UNITED
STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.  20549  FORM
10-K/A AMENDMENT NO. 2  |X|
ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2006  |_|
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE
TRANSITION PERIOD FROM TO  COMMISSION FILE NUMBER: 000-26807  CYTOGENIX, INC. (Exact
name of registrant as specified in its charter) Nevada
                              76-0484097 (State
or other jurisdiction of incorporation)    (I.R.S. Employer
Identification or
organization No.)  3100
WILCREST, SUITE 140, HOUSTON, TEXAS
                    77042 (Address
of principal executive offices) (Zip
Code)  Issuers
telephone number, including area code: 713-789-0070  Securities registered under Section 12 (b) of the Exchange Act:
NONE  Securities registered under Section 12 (g) of the Exchange Act: COMMON
STOCK WITH $.001 PAR VALUE (Title
of Class)  Indicate by check mark if the Registrant is a well known seasoned
issuer as defined in Rule 405 of the securities Act.  Yes |_| No |X|
Indicate by check mark if Registrant is not required to file reports pursuant to
Section 13 or Section 15 (d) of the Act.  Yes |_| No |X|  Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes |X| No |_|  Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  |X|      Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.  See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act.  Large accelerated filer |_| Accelerated Filer |X| Non-accelerated filer ||  Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).    Yes |_|
  No |X|  The aggregate market
value of the voting stock held by non-affiliates of the Registrant as of June
30, 2006 (the last business day of the Registrants most recently completed
second fiscal quarter) was approximately $143,119,897.  The number of
outstanding shares of the Registrants Common Stock as of the close of business
on March 30, 2007was 140,663,961.  DOCUMENTS INCORPORATED BY REFERENCE  Selected portions of the definitive Proxy Statement of CytoGenix,
Inc., which will be filed with the Securities and Exchange Commission within 120
days after December 31, 2006, are incorporated by reference in Part III of this
form 10-K.  EXPLANATORY NOTE  This
Amendment No.2 to the annual report on Form 10-K/A (Form 10-K/A) is being
filed to amend our annual report on Form 10-K for the year ended December 31,
2006 which was originally filed on March 30, 2007 (Original Form 10-K) and
amended by Amendment No. 1 thereto filed on May 9, 2007.  We are
filing this Form 10-K/A to amend and restate Part I, Item 1, Description of
Business, Part II, Item 6, Selected Financial Data, Part II, Item 7 Managements
Discussion and Analysis of Financial Condition and Results of Operations
 and Part II, Item 8 Financial Statements,.  In
connection with the establishment of the Companys stock option plans of 2003
and 2005, the Company did not recognize any compensation cost under SFAS 123(R).
 As a result of a recent letter from the staff of the SEC, we are restating
our financial statements (The Restatement) and associated disclosures to
include compensation cost upon vesting of options and to cease using the
designation "Development Stage Company."  We understated non-cash
expenses and net loss by $4,306,377 in the year ending December 31, 2006.
 The restatement impacted certain line items within cash flows from
operations, but had no effect on total cash flows from operations and did not
impact cash flows from financing or investing activities.  This restatement
had no impact on the balance sheets, statements of operations or the net
decrease in cash and cash equivalents reported in the statements of cash flows
for any periods reported prior to December 31, 2005.    2    For the convenience of the reader, this Form 10-K/A, sets forth
the Original Form 10-K in its entirety, as amended by this Form 10K/A.
 However, this Form 10-K/A amends only Item 1 of Part I and Items 6, 7, and
8 of Part II in their entirety, in each case, solely as a result of, and to
reflect, the Restatement, and, except as noted above, no other information in
the Original Form 10-K is amended hereby.  In addition, Item 15 of Part IV
of this Form 10-K/A has been amended to contain the currently-dated
certifications from our Chief Executive Officer and Chief Financial Officer
required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
 These certifications are attached to this Form 10-K/A as Exhibits31.1,
31.2, 32.1, and 32.2.  This
Form 10-K/A does not reflect events occurring after the filing of the Original
Form 10-K, and does not modify or update the disclosures therein in any way
other than as required to reflect the adjustments described above.  Such
events include, among others, the events described in our quarterly reports on
Form 10-Q for the quarters and year ended after December 31, 2006, and the
events described in our current reports on Form 8-K filed after the filing of
the Original Form 10-K.                                              3         CYTOGENIX, INC. FORM
10-K INDEX  PART
  I Page Item
1. Description
of Business (Restated) ................     6  Item
1A. Risk
Factors .  19  Item
1B. Unresolved
Staff Comments     26  Item
2. Description
of Property    26  Item
3. Legal
Proceedings ....   26  Item
4. Submission
of Matters to a Vote of Security Holders .....   27  PART
II  Item
5. Market
for Common Equity and Related Stockholder Matters
...  27  Item
6. Selected
Financial Data (Restated).. 29  Item
7. Managements
Discussion and Analysis of Financial Conditions and Results
of Operations (Restated) 30  Item
7A. Quantitative
and Qualitative Disclosures About Market Risk ......38  Item
8. Financial
Statements (Restated)   .  39  Item
9. Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure .  68  Item
9A. Controls
and Procedures .  68  Item
9B. Other
Information   68  PART
III  Item
10. Directors
and Executive Officers of the Registrant ...   68  Item
11. Executive
Compensation .  72  Item
12. Security
Ownership of Certain Beneficial Owners and Management  4    And
Related Stockholder Matters .   72  Item
13. Certain
Relationships and Related Transactions ..  72  Item
14. Principal
Accountant Fees and Services .  73   PART
IV  Item
15. Exhibits,
Financial Statement Schedules and Reports on Form 8-K.. 73  Signatures
...... 75                                       5      PART
I   ITEM
1. DESCRIPTION
OF BUSINESS  GENERAL OVERVIEW  CytoGenix, Inc. (CytoGenix or the Company) is a
biopharmaceutical company whose primary focus is the development and
commercialization of its proprietary technology for identifying and silencing
disease causing genes and expressing proteins for applications such as vaccines.
The Companys technology includes gene silencing techniques applicable to genes
from pathogenic organisms or selected genes from a host to prevent the
expression of harmful proteins, thereby preventing or ameliorating disease.
 The Company also has developed a novel cell free process to produce DNA
for use in its own products and for sale to the biopharmaceutical market.
 The Company seeks to generate revenues and improve the health and
well-being of humans, animals and plants by utilizing its technology to produce
molecular therapies.  In addition to development and commercialization of
therapeutic compounds, the Company seeks to provide the service of custom DNA
manufacturing as well as to sell and/or license its technology to other research
facilities and companies seeking to research or regulate a specific gene
function and to consumers of plasmid DNA.  The
Company was formed in 1995 as a biomedical research and development company.
 The original name of the Company was Cryogenic Solutions, Inc., until the
Company changed its name to CytoGenix, Inc. in January 2000.  Equity
funding has been the primary source of operational, research and
commercialization working capital since the Companys inception.  The
Company made a transition to research and development of its present
technologies in 1998.  Since then, the Company has dedicated itself to
engineering DNA-based molecules for therapeutic and drug target identification
purposes.  The Companys expertise in nucleic acid technology enables it to
focus on the development of new types of nucleic acid-based therapeutics.  GENE
EXPRESSION AND HUMAN DISEASE  Widely
published scientific studies conducted over the last 20 years by leading
universities, government research laboratories such as the National Institutes
of Health and the National Cancer Institute, and private research laboratories,
have established that most diseases are the result of malfunctioning genes in an
organisms genome, or the activities of genes affected by pathogens such as
viruses, bacteria or fungi.  This genetic activity causes the production of
harmful proteins that lead to the symptoms and destructive results of diseases.
 Examples of diseases caused by the production of such harmful proteins
include cancer, herpes, sepsis (blood poisoning) and a host of others.  To
produce a protein, a cell first makes a positive copy of the DNA code containing
the information necessary to produce the protein.  This messenger RNA
(mRNA) is called the sense molecule.  This message-carrying molecule then
moves to another part of the cell where it participates in the assembly of the
biochemical components to produce proteins.  6     In many
instances it is possible to inhibit the production of these harmful proteins by
introducing or producing small molecules of specific genetic material into the
cells themselves.  Fortunately, this genetic activity can be interrupted
and controlled at three levels with the introduction of a specific sequence of
single stranded DNA (ssDNA) into the cells at the level of the genomic DNA
itself, interfering with the messenger RNA (mRNA) transcribed by the genome
(antisense regulation); and by directly binding to a protein to disable it.  CYTOGENIX GENE SILENCING TECHNOLOGY  CytoGenix owns patented intracellular expression system technology
to produce  desired sequence-specific, ssDNA molecules in individual cells
for the purpose of triplex, antisense, catalytic DNA, and aptamer
applications.  1. Triplex: As mRNA is transcribed and the DNA strands are still
separated, a single strand of complementary DNA is inserted into the gap forming
a triple helix (triplex) structure, thus preventing the future production of
mRNA from that segment.  2. Antisense: Messenger RNA is intercepted en route by a
complementary ssDNA sequence that it binds to and results in the destruction of
the mRNA by enzymes within the cell, thus preventing the mRNA from producing the
undesired protein.  3. Catalytic DNA:  Similar to antisense, an ssDNA sequence
containing sequence regions binds to the mRNA, but also contains a unique
sequence region that acts to cut and destroy the mRNA, thus preventing it from
producing the undesired protein.  4. Aptamer:  The ssDNA binds to the protein itself in the cell
and causes the undesired protein to become inactivated or dysfunctional.  The key
to success with these genetic interventions is to insure that sufficient
quantities of the ssDNA molecules ultimately are produced in targeted cells or
induced from external sources.  CytoGenix has invented a compound that
functions as a tiny biological factory and after its introduction into the
cell, actually produces many copies of specific ssDNA molecules in the cell.
 A major element of CytoGenixs business is to refine this technology and
apply it to the delivery of various patented DNA molecules for the development
of effective therapeutic drugs.  DEVELOPMENTS TO DATE (RESEARCH AND DEVELOPMENT)  The
ssDNA expression vector technology originated with the work of Dr. Charles
Conrad, which he developed while at InGene, Inc.  This technology is
originally protected by issued United States Patent No. 6,054,299 entitled,
Methods and Compositions for Producing Single-stranded cloned DNA in eukaryotic
cells.  In 1999, CytoGenix purchased the rights to Dr. Conrads patent as
well as other proprietary information from InGene, and has since instituted a
broad research and development  7    program to advance single stranded DNA expression technology.
 Applications to protect subsequent improvements and therapeutic
applications of this technology have since been filed to expand the protection
of this technology in both the US and foreign markets.  In addition to the
original issued patent, CytoGenix currently holds a patent portfolio of
approximately 46 domestic and foreign issued or pending patent applications
protecting its technology.  This assertive approach to protection of the
Companys technology has enabled CytoGenix to expand and refine the development
of therapeutics for human, animal and agricultural use. The Company currently
has eleven granted patents which protect the Companys broad-based single
stranded DNA expression technology.  These
patents are important to the Company because they help form the basis of the
technology needed for the production of the Companys complementary technology
and other products.  The technology has been proven in numerous laboratory
and animal experiments and has been widely published as set forth below.
 It has been reported in scientific literature, such as in Reuters Business
Insight 2000 publication, Antisense Therapy: Technical Aspects and Commercial
Opportunities by Prof. Dr. K.K. Jain, M.D. that other molecule delivery methods
have failed to provide sufficient quantities to be therapeutically effective
except in limited applications.  Laboratory cell culture studies have
demonstrated that the Companys ssDNA expression vector can adequately deliver
sequence specific DNA molecules in sufficient quantities in virtually all cell
types, thereby overcoming many of the challenges previously experienced.
 As described under CytoGenix Gene Silencing Technology above, the
Companys technology is not limited to only antisense applications, but can
target and enzymatically cleave target mRNA using DNA enzyme formulations. As
described above, the technology can also be used to (i) generate triplex forming
oligonucleotides that bind to specific sites in the genome itself to inhibit
expression by the gene at that site, (ii) generate ssDNA that bind to specific,
targeted proteins to neutralize them and (iii) competitively inhibit genetic
expression/transcription of targeted genes.  The Company has successfully
extended the results achieved in cell cultures to cells in live animals.  The
genomics field has vastly expanded the number of potential drug targets.
 The Company has utilized its ssDNA expression technology to develop a
library screening technique for gene target identification and validation.
 The CytoGenix proprietary gene neutralization system is a powerful tool in
confirming gene target function.  The screening library technique enables
efficient testing of multiple oligonucleotide sequences.  When a sequence
silences a targeted gene, the construct for introducing the identified sequence
in cellular and animal experiments is readily produced.  Use of the
screening library has led to the discovery of sequences that have been useful in
several of the Companys products under development.  The
Company has developed a separate technology against bacteria using mimetic
oligonucleotides as sequences to silence targeted bacterial genes.
 Targeted genes include those necessary for the bacterias survival,
reproduction and/or for the expression of various toxins.  The
Company has also developed a novel technique for producing cell free DNA thus
bypassing the fermentation process.  The cell free synthesis of DNA has
numerous advantages:  CytoGenixs synDNA is virtually free of bacterial
endotoxins, as well as bacterial DNA, RNA and protein which must be laboriously
removed from DNA  8    manufactured using traditional fermentation process using live
bacteria. CytoGenixs process does not require the use of antibiotic markers and
does not require genetic sequences comprising the usual bacterial backbone of
plasmid DNA.  Elimination of the bacterial backbone enables production of
 synDNA construct that are approximately half the size of the plasmid DNA.
 More importantly, synDNA can be produced more rapidly and with fewer
complications than in the traditional fermentation methods.  Using
its expanding technological base, the Company is seeking to develop drugs that
address significant and unmet medical needs.  The Company is conducting
research and/or preclinical development with product candidates in the following
areas: infectious disease (anti-virals and anti-bacterials), inflammation,
cancer and vaccines.  PRODUCTS UNDER DEVELOPMENT:  INFECTIOUS DISEASE PROGRAM  CY301
SIMPLIVIR anti-herpes topicals are anticipated to address the needs of 70
million infected Americans.  Todays marginally effective products have
revenues in excess of $1 billion.  The most likely methods of use include
prophylactic and neonatal applications.  The Companys proprietary plasmid
DNA sequences are believed to turn-off the expression of the HSV ICP4 and ICP47
genes.  Found in HSV-1, -2 and Herpes Zoster, the ICP4 gene is critical for
the replication of the virus in the host cell.  The ICP47 gene produces a
protein that assists the virus in interfering with a hosts immune system in
recognizing the virus and eliminating it.  Pre-clinical in vitro studies
have shown a 100-fold reduction in HSV viral load in test cells containing the
Companys proprietary plasmid DNA coded with an ICP4 knockdown sequence.
 Mouse trials were initiated in August, 2003 and are continuing.
 Pre-clinical toxicology studies are being designed and will enable the
filing of an Investigational New Drug (IND) application with the Food & Drug
Administration (FDA) in 2008.  The
Company is also in the process of developing compounds against methicillin
resistant staphylococcus aureaus (MRSA).  INFLAMMATORY DISEASE PROGRAM  CY303
is a topical anti-inflammatory product that blocks the activity of an adhesion
molecule known as intercellular adhesion molecule or ICAM-1.  The initial
medical condition for this topical anti-inflammatory product is moderate to
severe psoriasis.  Other medical conditions where CY303 could be
therapeutically beneficial include contact dermatitis, acne, decubitus, rosacea
and joint swelling.  CANCER
PROGRAM  The
Company has entered into a sponsored research agreement with scientists at a
university medical center for preclinical experiments using the Companys ssDNA
expression vector technology to silence a gene that has been shown to cause
malignant transformation of tumor cells.  NUCLEIC
ACID DELIVERY TECHNOLOGY  9     DNA
delivery into cells is a rapidly developing area in gene therapy and
biotechnology.  Viral methods of DNA delivery are well-characterized and
efficient, but little is known about the toxicity and immunogenicity of viral
vectors.  As a result, the Company is continuing investigation of viral
vectors but concentrating its efforts on non-viral, transfection methods of DNA
delivery.  The Company is investigating targeted delivery using established
as well as innovative DNA delivery systems containing histidine-rich peptides
and polypeptides and self-assembled delivery systems based on cationic lipids
and polymers.  synDNA
PROCESS  As
briefly noted above, the Company has developed a novel method for producing
large amounts of high quality therapeutic DNA (synDNA) with significant
reductions in residual contaminants compared to traditional fermentation
methods.  Specifically, the Company has identified and optimized a method
for in vitro DNA synthesis and amplification for the production of good
manufacturing practice-grade (GMP) drug substances.  Cell-free amplification of DNA sequences has many important
benefits beginning with the size and composition of the plasmid.  Under
this system, there is no need for bacterial replication genes or selection
markers such as antibiotic resistant genes.  In most cases, this will
reduce the size and weight of the therapeutic DNA by at least 3,000 base pairs
or a molecular weight of approximately 2,000 kilo Daltons (kDa).  The
Dalton is a measure of molecular weight or mass.  The total absence of
bacteria and growth media assures that there is no need to employ mechanical or
chemical purification methods to extract cell or animal proteins, RNA, genomic
DNA and backbone molecules.  This feature allows the designer more control
of coding for non-specific and specific immune responses.  Greater
biological activity  The
Companys experiments have shown that the biological response to DNAs with no
vector backbone is approximately one and one-half times higher than traditional
plasmids.  Other investigators have reported greater activity levels of in
vivo studies using DNA mini circles.  At the molecular level, a 100
nanogram of traditional plasmid DNA is equal to 60ng of synDNA.  This may
explain the result of the Companys transfection experiments and suggest that
less synDNA may be able to generate the same biological effect as its plasmid
counterpart. This would translate in to substantial savings and lower costs.  Low
risk, low cost and fast cycle time  The
Companys novel process is bench scale and requires less equipment, space or
human intervention in comparison to bioprocess manufacturing facilities.
 This process lends itself to liquid-handling automation and one technician
can in most cases synthesize gram quantities in a matter of days working in
custom manufacturing suites. The Company believes that this synthetic process
will be more consistent, yield material of higher purity, and will enable
delivery of higher concentrations of Active Pharmaceutical Ingredient (API) if
needed.  10     Improved regulatory profile  Benefits provided by the cell-free synthesis from a regulatory
agency review and compliance perspective are significant.  Similarly,
product certified good manufacturing practice (cGMP) procedures detailing
methods for cell collection, processing and culture conditions would no longer
be necessary and would substantially reduce quality assurance and quality
control (QA/QC) and compliance overhead costs.  The synDNA process yields
DNA with markedly lower levels of endotoxin, bacterial genomic DNA, RNA and
proteins.  CytoGenix is carrying out a multi-pronged strategy with the
objective of commercializing this technology within the next year.  The
following summarizes the Companys plans:  o PROCESS OPTIMIZATION AND SCALE-UP, continued experimentation to
achieve yield optimization, reduced reagent usage and reduced costs.
 Manufacture milligram quantities consistently, conduct several animal
studies with various plasmids to verify bioactivity equal to or greater than
plasmids produced via traditional methods.  Scale-up to produce gram
quantities.  o DEVELOP REAGENT SUPPLIERS AND SOURCING, establish relationships
with manufacturers of enzymes. Develop quality parameters.  o CONSTRUCT CGMP PRODUCTION FACILITY, build and equip a side-by-side
manufacturing lines for simultaneous production of batches cGMP synDNA.  o BUSINESS DEVELOPMENT, the Company is currently evaluating options
for industry partnership for continued development of the process including
contract manufacturing.  The
Company is currently supporting five Sponsored Research Agreements (SRA):  1. Dr. Cy Steins laboratory at Montefiore Medical Center is using
CytoGenixs proprietary gene silencing DNA technology against a gene found in
melanoma cells that produces a protein known to counteract the effect of several
chemotherapeutic agents in difficult to treat cancers.  2. Dr. Frank Orsons laboratory at Baylor College of Medicine is
conducting animal trials to determine the effect of CytoGenixs gene silencing
technology on cancer in the lungs of mice using aerosol gene delivery
system.  3. Dr. Jeffrey Actors laboratory at University of Texas Health
Science Center in Houston is conducting animal trials to determine efficacies of
CytoGenixs antimicrobial oligodeoxynucleotides (ODN) compounds.   11    4. Dr. David Weiners laboratory at University of Pennsylvania is
conducting animal trials to determine efficacies of CytoGenixs synDNA vaccines
against Smallpox and other targets.  5. Dr. Slobodan Paessler at the University of Texas Medical Branch at
Galveston is conducting animal trials to test CytoGenixs synDNA vaccine
against avian flu (H5N1).  COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS  The
Company is currently working in a cooperative research and development agreement
(CRADA) with the United States Department of Agriculture to develop and test a
DNA vaccine against brucellosis.  The
Company has completed the details of protocols for a CRADA with the United
States Army Medical Research Institute for Infectious Diseases to develop and
test DNA vaccines for strains of ebola, equine encephalitis and alpha and beta
subunits of E. coli heat labile toxin.  PARTNERSHIPS  The
Company currently has several industry and government agency partnerships and is
actively seeking out-licensing opportunities in the application of the Companys
core technologies to promote the development of new therapeutic products in the
fields of infectious diseases, inflammation and cancer.  CytoGenix is also
seeking partnerships in the development of products in the areas of animal
health and agriculture.  The Companys cell-free method for the cGMP
production of therapeutic-grade DNA is also available for licensing.  The
Company currently has several academic and government agency collaborations to
promote the research and development of new therapeutic products.  Current
collaborators include:  USDA  Dr.
Steven Olsen at USDA is currently testing DNA vaccines against Brucellosis
Abortus, prepared by CytoGenix using synDNA technology, in animal models.  ALDEVRON, LLC.  CytoGenix has teamed up with Aldevron, LLC, a leader in the field
of DNA vaccines, to evaluate a synDNA vaccine derived from a plasmid provided
by Aldevron.  The synDNA vaccine was designed to produce a Hepatitis B
viral surface antigen and was evaluated in a rabbit model using Aldevrons
proprietary immunization process.  GE
HEALTHCARE BIO-SCIENCE CORPORATION  The
Company has entered an agreement with GE Healthcare Bio-Sciences Corp. whereas
GEHC will provide the Company with DNA production reagents for use in the  12    manufacture of vaccines and therapeutic compounds.   The
Company is in the process of negotiating with GEHC to renew and extend the
Agreement.  As of the date of this filing no agreement has been
finalized.  Technology  Sponsored Research  It is
the policy of the Company to seek outstanding scientific leaders and independent
investigators as collaborators in mutually beneficial projects.  The
following projects are sponsored in part by the Company:  o Jeffery
Actor, UT Health Science Center in Houston, In vivo and in vitro studies of
oligonucleotide compounds against MRSA and TB; o Slobodan
Paesseler, UT Medical Center in Galveston, In vivo study of DNA vaccines against
H5N1; o Cy
Stein, Montefiore Medical Center, New York,  Inhibition of cancer genes
using single-stranded DNA expression vector; o Frank
Orson, Baylor College of Medicine, In vivo study of DNA vaccine against
H1N1; o David
Weiner, University of Pennsylvania, In vivo studies (mice and monkeys) of DNA
vaccines against HIV and smallpox. PUBLICATIONS  The
Company and its cooperating university scientists have published a number of
scientific papers and presented at scientific meetings.  These publications
include:  1. Benimetskaya,
L., Ayyanar, K. Kornblum, N., Castanotto, D., Rossi, J., Wu, S., Lai, J., Brown,
B., Popova, N., Miller, P., McMicken, H., Chen, Y. & Stein, C. Bcl-2 protein
in 518A2 melanoma cells in vivo and in vitro.  Clinical Cancer Research,
12:4940-4948, 2006. 2. Xing-Xin Tan & Yin Chen, Discovery of Novel Antibiotics By
screening of an Oligodeoxynucleotide Expression Library, (invited review
article, submitted) New Research on Antisense Elements (Genetics). Frank
Columbus, Editor-in-Chief, Nova Science Publishers, Inc. 3. Tan, X. & Chen, Y., A novel genomic approach identifies
bacterial DNA-dependent RNA polymerase as the target of an antibacterial
oligodeoxynucleotide, RBL-1 Biochemistry, 44:6708-6714, 2005. 4. Tan, X., Actor, J.K., & Chen, Y., PNA antisense oligomer as a
therapeutic strategy against bacterial infection: proof of principle using mouse
peritonitis model, Antimicrobial Agent and Chemotherapy, 49: 3203-3207,
2005. 5. Tan, X., & Chen, Y., Discovery of novel antibiotics using
cell-based screening (Review), Current Drug Discovery, pp. 21-23, April,
2004. 6. Tan, X., Knesha, R., Margolin, W. and Chen, Y., DNA enzyme
generated by a novel single-stranded DNA expression vector inhibits expression
of the essential bacterial cell division gene ftsZ, Biochemistry, 43:1111-1117,
2004.  13    7. McMicken, H., Bates, P. and Chen, Y., Antiproliferative activity
of G-quartet-containing oligonucleotides generated by a novel single-stranded
DNA expression system, Cancer Gene Therapy, 10(12):867-869, 2003. 8. Chen, Y. and McMicken, H., Intracellular production of DNA enzyme
by a novel single-stranded DNA expression vector, Gene Therapy, 10:1776-1780,
2003. 9. Chen, Y., Ji, Y. and Conrad, C., Expression of single-stranded DNA
in mammalian cells, Biotechniques, 34:167-171, 2003. 10. Chen, Y., Novel Technologies for target validation, Genetic
Engineering News, 23(11):7-9, 2003. 11. Chen, Y., A novel single-stranded DNA (ssDNA) expression vector
(Review), Expert Opinion on Biological Therapy, 2:735-740, 2002. 12. Chen, Y., Meeting highlights, 10th International
conference on gene therapy of cancer, Expert Opinion on Biological Therapy,
2:443-445, 2002. 13. Chen, Y., Growth of oligo-based drugs, Genomics & Proteomics,
October, 2002. 14. Datta, H. and Glazer, P., Intracellular generation of
single-stranded DNA for chromosomal triplex formation and induced recombination,
Nucleic Acid Research, 29:5140-5147, 2001.  A marvel of biochemical
engineering means cells can produce DNA enzyme to attach cancer, New Scientist,
January, 2001. 15. Chen, Y., Ji, Y., Roxby, R. and Conrad, C., In vivo expression of
single-stranded DNA in mammalian cells with DNA enzyme sequences targeted to
c-raf, Antisense & Nucleic Acid Drug Development, 10:415-422, 2000.  BUSINESS STRATEGY  The
goal and the focus of the Company are to leverage its proprietary technology to
maximize investor value.  The Company is developing skin creams that should
be safer and more effective than systemic drugs (pills) for Herpes related
diseases.  Upon successful completion of FDA Phase I/II clinical trials,
the Company intends to seek license and distribution agreements with domestic
and foreign pharmaceutical companies.  o The Company intends to independently develop oligonucleotide
mediated therapeutic applications in several disease areas.  o The Company will pursue partnerships with other pharmaceutical or
biotechnology companies to develop DNA expression-based therapeutics.  o The Company will seek to maintain and expand its patent portfolio
and proprietary technology.  The Company aggressively pursues patent
protection to maintain worldwide rights relating to the development, manufacture
and sale of oligodeoxynucleotide mediated therapeutics and services and products
related to the manufacture of synDNA.  o The Company intends to leverage its oligonucleotide expertise
through licensing, process development and pilot manufacturing.  The
Company believes that it has established one of the leading nucleic acid
chemistry groups that can provide medicinal chemistry, process development and  14    manufacturing to others in need of this expertise.  The
Company believes that it will be able to capitalize on its continuing investment
in oligonucleotide and nucleic acid technology by entering into licensing,
process development and pilot manufacturing arrangements with collaborators to
generate revenues, while retaining this capability for its own drug
development.  o The Company plans to expand its customer base for sales of synDNA
as it advances the ability to amplify and purify diverse sequences.  The
sales will come from excess capacity above the material the Company needs for
its own product development.  The Company will seek strategic partners to
expand the production and distribution of synDNA based products.  MARKETING STRATEGY  The
Company plans to market initial products, when developed, and for which it will
obtain regulatory approval, through marketing arrangements or other licensing
arrangements with pharmaceutical companies.  Implementation of this
strategy will depend on many factors, including the market potential of any
products the Company develops, and its financial resources.  To market
products that will serve a large, geographically diverse patient population, we
expect to enter into licensing, distribution, or partnering agreements with
pharmaceutical companies that have large, established sales organizations.
 The timing of the Companys entry into marketing arrangements or other
licensing arrangements with large pharmaceutical companies will depend on
successful product development and regulatory approval within the regulatory
framework established by the Federal Food, Drug and Cosmetics Act, as amended,
and regulations promulgated there under.  Although the implementation of
initial aspects of the Companys marketing strategy may be undertaken before
this process is completed, the development and approval process typically is not
completed in less than three to five years after the filing of an
Investigational New Drug (IND) application and its marketing strategy therefore
may not be implemented for several years.  See Drug Approval Process and
Other Governmental Regulation.  NEW
FACILITY  The
Company signed an earnest money contract with GSL Constructors, Ltd. to design
and build the project located in the Westchase District of Houston.  The
contract is for 2.274 acres of land together with a facility. The Company has
engaged the services of Luwa USA to design and construct the cGMP portion of the
new 20,000 sq ft facility.  Groundbreaking for this project is anticipated
to occur in 2007 subject to financing.  INTELLECTUAL PROPERTY RIGHTS  The
Company has developed or acquired a comprehensive body of intellectual rights.
 The proprietary nature of, and protection for, the Companys technology,
processes and know-how are important to its business.  The Company plans to
prosecute and aggressively defend its patents and proprietary technology.
 The Companys policy is to patent the technology, inventions, and
improvements that are considered important to the development of its business
and that are patentable.  The Company also depends upon  15    trade secrets, know-how, and continuing technological innovation
to develop and maintain its competitive position.  A
patent portfolio including approximately 46 domestic and foreign issued or
pending patent applications protects the Companys technologies.  The
Company intends to protect its proprietary technology with additional filings as
appropriate.  DRUG
APPROVAL PROCESS AND OTHER GOVERNMENT REGULATION  The
system of reviewing and approving drugs in the United States is considered the
most rigorous in the world.  Estimates of the upper range of costs to bring
a single product from research through market approval and launch into commerce
range from $800 million (Pharmaceutical Research and Manufacturers Association)
to $1.7 billion in 2000 through 2002 (FDA), with the timing to do so typically
ranging between 10 and 15 years.  The Pharmaceutical Research and
Manufacturers Association estimates that of every 5,000 medicines tested, on
average, only five are tested in clinical trials, and only one of those is
approved for human use. These estimates may vary depending on the nature of the
drug and the mechanism by which it works.  DRUG
DISCOVERY  The
drug discovery process can take several years.  Once a company locates a
screening lead, or starting point for drug development, isolation and structural
determination may begin.  The development process results in numerous
chemical modifications to the screening lead in an attempt to improve its drug
properties.  After a compound emerges from the above process, the next
steps are to conduct further preliminary studies on the mechanism of action,
further in vitro (test tube) screening against particular disease targets and,
finally, some in vivo (animal) screening.  If the compound passes these
barriers, the toxic effects of the compound, if any, are analyzed by performing
preliminary exploratory animal toxicology.  If the results are positive,
the compound emerges from the basic research mode and moves into the
pre-clinical phase.  Preclinical Testing  During
the pre-clinical testing stage, laboratory and animal studies are conducted to
show biological activity of the compound against the targeted disease, and the
compound is evaluated for safety, stability, biodistribution (where the drug
goes in the body and in the case of DNA based drugs, bioincorporation (where the
DNA is incorporated in any of the bodys cells genome).  These tests
typically take approximately three and one-half years to complete.  Investigational New Drug Application  During
the pre-clinical testing, an IND is filed with the FDA to begin human testing of
the drug.  The IND becomes active if not rejected by the FDA within 30
days.  The IND must indicate the results of previous experiments, how,
where and by whom the studies were conducted, the chemical structure of the
compound, the method by which it is believed to work in the human body, any
toxic effects of the compound found in the  16    animal studies and how the compound is manufactured.
 Progress reports detailing the results of the clinical trials must be
submitted at least annually to the FDA.  Phase I
Clinical Trials  After
an IND becomes active, Phase I human clinical trials may begin.  These
tests, involving usually between 20 and 80 patients or healthy volunteers,
typically take approximately one year to complete and cost between $300,000 and
$500,000 per trial.  The Phase I clinical studies also determine how a drug
is absorbed, distributed, metabolized and excreted by the body, and the duration
of its action.  Phase I trials are not normally conducted for anticancer
product candidates.  A Phase Ib study involves patients with the targeted
disease cancer and is focused on safety.  Phase
II Clinical Trials  In
Phase II Clinical trials, controlled studies are conducted on approximately 100
to 300 volunteer patients with the targeted disease.  The preliminary
purpose of these tests is to evaluate the effectiveness of the drug on the
volunteer patients as well as to determine if there are any side effects.
 These studies generally take approximately two years and cost between
$500,000 and $4 million per trial.  In addition, Phase I/ II clinical
trials may be conducted to evaluate not only the efficacy of the drug on the
patient population, but also its safety.  Phase
III Clinical Trials  This
phase typically lasts about three years, usually involves 1,000 to 3,000
patients and costs between $5 million and $50 million per trial.  During
the Phase III clinical trials, physicians monitor the patients to determine
efficacy and to observe and report any reactions that may result from long-term
use of the drug.  New
Drug Application  After
the completion of the requisite three phases of clinical trials, if the data
indicate that the drug has an acceptable benefit to risk assessment and it is
found to be safe and effective, a New Drug Application (NDA) is filed with the
FDA.  The requirements for submitting an NDA are defined by the FDA.
 These applications are comprehensive, including all information obtained
throughout all clinical trials as well as all data pertaining to the
manufacturing and testing of the product.  In general, these filings can
far exceed 100,000 pages.  With the implementation of the Prescription Drug
Users Fee Act (PDUFA), review fees are provided at the time of NDA filing.
 In 2007, each NDA with clinical data must be accompanied by a $896,200
review fee.  If the NDA is assessed as unacceptable in the initial 30 day
review, it is returned to the submitter, with 50% of the fee.  The
historical average review time for a New Molecular Entity (NME) has remained
static at approximately 16 months, however, a new NME can be approved in as
little as six months.  Marketing Approval   17    If the FDA approves the NDA, the drug becomes available for
physicians to prescribe.  Periodic reports must be submitted to the FDA,
including descriptions of any adverse reactions reported.  The FDA may
request additional studies (Phase IV) to evaluate long-term effects.  Phase
IV Clinical Trials and Post Marketing Studies  In
addition to studies requested by the FDA after approval, these trials and
studies are conducted to explore new indications.  The purpose of these
trials and studies and related publications is to broaden the application and
use of the drug and its acceptance in the medical community.  COMPETITION  The
pharmaceutical and biotechnology industries are highly competitive.  The
Company faces competition from biotechnology and pharmaceutical companies using
more traditional approaches to treating human diseases.  The Companys
competitors may develop safer, more effective or less costly gene-based
therapeutics.  In addition, the Company faces and will continue to face
competition from other companies for corporate collaborations with
pharmaceutical and biotechnology companies, for establishing relationships with
academic and research institutions and for licenses to proprietary technology,
including intellectual property.  Many of
the Companys competitors and potential competitors have substantially greater
product development capabilities and financial, scientific, manufacturing,
managerial and human resources than the Company.  There can be no assurance
that research and development by others will not render the Companys products,
or the products developed by corporate partners using its licensed technologies
obsolete, or non-competitive, or that any product the Company or its corporate
partners develop will be preferred to any existing or newly developed
technologies.  In addition, there can be no assurance that the Companys
competitors will not develop safer, more effective or less costly cardiovascular
therapies, gene delivery systems, gene therapeutics, non-gene therapies, or
other therapies, achieve superior patent protection or obtain regulatory
approval of product commercialization earlier than the Company, any of which
could have a material adverse effect on its business, financial condition or
results of operations.  RESEARCH AND DEVELOPMENT  The
Company expensed $4,970,410, $1,724,317, and $831,472 on research and
development activities during the years ended December 31, 2006, 2005, and 2004,
respectively.  Research and development (R&D) expenses include related
salaries, contractor fees, materials, and utilities.  R&D
expenses also consist of independent R&D costs and costs associated with
collaborative development arrangements with other companies and research
institutions. Research and development costs are expensed as incurred.  EMPLOYEES   18    As of December 31, 2006, the Company has 12 employees, 5 of whom
hold advanced degrees.  None of the Companys employees are covered by
collective bargaining agreements, and the Company considers relations with its
employees to be good.  HOW YOU
CAN FIND ADDITIONAL INFORMATION  The
Company is a reporting company and files annual, quarterly and current reports,
proxy statements and other information with the SEC.  For further
information with respect to the Company, you may read and copy its reports,
proxy statements and other information, at the SEC public reference rooms at 100
F.  Street, N.E., Washington, D.C. 20549, as well as at the SECs regional
offices at 500 West Madison Street, Suite 1400, Chicago, IL 60661 and at 233
Broadway, New York, NY 10279.  You can request copies of these documents by
writing to the SEC and paying a fee for the copying cost.  Please call the
SEC at 1-800-SEC-0330 for more information about the operation of the public
reference rooms.  The Companys SEC filings are also available at the SECs
web site at http://www.sec.gov.  In addition, you can read and copy the
Companys SEC filings at the office of the National Association of Securities
Dealers, Inc.  at 1735 K Street, N.W., Washington, D.C. 2006.  Copies
of CytoGenixs Annual Reports on Form 10K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are
all available on its website (www.cytogenix.com) or by sending a request for a
paper copy to: CytoGenix, Inc. 3100 Wilcrest, Suite 140, Houston, TX
 77042, attn. Investor Relations.  ITEM 1A. RISK FACTORS  RISKS
AFFECTING FUTURE OPERATING RESULTS  The
Company does not provide forecasts of its future financial performance.
 While the Company is optimistic about its long-term prospects, the
following factors should be considered in evaluating its outlook.  If the
possibilities described as risks below actually occur, the Companys operating
results and financial condition would likely suffer and the trading price of its
common stock may fall, causing a loss of some or all of an investment in its
common stock.  CytoGenixs products are in an early stage of development and
may not be determined to be safe or effective.  The
Company is only in the early stages of development with its biopharmaceutical
products.  The Company has devoted almost all of its time to research and
development of its technology and products, protecting its proprietary rights
and establishing strategic alliances.  The Companys proposed products are
in the pre-clinical stages of development and will require significant further
research, development, clinical testing and regulatory clearances.  The
proposed products are subject to development risks.  These risks include
the possibilities that any of the products could be found to be ineffective or
toxic, or could fail to receive necessary regulatory clearances.  The
Company has not received any significant revenues from the sale of products and
the  19    Company may not successfully develop marketable products that will
increase sales and, given adequate margins, make it profitable.
 Competitors may develop superior or equivalent, but less expensive,
products.  The Company has incurred net losses since its inception, and the
Company may not achieve or sustain profitability.  The
Company incurred a net loss of $8.40 million in 2006 and of $3.53 million in
2005.  As of December 31, 2006, total shareholders equity was $2,901,753.
 Losses have resulted principally from expenses incurred in research and
development of technology and products, and general and administrative expenses
that the Company has incurred while building its business infrastructure.
 The Company expects to continue to incur significant operating losses in
the future as it continues its research and development efforts and seeks to
obtain regulatory approval of its products.  The Companys ability to
achieve profitability depends on its ability to raise additional capital,
complete development of its products, obtain regulatory approvals and market
those products.  It is uncertain when, if ever, the Company will become
profitable.  If
the Company fails to attract significant additional capital, the Company may be
unable to continue to successfully develop its products.  Since
the Company began operations, the Company has obtained operating funds primarily
by selling common stock.  Based on its current plans, the Company does not
believe that current cash balances will be sufficient to meet its operating and
capital needs throughout 2007.  Furthermore, the actual amount of funds
that will be needed will be determined by many factors, some of which are beyond
the Companys control.  These factors include the success of its research
and development efforts, the status of its pre-clinical and clinical testing,
costs relating to securing regulatory approvals and the costs and timing of
obtaining new patent rights, regulatory changes, competition and technological
developments in the market.  The Company may need funds sooner than
currently anticipated.  If
necessary, potential sources of additional funding could include strategic
relationships, public or private sales of shares of common stock or debt or
other arrangements.  The Company may not obtain additional funding when the
Company needs it on terms that will be acceptable to it or at all.  If the
Company raises funds by selling additional shares of common stock or securities
convertible into common stock, the ownership interest of existing shareholders
will be diluted.  If the Company is unable to obtain financing when needed,
its business and future prospects could be materially adversely affected.  If the
Company fails to receive necessary regulatory approvals, the Company will be
unable to commercialize its products.  All of the Companys products are
subject to extensive regulation by the United States Food and Drug
Administration, or FDA, and by comparable agencies in other countries.  The
FDA and comparable agencies require new pharmaceutical products to undergo
lengthy and detailed clinical testing procedures and other costly and
time-consuming compliance procedures.  The Company does not know when or if
it will be able to submit its products for regulatory review.  Even if the
Company submits a new drug application, there may be delays in obtaining
regulatory approvals, if the Company obtains them at all.  Sales of the
Companys products outside the United States will also be subject to regulatory
requirements governing clinical trials and product approval.  These
requirements vary from country to country and could delay  20    introduction of products in those countries.  The Company
cannot provide assurance that any of its products will receive marketing
approval from the FDA or comparable foreign agencies.  The
Company may fail to compete effectively, particularly against larger, more
established pharmaceutical companies, causing its business to suffer.  The
biotechnology industry is highly competitive.  The Company competes with
companies in the United States and abroad that are engaged in the development of
pharmaceutical technologies and products.  They include: biotechnology,
pharmaceutical, chemical and other companies; academic and scientific
institutions; governmental agencies, and public and private research
organizations.  Many of
these companies and many other competitors have much greater financial and
technical resources and production and marketing capabilities than the Company
does.  The biopharmaceutical industry is characterized by extensive
research and development and rapid technological progress.  Competitors may
successfully develop and market superior or less expensive products which render
the Companys products less valuable or unmarketable.  The
Company has limited operating experience.  The
Company has engaged solely in the development of biopharmaceutical technology.
 Although some members of the Companys management team have experience in
biotechnology operations, the Company has limited experience in manufacturing or
selling biopharmaceutical products.  The Company also has only limited
experience in negotiating and maintaining strategic relationships, and in
conducting clinical trials and other later-stage phases of the regulatory
approval process.  The Company may not successfully engage in some or all
of these activities.  The
Company has limited manufacturing capability.  While
the Company believes that it can produce materials for clinical trials and
produce products for human use at its recently completed synDNA production
suite, the Company may need to expand its commercial manufacturing capabilities
for products in the future if the Company elects not to or cannot successfully
partner with others to manufacture its products.  This expansion may occur
in stages, each of which would require regulatory approval, and product demand
could at times exceed supply capacity.  The Company has selected a site for
any expanded facilities but it can not be assured whether the Company will have
the financing needed for such construction.  The Company does not know if
or when the FDA will determine that such facilities comply with Good
Manufacturing Practices.  The projected location and construction of any
facilities will depend on regulatory approvals, product development,
pharmaceutical partners and capital resources, among other factors.
  The Company has not obtained regulatory approvals for any production
facilities for its products, nor can the Company assure investors that it will
be able to do so.  If
the Company loses key personnel or is unable to attract and retain additional,
highly skilled personnel required for its activities, its business will
suffer.  21     Competition for qualified personnel in the biopharmaceutical
industry is intense, and the Companys success will depend on its ability to
attract and retain highly skilled personnel. The Company is not aware of any key
personnel who plan to retire or otherwise leave the Company in the near future
other than Malcolm Skolnick who has expressed his desire to retire after the
Company identifies a new Chief Executive Officer.  Asserting, defending and maintaining the Companys intellectual
property rights could be difficult and costly, and failure to do so will harm
its ability to compete.  The
Companys success will depend on existing patents and licenses, and its ability
to obtain additional patents in the future.  A patent portfolio of
approximately 46 domestic and foreign patents and patent applications protects
the Company technologies. The
Company cannot assure investors that its pending patent applications will result
in patents being issued in the United States or foreign countries.  In
addition, the patents which have been or will be issued may not afford
meaningful protection for its technology and products.  Competitors may
develop products similar to the Companys which do not conflict with its
patents.  Others may challenge the Companys patents and, as a result, the
patents could be narrowed or invalidated.  The patent position of
biotechnology firms generally is highly uncertain, involves complex legal and
factual questions, and has recently been the subject of much litigation.
 No consistent policy has emerged from the United States Patent and
Trademark Office (USPTO), or the courts regarding the breadth of claims allowed
or the degree of protection afforded under biotechnology patents.  In
addition, there is a substantial backlog of biotechnology patent applications at
the USPTO and the approval or rejection of patents may take several years.  CytoGenixs success will also depend partly on its ability to
operate without infringing upon the proprietary rights of others, as well as its
ability to prevent others from infringing on its proprietary rights.  The
Company may be required at times to take legal action to protect its proprietary
rights and, despite its best efforts, the Company may be sued for infringing on
the patent rights of others.  The Company has not received any
communications or other indications from owners of related patents or others
that such persons believe the Companys products or technology may infringe
their patents.  Patent litigation is costly and, even if the Company
prevails, the cost of such litigation could adversely affect its financial
condition.  If the Company does not prevail, in addition to any damages the
Company might have to pay, the Company could be required to stop the infringing
activity or obtain a license.  Any required license may not be available to
the Company on acceptable terms, or at all.  If the Company fails to obtain
a license, its business might be materially adversely affected.  To help
protect its proprietary rights in unpatented trade secrets, the Company requires
its employees, consultants and advisors to execute confidentiality agreements.
 However, such agreements may not provide the Company with adequate
protection if confidential information is used or disclosed improperly.  In
addition, in some situations, these agreements may conflict with, or be subject
to, the rights of third parties with whom the Companys employees, consultants
or advisors have prior employment or consulting relationships.  Further,
others may independently develop substantially equivalent  22    proprietary information and techniques, or otherwise gain access
to the Companys trade secrets.  If
CytoGenixs strategic relationships are unsuccessful, its business could be
harmed.  The
Companys strategic relationship with GE Healthcare and others are important to
its success.  The development, improvement and marketing of many of its key
therapeutic products are or will be dependent, in part, on the efforts of the
Companys strategic partners.  For example, under the GE Healthcare
relationship, the Company may fail to achieve product development milestones; GE
Healthcare may fail to perform its obligations under the agreement, such as
failing to produce an adequate supply of sufficient quality raw materials to
produce synDNA; and the agreement with GE Healthcare may be subject to
termination in the event of a breach.  The Company may not be commercially
successful in its effort to produce and/or sell synDNA.  The transactions
contemplated by its agreements with strategic partners, including equity
purchases and cash payments, are subject to numerous risks and conditions.
 The occurrence of any of these events could severely harm CytoGenixs
business.  The
Companys near-term strategy is to develop its own products as well as
co-develop products with strategic partners, or to license the marketing rights
for its products to pharmaceutical partners after the Company completes one or
more Phase II clinical trials.  In this manner, the extensive costs
associated with late-stage clinical development and marketing will be shared
with, or will be the responsibility of, the Companys strategic partners.  To
fully realize the potential of its products, including development, production
and marketing, the Company may need to establish other strategic
relationships.  The
Company has limited sales capability and may not be able to successfully
commercialize its products.  The
Company has been engaged solely in the development of biopharmaceutical
technology.  Although some of its management have experience in
biotechnology company operations, the Company has limited experience in
manufacturing or selling pharmaceutical products.  The Company also has
only limited experience in negotiating and maintaining strategic relationships,
and in conducting clinical trials and other later-stage phases of the regulatory
approval process.  To the extent the Company relies on strategic partners
to fully commercialize its products, the Company will be dependent on their
efforts.  The Company may not successfully engage in any of these
activities.  The
Company may be subject to product liability lawsuits and its insurance may not
be adequate to cover damages.  The
Company believes it carries adequate insurance for the product development
research it currently conducts.  In the future, when the Company has
products available for commercial sale and use, the use of its products will
expose it to the risk of product liability claims.  Although the Company
intends to obtain product liability insurance coverage, product liability
insurance may not continue to be available to it on acceptable  23    terms and its coverage may not be sufficient to cover all claims.
 A product liability claim, even one without merit or for which the Company
has substantial coverage, could result in significant legal defense costs,
thereby increasing expenses, lowering earnings and, depending on revenues,
potentially resulting in additional losses.  Continuing efforts of government and third party payers to
contain or reduce the costs of health care may adversely affect the Companys
revenues and future profitability.  In
addition to obtaining regulatory approval, the successful commercialization of
its products will depend on the Companys ability to obtain reimbursement for
the cost of the product and treatment.  Government authorities, private
health insurers and other organizations, such as health maintenance
organizations are increasingly challenging the prices charged for medical
products and services.  Also, the trend toward managed health care in the
United States, the growth of healthcare organizations such as HMOs, and
legislative proposals to reform healthcare and government insurance programs
could significantly influence the purchase of healthcare services and products,
resulting in lower prices and reducing demand for products.  The cost
containment measures that healthcare providers are instituting and any
healthcare reform could affect the Companys ability to sell its products and
may have a material adverse effect on operations.  Reimbursement in the
United States or foreign countries may not be available for any of the Companys
products, any reimbursement granted may be reduced or discontinued, and limits
on reimbursement available from third-party payers may reduce the demand for, or
the price of, its products.  The lack or inadequacy of third-party
reimbursements for its products could have a material adverse effect on the
Companys operations.  Additional legislation or regulation relating to the
healthcare industry or third-party coverage and reimbursement may be enacted in
the future that adversely affects the Companys products and its business.  If
the Company fails to establish strategic relationships with larger
pharmaceutical partners, its business may suffer.  The
Company does not intend to conduct late-stage (Phase III) human clinical trials
on its own.  The Company anticipates entering into relationships with
larger pharmaceutical companies to conduct later trials and to market its
products.  The Company also plans to continue to use contract manufacturing
for late stage clinical and commercial quantities of its products.  The
Company may be unable to enter into corporate partnerships which could impede
its ability to bring its products to market.  Any such corporate
partnerships, if entered into, may not be on favorable terms and may not result
in the successful development or marketing of the Companys products.  If
the Company is unsuccessful in establishing advantageous clinical testing,
manufacturing and marketing relationships, it is not likely to generate
significant revenues and become profitable.  RISKS
RELATED TO SHARE OWNERSHIP  CytoGenixs right to issue preferred stock and/or its
classified Board of Directors may delay a takeover attempt and prevent or
frustrate any attempt to replace or remove the then current management of the
Company by shareholders.   24    Authorized capital consists of 300,000,000 shares of common stock
and 50,000,000 shares of preferred stock.  The Companys board of
directors, without any further vote by the shareholders, has the authority to
issue preferred shares and to determine the price, preference, rights and
restrictions, including voting and dividend rights, of these shares.  The
rights of the holders of shares of common stock may be affected by the rights of
holders of any preferred shares that the board of directors may issue in the
future.  For example, the board of directors may allow the issuance of
preferred shares with more voting rights, higher dividend payments or more
favorable rights upon dissolution, than the shares of common stock or special
rights to elect directors.  The
Company has a classified board of directors, which means that only one-third
of its directors are eligible for election each year.  Therefore, if
shareholders wish to change the composition of the Board of Directors, it could
take at least two years to remove a majority of the existing directors or three
years to change all directors.  Having a classified board of directors may,
in some cases, delay mergers, tender offers or other possible transactions which
may be favored by some or a majority of the Companys shareholders and may delay
or frustrate action by shareholders to change the then current Board of
Directors and management.  CytoGenixs stock price is volatile and may fluctuate due to
factors beyond its control.  Historically, the market price of the Companys stock has been
highly volatile as reflected in the table in Part II, Item 5 of this report.
 The following types of announcements could have a significant impact on
the price of the Companys common stock: positive or negative results of testing
and clinical trials by the Company or its competitors; delays in entering into
corporate partnerships; technological innovations or commercial product
introductions by the Company or its competitors; changes in government
regulations; developments concerning proprietary rights, including patents and
litigation matters; public concern relating to the commercial value or safety of
any of the Companys products; financing or other corporate transactions; or
general stock market conditions.  Further, the stock market experiences significant price and volume
fluctuations.  These fluctuations have particularly affected the market
prices of equity securities of many biopharmaceutical companies that are not yet
profitable.  Often, the effect on the price of such securities is unrelated
or disproportionate to the operating performance of such companies.  These
broad market fluctuations may adversely affect the ability of a shareholder to
dispose of his or her shares at a price equal to or above the price at which the
shares were purchased.  The
significant number of the Companys shares of Common Stock eligible for future
sale may cause the price of its common stock to fall.  The
Company has outstanding 140,663,961 shares of common stock as of December 31,
2006 and substantially all are eligible for sale under Rule 144 or are otherwise
freely tradable.   25    CytoGenixs employees have been granted options to buy a total of
22,179,000 shares of common stock as of December 31, 2006.  The options
granted have exercise prices between $.185 and $1.01 per share.  The shares
of common stock granted in the options under the stock option plan have not been
registered as of December 31, 2006.  The options for these shares may not
be exercised until such registration.  The
Company may issue options to purchase up to an additional 13,821,000 shares of
common stock as of December 31, 2006 under its stock option plans.  Sales
of substantial amounts of shares into the public market could lower the market
price of the common stock.  The
Company does not expect to pay dividends in the foreseeable future.  The
Company has never paid dividends on its shares of common stock and does not
intend to pay dividends in the foreseeable future.  Therefore, an
investment should only be made with the expectation of realizing a return
through capital appreciation.  An investment should not be made with the
expectation of dividend income.   ITEM 1B. UNRESOLVED STAFF COMMENTS  None   ITEM 2. DESCRIPTION OF PROPERTY  The
Companys corporate executive offices are located at 3100 Wilcrest, Suite 140,
Houston, Texas 77042.  The Company has occupied approximately 6000 square
feet of executive office and laboratory space since December 2003.  The
facility is in new condition and is adequate for the Companys current
operations.  Rent on the facility averages to be $5,701 per month with a
lease term ending September 2009.  The Company believes its current and
contracted for facilities are suitable and adequate for its present and
foreseeable future operational requirements.  ITEM 3. LEGAL PROCEEDINGS  PHANUEL
PURSUITS, LLC Phanuel Pursuits - Suit
was filed in October 2004 claiming that CytoGenix (licensor) had breached a
license agreement with Phanuel Pursuits (licensee) for use of the CytoGenix
ssDNA expression technology in Indian and Chinese therapeutics. The licenses
were dependent upon foreign regulatory approval. The case was dismissed prior to
trial for lack of evidence and no appeal was filed. Action on this matter was
therefore finalized in March of 2006. WILLIAM
B. WALDROFF AND APPLIED VETERINARY GENOMICS, INC. V. CYTOGENIX, INC.  26    Waldroff and Applied
Veterinary Genomics, Inc. - Litigation initiated in March 2004 over the validity
of license agreements between CytoGenix (licensor) and William Waldroff
(licensee) for use of CytoGenix ssDNA expression technology in shrimp and horse
therapeutic applications. AVGI, as sublicensee, was a third party in this
action. A jury trial held in February 2005 resulted in entry of a judgment
against CytoGenix requiring performance on the contracts and payment of attorney
fees. CytoGenix subsequently appealed this decision and in December 2006 the 1st
Court of Appeals reversed the trial court's judgment, finding no need for
CytoGenix to perform on the contracts and no need for either party to pay the
opposing party's attorney fees. Waldroff and Applied Veterinary Genomics filed a
motion for a rehearing and CytoGenix filed a timely response to that
motion.On March 3, 2007, the Court of
Appeals denied Waldroff/AVGIs Motion forRehearing.  As of the date
of this filing, Waldroff/AVGI has not filed a petition for review by the Supreme
Court of Texas. DEFAMATORY
ACTIONS The Company is actively
pursuing legal action against various parties involved in the posting of
defamatory comments about the Company and several of its officers on public
investor chat-room websites. A settlement proposal was completed with one of the
parties who has published an apology on Investors Hub
(www.investorshub.com) EMPLOYMENT
ACTIONS In
November of 2006, the former Chief Financial Officer (CFO), Lawrence Wunderlich,
and the former Chief Operations Officer (COO), Frank Vazquez, resigned from the
Company.  The Company and former officers are currently pursuing
arbitration to resolve claims by Messrs Vazquez and Wunderlich and counterclaims
by the Company.  In conjunction with the former officers resignations, the
former CFO filed a SOX Whistleblower Complaint with the Department of Labor in
January of 2007.  The action is against the Company and the Chief Executive
Officer, Malcolm Skolnick. The SEC has requested information from the Company
addressing the allegations and the Company has responded in compliance with that
request.  The Companys Board of Directors instituted a special committee
of independent directors who have appointed an independent, outside counsel to
conduct an independent investigation.  As of March 30, 2007 this
investigation is in progress.  Management intends to vigorously defend the
actions brought by the former CFO and COO.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  There were no matters submitted to a vote of
securities holders during the fourth quarter of our fiscal year ended December
31, 2006.    PART
II  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS  Authorized capital stock consists of 300,000,000 shares of common
stock, par value $0.001 per share, and 50,000,000 shares of preferred stock, par
value $0.001 per share.  27    There were 140,663,961 shares of common stock and no shares of
preferred stock outstanding as of March 16, 2007.  The Companys common
stock is traded on the NASDAQ, OTC Bulletin Board under the ticker symbol
CYGX.OB.  The
high and low bid prices for the Companys common stock for each quarter within
the last two fiscal years, as quoted by the OTC Bulletin Board, were as follows.
 The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.    STOCKHOLDERS  As of
March 19, 2007 there were approximately 660 shareholders of record of Common
Stock, one of which is Cede & Co., a nominee for Depository Trust Company
(or DTC).  All of the shares of Common Stock held by brokerage firms,
banks, and other financial institutions as nominees for beneficial owners are
deposited into participant accounts at DTC, and are considered to be held of
record by Cede & Co. as one shareholder.  The Company has not paid any
dividends on its Common Stock and the Board does not intend to declare any
dividends in the foreseeable future.   PERFORMANCE GRAPH  The Companys common
stock began trading on the OTC Bulletin Board in August 2001.  The
following graph depicts the Companys total return to stockholders from August
2001 through December 31, 2006, relative to the performance of the Amex Biotech
Index and Nasdaq Composite Index.  All of the cumulative total returns are
computed assuming the value of the investment in Common Stock and each indexed
as $100.00 on August 16, 2001 and the reinvestment of dividend at the frequency
with which dividends were paid during applicable years.      28       Base
INDEXED RETURNSPeriod
Years EndingCompany/Index
24-Aug-01
31-Dec-01
31-Dec-02
31-Dec-03
31-Dec-04
31-Dec-05
31-Dec-06CYTOGENIX,
INC.
100
77
39
308
308
435
231AMEX BIOTECH
INDEX
100
106
61
89
99
124
137NASDAQ COMPOSITE
INDEX
100
102
70
105
113
115
126  CHANGES
IN SECURITIES  All of
the Companys securities sold during 2006 have been either previously reported
on its Form 10-Qs and Form 8-Ks filed with the Securities and Exchange
Commission.  The
Company issued 966,751 shares of common stock to individuals in consideration
for their services in a $.40 per share private placement completed in the fourth
quarter of 2006.  The shares were recorded as a cost of capital in
conjunction with the fourth quarter fundraising.   ITEM 6.
 SELECTED FINANCIAL DATA ----------------------------------------------------  The
following selected financial data should be read in conjunction with Item 7.
Managements Discussion and Analysis or Plan of Operation and Item
8.Financial Statements.   Operating Data: As of December 31,  2006 2005 2004 2003 2002  Gross Margin $      31,446 $
          - $ - $   (184,893) $
     1,700   29    Research and Development (4,970,410) (1,724,317) (831,472) (454,433) (187,040)  General and
administrative (3,069,945) (1,495,454) (1,434,893) (1,213,780) (1,386,218)  Consulting
Expense (345,637) (290,000) (60,926) (415,869) (816,947)  Depreciation (48,754) (25,391) (38,125)
                (38,445) (40,699)  Other Income/
Expense 1,389 2,037 40 (9,805) - -----------------
         --------------
    -----------------
         -----------------
          ------------ Net Loss (8,401,911) (3,533,125) (2,365,376) (2,317,225) (2,429,204)  Weighted Average number of common shares outstanding basic
and diluted $        (0.07) $       (0.03) $        (0.02) $         (0.03) $
      (0.04)  Balance sheet data: Cash and Cash Equivalents
           2,854,197 1,307,965 453,235 236,962 - Capital Expenditures 254,846
                 16,987
                 12,964 45,358
               10,387 Working Capital 2,030,112 226 930 (586,518) (339,866)
          (658,541) Total assets 4,209,684 1,509,948 524,693 353,958 101,329 Total liabilities 1,307,931 1,102,427 1,039,753 597,202 666,755 Shareholders Equity 2,901,753 407,525 (515,060) (243,244) (565,426)   ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  FORWARD-LOOKING INFORMATION  This
report contains forward-looking statements regarding the Companys plans,
expectations, estimates and beliefs.  Actual results could differ
materially from those discussed in, or implied by, these forward-looking
statements.  Forward-looking statements are identified by words such as
believe, anticipate, expect, intend, plan, will, may, and other
similar expressions.  In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements.  The Company has based these
forward-looking statements largely on its expectations.  Forward-looking
statements in this report include, but are not necessarily limited to, those
relating to the Companys: o intention to introduce new products, o receipt of any required FDA or other regulatory approval for its
products, o expectations about the markets for its products, o acceptance of its products, when introduced, in the
marketplace, o future capital needs, and o success of its patent applications.  Forward-looking statements are subject to risks and uncertainties,
certain of which are beyond the Companys control.  Actual results could
differ materially from those anticipated as a result of the factors described in
the Risk Factors and detailed in the Companys other Securities and Exchange
Commission filings, including among others:  o the effect of regulation by the FDA and other governmental
agencies,  30    o delays in obtaining, or its inability to obtain, approval by the
FDA or other regulatory authorities for its products, o research and development efforts, including delays in developing,
or the failure to develop, its products, o the development of competing or more effective products by other
parties, o the results of pre-clinical and clinical testing, o uncertainty of market of acceptance of its products, o problems that it may face in manufacturing, marketing, and
distributing its products, o inability to raise additional capital when needed, o delays in the issuance of, or the failure to obtain, patents for
certain of its products and technologies, and o problems with important suppliers and business partners.  Because
of these risks and uncertainties, the forward-looking events and circumstances
discussed in this report or incorporated by reference might not transpire.
 Factors that cause actual results or conditions to differ from those
anticipated by these and other forward-looking statements include those more
fully described in the Risk Factors section and elsewhere in this report.  OVERVIEW  From
its inception in 1995, the Company has devoted its resources primarily to fund
its research and development efforts.   The Company has been
unprofitable since inception and, other than limited interest and grant revenue,
has had minimal revenues from the sale of products and other sources. The
Company anticipates an increase in revenues for 2007.  The Company expects
to continue to incur losses for the foreseeable future as it continues to expand
its research and development efforts and enter additional collaborative efforts.
 As of December 31, 2006, the Companys accumulated deficit was
$31,459,965.  RESULTS
OF OPERATIONS  Year
Ended December 31, 2006 Compared to Year Ended December 31, 2005  For the
year ended December 31, 2006, the Company incurred a net loss of $8,401,911, or
less than $0.07 per share, and $76,993 of revenue as compared with a net loss of
$3,533,125, or less than $0.03 per share, and no revenue for the twelve months
ended December 31, 2005.  Research and Development Expenses.  Research and development
expenses increased approximately 3,246,093 to $4,970,410 for the twelve months
ended December 31, 2006 compared to $1,724,317 for the same period in 2005.
  Of the increase, $2,771,262 was due to non-cash stock option
compensation expense for employees in our research and development department
and $474,831 was due to increased research activity and consultant assistance in
obtaining communications with several federal agencies of the US Government.
 Approximately $310,660 of the additional amount results from the increased
activity costs of antibacterial and DNA vaccine research and the remaining
$164,171 of the increase were additional costs incurred for R&D
consultants.   31    General and Administrative Expenses.  General and
administrative expenses increased to $3,069,945 for the twelve months ended
December 31, 2006 compared to $1,495,454 for the same period in 2005.
 Non-cash stock compensation from stock options accounted for $1,535,115 of
the increase and $39,376 was due primarily to the increased costs in accounting
fees for Sarbanes-Oxley compliance.  Consulting Expenses.  Consulting expenses increased to
$345,637 for the twelve months ended December 31, 2006 compared to $290,000 for
the same period in 2005.  This increase is primarily attributed to the
services of Jacobs Engineering relating to the proposed construction of office
and manufacturing facility.  Other costs included commissions paid for
synDNA sales referrals and consulting cost used to evaluate development of
existing research platforms and business directives for the Company.  In
2006 the Company issued 320,000 shares of common stock valued at $.86 per share
for services for preparing and coordinating with the Company and others in the
development of business plans, investor presentations, and financial models,
which represents $275,200 of the $345,637.  In 2005, the Company issued
500,000 shares of common stock valued at $.58 per share for service for
preparing and coordinating with the Company and others in the development of
business plans, investor presentations, and financial models, which represents
the entire $290,000.  Depreciation and Amortization Expense.  Depreciation and
amortization expenses increased to $48,754 for the twelve months ended December
31, 2006 compared to $25,391 for the same period in 2005 primarily due to
equipment purchased to expand the lab to accommodate synDNA sales production.
 In 2006, the Company also installed a new server to optimize security and
data retention.  Year
Ended December 31, 2005 Compared to Year Ended December 31, 2004  For the
year ended December 31, 2005, the Company reported a net loss of
 $3,533,125,  or less  than  $0.03 per  share,
 and no  revenue  as  compared  with a net loss of
$2,365,376,  or less than $0.02 per share,  and no revenue for the
twelve months ended December 31, 2004.  Research and Development  Expenses.  Research and
development expenses increased to
 $1,724,317  for the twelve  months  ended  December
 31,  2005  compared to $831,472 for the same period in 2004
 primarily due to hiring of additional  R&D employees  and
 increased  research  activity.  Approximately
 $673,000  of  the increase is a result of the increased
 staff  and the  remaining  $220,000 of the increase results
 from the increased activity cost of antibacterial and DNA vaccine
research.  General
and Administrative Expenses.   General and administrative expenses
increased to $1,495,454 for the twelve months ended December 31, 2005 compared
to $1,434,893 for the same period in 2004.  The increase includes an
increase  in legal  fees of  $244,000,  of which
 $199,000  is due to increased  patent  attorney fees and
 litigation  fees for the legal  proceeding described in Part II,
Item 3 above. An increase in staff along with increases in officer salaries
contributed to an increase of $305,000 in payroll costs. These costs  were
 offset  by  a  decrease  in  third  party
 investor  relations  and advertising fees of approximately
$489,000.   32    Consulting  Expenses.  Consulting expenses increased to
$290,000 for the twelve months ended December 31, 2005 compared to $60,926 for
the same period in 2004. This increase is primarily attributed to a one year
consulting contract where CytoGenix engaged a firm to consult on various
investor relations and financial business matters.  Depreciation and Amortization Expenses.  Depreciation and
amortization expenses decreased to $25,391 for the twelve months ended
 December 31, 2005 compared to $38,125  for  the  same
 period  in 2004  primarily  due to  office
 furnishings purchased in previous years becoming fully depreciated in
2005.   LIQUIDITY AND CAPITAL RESOURCES  The
Company has financed its operations since inception primarily through equity
sales totaling $17,000,000, and from grants and contract research funding of
$200,000 from various sources.  The Company expects to continue to incur
losses as it expands its research and development activities and related
regulatory work and increases its collaborative efforts.  For 2007, the
Company expects expenditures for operations, including its collaborative
efforts, and its building of a GMP facility to be approximately $5 to $6
million.  The increase compared to 2006 expenditures is expected to result
from the purchase of an additional building for the GMP facility coupled with
additional production staff and expansion of preclinical product development
efforts.  However, if need be in 2007, the Company could reduce its
expenditures because the vast majority of its costs are variable.  Those
estimated expenditures include amounts necessary to fulfill its obligations
under various collaborative, research and licensing agreements during 2007.  On
December 4, 2006, Lawrence Wunderlich, the Companys former Chief Financial
Officer and a former director, and Frank Vazquez, the Companys former chief
operating officer and a former director, filed a complaint with the American
Arbitration Association to recover over $800,000 in severance payments that they
allege the Company owes them.  In the event Messrs. Wunderlich and Vazquez
are successful in their claims against the Company, it may have a material
adverse impact on the liquidity of the Company.  See Part I, Item 3, Legal
Proceedings for a more detailed description of this dispute.  Because
of the cost (up to $1.7 billion) and timeframe (up to 15 years) traditionally
associated with developing a potential drug or pharmaceutical product to where
FDA approval for human sales is received, the Companys business strategy is to
develop its products to initial Phase III human clinical trials and look for
third parties to fund completion of development of the product and market the
product through strategic partnerships, license agreements or other
relationships.  The Company also looks for collaborative and other efforts
utilizing its technology to increase shareholder value.  The Company
currently uses this strategy to limit the potential cost the Company would incur
in developing a product.  The Companys expected costs under our various
contracts and for various drug development products can be estimated for the
next year or two, but not much beyond that due to the uncertainty of clinical
trial results and research results.  Because of the various factors noted
above and the expectation that, until the Company establishes revenue sources,
the Company will license to, or jointly develop its  33    prospective products with, strategic partners, the Company
reviews, at least annually, each research program and clinical trial, based on
results and progress during the prior year and estimates its needs for that
program or trial for the coming year, making adjustments based on the progress
of the program during the year.  The Company does not set long-term
development budgets or development schedules for bringing its products to market
or track its research costs on a product basis.  Cash
and cash equivalents were $2,854,197 at December 31, 2006, compared with
$1,307,965 at December 31, 2005.  The increase of $1,546,232 was due
primarily to net proceeds from a private placement of 10,369,990 shares of its
common stock at $.40 per share.  The sale closed November 30, 2006.
 The securities were sold in a private placement to accredited investors
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.  To fund
operations in 2007 and beyond the Company will need to raise additional capital.
 The Company will continue to look for opportunities to finance its ongoing
activities and operations through accessing corporate partners or the equity
markets, as the Company currently has no credit facility, nor does the Company
currently intend to seek one.  CONTRACTUAL PAYMENT OBLIGATIONS  The
Companys off-balance sheet arrangements are limited to rents on its primary
facility.  These off-balance sheet arrangements are expensed as incurred.
 A summary of contractual commitments and obligations as of December 31,
2006 is as follows:  PAYMENTS
DUE BY PERIOD  CONTRACTUAL OBLIGATION Total 2007 2008 2009  Operating leases $   228,390 $    74,806 $     76,792 $   76,792 GSL Earnest Money Contract $3,322,315 $  474,572 $ 2,847,743 $
          -  The
Companys future expenditures and capital requirements depend on numerous
factors, most of which are difficult to project beyond the short term,
including, without limitation, the progress of research and development
programs, the progress of pre-clinical and clinical trials, the time and costs
involved in obtaining regulatory approvals, the cost of filing, prosecuting,
defending and enforcing any patent claims and other intellectual property
rights, competing technological and market developments, its ability to
establish collaborative arrangements and the terms of any such arrangements, and
the costs associated with commercialization of its products.  Cash
requirements are expected to continue to increase each year as the Company
expands its activities and operations.  There can be no assurance, however,
that the Company will ever be able to generate product revenues or achieve or
sustain profitability.  NEW
ACCOUNTING PRONOUNCEMENTS  In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value Measurements.  SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in GAAP, and expands
disclosures about fair value  34    measurements.  This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007. 
Management is currently evaluating the impact SFAS No. 157 will have on the
Companys financial position, results of operations, and cash flows.  In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities  including an amendment of FASB
statement No. 115. This Statement permits all entities to choose, at specified
election dates, to measure eligible items at fair value (the fair value
option). A business entity shall report unrealized gains and losses on items
for which the fair value option has been elected in earnings (or another
performance indicator if the business entity does not report earnings) at each
subsequent reporting date. Upfront costs and fees related to items for which the
fair value option is elected shall be recognized in earnings as incurred and not
deferred. If an entity elects the fair value option for a held-to-maturity or
available-for-sale security in conjunction with the adoption of this Statement,
that security shall be reported as a trading security under Statement 115, but
the accounting for a transfer to the trading category under paragraph 15(b) of
Statement 115 does not apply. Electing the fair value option for an existing
held-to-maturity security will not call into question the intent of an entity to
hold other debt securities to maturity in the future. This statement is
effective as of the first fiscal year that begins after November 15, 2007.
 The Company is currently analyzing the effects of SFAS 159 but does not
expect its implementation will have a significant impact on the Company's
financial condition or results of operations.  In July
2006, the FASB issued FASB Interpretation (FIN) No. 48 Accounting for
Uncertainly in Income Taxes  An Interpretation of FASB Statement No. 109. 
FIN 48 prescribes detailed guidance for the financial statement recognition,
measurement, and disclosure of uncertain tax positions recognized in an
enterprises financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes.  Tax positions must meet a more-likely-than-not
recognition threshold at the effective date to be recognized upon the adoption
of FIN 48 and in subsequent periods.  FIN 48 will be effective for fiscal
years beginning after December 15, 2006, and the provisions of FIN 48 will be
applied to all positions upon the adoption of the Interpretation.  The
cumulative effect of this applying the provisions of this Interpretation will be
reported as an adjustment to the opening balance of retained earnings for that
fiscal year.  Management is currently evaluating the impact of FIN 48 on
the financial statements but does not believe that its adoption will have a
material effect on the Companys financial position, results of operations, or
cash flows.  In
September 2006, the SEC issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when quantifying
Misstatements in Current Year Financial Statements (SAB 108).
SAB 108 requires companies to evaluate the materiality of identified
unadjusted errors on each financial statement and related financial statement
disclosure using both the rollover approach and the iron curtain approach, as
those terms are defined in SAB 108. The rollover approach quantifies
misstatements based on the amount of the error in the current year financial
statement, whereas the iron curtain approach quantifies misstatements based on
the effects of correcting the misstatement existing in the balance sheet at the
end of the current year, irrespective of the misstatements year(s) of origin.
Financial statements would require adjustment when either approach results in
quantifying a misstatement that is material.  35    Correcting prior year financial statements for immaterial errors
would not require previously filed reports to be amended. If a Company
determines that an adjustment to prior year financial statements is required
upon adoption of SAB 108 and does not elect to restate its previous
financial statements, then it must recognize the cumulative effect of applying
SAB 108 in fiscal 2006 beginning balances of the affected assets and
liabilities with a corresponding adjustment to the fiscal 2006 opening balance
in retained earnings. SAB 108 is effective for interim periods of the first
fiscal year ending after November 15, 2006, and will be adopted by the
Company in the first quarter of 2007.  The Company does not expect the
adoption of this interpretation to have an impact on its financial position or
results of operations.  CRITICAL ACCOUNTING POLICIES AND ESTIMATES  The
discussion and analysis of the Companys financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
 The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosure of contingent assets and
liabilities.  On an ongoing basis, the Company evaluates its estimates,
including those related to valuation of investments, long-lived assets, and
revenue recognition.  The Company bases their estimates on historical
experience and on various other assumptions.  Actual results may differ
from these estimates under different assumptions or conditions.  The
Company believes the following critical accounting policies and the related
judgments and estimates affect the preparation of its financial statements. Cash
and Cash Equivalents  Cash
and cash equivalents include highly liquid, temporary cash investments having
original maturity dates of three months or less.  For reporting purposes,
such cash equivalents are stated at cost plus accrued interest which
approximates fair value.  Accounts Receivable  The
companys accounts receivable primarily consist of trade receivables.
 Management reviews accounts receivable on a monthly basis to determine if
any receivables will potentially be uncollectible.  The company includes
any accounts receivable balances that are determined to be uncollectible in its
allowance for doubtful accounts.  As of December 31, 2006 and 2005 the
allowance for doubtful accounts is zero.  Inventory  Inventory includes raw materials (liquid buffers and enzyme mix)
that are used to produce enzymatically synthesized DNA (synDNA(TM)).
 Inventory is stated at the lower of cost or market, cost being determined
using the first-in, first out ("FIFO") method.  Reserves are established
for excess or obsolete inventories. Inventory is included in the cost of revenue
when sold.  Property and Equipment   36    Property and equipment is recorded at cost and depreciation is
computed using the straight-line method over the useful lives of the assets.
 Major renewals and improvements are capitalized; minor replacements,
maintenance and repairs are charged to current operations.  Impairment of Long-lived Assets  CytoGenix performs reviews for the impairment of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment of or Disposal of Long-Lived Assets, sets forth
guidance as to when to recognize an impairment of long-lived assets and how to
measure such impairment.  The standards require certain assets be reviewed
for impairment whenever events or circumstances indicate the carrying amount may
not be recoverable.  Revenue
Recognition  CytoGenixs revenues are primarily derived from selling synDNA.
 CytoGenix recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable and
collectibility is probable.  Research and Development  Internal research and development costs are expensed as incurred.
 Research and development costs include salaries and personnel-related
costs, supplies and materials, facility costs, depreciation of facility
property, and outside services required to conduct the preclinical
development.  Income
Taxes  The
asset and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities.  CytoGenix records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.  Earnings Per Common Share  Basic
and diluted net loss per share excludes dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding for the period
presented  Stock-Based Compensation  Effective January 1,
2006, the Company adopted SFAS No. 123 (revised),
"Share-Based Payment" (SFAS 123(R)) utilizing the modified prospective approach.
Prior to the adoption of SFAS 123(R) we accounted for
stock option grant in accordance with APB  37    Opinion No. 25, Accounting for Stock Issued to Employees," and
accordingly, recognized compensation expense for stock option grants
using the intrinsic value method.  Under
the modified prospective approach, SFAS 123(R) applies to new awards
and to awards that were outstanding on January 1, 2006 that
are subsequently modified, repurchased or cancelled.  Under the
modified prospective approach, compensation cost recognized in
the first quarter of fiscal 2006 includes compensation cost for all
share-based payments granted prior to, but not yet vested as of January 1, 2006,
based on the grant-date fair value estimated in accordance with the
original  provisions of SFAS 123, and compensation cost for all
share-based payments granted subsequent  to January 1, 2006 based
on the grant-date fair value estimated in accordance with the
provisions of SFAS 123(R).  For all quarters after the first quarter of
fiscal 2006, compensation costs recognized will include compensation costs for
all share-based payments granted based on the grant date fair value estimated in
accordance with the provisions of SFAS 123(R).  As of December 31, 2006 no
options have been exercised.   ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  As of December 31, 2006 the Company has a restricted long-term CD
investment for the Waldroff litigation matter discussed in Note 8 to the
financial statements.  Pending appeal of this case CytoGenix has
established a long-term CD in the amount of $115,500 to comply.  This CD
earns interest at a rate of 3.4% annually.  This CD must be maintained
until a mandate is issued by the 1st Court of Appeals.  Only upon issuance
of the mandate can we petition for the refund of the CD.                        38    ITEM 8. FINANCIAL STATEMENTS   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To
the Board of Directors and Stockholders of CytoGenix, Inc. We have audited managements assessment, included in the
accompanying Managements Report on Internal Control Over Financial Reporting,
that CytoGenix, Inc. did not maintain effective internal control over financial
reporting as of December 31, 2006, because of the effect of significant control
deficiencies which, collectively, represent a material weakness, based on
criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organization of the Treadway Commission (COSO).
CytoGenix, Inc.s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an
opinion on managements assessment and an opinion on the effectiveness of the
companys internal control over financial reporting 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 effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion. A companys internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles. A companys
internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. A material weakness is a control deficiency, or combination of
control deficiencies, that results in more than a remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected. The following control  39    deficiencies which, in combination, constitute a material weakness
have been identified and included in managements assessment: · The Company has inadequate segregation of duties within various
accounting processes and lacks sufficient monitoring controls over these
processes to mitigate the risk.  The accounting processes lacking
sufficient monitoring controls include the signing of checks, bank statement
reconciliation, and review of data used to prepare the financial statements. · The Company lacks procedures to properly account for non-routine
or complex accounting issues. · The Company lacks controls to ensure that agreements are provided
to, and reviewed by, accounting and financial reporting personnel on a timely
basis. · The Company lacks a well-defined process for the financial
reporting process including review and approvals.  There is no standard and
consistent financial reporting package; there is not a process in place for
evaluating alternative accounting treatments for significant transactions that
are documented and approved by management; there are no formal or informal
procedures for journal entry review, and no formal or informal procedures to
ensure the completeness and accuracy of financial statement disclosures.  This material weakness was considered in determining the nature,
timing, and extent of audit tests applied in our audit of the 2006 financial
statements, and this report does not affect our report dated March 12, 2007 on
those financial statements. In our opinion, managements assessment that CytoGenix, Inc. did
not maintain effective internal control over financial reporting as of December
31, 2006, is fairly stated, in all material respects, based on criteria
established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also,
in our opinion, because of the effect of the material weakness described above
on the achievement of the objectives of the control criteria, CytoGenix, Inc.
has not maintained effective internal control over financial reporting as of
December 31, 2006, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).  /s/  LBB & Associates Ltd., LLP LBB
& Associates Ltd., LLP Houston, TX March
12, 2007         40      Managements Report on Internal Control Over Financial
Reporting  Board of Directors
and Shareholders of Cytogenix, Inc.  The
Management of CytoGenix, Inc. (the Company) is responsible for establishing
and maintaining adequate internal control over financial reporting for the
Company.  The Companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with U. S. generally accepted accounting principles.
 The Companys internal control over financial reporting includes those
policies and procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company, (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statement in accordance with U. S. generally accepted accounting principles, and
that  receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention of timely detection of
unauthorized acquisition, use or disposition of the Companys assets that could
have a material effect on the financial statements.  All
internal control systems, no matter how well designed, have inherent
limitations, Therefore, even those systems determined to be effective may not
prevent or detect misstatements.  The
Companys management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2006, utilizing the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework.  Managements
assessment included evaluating the design of the Companys internal control over
financial reporting and testing the operational effectiveness of the Companys
internal control over financial reporting.  A
material weakness is a control deficiency, or combination of control
deficiencies, that results in a more than remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.  The Company identified the following control deficiencies
which, together, constitute a material weakness in the Companys assessment of
the effectiveness of internal control over financial reporting as of December
31, 2006:  · The Company has inadequate segregation of duties within various
accounting processes and lacks sufficient monitoring controls over these
processes to mitigate the risk.  The accounting processes lacking
sufficient monitoring controls include the signing of checks, bank statement
reconciliation, and review of data used to prepare the financial statements. · The Company lacks procedures to properly account for non-routine
or complex accounting issues. · The Company lacks controls to ensure that agreements are provided
to, and reviewed by, accounting and financial reporting personnel on a timely
basis. · The Company lacks a well-defined process for financial reporting,
including review and approvals.  There is no standard and consistent
financial reporting package; there is not a process in place for evaluating
alternative accounting  41    treatments for significant transactions that are documented and
approved by management; there are no formal or informal procedures for journal
entry review, and no formal or informal procedures to ensure the completeness
and accuracy of financial statement disclosures.  Because
of the aforementioned control deficiencies, which together constitute a material
weakness, the Companys management has concluded that the Companys internal
control over financial reporting was ineffective as of December 31, 2006.  The
Company is in the process of remediating its control deficiencies.
 However, the material weakness in internal control over financial
reporting that has been identified will not be remediated until numerous
internal controls are implemented and operate for a period of time, are tested,
and the Company is able to conclude that such internal controls are operating
effectively. Effective with the first quarter in 2007, the Company has (i)
implemented increased segregation of duties between the check issuance, the
check signature, and the bank statement reconciliation functions, (ii)
implemented the requirement for greater documentation for all expenditures,
including approvals by division manager and CEO under certain circumstances, and
(iii) hired an outside financial reporting consultant to review the financial
data used to prepare the financial statements.  The Company cannot provide
assurance that these procedures will be successful in identifying material
errors that may exist in the financial statements.  The Company cannot make
assurances that it will not identify additional material weaknesses in its
internal control over financial reporting in the future.  Managements assessment of the effectiveness of the Companys
internal control over financial reporting as of December 31, 2006 has been
audited by LBB & Associates Ltd., LLP, the Companys independent registered
public accounting firm, as stated in their report included in this Annual Report
on Form 10-K.  CytoGenix, Inc.  /s/
 MALCOLM SKOLNICK Malcolm Skolnick PRESIDENT & CEO/ (PRINCIPAL
EXECUTIVE OFFICER)  /s/
 PAM SCHERTZ Pam Schertz CHIEF FINANCIAL OFFICER          42     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To
the Board of Directors and Stockholder of CytoGenix, Inc.  We have audited the accompanying balance sheets of CytoGenix, Inc.
as of December 31, 2006 and 2005, and the related statements of operations,
stockholders equity (deficit), and cash flows for each of the years in the
three-year period ended 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 audits. We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CytoGenix, Inc. as
of December 31, 2006 and 2005, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2006 in
conformity with accounting principles generally accepted in the United States of
America. As discussed in Note 3 to the financial statements, the Company's
absence of significant revenues, recurring losses from operations, and its need
for additional financing in order to fund its projected loss in 2007 raise
substantial doubt about its ability to continue as a going concern. The 2006
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), CytoGenix, Inc.s
internal control over financial reporting as of December 31, 2006, based on
criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
our report dated March 12, 2007 expressed an unqualified opinion on managements
assessment of internal control over financial reporting and an adverse opinion
on the effectiveness of internal control over financial reporting. As discussed in Notes 2 and 10, the accompanying financial
statements have been restated.  /s/  LBB
& Associates Ltd., LLP LBB & Associates
Ltd., LLP Houston, TX March 12, 2007,
except for Notes 2 and 10, for which the date is March 4, 2008.                43      CYTOGENIX, INC.BALANCE SHEETSDecember 31, 2006

December 31, 2005(Restated)ASSETSCurrent Assets:Cash
$
                2,854,197

$
                1,307,965Accounts receivable, net
2,577

-Inventory
421,957

-Prepaid expenses
14,297

21,392Total Current Assets
3,293,028

1,329,357Property and equipment, net
261,793

56,287Deposits
481,971

6,399Long-term investments - restricted
172,892

117,905Total Assets
$
                4,209,684

$
                1,509,948LIABILITIES AND STOCKHOLERS'
EQUITYCurrent Liabilities:Long-term debt, current portion
$
                     25,153

$
                               -Accounts payable
309,874

258,495Accrued expenses
927,889

843,932Total Current Liabilities
1,262,916

1,102,427Long-term debt, less current portion
45,015

-Total Liabilities
1,307,931

1,102,427COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS' EQUITY:Preferred stock, $.001 par value; 50,000,000 share
authorized,no shares issued and outstanding
-

-Common stock, $.001 par value; 300,000,000 share
authorized,140,663,961 and 124,460,970 share issued and
outstanding as ofDecember 31, 2006 and 2005, respectively
140,664

124,461Additonal paid-in capital
34,851,026

23,971,086     44     Treasury stock
(629,972)

(629,972)Accumulated deficit
(31,459,965)

(23,058,054)Total Stockholders' Equity
2,901,753

407,521Total Liabilities and Stockholders'
Equity
$
                4,209,684

$
                1,509,948The accompanying notes are an integral
part of these financial statements                                    45     CYTOGENIX, INC.STATEMENTS OF OPERATIONSYear Ended December 31,2006

2005

2004(Restated)REVENUES
$
            76,993

$
                     -

$
                     -COSTS OF REVENUES
45,547

-

-GROSS MARGIN
31,446

-

-COSTS AND EXPENSES:Research and development
4,970,410

1,724,317

831,472General and administrative
3,069,945

1,495,454

1,434,893Consulting expense
345,637

290,000

60,926Depreciation and amortization
48,754

25,391

38,125LOSS FROM OPERATIONS
(8,403,300)

(3,535,162)

(2,365,416)OTHER INCOME(EXPENSE):Interest income
4,987

2,405

40Interest expense
(3,011)

-

-Loss on disposal of property of equipment
(587)

(368)

-NET LOSS
$
     (8,401,911)

$
     (3,533,125)

$
     (2,365,376)Net loss per share:Basic and diluted net loss per share
$
              (0.07)

$
              (0.03)

$
              (0.02)Weighted average shares outstanding:Basic and diluted
127,366,388

114,181,072

101,817,083The accompanying notes are an integral
part of these financial statements              46      CYTOGENIX, INC.STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)PERIOD FROM DECEMBER 31, 2003 THROUGH DECEMBER 31,
2006Common Stock
Additional


TotalPaid -in
Treasury
Retained
StockholdersShares
Amounts
Capital
Stock
Deficit
Equity (Deficit)BALANCE,
December 31, 2003
98,724,993
98,725
17,447,556
(629,972)
(17,159,553)
(243,244)Shares issued
for cash, net fundraising
8,715,191
8,715
1,542,886
-
-
1,551,601Shares issued
for services
482,032
482
162,760
-
-
163,242Shares issued
for debt
39,267
39
31,250
-
-
31,289Shares issued
for exercised warrants
1,242,856
1,243
346,185
-
-
347,428Net loss
-
-
-
-
(2,365,376)
(2,365,376)BALANCE,
December 31, 2004
109,204,339
109,204
19,530,637
(629,972)
(19,524,929)
(515,060)Shares issued
for cash, net fundraising
13,928,967
13,929
3,571,151
-
-
3,585,080Shares issued
for debt
647,701
648
541,478
-
-
542,126Shares issued
for services
679,963
680
327,820
-
-
328,500Net loss
-
-
-
-
(3,533,125)
(3,533,125)BALANCE,
December 31, 2005
124,460,970
124,461
23,971,086
(629,972)
(23,058,054)
407,521Shares issued
for cash, net fundraising
15,882,991
15,883
6,298,683
-
-
6,314,566Shares issued
for services
320,000
320
274,880
-
-
275,200Stock Option
Shares


4,306,377


4,306,377Net loss
-
-
-
-
(8,401,911)
(8,401,911)BALANCE,
December 31, 2006 (Restated)
140,663,961
$
                 140,664
$
            34,851,026
$
               (629,972)
$
          (31,459,965)
$
              2,901,753The accompanying notes are an integral
part of these financial statements      47      CYTOGENIX, INC.STATEMENTS OF CASH FLOWSYear Ended December 31,2006

2005

2004(Restated)OPERATING ACTIVITIES:Net loss

$
     (8,401,911)

$
     (3,533,125)

$
     (2,365,376)Adjustments to reconcile net loss to net
cashused in operating activities:Deprecation and amortization
48,754

25,391

38,128Stock-based compensation expenses
4,306,377

-

-Loss on disposal of property and equipment
587

368

-Gain on long-term investments - restricted
(4,987)

(2,405)

-Stock issued for services
275,200

328,500

163,242Changes in assets and liabilities:Accounts receivable
(2,577)

-

-Inventory
(421,957)

-

-Prepaid expenses
7,095

(21,392)

20,374Accounts payable
51,379

20,662

(50,533)Accrued expenses
83,956

584,138

524,372Net cash used in operating activities
(4,058,084)

(2,597,863)

(1,669,793)INVESTING ACTIVITIES:Purchase of property and equipment
(254,846)

(16,987)

(12,964)Deposit on Building Contract
(475,572)Purchase of long-term investments -
restricted
(50,000)

(115,500)

-Net cash used in investing activities
(780,418)

(132,487)

(12,964)FINANCING ACTIVITIES:Proceeds from notes payable
80,000

-

-Payment on notes payable
(9,832)

-

-Buyback of stock warrants
-

-

(571)Sale of common stock
6,314,566

3,585,080

1,551,601Sale of common stock for exercised warrants
-

-

348,000Net cash provided by financing activities
6,384,734

3,585,080

1,899,030NET CHANGE IN CASH
1,546,232

854,730

216,273CASH, beginning of period
1,307,965

453,235

236,962CASH, end of period
$
       2,854,197

$
       1,307,965

$
          453,235SUPPLEMENTAL CASH FLOW INFORMATION:  48     Interest paid
$
              1,272

$
                     -

$
                     -Income taxes paid
$
                     -

$
                     -

$
                     -NONCASH TRANSACTIONS:Common stock issued for debt
$
                     -

$
          542,126

$
            31,289The accompanying notes are an integral
part of these financial statements                                                            49      CYTOGENIX, INC. NOTES TO
FINANCIAL STATEMENTS December
31, 2006  NOTE 1
 SUMMARY OF ACCOUNTING POLICIES  Nature
of business  CytoGenix, Inc. (CytoGenix) was incorporated on February 10,
1995 in Nevada.  CytoGenix is a biotechnology company focusing on
controlled cellular dedifferentiation and transdifferentiation processes.
  CytoGenix has acquired the rights for application to a specialized
expression vector capable of producing single stranded DNA (ssDNA) in both
eukaryotes and prokaryotes.  Basis
of Presentation  These
financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America.  As of
January 1, 2006, the Company ceased using the designation Development Stage
Company.  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 and
liabilities at the date of the balance sheet.  Actual results could differ
from those estimates.  Cash
and Cash Equivalents  Cash
and cash equivalents include highly liquid, temporary cash investments having
original maturity dates of three months or less.  For reporting purposes,
such cash equivalents are stated at cost plus accrued interest which
approximates fair value.  Accounts Receivable  The
Companys accounts receivable primarily consist of trade receivables.
 Management reviews accounts receivable on a monthly basis to determine if
any receivables will potentially be uncollectible.  The company includes
any accounts receivable balances that are determined to be uncollectible in its
allowance for doubtful accounts.  As of December 31, 2006 and 2005 the
allowance for doubtful accounts is zero.  Inventory  Inventory includes raw materials (liquid buffers and enzyme mix)
that are used to produce enzymatically  synthesized DNA (synDNA).
 Inventory is stated at the lower  50    of cost or market, cost being determined using the first-in, first
out ("FIFO") method.  Reserves are established for excess or obsolete
inventories. Inventory is included in the cost of revenue when sold.  Property and Equipment  Property and equipment is recorded at cost and depreciation is
computed using the straight-line method over the useful lives of the assets.
 Major renewals and improvements are capitalized; minor replacements,
maintenance and repairs are charged to current operations.  Impairment of Long-lived Assets  CytoGenix performs reviews for the impairment of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment of or Disposal of Long-Lived Assets, sets forth
guidance as to when to recognize an impairment of long-lived assets and how to
measure such impairment.  The standards require certain assets be reviewed
for impairment whenever events or circumstances indicate the carrying amount may
not be recoverable.  Revenue
Recognition  CytoGenixs revenues are primarily derived from selling synDNA.
 CytoGenix recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable and
collectibility is probable.  Research and Development  Internal research and development costs are expensed as incurred.
 Research and development costs include salaries and personnel-related
costs, supplies and materials, facility costs, depreciation of facility
property, and outside services required to conduct the preclinical
development.  Income
Taxes  The
asset and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities.  CytoGenix records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.  Earnings Per Common Share  Basic
and diluted net loss per share excludes dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding for the period
presented.  51     NOTE 1
 SUMMARY OF ACCOUNTING POLICIES (CONTINUED)  Stock-Based Compensation  Effective January 1,
2006, the Company adopted SFAS No. 123 (revised),
"Share-Based Payment" (SFAS 123(R)) utilizing the modified prospective approach.
Prior to the adoption of SFAS 123(R) we accounted for
stock option grant in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees," and
accordingly, recognized compensation expense for stock option grants
using the intrinsic value method.  Under
the modified prospective approach, SFAS 123(R) applies to new awards
and to awards that were outstanding on January 1, 2006 that
are subsequently modified, repurchased or cancelled.  Under the
modified prospective approach, compensation cost recognized in
the first quarter of fiscal 2006 includes compensation cost for all
share-based payments granted prior to, but not yet vested as of January 1, 2006,
based on the grant-date fair value estimated in accordance with the
original  provisions of SFAS 123, and compensation cost for all
share-based payments granted subsequent  to January 1, 2006 based
on the grant-date fair value estimated in accordance with the
provisions of SFAS 123(R).  For all quarters after the first quarter of
fiscal 2006, compensation costs recognized will include compensation costs for
all share-based payments granted based on the grant date fair value estimated in
accordance with the provisions of SFAS 123(R).  Segment
Reporting   The Company operates in one industry
segment  biotechnology research and development. The Company operates in
one geographic area, being the United States of America.  FASB Statement No. 131,Disclosures about Segments of an Enterprise
and Related Information,
establishes standards for reporting information about operating segments.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. The Companys chief operating
decision maker is its Chief Executive Officer. The Companys Chief Executive
Officer reviews financial information presented on a consolidated basis for
purposes of allocating resources and evaluating financial performance. The
Company has one business activity and there are no segment managers who are held
accountable for operations, operating results and plans for products or
components below the consolidated unit level. Accordingly, the Company reports
as a single operating segment.   52    NOTE 1  SUMMARY OF ACCOUNTING POLICIES (CONTINUED)  Recent
Accounting Pronouncements  In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value Measurements.  SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in GAAP, and expands
disclosures about fair value measurements.  This statement is effective for
financial statements issued for fiscal years beginning after November 15,
2007.  Management is currently evaluating the impact SFAS No. 157 will have
on the Companys financial position, results of operations, and cash
flows.   In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities  including an amendment of FASB
statement No. 115. This Statement permits all entities to choose, at specified
election dates, to measure eligible items at fair value (the fair value
option). A business entity shall report unrealized gains and losses on items
for which the fair value option has been elected in earnings (or another
performance indicator if the business entity does not report earnings) at each
subsequent reporting date. Upfront costs and fees related to items for which the
fair value option is elected shall be recognized in earnings as incurred and not
deferred. If an entity elects the fair value option for a held-to-maturity or
available-for-sale security in conjunction with the adoption of this Statement,
that security shall be reported as a trading security under Statement 115, but
the accounting for a transfer to the trading category under paragraph 15(b) of
Statement 115 does not apply. Electing the fair value option for an existing
held-to-maturity security will not call into question the intent of an entity to
hold other debt securities to maturity in the future. This statement is
effective as of the first fiscal year that begins after November 15, 2007.
 The Company is currently analyzing the effects of SFAS 159 but does not
expect its implementation will have a significant impact on the Company's
financial condition or results of operations.  In July
2006, the FASB issued FASB Interpretation (FIN) No. 48 Accounting for
Uncertainly in Income Taxes  An Interpretation of FASB Statement No. 109. 
FIN 48 prescribes detailed guidance for the financial statement recognition,
measurement, and disclosure of uncertain tax positions recognized in an
enterprises financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes.  Tax positions must meet a more-likely-than-not
recognition threshold at the effective date to be recognized upon the adoption
of FIN 48 and in subsequent periods.  FIN 48 will be effective for fiscal
years beginning after December 15, 2006, and the provisions of FIN 48 will be
applied to all positions upon the adoption of the Interpretation.  The
cumulative effect of this applying the provisions of this Interpretation will be
reported as an adjustment to the opening balance of retained earnings for that
fiscal year.  Management is currently evaluating the impact of FIN 48 on
the financial statements but does not believe that its adoption will have a
material effect on the Companys financial position, results of operations, or
cash flows.  53    NOTE 1  SUMMARY OF ACCOUNTING POLICIES (CONTINUED)  Recent
Accounting Pronouncements (Continued)  In
September 2006, the SEC issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when quantifying
Misstatements in Current Year Financial Statements (SAB 108).
SAB 108 requires companies to evaluate the materiality of identified
unadjusted errors on each financial statement and related financial statement
disclosure using both the rollover approach and the iron curtain approach, as
those terms are defined in SAB 108. The rollover approach quantifies
misstatements based on the amount of the error in the current year financial
statement, whereas the iron curtain approach quantifies misstatements based on
the effects of correcting the misstatement existing in the balance sheet at the
end of the current year, irrespective of the misstatements year(s) of origin.
Financial statements would require adjustment when either approach results in
quantifying a misstatement that is material. Correcting prior year financial
statements for immaterial errors would not require previously filed reports to
be amended. If a Company determines that an adjustment to prior year financial
statements is required upon adoption of SAB 108 and does not elect to
restate its previous financial statements, then it must recognize the cumulative
effect of applying SAB 108 in fiscal 2006 beginning balances of the
affected assets and liabilities with a corresponding adjustment to the fiscal
2006 opening balance in retained earnings. SAB 108 is effective for interim
periods of the first fiscal year ending after November 15, 2006, and will
be adopted by the Company in the first quarter of 2007.  The Company does
not expect the adoption of this interpretation to have an impact on its
financial position or results of operations.  NOTE 2 
RESTATEMENT  In
connection with the establishment of the Companys stock option plans of 2003
and 2005, the Company took the position that no compensation cost should be
recognized by the Company until such time as the underlying shares were
registered, as this constituted a performance condition under SFAS 123(R) and
that such condition was not deemed probable at the time of the filing.  The
SEC disagreed with this position and requested the Company restate its financial
statements and associated disclosures to include compensation cost assuming the
options are exercisable as they vest.  The error resulted in the
understatement of non-cash expenses and a corresponding understatement of net
loss of $4,306,377 for the year ending December 31, 2006.  The restatement
impacted certain line items within cash flows from operations, but had no effect
on total cash flows from operations and did not impact cash flows from financing
or investing activities.  This restatement had no impact on the balance
sheets, statements of operations or the net decrease in cash and cash
equivalents reported in the statements of cash flows for any periods reported
prior to January 1, 2006.  The
restatement also affected Note 10.  The
effect of the restatement on specific items in the balance sheets by quarter is
as follows:    54     March 31, 2006As PreviouslyReported

Adjustments

As RestatedSTOCKHOLDERS' DEFICIT:Additional paid-in capital
$     23,970,170

$   2,177,028

$ 26,147,198Retained earnings (deficit)
(24,093,548)

(2,177,028)

(26,270,576)Total Stockholders' Deficit
(627,973)

-

(627,973)June 30, 2006As PreviouslyReported

Adjustments

As RestatedSTOCKHOLDERS' EQUITY:Additional paid-in capital
$     26,063,515

$   2,929,945

$ 28,993,460Retained earnings (deficit)
(25,010,311)

(2,929,945)

(27,940,256)Total Stockholders' Equity
551,835

-

551,835September 30, 2006As PreviouslyReported

Adjustments

As RestatedSTOCKHOLDERS' DEFICITAdditional paid-in capital
$     26,407,990

$   3,682,862

$ 30,090,852Retained earnings (deficit)
(26,230,010)

(3,682,862)

(29,912,872)Total Stockholders' Deficit
(322,665)

-

(322,665)December 31, 2006As PreviouslyReported

Adjustments

As RestatedSTOCKHOLDERS' EQUITY:Additional paid-in capital
$     30,544,649

$   4,306,377

$ 34,851,026Retained earnings (deficit)
(27,153,588)

(4,306,377)

(31,459,965)Total Stockholders' Equity
2,901,753

-

2,901,753  The
effect of the restatement on specific items in the statements of operations by
quarter is as follows:  Three months ended March 31,
2006As PreviouslyReported

Adjustments

As RestatedCOSTS AND EXPENSES:Research and development
$
       498,509

$   1,392,207

$   1,890,716General and administrative
522,358

784,821

1,307,179LOSS FROM OPERATIONS
(1,036,460)

(2,177,028)

(3,213,488)  55     NET LOSS
(1,035,494)

(2,177,028)

(3,212,522)Six months ended June 30,
2006As PreviouslyReported

Adjustments

As RestatedCOSTS AND EXPENSES:Research and development
$     1,141,077

$   1,873,459

$    3,014,536General and administrative
810,986

1,056,486

1,867,472LOSS FROM OPERATIONS
(1,954,204)

(2,929,945)

(4,884,149)NET LOSS
(1,952,257)

(2,929,945)

(4,882,202)Nine months ended September 30,
2006As PreviouslyReported

Adjustments

As RestatedCOSTS AND EXPENSES:Research and development
$     1,696,051

$   2,354,711

$    4,050,762General and administrative
1,166,715

1,328,151

2,494,866LOSS FROM OPERATIONS
(3,173,808)

(3,682,862)

(6,856,670)NET LOSS
(3,171,956)

(3,682,862)

(6,854,818)Year ended December 31, 2006As PreviouslyReported

Adjustments

As RestatedCOSTS AND EXPENSES:Research and development
$     2,199,148

$   2,771,262

$    4,970,410General and administrative
1,534,830

1,535,115

3,069,945LOSS FROM OPERATIONS
(4,096,923)

(4,306,377)

(8,403,300)NET LOSS
(4,095,534)

(4,306,377)

(8,401,911)  The
effect of the restatement on specific items in the statements of cash flows by
quarter is as follows:  Three months ended March 31,
2006As PreviouslyReported

Adjustments

As RestatedOPERATING ACTIVITIES:Net Loss
$    (1,035,494)

$  (2,177,028)

$(3,212,522)Adjustments to reconcile net loss to net
cashShare-based compensation expense
-

2,177,028

2,177,028Net cash used in operating activities
(1,039,076)

-

(1,039,076)Six months endedJune 30,
2006As PreviouslyReported

Adjustments

As Restated  56     OPERATING ACTIVITIES:Net Loss
$    (1,952,257)

$  (2,929,945)

$(4,882,202)Adjustments to reconcile net loss to net
cashShare-based compensation expense
-

2,929,945

2,929,945Net cash used in operating activities
(2,028,146)

-

(2,028,146)Nine months ended September 30,
2006As PreviouslyReported

Adjustments

As RestatedOPERATING ACTIVITIES:Net Loss
$    (3,171,956)

$  (3,682,862)

$(6,854,818)Adjustments to reconcile net loss to net
cashShare-based compensation expense
-

3,682,862

3,682,862Net cash used in operating activities
(3,034,520)

-

(3,034,520)Year ended December 31, 2006As PreviouslyReported

Adjustments

As RestatedOPERATING ACTIVITIES:Net Loss
$    (4,095,534)

$  (4,306,377)

$(8,401,911)Adjustments to reconcile net loss to net
cashShare-based compensation expense
-

4,306,377

4,306,377Net cash used in operating activities
(4,058,084)

-

(4,058,084)   NOTE 3
 GOING CONCERN  CytoGenix has had negligible revenues since inception and only
approximately $77,000 in the last two years.  The Company has incurred
losses totaling $31,459,965 from inception through December 31, 2006.
 Because of these conditions, CytoGenix will require additional working
capital to develop business operations.  CytoGenix intends to raise
additional working capital either through private placements, public offerings
and/ or bank financing.  There
are no assurances that CytoGenix will be able to achieve a level of revenues
adequate to generate sufficient cash flow from operations or obtain additional
financing through private placements, public offerings and/ or bank financing
necessary to support CytoGenixs working capital requirements.  To the
extent that funds generated from any private placements, public offerings and/
or bank financing are insufficient, CytoGenix will have to raise additional
working capital.  No assurance can be given that additional financing will
be available, or if available, will be on terms acceptable to CytoGenix.
 If adequate working capital is not available CytoGenix may not increase
its operations.  These
conditions raise substantial doubt about CytoGenixs ability to continue as a
going concern.  The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and  57    classification of liabilities that might be necessary should
CytoGenix be unable to continue as a going concern.  NOTE 4
 LONG TERM INVESTMENT - RESTRICTED  The
Company established a CD for $50,000 with Frost National bank which matures July
18, 2007.  This CD earned interest at 4.650% and in 2006 interest earned is
$1,057.  The CD was required by Frost National Bank to partially secure the
equipment loan discussed in Note 7.  The Company has a restricted long-term CD investment for the
Waldroff litigation matter discussed in Note 12 to the financial statements.
 Pending appeal of this case CytoGenix has established a long-term CD in
the amount of $115,500 to comply with the court order.  This CD earns
interest at a rate of 3.4% annually.  This CD must be maintained until a
mandate is issued by the 1st Court of Appeals.  Only upon issuance of the
mandate can we petition for the refund of the CD.  NOTE 5
 PROPERTY AND EQUIPMENT, NET  Property consisted of the following as of December 31:  2006 2005 Lab equipment 5-7 years $ 299,005        $ 104,635 Office Furniture & Fixtures 3-7 years 62,592 57,759 Office Equipment 3-7 years 63,246 57,518 Leasehold Improvements Lease Term 16,804 3,164 Less: accumulated depreciation (179,854) (166,789) ----------- ----------- Net book value $ 261,793 $   56,287 ======= =======  Depreciation expense totaled $48,754, $25,391, and $38,125 for
2006, 2005, and 2004 respectively.  NOTE 6
- DEPOSITS  The
Company deposits at December 31, 2006 include the first installment for the
construction of the new production and office facility in Houston, Texas in the
amount of $475,572.  The remaining balance in the deposit account is a rent
deposit on the current facilities for $6,399.   NOTE 7
 ACCRUED EXPENSES  Accrued
expenses consist mainly of unpaid salaries and unpaid payroll taxes on cash
compensation and stock based compensation.  Total accrued payroll taxes for
previously issued stock compensation as of December 31, 2006 and 2005 was
$207,154 and $207,154, respectively.  Accrued bonus compensation per
employment agreements was as of December 31, 2006 and 2005 was $361,946 and
$396,946 respectively.   58    NOTE 8  DEBT  CytoGenix entered into an $80,000, 36 month promissory note with a
bank on July 18, 2006 to finance the cost of equipment.  The note requires
monthly payments of $2,569 including interest at 9.51%.  Interest paid for
the year ended December 31, 2006 was $3,012.  Annual maturities of
debt during each of the years ended December 31, are as follows:  2007 $ 25,153 2008 30,105 2009 14,910 2010 - 2011 - Total $ 70,168   NOTE 9
 COMMON STOCK ISSUANCES  CytoGenix has issued common stock since inception as follows:  STOCK ISSUED FOR SERVICES:  Year Shares Amount ----- ----------- ------------- 1995 4,584,500 $    47,383 1996 500,000 375,000 1997 3,687,425 691,392 1998 3,601,021 2,820,826 1999 544,348 468,322 2000 546,171 491,473 2001 1,780,009 334,742 2002 3,162,535 1,016,747 2003 4,295,315 733,351 ----------- ------------- Sub-total        22,701,324 6,979,236 2004 482,032 163,242 2005 679,963 328,500 2006 320,000 275,200    59    NOTE 9  COMMON STOCK ISSUANCES (CONTINUED)  STOCK
ISSUED FOR CASH:  Year Shares Amount ----- ----------- ------------- 1995 110,000 $   21,000 1997 825,974 129,132 1998 2,964,000 593,800 1999 317,220 130,026 2000 1,268,989 610,800 2001 14,496,853 1,283,958 2002 12,992,411 1,596,043 2003 31,662,784 1,321,349 ----------- ----------- Sub-total        64,638,231 5,686,108 2004 8,715,191 1,551,601 2005 13,928,967 3,585,080 2006 15,882,991 6,314,566  In
2006, restricted common stock sold for cash was consistently sold through
private placement offering at a discount.  The difference between the
selling price and the fair market value on the date sold was approximately
$3,686,112 for the year.  STOCK
ISSUED FOR DEBT:  In
2006, there were no shares issued for debt. In 2005, 647,701 shares were issued
for debt totaling $542,126.  In
1998, 212,780 shares were issued for debt totaling $135,990 and in 2000, 500,000
shares were issued for a patent, recorded at the fair value of the stock issued
totaling $375,000.  In 1999, 20,000,000 shares were put into treasury and
8,229,288 were retired from treasury.  In 2001, 2,819,337 shares were
retired.  In 2003, 121,284 shares were issued for debt totaling $95,814. In
2004, 39,267 shares were issued for debt totaling $31,289.  NOTE 10
 STOCK OPTIONS AND WARRANTS  In
2004, CytoGenix issued 1,242,856 warrants as part of a private placement
memorandum.  The warrants are exercisable at $0.28 per share, vest
immediately and expire one year from the grant date.  Of these warrants
642,857 were not exercised and expired in 2005.  There were no warrants
outstanding at December 31, 2006 or 2005.  On June 24, 2003, the Company adopted the 2003 Stock Option Plan
(the 2003 Plan) to provide for the granting of incentive stock options to
executive officers and employees of the Company, as determined by a committee of
the Companys board of directors.  Non-qualified options may also be
granted under the 2003 Plan to non-employee directors and consultants of the
Company.  60    NOTE 10  STOCK OPTIONS AND WARRANTS (CONTINUED) A total of 18,000,000 share of common stock have been reserved for
the issuance under the 2003 Plan.  All stock options granted under the 2003
Plan vest, subject to a Condition Precedent, 33.3% over each of the first and
second anniversaries of the grant date and expire no later than ten years from
the date of the plan on June 24, 2013. Awards granted under the Option Plan are
to be determined from time to time by a compensation committee. If an option
expires or is terminated, surrendered or cancelled without having been fully
exercised, the unused share covered by any such Option shall again be available
for grant under the Option Plan.  As of December 31, 2006 6,325,000 common
stock shares are available to be awarded under this plan.  No option issued
under the 2003 Plan is exercisable, even if vested, unless and until such time
that the underlying shares to be issued are publicly registered with the
Securities and Exchange Committee, such registration constituting the Condition
Precedent.  The Company is under no obligation to register the underlying
shares, nor is there any recourse by the option holder in the event their
options expire or otherwise terminate prior to the Condition Precedent being
met.  On June 14, 2005 the Company adopted the 2005 Stock Option Plan
(the 2005 Plan) to provide for the granting of incentive stock options to
executive officers and employees of the Company, as determined by a committee of
the Companys board of directors.  Non-qualified options may also be
granted under the 2005 Plan to non-employee directors and consultants of the
Company A total of 18,000,000 share of common stock have been reserved for
the issuance under the 2005 Plan.  All stock options granted under the 2003
Plan vest, subject to a Condition Precedent, 33.3% over each of the first and
second anniversaries of the grant date and expire no later than ten years from
the date of the plan on June 14, 2015. Awards granted under the Option Plan are
to be determined from time to time by a compensation committee. If an option
expires or is terminated, surrendered or cancelled without having been fully
exercised, the unused share covered by any such Option shall again be available
for grant under the Option Plan.  As of December 31, 2006 7,496,000 common
stock shares are available to be awarded under this plan.  No option issued
under the 2005 Plan is exercisable, even if vested, unless and until such time
that the underlying shares to be issued are publicly registered with the
Securities and Exchange Committee, such registration constituting a Condition
Precedent.  The Company is under no obligation to register the underlying
shares, nor is there any recourse by the option holder in the event their
options expire or otherwise terminate prior to the Condition Precedent being
met.  Restatement of Stock Options  In
connection with the establishment of the Companys stock option plans of 2003
and 2005, the Company took the position that no compensation cost should be
recognized by the Company until such time as the underlying shares were
registered, as this constituted a performance condition under SFAS 123 (R) and
that such condition was not deemed probable at the time of the filing.  The
SEC disagreed with this position and requested the Company restate its financial
statements and associated disclosures to include compensation costs assuming the
options as exercisable as they vest.  The error resulted in the
understatement of non-cash expense and a corresponding understatement of net  61    loss of $4,306,377 for the year ended December 31, 2006.  The
restatement impacted certain line items within the cash flows from operations
but no effect on total cash flows from operations and did not impact cash flows
from financing or investing activities.  This restatement had no impact on
the balance sheets, statements of operations or the net decrease in cash and
cash equivalents reported in the statements of cash flows for any periods
reported prior to December 31, 2006.  Based on the employee
stock option plans, compensation expense recorded for options fully vested as of
December 31, 2006 was recorded as follows:  Research
and development $2,771,262 General
and administrative 1,535,115 Stock-based
compensation $4,306,377   We used the
Black-Scholes option-pricing model (Black-Scholes model) to value our stock
options with the following assumptions:  Volatility 92.1%
to 250% Risk-Fee
Interest Rate  4.50% Dividend
Yield  0.00% Expected
Term (years) 10.00  A summary for our
stock-based compensation activity for the three years ended December 31, 2006 is
presented below:   Average
AggregatedAverage
Life
FairOptions
Price 1
(years)2
ValueOutstanding at December 31, 2003
14,200,000
$
                0.20
9.50
$
       2,883,325Granted
350,000
0.25
10.00
$
            85,842Exercised
-
-
-
-Forfeited/expired
-
-
-
-Outstanding at December 31, 2004
14,550,000
$
                0.20
8.50
$
       2,969,167Granted
18,450,000
0.70
10.00
$      12,615,230Exercised
-
-
-
-Forfeited/expired
-
-
-
-Outstanding at December 31, 2005
33,000,000
$
                0.48
8.40
$      15,584,397Granted
2,004,000
1.01
10.00
$
       1,789,644Exercised
-
-
-
-Forfeited/expired
(12,825,000)
0.50
8.40
(6,280,191)Outstanding at December 31, 2006
22,179,000
$
                0.52
7.50
$      11,093,850Exercisable at December 31, 2006
17,401,333
$
                0.45
7.30
$
       7,628,763Exercisable at December 31, 2005
20,583,333
$
                0.35
8.0
$
       7,157,107Exercisable at December 31, 2004
9,583,333
$
                0.20
8.5
$
       1,958,285  62      1
Weighted-average exercise price 2 Weighted-average
contractual life remaining  The
associated fair value of options vested prior to December 31, 2005 was
$11,891,000.  This amount was not expensed at the time of vesting in
accordance with the then applicable provision of APB 25.  All options are
issued with an exercise price equal to the market value resulting in no
intrinsic value.  The
unvested options fair value will be recognized over their respective vesting
periods which ends March 31, 2008  NOTE 11
 INCOME TAXES  For the
period from inception through December 31, 2006, CytoGenix has incurred net
losses and, therefore, has no tax liability.  The net deferred tax asset
generated by the loss carry-forward has been fully reserved.  The valuation
allowance increased approximately $1,400,000, $1,205,000, and $800,000 during
the years ended December 31, 2006, 2005 and 2004, respectively.  The
cumulative net operating loss carry-forward is approximately $19,926,500 at
December 31, 2006, and will expire in the years 2013 through 2022.  Deferred income taxes consist of the following at December 31,  2006 2005 Long-term: Deferred tax assets $ 6,775,000 $     5,375,000 Valuation allowance (6,775,000) (5,375,000) -------------------- ------------------ $
                       - $
                  - ============= ===========  NOTE 12
 CONCENTRATIONS  The
Company had gross sales of $76,993, $0 and $0 for the years ended 2006, 2005 and
2004, respectively.  The Company has three customers that represent 100% of
the gross sales for the year ended December 31, 2006.  The Company has one
supplier that provides all the materials necessary to generate the sales for the
year ended December 31, 2006.  The
Company has cash balances in a single financial institution which, from time to
time, exceed the federally insured limit of $100,000. As of December 31, 2006,
the Companys cash balance exceeded the federally insured limit by $2,767,887.
 No loss has been incurred related to this concentration of cash.  NOTE 13
 COMMITMENTS AND CONTIGENCIES  Lease   63    CytoGenix leases office facilities under an operating lease that
expires on December 31, 2009.  Rent expense was $69,749, $66,455 and
$68,407 for 2006, 2005 and 2004, respectively.  Annual future rent payments
are as follows:   Year

Amount2007
$
74,8062008

76,7922009

76,792   Over
the term of the lease the rent works out to an average of $5,701 per month
starting December 2003 and ending September 2009.  As of December 31, 2006
and 2005 deferred rent was $25,981 and $32,656, respectively and is included in
accrued expenses.  NOTE 13
 COMMITMENTS AND CONTIGENCIES (CONTINUED)  Land
& Building  The
Company signed an earnest money contract with GSL Constructors, Ltd. for
design/build project located in the Westchase District of Houston for
$3,796,577. Upon execution of the earnest money contract a deposit of $474,572
was paid by the Company.  The second payment of $474,572 will be due when
the facility is completed to Dried-In Conditions.  The balance will be due
at closing. The contract is for 2.274 acres of land together with a facility.
The Company has engaged the services of Luwa SA to design and construct the cGMP
portion of the new 20,000 sq ft facility.  Groundbreaking for this project
is anticipated to occur in 2007 subject to financing.  Research  CytoGenix has entered into Sponsored Research Agreements (SRA)
with several Universities.  The Universities do research for CytoGenix
related to CytoGenixs proprietary technology.  As work progresses, the
Universities invoice CytoGenix for reimbursement of expenses related to the
research.  The SRAs have established budgets.  As of December 31,
2006 unbilled amounts under the SRAs totaled approximately $120,987.  As of
December 31, 2006 the Company renewed an SRA with the Montefiore Medical Center.
 A Company director is affiliated with Montefiore Medical Center.  Employment  Per the
employment agreement of the CEO, there is a severance pay obligation for early
termination for any reason other than cause, permanent disability, or if the
employee voluntarily resigns following a constructive termination, (collectively
a Termination Event) then the Company shall pay the employee base compensation
for a period of twelve (12) months following termination.  In addition, the
Company shall also reimburse the Employee for the payment of the Employee COBRA
or equivalent other replacement  64    medical and dental insurance premiums for the period of twelve
(12) months. The cash obligation under this arrangement if the CEO were to be
terminated on January 1, 2007 could result in a cash outflow of approximately
$515,000.  Board of Directors  There
are currently four outside Directors who received $25,000 each in compensation
for the year ending December 31, 2006.  The compensation for 2007 will
increase to $40,000 each per year.   65    NOTE 13  COMMITMENTS AND CONTIGENCIES (CONTINUED)  Inventory  The
Company has entered an agreement with GE Healthcare Bio-Sciences Corp. whereas
GEHC will provide the Company with DNA production reagents for use in the
manufacture of vaccines and therapeutic compounds.  The Company committed
under this agreement to spend $350,000 for the year ended December 31, 2006.
  The Company met the commitment for 2006 and is in the process of
negotiating with GE for the options for 2007 and beyond.  As of the date of
this filing no agreement has been finalized.  Litigation  Phanuel Pursuits, LLC  Phanuel
Pursuits, LLC suit was filed in October 2004 claiming that CytoGenix (licensor)
had breached a license agreement with Phanuel Pursuits (licensee) for use of the
CytoGenix ssDNA expression technology in Indian and Chinese therapeutics. The
licenses were dependent upon foreign regulatory approval. The case was dismissed
prior to trial for lack of evidence and no appeal was filed. Action on this
matter was therefore finalized in March of 2006.  William B Waldroff and Applied Veterinary Genomics,
Inc. Waldroff and Applied
Veterinary Genomics, Inc. (AVGI) - Litigation initiated in March 2004 over the
validity of license agreements between CytoGenix (licensor) and William Waldroff
(licensee) for use of CytoGenix ssDNA expression technology in shrimp and horse
therapeutic applications. AVGI, as sublicensee, was a third party in this
action. A jury trial held in February 2005 resulted in entry of a judgment
against CytoGenix requiring performance on the contracts and payment of attorney
fees. CytoGenix subsequently appealed this decision and in December 2006 the 1st
Court of Appeals reversed the trial court's judgment, finding no need for
CytoGenix to perform on the contracts and no need for either party to pay the
opposing party's attorney fees. Waldroff and Applied Veterinary Genomics filed a
motion for a rehearing; CytoGenix filed a timely response to that motion and the
parties await decision by the Court. On March 3, 2007, the Court of Appeals
denied Waldroff/AVGIs Motion forRehearing.Pending
resolution of the Courts decision and possible further appeals, CytoGenix has
established a long-term CD in the amount of $115,500 to comply with the trial
court judgment. This CD earns interest at a rate of 3.4% annually. Accrued
Interest for the year ended December 31, 2006 and 2005 was $3,929 and $2,405
respectively. Defamatory
Actions The Company is actively
pursuing legal action against various parties involved in the posting of
defamatory comments about the Company and several of its officers on public
investor chat-room websites.  A settlement with one of the parties resulted
in an apology posted on Investors Hub (www.investorshub.com),  66    NOTE 14 - SUBSEQUENT EVENTS  In
November of 2006, the former Chief Financial Officer (CFO), Lawrence Wunderlich,
and the former Chief Operations Officer, Frank Vazquez, resigned from the
Company.  The Company and former officers are currently pursuing
arbitration to resolve claims by Messrs Vazquez and Wunderlich and counterclaims
by the Company.  In conjunction with the former officers resignations, the
former CFO filed a SOX Whistleblower Complaint with the Department of Labor in
January of 2007.  The action is against the Company and the Chief Executive
Officer, Malcolm Skolnick.  The SEC
has requested information from the Company addressing the allegations and the
Company has responded to the request.  The Companys Board of Directors
instituted a special committee of independent directors who have appointed an
independent, outside counsel to conduct an independent investigation.  As
of March 20, 2007 this investigation is in progress.  Management intends to
vigorously defend the actions brought by the former CEO and CFO.   NOTE 15
 UNAUDITED QUARTERLY FINANCIAL DATA   First Quarter Second Quarter Third Quarter Fourth Quarter  Year
Ended December 31, 2006 Net Sales $
               - $        37,180 $          8,115 $        31,698 Gross Profit - 25,524 (11,327) 17,249 Net Loss (3,212,522) (1,669,680) (1,972,616) (1,547,093) Basic Loss Per Share (0.01) (0.01) (0.01) (0.01) Year
Ended December 31, 2005 Net Sales $
               - $
                - $
                 - $
                - Gross Profit - - - - Net Loss (686,845) (591,514) (1,065,266) (1,189,500) Basic Loss Per Share (0.01) (0.00) (0.01) (0.01) Year
Ended December 31, 2004 Net Sales $
               - $
                - $
                 - $
                - Gross Profit - - - - Net Loss (382,440) (461,935) (485,044) (1,035,957) Basic Loss Per Share (0.00) (0.00) (0.00) (0.01)     NOTE 16
-  EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITORS'
REPORT On March 20, 2008, the Company received notice
of termination of its construction contract with GSL Construction Contractors,
Ltd. ("GSL") and forfeited approximately $1,200,000 in deposits the Company had
made as part of this agreement.  67     ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES  Not
applicable.   ITEM 9A. CONTROLS AND PROCEDURES  Evaluation of Disclosures Controls and Procedures  In
order to ensure that the information we must disclose in our filings with the
Securities and Exchange Commission is recorded, processed, summarized, and
reported on a timely basis, we have formalized our disclosure controls and
procedures.  Our principal executive officer and principal financial
officer have reviewed and evaluated the effectiveness of our disclosure controls
and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of
December 31, 2006.  Based on such evaluations, such officers have concluded
that, as of December 31, 2006, our disclosure controls and procedures were
effective in timely alerting them to material information relating to us(and our
consolidated subsidiaries) required to be included in our periodic SEC filings.
 These has been no change in our internal control over financial reporting
during the quarter ended December 31, 2006 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.  See
Managements Report on Internal Control over Financial Reporting in Item 8,
which is incorporated herein by reference.  ITEM 9B. OTHER INFORMATION  None  PART
III   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT  EXECUTIVE OFFICERS OF THE COMPANY AND OTHER KEY EMPLOYEES  Set
forth below are the names, ages as of March 16, 2007 and titles of the persons
currently serving as Director, Executive Officers and Significant Employees of
the Company:  NAME
AGE
TITLE  Malcolm H Skolnick
              71 Chief Executive Officer, President and Director Term of Office 2006-2009  Pam Schertz 50 Chief Financial Officer  68     Cindee Ewell 52 Vice President of Legal Affairs  Yin Chen 44 Vice President of Research & Development  Kurt Berens 44 Vice President of Product Development  Xin-Xing Tan 37 Senior Research Scientist  Frederic Kendirgi 36 Senior Research Scientist  Scott
E. Parazynski, M.D.       47 Director  Term
of Office: 2006-2009  Cy A. Stein,
M.D., Ph.D.       52
                   Director  Term
of Office: 2003-2006  John
J. Rossi, Ph.D.
              60 Director  Term
of Office: 2004-2007  Raymond L.
Ocampo, Jr.       53
                   Director  Term
of Office: 2004-2007  DR.
MALCOLM H. SKOLNICK has been the Chief Executive Officer and President of the
Company since September 1, 1999.  Prior to that time and for the last 30
years Dr. Skolnick was a Professor in the University of Texas Health Sciences
Center at Houston.  Dr. Skolnick received M.S. and Ph.D. degrees in physics
from Cornell University and a J.D. from the University of Houston.  Dr.
Skolnick has conducted basic science and clinical research and is a patented
inventor.  He is licensed to practice law in Texas and is a registered
patent attorney.  He has practiced intellectual property law, been active
in technology transfer and licensing activities and serves on the Boards of
 Southwest Health Technology Foundation, Citizens League for Environmental
Action Now (CLEAN), and Frank Evans Center for Conflict Resolution and
Responsible Community Designs (a private company).  MS.
PAM SCHERTZ was appointedInterim CFO on
December 1, 2006 and holds the position of Corporate Treasurer.  Ms.
Schertz previously served as Controller for the company beginning in October
2003.  Prior to working for CytoGenix, Ms. Schertz has over 15 years of
experience in accounting in various industries, including a casket manufacturer,
an independent power company, and an architecture firm.  Management
positions have included serving as Controller at a high-end clothier and at a
civil engineering firm.  Ms. Schertz received her BBA in Accounting from
the University of Houston as is a licensed CPA in the State of Texas.  DR. YIN
CHEN earned this Ph.D. in Molecular Biology & Biochemistry at the University
of Maine in 1996.  Subsequently, he was a post-doctoral fellow at Beth
Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School.
 In 1999, he joined InGene, Inc. of Kansis City, MO as senior research
scientist and then CytoGenix, as chief research scientist in February 2000.
 He is one of co-inventors of the Companys  69    proprietary ssDNA expression systems.  He was appointed as
Chief Scientific Officer and Vice President of Research and Development on
November 7, 2001 and is Executive Secretary of the Scientific Advisory
Committee.  DR.
CINDEE EWELL brings a combination of scientific, legal,  and intellectual
property experience that is critical to securing and maintaining the legal
protection of the technology as well as our Company agreement with outside third
parties.  Dr. Ewell holds a Bachelor  of Science  degree from
 Cornell  University,  a Doctor of  Philosophy degree from
the  University  of Texas Health  Science  Center at
Houston, a Juris Doctorate from South Texas College of Law, and has over seven
years of post-doctoral experience working in the Department of Cell Biology at
Baylor College of Medicine. Dr. Ewell initially worked in the biotechnology
industry as a microbiologist and then moved on into academics where she worked
more as a cellular molecular biologist. Her legal expertise includes
approximately three years law firm experience where she worked with large
pharmaceutical and chemical clients in the areas of patent prosecution and
freedom to operate.  MR.
KURT BERENS has ten years research and development experience in ethical drugs
and medical devices.  Mr. Berens has been a collaborator on projects in
academia and was most recently the Manager of the Cellular and Biomedical
Section at NASA-Johnson   Space Center.   He  was
 a  Senior  Project  Manager  for  Texas
Biotechnology  for six years, Mr. Berens was part of a development team
that was successful   in  obtaining  FDA  approval
 for   Argatroban(R).   Trained as a pharmaceutical
scientist,  Mr.  Berens  has  worked  successfully
 in both  the academic  and  commercial  drug
 development  fields.  Mr. Berens received his Bachelor's degree
at the University of Minnesota followed by doctoral studies in pharmaceutics at
the University of Houston.  DR. XIN
XING TAN joined the Company on October 1, 2002 as a Senior Research Scientist.
 His responsibilities and expertise lie in the areas of DNA/RNA
manipulation,  cDNA library  screening,  gene  expression
 regulation  and  Photosystem  II  protein complexes.
 Dr Tan graduated from Wuhan University in Wuhan, P.R.  China.
 He attained his doctorate in biochemistry at the Chinese Academy of
Sciences. Following graduation he maintained a position of NIH Postdoctoral
Fellow at Rice University before joining CytoGenix, Inc.  DR.
FREDERIC KENDIRGI  is a Senior Research Scientist bringing broad
 experience  in  eukaryotic  gene  expression as well
as developing  assays for  protein  detection/function  and
 expression  vectors in eukaryotic  systems. He earned his M.Sc.
in Virology and Immunology in 1995 from the University of Quebec (INRS-Institut
Armand-Frappier) Laval, Canada and his Ph.D.  in biochemistry  and
Molecular  Biology from the  University of Calgary, Calgary Alberta,
Canada in 2000.  Subsequently, he joined the laboratory of Dr. S.R. Wente
as post-doctoral scientist at Washington University in St. Louis and Vanderbilt
University, Nashville.  Dr.  Kendirgi has authored, co-authored or
presented 10 scientific abstracts at national and international meeting and 5
scientific papers. He joined CytoGenix research and development team in October
2004.  SCOTT
E. PARAZYNSKI, M.D.  Dr. Parazynski is a graduate of Stanford University
and Stanford  Medical  School and pursued  clinical
 training at the Brigham and  70    Women's  Hospital  (Boston,  MA) and emergency
 medicine  residency  training in Denver, CO. He has published
articles in the field of space physiology and has expertise in human adaptation
to stressful environments.  Dr.  Parazynski is a member  of
 the  Aerospace  Medical   Association,   the
 American  Society  for Gravitational  and Space
 Biology  and has  received  numerous  special
 honors, including the National Institutes of Health Predoctoral Training
Award in Cancer Biology, NASA Graduate Student Researcher's Award and Research
Honors Award from Stanford Medical School. Dr. Parazynski has been an astronaut
since 1992 and has logged over 262 hours in space.  He first flew in 1994
on the Atmospheric Laboratory for Applications and Science (ATLAS-3) mission,
which was part of an on-going program to determine the Earth's energy balance
and atmospheric change over an 11-year solar cycle.  During this mission,
he and his crewmates also evaluated the Interlimb Resistance Device, a
free-floating exercise he developed to prevent musculoskeletal atrophy in
microgravity.  CY A.
STEIN, M.D., PH.D.  Dr. Stein is currently Professor of Medicine Urology
and Pharmacology in the Oncology Department of Albert Einstein College of
Medicine, New York. In addition to his clinical and faculty  activities,
 he is co-editor-in-chief of Antisense and Nucleic Acid Drug Development,
sits on seven editorial  advisory boards,  including  Nucleic
Acids Research,  serves on eight scientific advisory boards, including
Genta (Berkeley Heights, NJ), Targent (New York, NY), A3D (Heidelberg, Germany),
and is an ad hoc reviewer for over 20 peer reviewed  journals.  He has
authored 97 peer reviewed journal articles.  He has written 56 book
chapters, reviews and editorials, and he holds six patents issued and four
patents pending.  He attended Brown  University  (BA),
 Stanford University (PhD in Organic Chemistry), Albert Einstein College of
Medicine (MD), and New York  Hospital-Cornell  Medical  Center
 (Internship  and  Residency  in Internal Medicine). Dr
Stein was a Clinical Associate and Senior Staff Fellow at The National Cancer
Institute, Bethesda, Maryland.  JOHN J.
ROSSI, PH.D., Associate Director for Laboratory Research, City of Hope
Comprehensive Cancer Center.  Dr. Rossi began his employment with City of
Hope (COH) in 1980 as an assistant research scientist in the Department of
Molecular Genetics.  He was promoted to chairman of the Division of Biology
in 1992.  In 1993, COH bestowed  its highest  honor upon him by
naming him to its Gallery of Medical and  Scientific  Achievement
 for his  pioneering  work at the molecular level in the battle
 against AIDS and other major  diseases.  In 1998, Dr. Rossi was
appointed as the Dean of the City of Hope Graduate School of Biological
Sciences. Dr. Rossi is an expert in ribozymes (molecular scissors).  One of
his most notable projects is in the area of ribozyme research in AIDS.  He
led the research team that first suggested applying ribozymes to treat HIV. His
research in molecular genetics and microbiology has resulted in eight patents
being granted and has served as the basis for more than 120 scientific papers.
Dr. Rossi received his bachelor's degree from the University of New Hampshire
and earned his doctorate at the University of Connecticut.  Prior to his
working at COH, Dr. Rossi completed four years of post Ph.D. training at Brown
University in Providence, Rhode Island.  RAYMOND
L. OCAMPO JR. is a lawyer and businessman.  He currently serves on the
boards of PMI Group, Inc. (PMI) and Pinpoint Solutions Corporation.  Mr.
Campo retired in November 1996 as Senior Vice President, General Counsel &
Secretary at Oracle Corporation, the world's second largest software company,
after serving as its chief legal  71    counsel for more than a decade. Before joining Oracle Corporation
in 1986, Mr. Ocampo was engaged in the private practice of law in San Francisco
(1976-86) and was an adjunct professor at Hastings College of the Law (1977-83).
 He received his undergraduate degree form U.C.L.A. in 973 and his law
degree from Boalt Hall School of Law at U.C. Berkely in 1976. Mr. Ocampo
authored Surfing the Law and Technology Tsunami (American Bar Association 2001),
a collection of keynote  addresses about the intersection of law and
technology,  and co-authored Negotiating  and  Drafting
 Software  Consulting  Agreements (Glasser  LegalWorks
1996). Mr. Ocampo was the 2001-02 Chair of the American Bar Association's
Section of Science & Technology law. He previously  served as the chair
of the Section's  E-Commerce  Division (1998-99) and Internet &
Cyberspace Committee  (1996-99)  and served as co-chair  of the
 Multimedia  &  Interactive Technologies  Committee
 (1995-96).  He also served as chair of the Computer Litigation
Committee (1992-94) of the ABA's Section of Litigation.  The
Company has not adopted a Code of Ethics that applies to the Companys principal
executive officers, the principal financial officer, the principal accounting
officer or the controller.  No Code of Ethics has been adopted because the
Company and the board of directors chose to devote its working capital to the
Companys research and development projects instead of reducing to writing
standards designed to deter wrongdoing and promote honest and ethical conduct.
 The Board of Directors and current management has decided that in lieu of
current events and the anticipated growth of the company a Code of Ethics will
be adopted in 2007.  ITEM 11. EXECUTIVE COMPENSATION  The information required by Item 11 of Form 10-K is incorporated
by reference to the Companys Proxy Statement.   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.  The information required by Item 12 of Form 10-k is incorporated
herein by reference to the Companys Proxy Statement.   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.  The Company entered into a consultant agreement with one of the
Companys Directors, Cy A. Stein, Ph.D.  This agreement is for services by
Dr. Stein to evaluate and consult in the development of existing and new
research platforms and business directives for the Company.  The agreement
began on October 3, 2006 and extends for no longer than six (6) months for a fee
of $3,000 per month plus travel expenses.  The Company has paid to Dr.
Stein the amount of $11,540 for the year ended December 31, 2006.       72    ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES  The information required by Item 15 of Form 10-K is incorporated
by reference to the Companys Proxy Statement.  ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS  (A) (1) AND (2) Financial Statements and Financial Statement Schedules
See Index to Consolidated Financial Statements on page F-1  (A) (3)  EXHIBITS EXHIBIT
NUMBER


DESCRIPTION3.1

--
Articles of
Incorporation of Cryogenic Solutions, Inc.
(incorporated
by reference to exhibit 3.1 to the registrants
registration
statement on Form 10-SB, as amended
(File No.
000-26807), filed with the Securities & Exchange
Commission
(SEC) initially on July 23, 1999 the (Form 10-SB))3.2

--
Certificate of Amendment dated November 1, 1995 of Articles
of
Incorporation of Cryogenic Solutions, Inc. (incorporated by
re-
ference to exhibit 3.2 of the Form 10-SB).3.3

--
Certificate of
Amendment dated January 13, 2000 of Articles of
Incorporation
of CytoGenix, Inc. (incorporated by reference
to exhibit 3.3
of the Form 10-SB).3.4

--
Certificate of
Amendment dated March 7, 2001 of Articles of
Incorporation
of CytoGenix, Inc. (incorporated by reference to
Annex II
of the definitive proxy statement on Schedule 14A
filed with the
SEC on December 23, 2003).3.5

--
Certificate of
Amendment dated April 6, 2004 of Articles of
Incorporation
of CytoGenix, Inc. (incorporated by reference to
Exhibit 3.5 to
the registrants Form 10-KSB for the year ended
December 31,
2003 filed with the SEC on April 14, 2004).3.6

--
Bylaws of Cryogenic Solutions, Inc (incorporated by
reference to
exhibit 3.4 of the Form 10-SB).3.7

--
Amendments to
Bylaws of CytoGenix, Inc. (incorporated by
reference to
Annex I of the definitive proxy statement on
Schedule 14A
filed with the SEC on December 23, 2003).  73     10.1+

--
Employment
Agreement dated January 1, 2005 between
CytoGenix, Inc.
and Malcolm H. Skolnick (incorporated
by
reference to exhibit 10.1 of the Form 10-K/A for
Year ended
December 31, 2005 filed with the SEC Inc. on
April 21,
2006).10.2

--
License
Agreement dated February 3, 2000, between CytoGenix,
Inc. and
PharmaGenix, LLC. (incorporated by reference to
exhibit
10.3 of the Form 10-SB).10.3

--
Technology
Transfer Agreement dated June 26, 1998 between
Cryogenic
Solutions, Inc. and InGene, Inc. (incorporated by
reference
to exhibit 10.4 of the Form 10-SB)10.4

--
Sponsored
Research Agreement between CytoGenix, Inc. and
Baylor College
of Medicine as of March 1, 2000 (incorporated
by reference to
exhibit 0.7 of the Form 10-SB).10.5+

--
Stock Option
Plan (incorporated by reference to Annex III of
the definitive
proxy statement on schedule 14A filed with the
SEC on December
23, 2003).10.6+

--
Stock Option
Plan (incorporated by reference to Annex I of the
definitive
proxy statement on schedule 14A filed with the
SEC on June 17,
2005).10.7

--
Supply
Agreement dated March 22, 2006, between CytoGenix,
Inc. and GE
Healthcare Bio-Science Corporation (incorporated
by reference to
Exhibit 10 to the registrants current report on
Form 8-K filed
with the SEC on March 28, 2006).10.8

--
Ernest Money
Contract of Design/Build Project dated October
30, 2006
between CytoGenix, Inc. and GSL Contractors, Ltd.
(incorporated
by reference to Exhibit 10.1 to the registrants
current report
on Form 8-K filed with the SEC on November 3,
2006).31.1

--
Certifications
of Principal Executive Officer pursuant to Rule
13a-14(a) of
the Securities Exchange Act of 1934, the Act.31.2

--
Certifications
of Principal Financial Officer pursuant to Rule
13a-14(a) of
 the Act.32.1

--
Certifications
of Principal Executive Officer pursuant to 18
U.S.C.
Section 1350.32.2

--
Certifications
of Principal Financial Officer pursuant to 18
U.S.C.
Section 1350. __________________  + Management contract or compensatory plan or arrangement. 74        SIGNATURES In
accordance with Section 13 or 15(d) Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.  CYTOGENIX, INC.  By:       /s/ Malcolm
Skolnick MALCOLM SKOLNICK, PH.D. PRESIDENT AND CHIEF EXECUTIVE OFFICER  Date:  April 4, 2008  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.  By:        /s/  Malcolm
Skolnick  Date: April 4, 2008 MALCOLM SKOLNICK, PH.D. PRESIDENT AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR)  Date:  April 4, 2008 By: /s/ Raymond L Ocampo, Jr. RAYMOND L. OCAMPO, JR. DIRECTOR  Date:  April 4, 2008 By: /s/ Scott E. Parazynski SCOTT E. PARAZYNSKI DIRECTOR  Date: April 4, 2008 By: /s/ Cy A. Stein CY A. STEIN DIRECTOR  Date:  April 4, 2008 By: /s/ John J. Rossi JOHN J. ROSSI DIRECTOR   Date: April 4, 2008 By: /s/ Greg Taylor GREG TAYLOR CHIEF FINANCIAL OFFICER      75