses
              
              
              6,111Due
                  to BioSafe - related party
              
              
              37,371Total
                  Current Liabilities
              
              
              146,514Commitments
                  and ContingenciesSTOCKHOLDERS’
                  EQUITYSeries
                  A Convertible Preferred Stock - $0.001 par value; 6,000,000
                  authorized;3,774,000
                  issued and outstanding. (Liquidation preference
                  $2,000,000)
              
              
              3,774Common
                  Stock - $0.001 par value; 21,000,000 shares authorized;6,175,000
                  shares issued and outstanding
              
              
              6,175Additional
                  paid-in capital
              
              
              2,400,003Deficit
                  accumulated during the development stage
              
              
              (646,802
              )TOTAL
                  STOCKHOLDER'S EQUITY
              
              
              1,763,150TOTAL
                  LIABILITIES AND STOCKHOLDER'S EQUITY
              
              $
              1,909,664
 
 *The
        accompanying notes are an integral part of these financial
        statements.*
  F-2
  Lab123,
        Inc.
 (A
        Development Stage Company)
 Statement
        of Operations
 For
        the
        Period August 25, 2006 (Date of Inception) to December 31, 2006
 
 
 
 REVENUE,
                  NET
              
              $
              255,857COST
                  OF GOODS SOLD
              
              
              157,054GROSS
                  PROFIT
              
              
              98,803OPERATING
                  EXPENSES:Compensation
              
              
              78,427Professional
                  fees
              
              
              52,315Administrative
                  fee - related party
              
              
              57,372Other
                  administrative costs
              
              
              17,855Bad
                  debt expense
              
              
              15,000Depreciation
              
              
              136Total
                  Operating Expenses
              
              
              221,105Loss
                  Before Provision for Income Taxes
              
              
              (122,302
              )Provision
                  for Income Taxes
              
              
              -NET
                  LOSS
              
              
              (122,302
              )Deemed
                  dividend on preferred stock
              
              
              (524,500
              )Net
                  Loss applicable to common stockholders
              
              $
              (646,802
              )Net
                  Loss per Common Share:(Basic
                  and Diluted)
              
              $
              (0.02
              )Net
                  Loss Available to Common Stockholders’
                per
                  Common Share:(Basic
                  and Diluted)
              
              $
              (0.09
              )Weighted
                  average common shares outstanding(Basic
                  and Diluted)
              
              
              6,955,078
  *The
        accompanying notes are an integral part of these financial
        statements.*
  F-3
  Lab123,
        Inc.
 (A
        Development Stage Company)
 Statement
        of  Stockholders’ Equity
 For
        the
        Period August 25, 2006 (Date of Inception) to December 31, 2006
 **Deficit****Accumulated****Additional**
                
                **During
                    the**
                
                **Total****Preferred
                    Stock**
                
                **Common
                    Stock**
                
                **Paid
                    - in**
                
                **Development**
                
                **Stockholder’s****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **Stage**
                
                **Equity**Issuance
                    of shares under employment agreement (August 30, 2006,
                    $0.36)
                
                
                —
                
                $
                —
                
                
                1,500,000
                
                $
                1,500
                
                $
                106,500
                
                $
                —
                
                $
                108,000Issuance
                    of preferred stock and warrants under private placement (September
                    6,
                    2006)
                
                
                3,774,000
                
                
                3,774
                
                
                —
                
                
                —
                
                
                1,881,678
                
                
                —
                
                
                1,885,452Deemed
                    dividend of beneficial conversion feature for preferred stock
                    sold under
                    private placement. (September 6, 2006)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                524,500
                
                
                (524,500
                )
                
                —Issuance
                    of common stock for services provided to principals of an advisory
                    firm as
                    part of the private placement. (September 6, 2006, $0.53)
                
                
                —
                
                
                —
                
                
                125,000
                
                
                125
                
                
                (125
                )
                
                —
                
                
                —Issuance
                    of common stock to BioSafe for license agreement (September 6,
                    2006)
                
                
                —
                
                
                —
                
                
                6,050,000
                
                
                6,050
                
                
                (6,050
                )
                
                —
                
                
                —Return
                    of shares under employment agreement (December 31, 2006,
                    $0.36)
                
                
                —
                
                
                —
                
                
                (1,500,000
                )
                
                (1,500
                )
                
                (106,500
                )
                
                —
                
                
                (108,000
                )Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (122,302
                )
                
                (122,302
                )Balance
                    at December 31, 2006
                
                
                3,774,000
                
                $
                3,774
                
                
                6,175,000
                
                $
                6,175
                
                $
                2,400,003
                
                $
                (646,802
                )
                $
                1,763,150
  *The
        accompanying notes are an integral part of these financial
        statements.*
  F-4
  Lab123,
        Inc.
 (A
        Development Stage Company)
 Statement
        of Cash Flows
 For
        the
        Period August 25, 2006 (Date of Inception) to December 31, 2006
 
 CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  Loss
              
              $
              (122,302
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              136Amortization
                  of license agreement
              
              
              25,000Reserve
                  for inventory
              
              
              72,972Bad
                  debt
              
              
              15,000Changes
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              (204,608
              )Inventory
              
              
              (106,459
              )Inventory
                  deposit Biosafe - related party
              
              
              (300,000
              )Accounts
                  payable
              
              
              103,032Accrued
                  expenses
              
              
              6,111Due
                  to BioSafe - related party
              
              
              37,371Net
                  cash used in operating activities
              
              
              (473,747
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  of license from Biosafe - related party
              
              
              (1,000,000
              )Purchase
                  of equipment
              
              
              (2,448
              )Net
                  cash used in investing activities
              
              
              (1,002,448
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Net
                  proceeds from sale of Series A Convertible Preferred Stock
              
              
              1,885,452Net
                  cash provided by financing activities
              
              
              1,885,452NET
                  INCREASE IN CASH
              
              
              409,257CASH
                  AT AUGUST 25, 2006 (Date of Inception)
              
              
              -CASH
                  AT DECEMBER 31, 2006
              
              $
              409,257SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid for Interest
              
              $
              —Cash
                  paid for Income Taxes
              
              $
              —
  *The
        accompanying notes are an integral part of these financial
        statements.*
 F-5
  Lab123,
        Inc.
 (A
        Development Stage Company)
 NOTES
        TO FINANCIAL STATEMENTS
  **NOTE
        1 - Organization, Business and Operations**
  Lab123,
        Inc. (a development stage company) (“Lab123” or the “Company”) is currently a
        development stage company under the provisions of Statement of Financial
        Accounting Standards (“SFAS”) No. 7, Development Stage Enterprises and was
        incorporated in Delaware on August 25, 2006. Lab123 is a marketing,
        distributing and manufacturing company whose objective is to license,
        broker or acquire retail medical diagnostic products and services to sell
        into
        retail drug stores and chains in the United States and to internet drug
        retailers. As of December 31, 2006, the Company has commenced operations
        and
        will continue to report as a development stage company until significant
        revenues are generated. The corporate office is located in Lake Forest,
        Illinois.
 
 All
        activity through December 31, 2006 relates to the Company’s formation, the
        progress towards the completion of the private placement described below
        and the
        initial commencement of operations beginning approximately October 1, 2006.
        The
        Company has selected December 31, 2006 as its fiscal year-end.
 
 **NOTE
        2 - Liquidity and Financial Condition**
 
 These
        financial statements have been prepared in accordance with generally accepted
        accounting principles applicable to a going concern, which implies the Company
        will continue to meets its obligations and continue its operations for the
        next
        fiscal year. Realization values may be substantially different from carrying
        values as shown and these financial statements do not include any adjustments
        to
        the recoverability and classification of recorded asset amounts and
        classification of liabilities that might be necessary should the Company
        be
        unable to continue as a going concern. The Company has accumulated losses
        of
        $122,302 since inception and may not have sufficient working capital to sustain
        its operations for the next fiscal year. These factors raise substantial
        doubt
        regarding the Company’s ability to continue as a going concern.
 
 As
        described more fully in Note 3, on September 6, 2006 the Company entered
        into a
        convertible preferred stock purchase agreement with Barron Partners for a
        total
        of $2,000,000. These proceeds have been and will be used primarily to fund
        the
        Company’s working capital needs, pay the expenses associated with the formation
        of Company and partially fund the license as further discussed in Note 8,
        the
        Company has obtained for certain retail medical diagnostic products to sell
        into
        the retail drug stores and chains the United States and internet drug
        retailers.
 
 The
        continuation of the Company as a going concern is dependent upon the continued
        financial support from its shareholders, the ability of the Company to obtain
        additional necessary equity financing to continue operations, and the attainment
        of profitable operations. Management is continuously exploring opportunities
        to
        increase revenues in new business areas. Management has plans in place to
        address this concern and expects that the Company will be able to obtain
        additional funds by equity financing and/or related party advances. However,
        there can be no assurance that the Company can continue to raise additional
        funds on terms that are acceptable or available at all. The inability to
        raise
        necessary funds can have a material adverse effect on the Company's financial
        position, results of operations and cash flows. Management believes it has
        sufficient liquidity available to operate through at least December 31,
        2007.
 
 **NOTE
        3 - Barron Private Placement**
 
 On
        September 6, 2006 the Company entered into a convertible preferred stock
        purchase agreement with Barron Partners (“Barron”) to issue 3,774,000 shares of
        Series A Convertible Preferred Stock (“Series A Preferred”) at $0.53 per share,
        for a total of $2,000,000. One share of Series A Preferred is initially
        convertible into one share of Common Stock at any time, except that at no
        time
        may Barron own any more than 4.9% of the Company’s issued and outstanding common
        stock. In addition, Barron received warrants to purchase 3,774,000 shares
        of
        common stock (“Warrant”). The Warrants entitle the holder to purchase from the
        Company an equal number of common stock at an exercise price per share of
        $0.80
        for 1,887,000 shares and $1.10 for the remaining 1,887,000 shares. The warrants
        are exercisable immediately and shall expire five years from the purchase
        date;
        the warrants carry a cashless exercise provision. Barron Partners was required
        to be reimbursed $85,000 to cover its due diligence and transaction costs
        and as
        of December 31, 2006, the balance is included as part of accounts payable.
 
 Pursuant
        to the terms of the agreement, from September 6, 2006, the purchase date,
        until
        the expiration of 48 months after the Closing Date or until Barron owns less
        than 5% of their Series A Preferred, whichever occurs first, if the Company
        closes on the sale of a note or notes, shares of common stock, or shares
        of any
        class of Preferred Stock at a price per share of common stock, or with a
        conversion right to acquire common stock at a price per share of common stock,
        that is less than the conversion value the Company shall make a post-purchase
        adjustment in the conversion value so that the conversion value is reduced
        to
        price per share of common stock or conversion price of the securities
        sold.
  F-6
  Conversion
        price adjustment based on 2006 and 2007 earnings per share:
 
 In
        the
        event the Company earns between $0.0306 and $0.0187 (40% Decline) per share
        (where such earnings in this computation shall always be defined as earnings
        on
        a pre tax fully diluted basis for the period from August 25, 2006 (Date of
        Inception) to December 31, 2006 from continuing operations before any
        non-recurring items), the then current conversion value at the time the 2006
        Audited Financials are filed with the SEC shall be decreased proportionally
        by
        0% if the earnings are $0.0306 per share or greater and by 40% if the earnings
        are $0.0187 per share or less.
 
 In
        the
        event the Company earns between $0.19 and $0.1446 (25% Decline) per share
        (where
        such earnings in the computation shall always be defined as earnings on a
        pre tax fully diluted basis for the year ended December 31, 2007 from continuing
        operations before any non-recurring items), the then current conversion value
        at
        the time the 2007 Audited Financials are filed with the SEC shall be decreased
        proportionally by 0% if the earnings are $0.19 per share or greater and by
        25%
        if the earnings are $0.1446 per share or less.
 
 The
        stock
        purchase agreement also contains certain covenants including:
  ·
                For
                    five years after Closing the Company shall not to enter into
                    any new
                    borrowings of more than twice as much as the sum of the EBITDA
                    from
                    recurring operations over the past four quarters without Barron’s
                    consent.
  ·
              A
                    majority of the Board of Directors must qualified independent
                    members.
  ·
              In
                    any future stock issuance, Barron has the right to purchase issued
                    shares
                    sufficient to prevent
                    dilution.
  The
        Series A Preferred will be accounted for in accordance with Emerging Issues
        Task
        Force (“EITF”) No. 98-5 “Accounting for Convertible Securities with Beneficial
        Conversion Features or Contingently Adjustable Conversion Ratios” (“EITF 98-5”),
        EITF No. 00-27 “Application of Issue No. 98-5 to Certain Convertible
        Instruments”. Upon issuance of the Series A Preferred the Company recognized an
        effective beneficial conversion feature of approximately $524,000 based upon
        the
        relative fair values of the underlying securities issued. This beneficial
        conversion feature will be recorded as a deemed preferred stock
        dividend.
 
 The
        warrants and conversion option will be accounted for under EITF No. 00-19
        “Accounting for Derivative Financial Instruments Indexed to, and Potentially
        Settled in, a Company's Own Stock” (“EITF 00-19”). The warrants and conversion
        option were not deemed to be a derivative liability in accordance with SFAS
        No.
        133 (par 11a) as the contracts were indexed to the Company’s own stock and
        qualified as equity in the balance sheet.
  On
        September 6, 2006 The Company entered into a registration rights agreement
        with
        Barron whereby the Company is required to file a registration statement with
        the
        SEC, to register the resale of the shares of common stock that the Company
        will
        issue upon conversion of the convertible preferred stock and exercise of
        warrants issued to Barron.
 
 The
        Company was required to use its best efforts to cause the registration statement
        to be declared effective within 120 days of the closing date and obtained
        an
        effective registration statement on January 10, 2007.
 
 Under
        the
        liquidated damages provision, if the Company fails to meet the effectiveness
        deadline for the registration statement, the Company shall issue to Barron
        2,491
        additional shares of the Series A Preferred to Barron as liquidated damages
        for
        each day that the registration is not effective after the deadline until
        September 6, 2008. The obligations of the Company under the registration
        rights
        agreement terminate if and when Barron no longer holds more than 5% of its
        shares of registrable securities.
 
 The
        Company has also granted to each of the other potential selling stockholders
        noted below, “piggyback” registration rights to include shares of common stock
        they own in the registration statement.
  The
        shareholders granted registration rights and the total number of shares
        beneficially owned by each of them are: Barron (7,548,000), Biosafe (6,050,000)
        and the principals of an advisory firm (125,000).
  The
        Company adopted the guidance of EITF 05-4 “The Effect of a Liquidated Damages
        Clause on a Freestanding Financial Instrument Subject to Issue No. 00-19” View
        C, in analyzing the fair value of the registration rights as a derivative
        liability. The analyses and valuation of the registration rights considers
        the
        potential magnitude of such liquidating damages and the probability of this
        liability occurring as part of the assumption used in the valuation methodology.
        The Company has not yet adopted Financial Accounting Standards Board Staff
        Position No. EITF 00-19-2, "Accounting for Registration Payment Arrangements"
        and does not expect the adoption to have an impact on the Company’s financial
        position, results of operations or cash flows (See Note 4).
 
 The
        Company is required to provide for a net share settlement of the liquidated
        damages provision, there are sufficient authorized and unissued shares for
        the
        maximum amount issuable and under no circumstances does the agreement provide
        for an alternative net cash settlement of the liquidated damages.
 
 As
        of
        September 6, 2006, the Company determined that there were no indications
        that it
        would not obtain an effective registration statement and therefore determined
        the provision for liquidated damages to be deminimus.
  F-7
 
 Subsequent
        to December 31, 2006, the Company determined under the terms of the agreement
        that earnings per share for the period from August 25, 2006 (Date of Inception)
        to December 31, 2006 were less than the $0.0187 and, accordingly, reduced
        the
        conversion price of the Series A Preferred by 40% from $0.53 to $0.32. The
        Company will recognize an additional deemed dividend for the conversion price
        reduction of approximately $788,000 during the second quarter ended June
        30,
        2007. The Company will not recognize an additional charge for the reduction
        of
        the 3,774,000 warrants from $0.80 to $0.48 for 1,887,000 shares and from
        $1.10
        to $0.66 for the remaining 1,887,000 shares during the second quarter ended
        June
        30, 2007.
 
 In
        the
        second quarter of 2007, the Company verbally agreed to cease its business
        partnership with Barron. The Company is currently in negotiations and plans
        to
        close on this arrangement on or around June 30, 2007. However, there can
        be no
        assurance that the Company will be successful in completing this
        transaction.
 
 **NOTE
        4 - Summary of Significant Accounting Policies**
  ***Use
        of Estimates***
 
 The
        preparation of 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,
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period.
 
 Management
        bases its estimates on historical experience and on various assumptions that
        are
        believed to be reasonable under the circumstances, the results of which form
        the
        basis for making judgments about the carrying value of assets and liabilities
        that are not readily apparent from other sources. The most significant
        estimates, among other things, are used in accounting for allowances for
        bad
        debts, inventory valuation and obsolescence, deferred income taxes, expected
        realizable values for long-lived assets (primarily intangible assets),
        contingencies, revenue recognition as well as the recording and presentation
        of
        our convertible preferred stock and related warrants. Estimates and assumptions
        are periodically reviewed and the effects of any material revisions are
        reflected in the consolidated financial statements in the period that they
        are
        determined to be necessary. Actual results could differ from those estimates
        and
        assumptions
 
 ***Development
        Stage Company***
 
 The
        Company has generated nominal revenues to date; accordingly, the Company is
        considered a development stage enterprise as defined in Financial Accounting
        Standards Board No. 7, "Accounting and Reporting for Development Stage
        Companies." The Company is subject to a number of risks similar to those
        of
        other companies in an early stage of development.
 
 ***Cash
        and Cash Equivalents***
  The
        Company considers all highly liquid temporary cash investments with an original
        maturity of three months or less when purchased, to be cash
        equivalents.
 
 ***Accounts
        Receivable and Allowance for Doubtful Accounts***
 
 The
        Company generates accounts receivable from the shipment of its medical devices.
        Customer obligations are due under normal trade terms granted by the Company
        on
        the basis of each customers own creditworthiness.
 
 Management
        assesses the remaining balance of accounts receivable to determine whether
        an
        allowance is necessary based on an analysis of past due accounts, the collection
        history, the assessment of future economic conditions and other factors that
        may
        indicate that the collectibility of an account may be in doubt and to determine
        the best estimate of the portion that will be collected. Account balances
        deemed
        to be uncollectible are charged to the allowance after all means of collection
        have been exhausted and the potential for recovery is considered
        remote.
 
 The
        Company does not generally require collateral or other security to support
        the
        customer receivable. The Company has established an allowance for doubtful
        accounts of $15,000, based upon facts surrounding the credit risk of specific
        customer and past history. Management believes that such allowance is adequate
        and does not anticipate incurring significant losses on its trade receivables
        in
        excess of established allowances. While such bad debts expense have historically
        been within expectations and allowances established, the Company cannot
        guarantee that it will continue to experience the same credit loss rates
        that it
        has in the past. If the financial condition of customers were to deteriorate,
        resulting in an impairment of their ability to make payments additional
        allowances may be required.
 
 ***Inventory***
 
 Inventory
        is valued at the lower cost or market, on a “first in first out” cost basis. The
        Company analyzes its inventory reserves for slow-moving, excess and obsolete
        inventories. Inventory reserve estimates are based on historical and projected
        sales volume and anticipated selling prices. If the Company does not meet
        its
        sales expectations, these reserves are increased. Products that are determined
        to be obsolete are written down to net realizable value. If the value of
        the
        inventoried goods should ever be impaired or decline below the recorded value,
        the Company will record a corresponding inventory valuation reserve as part
        of
        cost of goods sold. As of December 31, 2006, the Company believes reserves
        are
        adequate and inventories are reflected at net realizable value.
  F-8
  ***Property
        and Equipment***
 
 Property
        and Equipment are stated at cost less accumulate depreciation. Maintenance
        and
        repairs are charged to expense as incurred; costs of major additions and
        betterments that extend the useful life of the equipment are capitalized.
        When
        equipment is sold, or otherwise disposed of, the cost and related accumulated
        depreciation are eliminated from the accounts and any resulting gain or loss
        is
        reflected in the financial statement.
 
 Depreciation
        is provided for using the straight-line method over the estimated useful
        lives
        of the related assets which is 3 years.
  ***Intangibles***
  Intangibles
        consisted of a license agreement with Biosafe (Note 8) which is amortized
        on a
        straight-line basis over it’s estimated useful life of 10 years.
 
 ***Income
        Taxes***
  The
        Company accounts for income taxes using the liability method as required
        by
        Statement of Financial Accounting Standards No. 109, Accounting for Income
        Taxes
        (“SFAS 109”). Under this method, deferred tax assets and liabilities are
        determined based on differences between their financial reporting and tax
        basis
        of assets and liabilities at the enacted tax rates in effect for the years
        in
        which the differences are expected to reverse. The Company evaluates the
        recoverability of deferred tax assets and establishes a valuation allowance
        when
        it is more likely than not that some portion or all of the deferred tax assets
        will not be realized. If it becomes more likely than not that a tax asset
        will
        be used, the related valuation allowance on such assets would be reversed.
        Management makes judgments as to the interpretation of the tax laws that
        might
        be challenged upon an audit and cause changes to previous estimates of tax
        liability. In management’s opinion, adequate provisions for income taxes have
        been made for all years. If actual taxable income by tax jurisdiction varies
        from estimates, additional allowances or reversals of reserves may be necessary.
        Income tax expense consists of the tax payable for the period and the change
        during the period in deferred tax assets and liabilities. (See Note 11).
  ***Long-Lived
        Assets***
  The
        Company has adopted Statement of Financial Accounting Standards ("SFAS")
        No. 144
        "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No.
        144"). The Statement requires that long-lived assets and certain identifiable
        intangibles held and used by the Company be reviewed for impairment whenever
        events or changes in circumstances indicate that the carrying amount of an
        asset
        may not be recoverable. Events relating to recoverability may include
        significant unfavorable changes in business conditions, recurring losses,
        or a
        forecasted inability to achieve break-even operating results over an extended
        period. The Company evaluates the recoverability of long-lived assets based
        upon
        forecasted undiscounted cash flows. Should impairment in value be indicated,
        the
        carrying value of intangible assets will be adjusted, based on estimates
        of
        future discounted cash flows resulting from the use and ultimate disposition
        of
        the asset. SFAS No. 144 also requires assets to be disposed of be reported
        at
        the lower of the carrying amount or the fair value less costs to dispose
        of.
  ***Loss
        Per Common Share***
  Basic
        earnings (loss) per share have been calculated based upon the weighted average
        number of common shares outstanding. The Series A Preferred and Warrants
        have
        been excluded as common stock equivalents in the diluted earnings per share
        because their effect would be anti-dilutive. The aggregate number of potential
        common stock equivalents outstanding as of December 31, 2006 not included
        in
        basic and diluted net loss per share is as follows:
 
 Series
                  A Preferred
              
              
              3,774,000Warrants
              
              
              3,774,000Total
              
              
              7,548,000
 
 ***Revenue
        Recognition***
 
 Revenue
        is recognized when persuasive evidence of an arrangement exists, the price
        is
        fixed or determinable, the collectibility is reasonable assured, and the
        delivery and acceptance of the product has occurred. Management exercises
        judgment in evaluating these factors in light of the terms and conditions
        of its
        customer contracts and other existing facts and circumstances to determine
        the
        appropriate revenue recognition. Due to limited commercial sales history,
        the
        Company’s ability to evaluate the collectibility of customer accounts requires
        significant judgment. Sales discounts and allowances are recorded at the
        time
        product sales are recognized and are offset against sales revenue. Consignment
        sales or “pay-on-scan” sales are recorded as revenue when the sale at the retail
        store level has occurred. If a sale occurs that has a right-of-return, a
        reserve
        for returns will be created using Company and industry experience as to rates
        of
        return. Service revenue is recognized in the period in which the service
        was
        performed.
  F-9
  ***Accounting
        for Preferred Stock and Related Warrants***
  The
        Company accounted for the Series A Preferred in accordance with Emerging
        Issues
        Task Force ("EITF") No. 98-5 "Accounting for Convertible Securities with
        Beneficial Conversion Features or Contingently Adjustable Conversion Ratios"
        ("EITF 98-5"), EITF No. 00-27 "Application of Issue No. 98-5 to Certain
        Convertible Instruments". The warrants and conversion option will be accounted
        for under EITF No. 00-19 "Accounting for Derivative Financial Instruments
        Indexed to, and Potentially Settled in, a Company's Own Stock" ("EITF 00-19").
        The warrants and conversion option were not deemed to be a derivative liability
        in accordance with SFAS No. 133 (par 1la) as the contracts were indexed to
        the
        Company's own stock and qualified as equity in the balance sheet.
 
 ***Product
        Warranty***
 
 The
        Company offers warranties for certain of its products and or customers. The
        Company accrues its estimated exposure to warranty claims based upon historical
        warranty claim costs as a percentage of sales. Management will review these
        estimates on a regular basis and adjust the warranty provisions as actual
        experience differs from historical estimates. These costs were deemed diminimus
        for the period August 25, 2006 (Date of Inception) to December 31,
        2006.
 
 ***Shipping
        and Handling Costs***
 
 The
        Company includes shipping and handling costs in the statement of operations
        as
        part of cost of sales. These amounts were deemed diminimus
        for the period August 25, 2006 (Date of Inception) to December 31,
        2006.
 
 ***Advertising
        Costs***
 
 Costs
        related to advertising and promotions are charged to operating expense as
        incurred. These costs were deemed diminimus
        for the period August 25, 2006 (Date of Inception) to December 31,
        2006.
  ***Stock
        Based Compensation***
 
 The
        Company adopted SFAS No. 123R "Share Based Payment". This statement is a
        revision of SFAS Statement No. 123, and supersedes APB Opinion No. 25, and
        its
        related implementation guidance. SFAS 123R addresses all forms of share based
        payment ("SBP") awards including shares issued under employee stock purchase
        plans, stock options, restricted stock and stock appreciation rights. Under
        SFAS
        123R, SBP awards will result in a charge to operations that will be measured
        at
        fair value on the awards grant date, based on the estimated number of awards
        expected to vest over the service period.
 
 On
        August
        30, 2006, the Company issued 1,500,000 shares of common stock to the Chief
        Executive Officer; the Company recorded a charge to operations of $108,000
        for
        the 300,000 shares that vested immediately on the date of issuance. The
        remaining 1,200,000 shares were valued at $432,000 and were to be amortized
        over
        the life of the employment agreement (see Note 9). On December 28, 2006,
        Mike
        Sosnowik, CEO of the Company, returned his stock certificate for the 1,500,000
        shares provided in the stock grant and renounced any claim to these shares.
        Accordingly, the Company reversed the charge for the period ended December
        31,
        2006.
 
 ***Fair
        Value of Financial Instruments***
 
 LAB123
        calculates the fair value of financial instruments and includes this additional
        information in the notes to financial statements when the fair value is
        different than the book value of those financial instruments. When the book
        value approximates fair value, no additional disclosure is made. LAB123 uses
        quoted market prices whenever available to calculate these fair values. When
        quoted market prices are not available, LAB123 uses standard pricing models
        for
        various types of financial instruments which take into account the present
        value
        of estimated future cash flows. As of December 31, 2006 the carrying value
        of
        all financial instruments approximated fair value.
  ***Recently
        Issued Accounting Pronouncements***
 
 In
        June
        2006,  the Financial Accounting Standards Board (the “FASB”) 
issued  FASB  Interpretation  No. 48,  "Accounting  for
        Uncertainty in Income Taxes - an  interpretation  of FASB Statement
        No. 109" ("FIN48"),  which  clarifies the accounting  for 
uncertainty  in tax positions.  This interpretation 
requires  that the Company recognize  in its financial 
statements,  the impact of a tax  position,  if that 
position  is more  likely than not of being sustained  on 
audit,  based  on  the  technical  merits  of
        the  position.  The provisions of FIN 48 are effective as of the
        beginning of the Company's 2007 fiscal year and is to be applied to all
        open tax years as of the date of effectiveness with the cumulative effect
        of the
        change in accounting principle recorded as an adjustment to opening
        retained earnings.  The Company is in the process of evaluating the
        impact of the application of FIN 48 to its financial statements and is currently
        not yet in a position to determine such effects.
 F-10
 
 In
        September 2006, the staff of the Securities and Exchange Commission issued
        Staff
        Accounting Bulletin No. 108 (“SAB 108”) which provides interpretive guidance on
        how the effects of the carryover or reversal of prior year misstatements
        should
        be considered in quantifying a
        current
        year misstatement. SAB 108 is effective for fiscal years ending on or after
        November 15, 2006. The adoption of SAB 108 did not have a material impact
        on the
        Company’s financial position, results of operations or cash flows.
  In
        September 2006, the FASB issued SFAS No. 157, "Accounting for Fair Value
        Measurements." SFAS No. 157 defines fair value, and establishes a framework
        for
        measuring fair value in generally accepted accounting principles and expands
        disclosure about fair value measurements. SFAS No. 157 is effective for
        financial statements issued subsequent to November 15, 2007. The Company
        does
        not expect the new standard to have any material impact on the financial
        position, results of operations and cash flows.
  In
        December 2006, the FASB approved FASB Staff Position (FSP) No. EITF 00-19-2,
        "Accounting for Registration Payment Arrangements" ("FSP EITF 00-19-2"),
        which
        specifies that the contingent obligation to make future payments or otherwise
        transfer consideration under a registration payment arrangement, whether
        issued
        as a separate agreement or included as a provision of a financial instrument
        or
        other agreement, should be separately recognized and measured in accordance
        with
        SFAS No. 5, "Accounting for Contingencies". FSP EITF 00-19-2 also requires
        additional disclosure regarding the nature of any registration payment
        arrangements, alternative settlement methods, the maximum potential amount
        of
        consideration and the current carrying amount of the liability, if any. The
        guidance in FSP EITF 00-19-2 amends FASB Statements No. 133, "Accounting
        for
        Derivative Instruments and Hedging Activities", and No. 150, "Accounting
        for
        Certain Financial Instruments with Characteristics of both Liabilities and
        Equity", and FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
        Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
        of
        Others", to include scope exceptions for registration payment arrangements.
        FSP
        EITF 00-19-2 is effective immediately for registration payment arrangements
        and
        the financial instruments subject to those arrangements that are entered
        into or
        modified subsequent to the issuance date of this FSP, or for financial
        statements issued for fiscal years beginning after December 15, 2006, and
        interim periods within those fiscal years, for registration payment arrangements
        entered into prior to the issuance date of this FSP. The adoption of this
        pronouncement is not expected to have an impact on the Company's financial
        position, results of operations or cash flows.
  In
        October 2005, the FASB issued FSP FAS 123(R)-2, "Practical Accommodation
        to the
        Application of Grant Date as Defined in FASB Statement No. 123(R)", which
        provides clarification of the concept of mutual understanding between employer
        and employee with respect to the grant date of a share-based payment award.
        This
        FSP provides that a mutual understanding of the key terms and conditions
        of an
        award shall be presumed to exist on the date the award is approved by management
        if the recipient does not have the ability to negotiate the key terms and
        conditions of the award and those key terms and conditions will be communicated
        to the individual recipient within a relatively short time period after the
        date
        of approval. This guidance was applicable upon the initial adoption of SFAS
        123(R). The adoption of this pronouncement did not have an impact on the
        Company's financial position, results of operations or cash flows.
  In
        February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 provides
        companies with an option to report selected financial assets and liabilities
        at
        fair value. The objective of SFAS 159 is to reduce both complexity in accounting
        for financial instruments and the volatility in earnings caused by measuring
        related assets and liabilities differently. Generally accepted accounting
        principles have required different measurement attributes for different assets
        and liabilities that can create artificial volatility in earnings. The FASB
        has
        indicated it believes that SFAS 159 helps to mitigate this type of
        accounting-induced volatility by enabling companies to report related assets
        and
        liabilities at fair value, which would likely reduce the need for companies
        to
        comply with detailed rules for hedge accounting. SFAS 159 also establishes
        presentation and disclosure requirements designed to facilitate comparisons
        between companies that choose different measurement attributes for similar
        types
        of assets and liabilities. SFAS 159 does not eliminate disclosure requirements
        included in other accounting standards, including requirements for disclosures
        about fair value measurements included in SFAS 157 and SFAS No. 107,
        "Disclosures about Fair Value of Financial Instruments." SFAS 159 is effective
        for the Company as of the beginning of an entity’s first fiscal year that begins
        after November 15, 2007. The adoption of this pronouncement is not expected
        to
        have an impact on the Company's financial position, results of operations
        or
        cash flows.
 
 **NOTE
        5 - Related Party Transactions**
 
 ***Due
        to Biosafe***
 
 Biosafe
        and its affiliates is an affiliated company whose Chairman is also the Chairman
        of the Company. BioSafe is a shareholder and owns approximately 98% of the
        Company’s outstanding common stock and is the licensor of the Company’s license
        agreement (See Note 8). Biosafe’s products specialize in the use of micro-sample
        blood transportation devices and unique, scientific procedures for the clinical
        testing of these micro-blood samples. From time to time the Company may obtain
        terms that are beneficial to the Company that the Company may not normally
        obtain if the Company would seek the same terms from an outside
        vendor.
 
 In
        October 2006, the Company entered into a verbal agreement with BioSafe where
        by
        for a monthly fee of approximately $15,000, BioSafe will provide office space,
        administrative and financial services. For the period from August 25, 2006
        (Date
        of Inception) to December 31, 2006, the Company incurred a charge of $57,372
        under this agreement.
 
 During
        the period from August 25, 2006 (Date of Inception) to December 31, 2006,
        BioSafe advanced and paid legal costs and certain formation expenses on behalf
        of the Company. As of December 31, 2006, $ 37,371 was due to Biosafe. The
        balance does not have repayment terms or a stated interest rate.
  F-11
 
 During
        the period ended August 25, 2006 (Date of Inception) to December 31, 2006,
        the
        Company paid a deposit to BioSafe of $300,000 for the purchase of approximately
        $600,000 of inventory.
 
 **NOTE
        6 - Property and Equipment, net**
  Property,
        equipment and accumulated depreciation are as follows:
 Office
                    equipment
                
                $
                2,448Less:
                    accumulated depreciation
                
                
                (
                    136
                )Property
                    and Equipment, net
                
                $
                2,312
 
 Depreciation
        expense for the period from August 25, 2006 (Date of Inception) to December
        31,
        2006 was $136.
  **NOTE
        7- Inventory, Net**
 
 Inventory
        consisted primarily of finished goods on consignment:
 Finished
                    goods
                
                $
                106,459Less:
                    reserve allowance
                
                
                (
                    72,972
                )Inventory,
                    net
                
                $
                33,487
  As
        of
        December 31, 2006, the Company has established a valuation reserve for lost
        merchandise with the consignee. The Company is currently in negotiations
        with
        the consignee for the lost merchandise.
 
 **NOTE
        8 License Agreement (Product Marketing Rights)**
 
 On
        September 7, 2006 the Company entered into a twenty-five year license
        agreement with Biosafe that gives the Company the exclusive territorial right
        to
        market five medical diagnostic tests to retail drug stores and mass
        merchandisers within the U.S. and internet-based drug retailers for a purchase
        price of $1,000,000 in cash and 6,050,000 shares of the Company’s common stock.
        The license agreement also includes certain restrictions and rights including
        the following:
  ·
              The
                    licensor is to receive royalty payments of 8% of collected revenues
                    related to the licensed products. The royalty fee was waived
                    in perpetuity
                    assuming all licensed product is purchased from Licensor, such
                    royalty
                    payment has been waived by the licensor through December 31,
                    2012.  ·
                The
                      continued market exclusivity is dependent upon the Company’s aggregate
                      unit sales of licensed products of at least 250,000 units in
                      2007 and
                      300,000 units in each subsequent year of the license. Should
                      the unit
                      sales ever drop below the threshold(s); the Company can maintain
                      the
                      exclusivity by paying an amount equal to the minimum royalty on the
                      number of units below the thresholds to maintain
                      exclusivity.  ·
                  The
                        Company may continue throughout the entire term of the license
                        agreement
                        to have the licensor produce and process the tests at cost
                        plus 20% or
                        elect to in-source (or out-source to another third-party)
                        the production
                        and processing.
 For
        the
        period ended August 25, 2006 (Date of Inception) to December 31, 2006, BioSafe
        waived its 8% royalty payment of collected revenues related to the licensed
        products and will not be paid in subsequent periods; as a result the Company
        did
        not record a charge of approximately $20,000 during the period ended and
        Biosafe
        waived its right to seek to recover these amounts in future
        periods.
 
 The
        license agreement was valued at $1,000,000 for the cash payment and is being
        amortized over the estimated useful life of the underlying products which
        management estimates to be approximately ten years. The Company recorded
        an
        amortization charge related to the license of $25,000, which has been included
        in cost of sales for the period August 25, 2006 (Date of Inception) to December
        31, 2006. As of December 31, 2006 the license agreement, net of accumulated
        amortization amounted to $975,000. In 2006, management compared the sum of
        LAB123’s undiscounted cash flow projections (gross margin dollars from product
        sales) of the License to the carrying value of that License. The results
        of this
        test indicated that there was no impairment. However, this process utilized
        probability weighted undiscounted cash flow projections which include a
        significant amount of management’s judgment and estimates as to future revenue.
        If these probability weighted projections do not come to fruition, the Company
        could be required to record an impairment charge in the near term and such
        impairment could be material.
  F-12
 
 Amortization
        of the license agreement is expected to be approximately $100,000 per year
        and
        amortized on a straight line basis over 10 years. Assuming no changes in
        the
        Company’s intangible assets, estimated amortization expense for each of the five
        succeeding fiscal years ending December 31 is expected to be $100,000 per
        year.
 
 On
        March
        13, 2007 an involuntary bankruptcy petition was filed against Biosafe, in
        the
        United States Bankruptcy Court for the Northern District of Illinois Eastern
        Division. On May 15, 2007, upon joint motion of the creditors who filed the
        involuntary petition and Biosafe, the petition was dismissed.
 
 **NOTE
        9 - Commitments and Contingencies**
 
 ***Employment
        Agreement***
 
 On
        August
        30, 2006 the Company entered into a five year employment agreement with the
        Company’s Chief Executive Officer, that called for an for annual salary of
        $200,000 and an incentive bonus of $200,000 if certain target earnings before
        interest, taxes, depreciation and amortization were achieved plus 8% on any
        earning above target.
 
 On
        August
        30, 2006, the Company issued 1,500,000 shares of common stock to the Chief
        Executive Officer; the Company recorded a charge to operations of $108,000
        for
        the 300,000 shares that vested immediately on the date of issuance. The
        remaining 1,200,000 shares were valued at $432,000 and were to be amortized
        over
        the life of the employment agreement. On December 28, 2006, The Chief Executive
        Officer of the Company returned his stock certificate for the 1,500,000 shares
        provided in the stock grant and renounced any claim to these shares.
        Accordingly, the Company reversed the charge for the period ended December
        31,
        2006. **
 
 On,
        January 22, 2007, the Chief Executive Officer resigned as an employee of
        the
        Company and the agreement was terminated. The Chief Executive Officer was
        retained as a consultant to the Company through April 30, 2007 at $16,666
        per
        month.
 
 ***Legal
        Proceedings***
 
 The
        Company may be involved in routine litigation incidental to the normal course
        of
        business. While it is not feasible to predict or determine the final outcome
        of
        these claims, the Company believes the resolution will not have a material
        adverse effect on its financial position, results of operations or liquidity.
 
 **NOTE
        10 - Stockholders’ Equity**
 
 On
        December 6, 2006, the Company amended the Articles of Incorporation increasing
        the number of shares of common stock that are authorized to issue. The total
        number of common and preferred shares authorized to be issued was increased
        to
        27,000,000, par value $0.001 per share, by increasing the authorized common
        stock to 21,000,000 shares of common stock, par value $0.001 per share, there
        was no change to the authorized preferred stock of 6,000,000 shares, par
        value
        $0.001 per share.
 
 ***a)
        Series A Convertible Preferred Stock***
 
 On
        September 6, 2006, the Company sold 3,774,000 in a private placement shares
        of
        Series A Preferred (See Note 3) for $2,000,000 or $0.53 per share. No dividends
        shall be payable with respect to the Series A Preferred and no dividends
        will be
        payable with respect to the outstanding common stock while the Series A
        Preferred is outstanding. The Series A Preferred stockholders have no voting
        rights. Upon the liquidation of the Company the Series A Preferred stockholders
        will have the right to receive $0.53 per share out of the assets of the Company.
        The Series A Preferred is subject to conversion price adjustments of 40%
        and 25%
        based on financial milestones of the Company for the period from August 25,
        2006
        (Date of Inception) to December 31, 2006 and for the year ending December
        31,
        2007, respectively.
 
 ***b)
        Common Stock***
 
 On
        September 6, 2006, the Company issued 125,000 shares of common stock to
        principals of an advisory firm for advisory services, valued at $66,250,
        in
        connection with the private placement (described in Note 3) and was charged
        to
        capital at the time of closing.
 
 ***c)
        Warrants***
  On
        September 6, 2006, as part of the private placement as more fully described
        in
        Note 3, the Company granted Warrants to purchase 3,774,000 shares of common
        stock. The Warrants entitle the holder to purchase from the Company an equal
        number of common stock at an exercise price per share of $0.80 for 1,887,000
        shares and $1.10 for the remaining 1,887,000 shares. The Warrants are
        exercisable immediately and shall expire five years from the purchase
        date.
  F-13
  The
        following tables illustrate the Company's Warrant issuances and balances
        outstanding as of, and during the period from August 25, 2006 (Date of
        Inception) to December 31, 2006 :
 Number
                      of Shares Underlying Warrants
                  
                  Weighted
                      Average Exercise Price Per ShareOutstanding
                      at August 25, 2006 (Date of Inception)
                  
                  
                  —
                  
                  $
                  —Granted
                  
                  
                  3,774,000
                  
                  
                  0.95Expired
                  
                  
                  —
                  
                  
                  —Exercised
                  
                  
                  —
                  
                  
                  —Outstanding
                      at December 31, 2006
                  
                  
                  3,774,000
                  
                  $
                  0.95
  The
        weighted average fair value of warrants granted was approximately $674,200
        or
        $0.18 per share.
 
 The
        Black-Scholes option valuation model is used to estimate the fair value of
        the
        warrants granted. The model includes subjective input assumptions that can
        materially affect the fair value estimates. The model was developed for use
        in
        estimating the fair value of traded options that have no vesting restrictions
        and that are fully transferable. For example, the expected volatility is
        estimated based on the most recent historical period of time equal to the
        weighted average life of the warrant granted. In management's opinion, this
        valuation model does not necessarily provide a reliable single measure of
        the
        fair value of the warrants granted. Principal assumptions used in applying
        the
        Black-Scholes model along with the results from the model were as
        follows:
 
 Assumptions:
              
              December
                  31, 2006Risk
                  free interest rate
              
              
              4.7
              %Expected life in years
              
              
              5
                  yearsExpected volatility
              
              
              51
              %Dividend
                yield
              
              
              0
              %
  The
        following is additional information with respect to the Company's warrants
        as of
        December 31, 2006:
 WARRANTS
                    OUTSTANDING
                
                WARRANTS
                    EXERCISABLEWeightedAverage
                
                Weighted
                
                
                
                WeightedNumber
                    of
                
                Remaining
                
                Average
                
                Number
                    of
                
                AverageExercise
                
                Outstanding
                
                Contractual
                
                Exercise
                
                Exercisable
                
                ExercisePrice
                
                Warrants
                
                Life
                
                Price
                
                Warrants
                
                Price$
                    0.80
                
                
                1,887,000
                
                
                4.7
                    years
                
                $
                0.80
                
                
                1,887,000
                
                $
                0.80$
                    1.10
                
                
                1,887,000
                
                
                4.7
                    years
                
                $
                1.10
                
                
                1,887,000
                
                $
                1.103,774,000
                
                
                
                
                
                
                
                
                3,774,000
 
 **NOTE
        11- Income Taxes**
  The
        Company has adopted Financial Accounting Standards No. 109, which requires
        the
        recognition of deferred tax liabilities and assets for the expected future
        tax
        consequences of events that have been included in the financial statement
        or tax
        returns.
  As
        of
        December 31, 2006, the Company had approximately $120,000 of U.S. net operating
        loss carry forwards available to offset future taxable income which, if not
        utilized, begin expiring in 2026. At December 31, 2006, the Company has a
        deferred tax asset of approximately $46,000, which consists primarily of
        temporary differences relating to net operating losses. Deferred income taxes
        reflect the net tax effects of operating loss and tax credit carry forwards
        and
        temporary differences between carrying amounts of assets and liabilities
        for
        financial reporting purposes and the amounts used for income tax purposes.
        In
        assessing the realizability of deferred tax assets, management considers
        whether
        it is more likely than not that some portion or all of the deferred tax assets
        will not be realized. The ultimate realization of deferred tax assets is
        dependent upon the generation of future taxable income during the periods
        in
        which temporary differences representing net future deductible amounts become
        deductible. SFAS No. 109 requires that a valuation allowance be established
        when
        it is “more likely than not” that all or a portion of deferred tax assets will
        not be realized. A review of all available positive and negative evidence
        needs
        to be considered, including a company’s performance, the market environment in
        which the company operates, the length of carryback and carryforward periods,
        and expectations of future profits, etc.
  Due
        to
        the uncertainty of the Company's ability to realize the benefit of the deferred
        tax assets, the deferred tax assets are fully offset by a valuation allowance
        at
        December 31, 2006.
  F-14
 
 SFAS
        No.
        109 requires that a valuation allowance be established when it is “more likely
        than not” that all or a portion of deferred tax assets will not be realized. A
        review of all available positive and negative evidence needs to be considered,
        including a company’s performance, the market environment in which the company
        operates, the length of carryback and carryforward periods, and expectations
        of
        future profits, etc.
 
 SFAS
        No.
        109 further states that forming a conclusion that a valuation allowance is
        not
        needed is difficult when there is negative evidence such as cumulative losses
        in
        recent years. Therefore, cumulative losses weigh heavily in the overall
        assessment. The Company will provide a full valuation allowance on future
        tax
        benefits until it can sustain a level of profitability that demonstrates
        its
        ability to utilize the assets, or other significant positive evidence arises
        that suggests the Company’s ability to utilize such assets.
 
 The
        difference between income taxes at the statutory Federal income tax rate
        and
        income taxes reported in the income statement is as follows:
 Provision
                  for income taxes at US statutory rate
              
              
              34
              %State,
                  net of federal benefit
              
              
              4
              %Valuation
                  allowance
              
              
              (38
              %)Provision
                  for income taxes
              
              
              0
              %
  **NOTE
        12 - Concentrations and Credit Risk**
 
 During
        the period from August 25, 2006 (Date of Inception) to December 31, 2006,
        revenues of one customer accounted for approximately $194,800 or 76% of total
        revenues. At December 31, 2006 there were outstanding receivables of
        approximately $189,600 or 93% from this customer.
 
 During
        2006, the Company’s sole product supplier was Biosafe.
 
 At
        times
        throughout the year, the Company may maintain certain bank accounts in excess
        of
        insured limits. At December 31, 2006, the Company’s total of uninsured cash
        balance was approximately $308,686. The Company mitigates its risk by investing
        in or through major financial institutions.
 
 **NOTE
        13 - Subsequent Events**
 
 ·
              Effective
                  January 31, 2007, Michael Sosnowik resigned his positions as Chief
                  Executive Officer and a director of the Lab123. On such date, Mr.
                  Sosnowik
                  and the Company entered into an agreement terminating Mr. Sosnowik’s
                  employment agreement with the Company. Under the Termination Agreement,
                  Mr. Sosnowik has agreed that during a transition period from February
                  1,
                  2007 to May 1, 2007, Mr. Sosnowik will make himself available to
                  assist
                  the Company on any issues or customer solicitations which were
                  open as of
                  January 31, 2007 and that during such transition period, Mr. Sosnowik
                  would continue to receive payments at a rate equal to the salary
                  ($200,000
                  per annum) he was receiving under his former employment agreement.
                  In
                  addition, Mr. Sosnowik will continue to receive Company paid health
                  insurance coverage through May 1, 2007 and the Company agreed to
                  waive Mr.
                  Sosnowik’s covenant not to compete with the Company after May 1,
                  2007.
 
 ·
              On
                  February 1, 2007, the Board of Directors of the Company approved
                  the terms
                  of an employment agreement between the Company and Mary Rodino
                  under which
                  Ms. Rodino will become employed by the Company as the Chief Executive
                  Officer of the Company effective as of March 1, 2007. The Board
                  also
                  elected Ms. Rodino as a director of the Company to fill the vacancy
                  created by the resignation of Mr.
                  Sosnowik.
 
 Under
        the
        terms of the employment agreement Ms. Rodino will be employed as the Chief
        Executive Officer for an initial term of three years and thereafter on a
        year to
        year basis unless either party terminates the employment agreement by written
        notice given at least 30 days prior to the end of the current term of the
        agreement. Under the agreement Ms. Rodino shall receive a salary at the rate
        of
        $200,000 per year and annual performance bonuses based upon the Company’s
        achievements.
 
 Under
        the
        employment agreement the Company will also grant to Ms. Rodino options to
        purchase an aggregate of 500,000 shares of the Company's common stock for
        $.36
        per share. Options to purchase an aggregate of 200,000 shares of common stock
        shall be vested immediately upon execution of the agreement, and options
        to
        purchase an additional 100,000 shares of common stock shall vest on each
        of the
        following dates: March 1, 2008, March 1, 2009 and March 1, 2010. Upon vesting,
        such options may be exercised until the earlier of (i) March 1, 2010, or
        (ii) 90
        days after termination of Ms. Rodino’s employment by the Company for any reason.
 
 On
        March
        19, 2007, Mary Rodino, resigned as Chief Executive Officer and a director
        of the
        Company, as such the Company cancelled the remaining options and Ms Rodino
        renounced any claim to the 200,000 options which vested. Accordingly, the
        Company did not incur a charge to operations for the period ended March 31,
        2007.
 
 ·
              On
                  March 17, 2007, the shareholders of the Company voted by unanimous
                  written
                  consent to remove Fred Fitzsimmons without cause (as permitted
                  by the
                  By-laws of the Company) as a director of the Company and elect
                  Michael
                  Carney to fill the vacancy on the Board of Directors thereby created.
                  There are no arrangements or understandings between Mr. Carney
                  and any
                  other persons pursuant to which he was selected as a director of
                  the
                  Company.
  F-15
  ·
              On
                  March 28, 2007, the Board of Directors of the Company elected Ernest
                  Azua
                  as an Executive Vice President of the Company for an interim period
                  until
                  the selection of a new President and Chief Executive Officer of
                  the
                  Company.Mr.
                  Azua was a Senior Vice President and Director of Intellectual Property
                  Management with Biosafe Medical Technologies, Inc. Mr. Azua shall
                  be paid
                  a salary at the rate of $125,000 per year for his full-time services
                  to
                  the Company.
 
 ·
              In
                  the second quarter of 2007, the Company verbally agreed to cease its
                  business partnership with Barron. The Company is currently in negotiations
                  and plans to close on this arrangement on or around June 30, 2007.
                  However, there can be no assurance that the Company will be successful
                  in
                  completing this transaction.
 
 ·
              On
                  March 13, 2007 an involuntary bankruptcy petition was filed against
                  Biosafe, our principal supplier, in the United States Bankruptcy
                  Court for
                  the Northern District of Illinois Eastern Division. On May 15,
                  2007, upon
                  joint motion of the creditors who filed the involuntary petition
                  and
                  Biosafe, the petition was
                  dismissed.
 F-16




Item
      8.
      Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.





There
      were no changes in or disagreements with accountants on accounting and financial
      disclosure for the period covered by this Report.





Item
      8A.
      Controls and Procedures.





The
      Company’s Executive Vice President, who is also the acting principal financial
      officer and principal executive officer, has evaluated the effectiveness of
      the
      Company’s “disclosure controls and procedures”  as
      such
      term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as
      amended, as of the end of the period covered by this Annual report on Form
      10-KSB. The evaluation process, including the inherent limitations on the
      effectiveness of such controls and procedures is more fully discussed below.
      Based upon his evaluation, the acting principal financial officer has concluded
      that the Company’s disclosure controls and procedures were not
      effective.





These
      controls were deemed not effective on account of a material weakness which
      relates to limited segregation of duties and a lack of necessary corporate
      accounting resources. Management is aware that there is a lack of segregation
      of
      duties at the Company due to the sole employee dealing with general
      administrative and financial matters. Additionally, there is a lack of a chief
      financial officer in the accounting department to critically evaluate and
      implement accounting principles and at times transactions are recorded
      improperly and require additional procedures and adjustments to be made by
      our
      auditors. We have implemented certain procedures to help minimize the risks
      associated with this material weakness, including using the services of
      Biosafe’s accounting staff to act as an interim financial and accounting
      consultant to review, compile and consolidate our financial statements on a
      quarterly and annual basis. When resources permit, we do intend to hire a chief
      financial officer with appropriate public company experience to relieve the
      sole
      employee of his current chief financial officer duties.





Except
      as
      described above, there were no significant changes in our internal controls
      over
      financial reporting that occurred during the quarter ended December 31, 2006
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





Item
      8B.  Other
      Information




Reports
      on Form 8-K.





During
      the period commencing on the first day of the last quarter of the period covered
      by this Report until December 31, 2006, the Company did not file any Current
      Reports on Form 8-K.




42





PART
      III




Item
      9.
      Directors, Executive Officers, Promoters, Control Persons and Corporate
      Governance; Compliance with Section 16(a) of the Exchange Act.




The
      following table sets forth certain information with respect to our directors
      and
      executive officers as of June 15, 2007:




**Name**
            
            **Age**
            
            **Position**
            
            **Director/Officer**
              **Since**Ernest
                R. Azua
            
            66
            
            Executive
                Vice President
            
            March
                2007Henry
                Warner
            
            58
            
            Director
                and Chairman of the Board
            
            August
                2006Michael
                Carney
            
            60
            
            Director
                (1)
            
            March
                2007Kent
                Connally
            
            60
            
            Director
                (1)
            
            September
                2006Kurt
                Katz
            
            74
            
            Director
                (1)
            
            September
                2006





(1)
      Member of Audit Committee and Compensation Committee.





Mr.
      Azua
      was a Senior Vice President and Director of Intellectual Property Management
      with Biosafe Medical Technologies, Inc. from March 2006 to March 27, 2007 in
      which capacity he was also responsible for product licensing and strategic
      planning to raise capital for that company. From July 1994 to July 2004 he
      was
      employed in various positions by Smith Barney & Co. and its predecessors,
      including as a Senior Vice President, Assistant Branch Manager and a resident
      manager of a satellite office. Mr. Azua is also an adjunct faculty member at
      Moraine Valley Community College and Joliet Junior College.





Michael
      Carney, has been the President of Stille, a Swedish manufacturer and distributor
      of surgical instruments and operating room tables, since September 2006. In
      2006
      he was a Senior Vice President of Fifth Third Bank, Cincinnati, Ohio in which
      position he was responsible for inside sales operations for non-prime lending
      programs. From 2004 to 2006 he was an Executive Vice President for Select
      Portfolio Servicing in which position he managed national sales and marketing
      efforts for the subprime mortgage servicing company. From 2000 to 2004 he was
      a
      Senior Vice President of Pacific USA in which position he was responsible for
      domestic and international sales for technology and financial services products
      on behalf of the Taiwanese-owned corporation.





Henry
      Warner was elected as a director and Chairman of the Board in August 2006.
      Mr.
      Warner is the Chief Executive Officer, Chairman and an indirect owner of 53%
      of
      the common stock of Biosafe Medical Technologies, Inc., an affiliate of Biosafe,
      the manufacturer, lab processor and licensor of Lab123’s primary sales products
      and a substantial stockholder of Lab123, Inc. Mr. Warner has operated as chief
      executive officer of several small businesses over his 30 year career and has
      been the President and Chief Executive Officer and, indirectly through a family
      owned company, the majority shareholder, of Biosafe since 1996. On March 13,
      2007 an involuntary bankruptcy petition was filed against Biosafe Medical
      Technologies, Inc. (“BMT”) in the United States Bankruptcy Court for the
      Northern District of Illinois Eastern Division. Henry Warner is a director
      and
      the the Chief Executive Officer of BMT and is the manager of a limited liability
      company which owns 53% of the outstanding stock of BMT. On May 15, 2007, upon
      joint motion of the creditors who filed the involuntary petition and BMT, the
      petition was dismissed.




43





Kent
      Connally was elected as a director in September 2006. Mr. Connally has been
      an
      attorney since 1975 and has practiced real estate law as a solo practitioner
      since 1992.





Kurt
      Katz
      was elected as a director in September 2006. Since June 1985 he has been
      Chairman of Polymeric Resources, a manufacturer of nylon resin
      compounds.


There
      are
      no family relationships among any directors or executive officers of
      Lab123.





Board
      Committees





Our
      Board
      of Director has appointed our three independent directors, Michael Carney,
      Kent
      Connally and Kurt Katz, to serve as members of the two committee of the Board
      of
      Directors that we have established -- the audit committee and the compensation
      committee.





Our
      audit
      committee will be involved in discussions with our independent auditor with
      respect to the scope and results of our year-end audit, our quarterly results
      of
      operations, our internal accounting controls and the professional services
      furnished by the independent auditor. Our Board of Directors has adopted a
      written charter for the audit committee which the audit committee will review
      and reassess for adequacy on an annual basis. The Company does not have an
      audit
      committee financial expert serving on its audit committee. At the present time,
      we believe that the members of our Board of Directors are collectively capable
      of analyzing and evaluating our financial statements and understanding internal
      controls and procedures for financial reporting. Our company, however,
      recognizes the importance of good corporate governance and during our 2007
      fiscal year intends to appoint a person to the audit committee who is a
      financial expert.





The
      compensation committee will serve as the stock option committee for any stock
      option plan that we may adopt, and it will review and approve any employment
      agreements with management and changes in compensation for our executive
      officers. Our Board of Directors has adopted a written charter for the
      compensation committee.





Code
      of
      Ethics





In
      September 2006 the Company adopted a Code of Ethics applying to its executive
      officers. Such Code of Ethics is being filed herewith as Exhibit 14.1 to this
      Report.





Item
      10.
      Executive Compensation.


Michael **** Sosnowik
      became the first employee of the Company when he was hired as the Chief
      Executive Officer on August 30, 2006. Mr. Sosnowik terminated his employment
      effective January 31, 2007. During the period from August 30, 2006 to December
      31, 2006 Mr. Sosnowik was paid an aggregate of $58,461 in salary. Mr. Sosnowik
      was retained a consultant to the Company though April 30, 2007 at $16,666 per
      month from February 1, 2007 to April 30, 2007. In September 2006 Mr. Sosnowik
      also was issued an aggregate of 1,500,000 of restricted common stock. Mr.
      Sosnowik returned all of such shares to the Company in December 2006 and
      renounced any interest in such shares.




44





The
      Company had no other employees or officers from its inception on August 25,
      2006
      to December 31, 2006. Mary Rodino served as our President for the period from
      March 1, 2007 to March 19, 2007. On March 29, 2007 Ernest Azua commenced his
      employment with us as our Executive Vice President.





Directors'
      Compensation





Each
      independent director shall receive an annual directors' fee of $5,000. In
      addition, each such person shall be reimbursed for all out of pocket expenses
      in
      connection the person’s service as a director of the Company.




Item
      11.
      Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.





The
      following table sets forth, as of June 6, 2007, certain information regarding
      the ownership of our common stock by (i) each person known by us to be the
      beneficial owner of more than 5% of the outstanding shares of common stock,
      (ii) each of our directors, (iii) each executive officer and
      (iv) all of our executive officers and directors as a group. Beneficial
      ownership, for purposes of this table, includes preferred stock convertible
      into
      common stock and warrants to purchase common stock that are either currently
      exercisable or convertible or will be exercisable or convertible within 60
      days
      of June 6, 2007.




The
      percentage ownership data is based on 6,175,000 shares of our common stock
      outstanding as of June 6, 2007. Under the rules of the SEC, beneficial
      ownership includes shares over which the indicated beneficial owner exercises
      voting and/or investment power. Shares of common stock subject to warrants
      or
      underlying convertible preferred stock that are currently exercisable or
      convertible, or will become exercisable or convertible, within 60 days of May
      16, 2007 are deemed outstanding for the purpose of computing the percentage
      ownership of the person holding the warrant or convertible preferred stock,
      but
      are not deemed outstanding for the purpose of computing the percentage ownership
      of any other person. Except as otherwise noted, we believe that the beneficial
      owners of the shares of common stock listed below have sole voting and
      investment power with respect to all shares beneficially owned.





**Shares
                Beneficially**
              **Owned****Name
                of Beneficial Owner**
            
            **Number**
            
            **Percent
                of Class**Barron
                Partners LP
              c/o
                Barron Capital Advisors, LLC
              730
                Fifth Avenue, 25thFloor
              New
                York, NY 10019
            
            
            7,548,000(1
            )
            
            4.9
            %Biosafe
                Laboratories, Inc.
              8600
                West Catalpa
              Chicago,
                Illinois 60656
            
            
            6,050,000
            
            
            98.0
            %Henry
                Warner
              c/o
                Biosafe Medical Technologies, Inc.
              100
                Field Drive, Suite 240
              Lake
                Forest, Illinois 60045
            
            
            0(2
            )
            
            0
            %Ernest
                Azua
            
            
            0
            
            
            0All
                current directors and current executive officers as a group (5
                persons)
            
            
            0(2
            )
            
            0
            %





45




(1)
            
            Contractual
                restrictions in the Barron preferred stock purchase agreement and
                warrants
                prohibit Barron from exercising any warrants or converting any preferred
                stock if such conversion or exercise would cause it to exceed 4.9%
                beneficial ownership of Lab123. Barron Partners holds 3,774,000 shares
                of
                Series A Stock (currently convertible into an aggregate of 6,250,000
                shares of our common stock plus warrants to purchase up to an aggregate
                of
                3,774,000 shares of our common stock of Lab123, in each case not
                giving
                effect to the contractual
                restrictions.







(2)
            
            Mr.
                Warner is the Chief Executive Officer and Chairman of the Board of
                Biosafe, which directly owns 6,050,000 shares of common stock of
                Lab123.
                Mr. Warner is the managing member of a limited liability company
                which
                owns approximately 54% of the outstanding common stock of
                Biosafe.





Item
      12.
      Certain Relationships, Related Party Transactions and Director
      Independence.





There
      have not been any transactions, or series of similar transactions, since
      the inception of the Company, or any currently proposed transaction, or
      series of similar transactions, to which the Company or any of its
      subsidiaries was or is to be a party, in which the amount involved exceeds
      the
      lesser of $120,000 or 1% of the Company’s total assets as of December 31, 2006
      and in which any director or executive officer of the Company, nominee for
      election as a director, any five percent security holder or any member of the
      immediate family of any of the foregoing persons had, or will have, a direct
      or
      indirect material interest, except that on September 7, 2006 we entered into
      a
      license and distributor agreement with Biosafe for our five Diagnostic Products.





To
      acquire the license, we paid to Biosafe a one time fee of $1,000,000 in cash
      and
      issued to Biosafe 6,050,000 shares of our common stock.. Henry Warner, one
      of
      our directors and our Chairman of the Board, is also the Chief Executive Officer
      and Chairman of the Board of Biosafe.





We
      believe that each of our directors, other than Henry Warner, is an independent
      director. The determination of independence of directors has been made using
      the
      definition of “independent director” contained under Rule 4200(a)(15) of the
      Rules of National Association of Securities Dealers, even though such
      definitions do not currently apply to us because we are not listed on
      Nasdaq.




46




We
      do not
      own any real estate or office equipment. Our headquarters are located
      temporarily in an office provided to the Company by Biosafe at 100 Field Drive,
      Suite 240, Lake Forest, Illinois 60045. The Company does not pay rent to Biosafe
      for such space, but since October the Company has been paying to Biosafe under
      an oral agreement which is subject to termination by either party at any time,
      $15,000 per month for office space, management services, insurance and
      utilities. This arrangement is intended to be temporary until the Company
      locates its permanent office location within the next six months.





Item
      13.
      Exhibits.




Exhibit
              Number
            
            Description of Exhibit3.1
            
            Certificate
                of Incorporation of the Company. Incorporated by reference to Exhibit
                3.1
                to the Company’s Registration Statement on Form SB-2 (File No. 333-137545)
                filed with the SEC on September 22, 2006 (the “SB-2”)3.2
            
            Certificate
                of Designations of Preferences, Rights and Limitations of Series A
                Convertible Preferred Stock of the Company. Incorporated by reference
                to
                Exhibit 3.2 to the SB-2.





3.3
            
            By-laws
                of the Company. Incorporated by reference to Exhibit 3.3 to the SB-2.
                .





3.4
            
            Certificate
                of Amendment to Certificate of Incorporation of the Company. Incorporated
                by reference to Exhibit 3.1 to the Company’s Registration Statement on
                Form SB-2 (File No. 333-137545) filed with the SEC on September 22,
                2006
                (the “SB-2”)4.1
            
            Common
                Stock Purchase Warrant A to purchase 1,887,000 shares of Common Stock
                issued to Barron. Incorporated by reference to Exhibit 4.1 to the
                SB-2.4.2
            
            Common
                Stock Purchase Warrant B to purchase 1,887,000 shares of Common Stock
                issued to Barron. Incorporated by reference to Exhibit 4.2 to the
                SB-2.





10.1
            
            Employment
                Agreement dated August 30, 2006 between Michael Sosnowik and the
                Company.
                Incorporated by reference to Exhibit 10.1 to the SB-2.10.2
            
            Distributor
                and License Agreement dated as of September 7, 2006 between Biosafe
                and the Company. Incorporated by reference to Exhibit 10.2 to the
                SB-2.




47




10.3
            
            Preferred
                Stock Purchase Agreement between the Company and Barron dated September
                6,
                2006. Incorporated by reference to Exhibit 10.3 to the
                SB-2.10.4
            
            Registration
                Rights Agreement between the Company and Barron dated September 6,
                2006.
                Incorporated by reference to Exhibit 10.4 to the SB-2.10.5
            
            Termination
                Agreement dated January 31, 2007 between the Company and Michael
                Sosnowik.
                Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
                on Form 8-K filed on February 5, 2007. Incorporated by reference
                to
                Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February
                5, 2007.10.6
            
            Letter
                to Marcum & Kliegman LLP dated June 15, 2007*14.1
            
            Code
                of Ethics.*31.1
            
            Certification
                of Principal Executive Officer and Principal Accounting Officer Pursuant
                to Section 302 of the Sarbanes-Oxley Act of 2002,*32.1
            
            Certification
                of Principal Executive Officer Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002*





21.1
            
            Subsidiaries
                of the Registrant - none





*
            Filed
                herewith





Item
      14.
      Principal Accountant Fees and Services.





The
      following table sets forth the fees billed to us for the period from our
      inception (August 25, 2006 December 31, 2006 by Marcum & Kliegman LLP
      (”M&K”):


Audit
                  Fees (1)
              
              $
              100,000Audit
                  Related Fees (2)
              
              $
              --Tax
                  Fees (3)
              
              $
              --All
                  Other Fees
              
              $
              --


(1)
      Consists of fees billed for professional services rendered for the audit of
      the
      financial statements of the Company as of December 31, 2006 and for the period
      from August 25, 2006 to December 31, 2006.





(2)
      Consists of fees for services relating to accounting consultation related to
      the
      performance of the audit that are not reported as audit fees.





(3)
      Consists of tax filing and tax related compliance and other advisory
      services.




48





Pre-Approval
      of Services by the Independent Auditor





The
      Board
      of Directors has established policies and procedures for the approval and
      pre-approval of audit services and permitted non-audit services. The Board
      has
      the responsibility to engage and terminate the Company’s independent registered
      public accountants, to pre-approve their performance of audit services and
      permitted non-audit services and to review with the Company’s independent
      registered public accountants their fees and plans for all auditing services.
      All services provided by and fees paid to M&K in 2006 were pre-approved by
      the Board of Directors.


49





SIGNATURES





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


LAB123,
              INC.Dated:
              June 19, 2007
            By:
            /s/ Ernest
              AzuaExecutive
              Vice President(Principal
                Executive Officer and Chief Accounting Officer)


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


/s/
                  Henry WarnerHenry
                  Warner
              
              Chairman
                  of the Board and Director
              
              June
                  19, 2007/s/
                  Michael CarneyMichael
                  Carney
              
              Director
              
              June
                  19, 2007/s/
                  Kurt KatzKurt
                  Katz
              
              Director
              
              June
                  19, 2007/s/
                  Kent ConnallyKent
                  Connolly
              
              Director
              
              June19,
                  2007


50