| [X]            | ANNUAL      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |                                                             |
|----------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------|
|           |                                                                                     | For the fiscal year      ended  December 31,      2007 |
| [  ] | TRANSITION      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT     |                                                             |
|           |                                                                                     | For      the transition period from _________ to ________        |
|           |                                                                                     |                                                             |
|           |                                                                                     | Commission      file number:  333-136372               |

| Znomics,      Inc.                                                  |
|---------------------------------------------------------------------|
| (Name      of small business issue in its charter)                  |
|                                                                |
| Nevada                                                              | 52-2340974 |
| (State      or other jurisdiction of incorporation or organization) | (I.R.S. Employer      Identification No.) |
|                                                                |  |
| 2611 SW Third Avenue, Suite 200      Portland, OR                   | 97201 |
| (Address      of principal executive offices)                       | (Zip      Code) |

| Issuer’s telephone      number:  503-827-5271 |   |
|---------------------------------------------------------------|--------|

| Securities      registered under Section 12(b) of the Exchange Act: |                                           |
|---------------------------------------------------------------------|------------------------------------------------|
|                                                                |                                           |
| Title      of each class                                            | Name      of each exchange on which registered |
| none                                                                | not      applicable                            |
|                                                                |                                           |
| Securities      registered under Section 12(g) of the Exchange Act: |                                           |
|                                                                |                                           |
| Title      of each class                                            | Name      of each exchange on which registered |
| none                                                                | not      applicable                            |

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TABLE OFCONTENTS

|                      |                                                                                                                   | Page |
|---------------------------|------------------------------------------------------------------------------------------------------------------------|------|
|  PART      I    |
| Item 1.                   | Description of Business                                                                                                | 3    |
| Item 2.                   | Description of Property                                                                                                | 12   |
| Item 3.                   | Legal Proceedings                                                                                                      | 12   |
| Item 4.                   | Submission of Matters to a Vote of Security      Holders                                                               | 12   |
|  PART      II   |
| Item 5.                   | Market for Common Equity and Related Stockholder Matters and      Small Business Issuer Purchases of Equity Securities | 13   |
| Item 6.                   | Management’s Discussion and Analysis or Plan of      Operation                                                   | 15   |
| Item 7.                   | Financial Statements                                                                                                   | 19   |
| Item 8.                   | Changes In and Disagreements With Accountants on Accounting and      Financial Disclosure                              | 20   |
| Item 8A.                  | Controls and Procedures                                                                                                | 21   |
|  PART      III  |
| Item 9.                   | Directors, Executive Officers, Promoters and Control Persons;      Compliance With Section 16(a) of the Exchange Act   | 23   |
| Item 10.                  | Executive Compensation                                                                                                 | 26   |
| Item 11.                  | Security Ownership of Certain Beneficial Owners and Management      and Related Stockholder Matters                    | 28   |
| Item 12.                  | Certain Relationships and Related Transactions, and Director      Independence                                         | 29   |
| Item 13.                  | Exhibits                                                                                                               | 30   |
| Item 14.                  | Principal Accountant Fees and Services                                                                                 | 30   |

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Item 1.   Description of Business

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| ·   | Vertebrate      physiology in a small organism with a short life cycle. Zebrafish      are small, develop ex utero, and have a short generation time. Female fish      lay approximately 200 eggs per week, year-round. At three to five days      post-fertilization, each fish is a free-swimming, free-feeding organism      complete with almost all of the organ systems found in mammals, including      heart, brain, blood, and pancreas. It is estimated that zebrafish have      80-90 percent of the genes found inhumans. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Robotic      screening. The zebrafish is suited for robotic screening as a live      animal. The three-to-five day old fish is approximately 1 to 2 mm in      length, and can be examined using high-throughput screening assays. In      addition, live zebrafish can be quantified and sorted automatically on the      basis of fluorescent intensity using modified fluorescence-activated cell      sorting (FACS) machines. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Simple      and efficient drug administration. The zebrafish is an excellent      organism with regard to drug dosing, since the gill system of the fish      efficiently transports many small molecules into its      bloodstream. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Direct      observation of internal organs. The zebrafish is transparent for      approximately the first seven days of its development. Thus, in contrast      to the mouse, the structure and function of internal organs, cells, and      tissues in the zebrafish can be readily observed, and direct visualization      can thus form the basis for automated drug and drug target      screens. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | zebrafish      disease models;                                                                                                                                        |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | methodology      and use of zebrafish retroviral insertional mutagenesis (gene disruption),      including our ZeneMark® Library of mutated and marked    genes; |

| ·   | drug      targets based on discovered or functionally defined genes and proteins;      and |
|--------------------|--------------------------------------------------------------------------------------------|
| ·   | proteins      or chemical compounds to serve as therapeutic drugs for human      diseases. |

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Item 2.   Description of Property

Item 3.   Legal Proceedings

Item 4.   Submission of Matters to a Vote of SecurityHolders

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Item 5.    Market for Common Equity and RelatedStockholder Matters and Small Business Issuer Purchases of EquitySecurities

| Fiscal      Year Ending December 31, 2006 |
|-------------------------------------------|
| Quarter      Ended                        |   | High      $ |   | Low      $ |
| March      30                             |   | 0 |   | 0 |
| June      30                              |   | 0 |   | 0 |
| September      30                         |   | 0 |   | 0 |
| December      31                          |   | 0 |   | 0 |

| Fiscal      Year Ending December 31, 2007 |
|-------------------------------------------|
| Quarter      Ended                        |   | High      $ |   | Low      $ |
| March      30                             |   | 0 |   | 0 |
| June      30                              |   | 0 |   | 0 |
| September      30                         |   | 0 |   | 0 |
| December      31                          |   | 3.20 |   | 2.65 |

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| Equity      Compensation Plan InformationAs      of December 31, 2007 |
|-----------------------------------------------------------------------|
| Plan      category                                                    | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights(a) |   | Weighted-average      exercise      price of      outstanding      options, warrants      and rights(b) |   | Number      of securities remaining available for future issuance      under      equity compensation plans (excluding      securities reflected in column (a))(c) |
| Equity      compensation plans approved by security holders           | 882,948  |   | $ | 1.10 |   | 825,374 |
| Equity      compensation plans not approved by security holders       |   |   |   |   |   |   |
| Total                                                                 | 882,948 |   | $ | 1.10 |   | 825,374 |

|  (a)       | Includes      882,948 stock options  outstanding as of December 31,      2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (b)  | No      stock rights exist at December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|  (c)  | Stock      options authorized at December 31, 2007 total 1,708,322. Stock options      authorized but not yet issued total 825,374 at December 31,      2007.  As a result of the Merger with Znomics Delaware, we      assumed The 2001 Znomics, Inc. Stock Incentive Plan (the “Plan”) and the      outstanding options under the Plan were converted into options to purchase      our common stock, post-merger, on comparable terms as the existing option.      The Plan is our only equity compensation  plan.  |

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Item 6.  Management’s Discussion and Analysis or Plan ofOperation

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| ·       | Our      limited and unprofitable operating history;                                             |
|--------------|--------------------------------------------------------------------------------------------------|
| ·       | the      ability to raise additional capital to finance our    activities;                       |
| ·       | legal and regulatory      risks associated with the Merger;                                      |
| ·       | the future trading      of our common stock;                                                     |
| ·       | our ability to      operate as a public company;                                                 |
| ·       | general economic and      business conditions;                                                   |
| ·       | the volatility of      our operating results and financial condition; and                        |
| ·  | our      ability to attract or retain qualified senior scientific and management      personnel. |

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Item 7.   Financial Statements

| Audited      Financial Statements:  |
|------------------------------------------|
| F-1                                      | Report of Independent Registered Public Accounting      Firm |
|                                     |   |
| F-2                                      | Consolidated Statements of Operations – Years Ended December      31, 2007 and 2006 and period from September 13, 2001 (Inception) to      December 31, 2007 |
|                                     |   |
| F-3                                      | Balance Sheets as of December 31, 2007 and 2006 |
|                                     |   |
| F-4                                      | Statement of Stockholders’ Equity  for period from      September 13, 2001 (Inception) to December 31, 2007 |
|                                     |   |
| F-5                                      | Statements of Cash Flows - Years Ended December 31,      2007  and 2006 and period from September 13, 2001 (Inception) to      December 31, 2007 |
|                                     |   |
| F-6                                      | Notes to Consolidated Financial    Statements |

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BalanceSheets  ($ in thousands except per share data)

| Assets                                                                                                                                                   | Restated2007 |    | Restated2006 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|---------|--------------|
| Current      assets:                                                                                                                                     |         |    |         |
| Cash      and cash equivalents                                                                                                                           | $            | 3,659   |         | $ | 138 |
| Accounts      receivable                                                                                                                                 |         | 106     |         |   | 72 |
| Prepaid      and other expenses                                                                                                                          |         | 74      |         |   | 15 |
| Total      current assets                                                                                                                                |         | 3,839   |         |   | 225 |
|                                                                                                                                                     |         |    |         |   |   |
| Property      and equipment, net of accumulated depreciation                                                                                             |         | 321     |         |   | 238 |
|                                                                                                                                                     |         |    |         |   |   |
| Total      asssets                                                                                                                                  | $            | 4,160   |         | $ | 463 |
|                                                                                                                                                     |         |    |         |   |   |
| Liabilities      and Stockholders' Equity                                                                                                                |         |    |         |   |   |
| Current      liabilities:                                                                                                                                |         |    |         |   |   |
| Accounts      payable                                                                                                                                    | $            | 154     |         | $ | 5 |
| Accrued      liabilities                                                                                                                                 |         | 30      |         |   | 113 |
| Deferred      grant revenue and expense                                                                                                                  |         | -       |         |   | 23 |
| Deferred      revenue                                                                                                                                    |         | 514     |         |   | 338 |
| Current      portion of long term liabilities                                                                                                            |         | 10      |         |   | 17 |
| Total      current liabilities                                                                                                                           |         | 708     |         |   | 496 |
|                                                                                                                                                     |         |    |         |   |   |
| Long      term liabilities:                                                                                                                              |         |    |         |   |   |
| Capital      leases, net of current portion                                                                                                              |         | -       |         |   | 1 |
| Notes      payable, net of current portion                                                                                                               |         | -       |         |   | 9 |
| Total      long term liabilities                                                                                                                         |         | -       |         |   | 10 |
|                                                                                                                                                     |         |    |         |   |   |
| Total      liabilities                                                                                                                                   |         | 708     |         |   | 506 |
|                                                                                                                                                     |         |    |         |   |   |
| Stockholders'      equity:                                                                                                                               |         |    |         |   |   |
| Convertible      preferred stock:                                                                                                                        |         |    |         |   |   |
|   Series      A, $0.01 par value; 660,000 shares authorized; 657,405 shares issued and      outstanding                                        |         | -       |         |   | 7 |
|        Series B, $0.01 par value, 130,000 shares authorized  and 126,675      shares issued and outstanding                                    |         | -       |         |   | 1 |
| Common      stock, $0.001 and $0.01 par value,                                                                                                           |         |    |         |   |   |
| 100,000,000      and 9,340,000 shares authorized, 11,072,560 and 1,500,000 shares issued      and outstanding at December 31, 2007 and 2006,respectively |         | 11      |         |   | 15 |
| Additional      paid-in capital                                                                                                                          |         | 5,625   |         |   | 926 |
|                                                                                                                                                     |         |    |         |   |   |
| Deficit      accumulated during the development stage                                                                                                    |         | (2,184) |         |   | (992) |
|                                                                                                                                                     |         |    |         |   |   |
| Total      stockholders' equity (deficit)                                                                                                                |         | 3,452   |         |   | (43) |
|                                                                                                                                                     |         |    |         |   |   |
| Total      liabilities and stockholders' equity                                                                                                          | $            | 4,160   |         | $ | 463 |

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Statements ofOperations ($ in thousands except per share data)

|                                                  | Year EndedDecember 31,2007 |      | RestatedYear EndedDecember 31,2006 |   | RestatedSeptember 13,2001 (Inception)to December 31,2007 |
|-------------------------------------------------------|----------------------------|-----------|------------------------------------|--------|----------------------------------------------------------|
|                                                  |                       |      |                               |   |                                                     |
| Sales      related to products and services           | $                          | 198       |                               | $      | 220                                                      |   | $ | 624 |
| Grant      revenue                                    |                       | 438       |                               |   | 746                                                      |   |   | 2,006 |
| Total      sales and revenue                          |                       | 636       |                               |   | 966                                                      |   |   | 2,630 |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Operating      expenses:                              |                       |      |                               |   |                                                     |   |   |   |
| Cost      of products and services                    |                       | 1,023     |                               |   | 338                                                      |   |   | 1,455 |
| Grant      expense                                    |                       | 438       |                               |   | 746                                                      |   |   | 2,006 |
| Selling,      general and administrative              |                       | 345       |                               |   | 8                                                        |   |   | 544 |
| Research      and development                         |                       | 17        |                               |   | -                                                        |   |   | 770 |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Total      operating expenses                         |                       | 1,823     |                               |   | 1,092                                                    |   |   | 4,775 |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Loss      from operations                             |                       | (1,187)   |                               |   | (126)                                                    |   |   | (2,145) |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Other      income (expense):                          |                       |      |                               |   |                                                     |   |   |   |
|      Investment      income  |                       | 38        |                               |   | 2                                                        |   |   | 47 |
|      Interest      expense   |                       | (5)       |                               |   | (5)                                                      |   |   | (52) |
|      Other      expense, net |                       | (38)      |                               |   | -                                                        |   |   | (34) |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Total      other income (expense)                     |                       | (5)       |                               |   | (3)                                                      |   |   | (39) |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Loss      before income tax                           |                       | (1,192)   |                               |   | (129)                                                    |   |   | (2,184) |
| Income      tax                                       |                       | -         |                               |   | -                                                        |   |   | - |
|      Net      loss           | $                          | (1,192)   |                               | $      | (129)                                                    |   | $ | (2,184) |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Loss      per common share data:                      |                       |      |                               |   |                                                     |   |   |   |
|     Basic                         | $                          | (0.35)    |                               | $      | (0.09)                                                   |   |   |   |
|     Diluted                       | $                          | (0.35)    |                               | $      | (0.09)                                                   |   |   |   |
|                                                  |                       |      |                               |   |                                                     |   |   |   |
| Weighted      average common shares outstanding:      |                       |      |                               |   |                                                     |   |
|    Basic      and Diluted              |                       | 3,414,509 |                               |   | 1,500,000                                                |   |   |   |

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Statement of Stockholders' Equity (in thousands)

|                                                                     | Series A convertiblepreferred stockShares                     Amount |   | Series B convertiblepreferred stockShares                   Amount |   | Common stockShares           Amount |   | Additionalpaid-in capital |   | RestatedDeficitaccumulated during development stage |   | RestatedTotal |
|--------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|--------|--------------------------------|--------|----------------------------------------------------------|--------|---------------|
| Balance      at September 13, 2001                                       |                                                                                                                                            |   | $                                                                                                                                   | -      |                                                                                       |   |                           | $      | -                                                        |   |          |   | $ | - |   | $ | - |   | $ | - |   | $ | - |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock to founders - September 13, 2001           |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   | 1,500         |   |   | 15 |   |   |   |   |   |   |   |   | 15 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of Series A convertible preferred stock - January 30, 2002 | 657                                                                                                                                             |   |                                                                                                                                | 7      |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   | 650 |   |   |   |   |   | 657 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of Series B convertible preferred stock - April 13, 2005   |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       | 127    |                           |   | 1                                                        |   |          |   |   |   |   |   | 253 |   |   |   |   |   | 254 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Contribution      of laboratory equipment                                |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   | 23 |   |   |   |   |   | 23 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                            |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   | (863) |   |   | (863) |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2005                                        | 657                                                                                                                                             |   |                                                                                                                                | 7      |                                                                                       | 127    |                           |   | 1                                                        |   | 1,500         |   |   | 15 |   |   | 926 |   |   | (863) |   |   | 86 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                            |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   | (129) |   |   | (129) |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006                                        | 657                                                                                                                                             |   |                                                                                                                                | 7      |                                                                                       | 127    |                           |   | 1                                                        |   | 1,500         |   |   | 15 |   |   | 926 |   |   | (992) |   |   | (43) |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Cancellation      of preferred and common stock on merger                | (657)                                                                                                                                           |   |                                                                                                                                | (7)    |                                                                                       | (127)  |                           |   | (1)                                                      |   | (1,500)       |   |   | (15) |   |   |   |   |   |   |   |   | (23) |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of new common stock on merger                              |                                                                                                                                       |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   | 11,073        |   |   | 11 |   |   | 4,198 |   |   |   |   |   | 4,209 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of stock warrants                                          |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   | 207 |   |   |   |   |   | 207 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      option valuation                                              |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   | 294 |   |   |   |   |   | 294 |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                            |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   | (1,192) |   |   | (1,192) |
|                                                                     |                                                                                                                                            |   |                                                                                                                                |   |                                                                                       |   |                           |   |                                                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                        | -                                                                                                                                               |   | $                                                                                                                                   | -      |                                                                                       | -      |                           | $      | -                                                        |   | 11,073        |   | $ | 11 |   | $ | 5,625 |   | $ | (2,184) |   | $ | 3,452 |

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Statements of Cash Flows (in thousands)

|                                                      | Year EndedDecember 31,2007 |    | RestatedYear EndedDecember 31,2006 |   | RestatedSeptember 13,2001 (Inception) to December 31,2007 |
|-----------------------------------------------------------|----------------------------|---------|------------------------------------|--------|----------------------------------------------------------------|
| Cash      flows from operating activities:                |                       |    |                               |   |                                                           |
| Net      loss                                             | $                          | (1,192) |                               | $      | (129)                                                          |   | $ | (2,184) |
| Adjustments      to reconcile net income to net           |                       |    |                               |   |                                                           |   |   |   |
|   cash      provided by operating activities:   |                       |    |                               |   |                                                           |   |   |   |
| Depreciation                                              |                       | 87      |                               |   | 63                                                             |   |   | 269 |
| Stock-based      compensation charges                     |                       | 294     |                               |   | -                                                              |   |   | 294 |
| Stock      warrants, expense                              |                       | 37      |                               |   | -                                                              |   |   | 37 |
| Issuance      of stock for licensing and services         |                       | -       |                               |   | -                                                              |   |   | 66 |
| Changes      in operating assets and liabilities:         |                       |    |                               |   |                                                           |   |   |   |
| Accounts      receivable                                  |                       | (34)    |                               |   | (20)                                                           |   |   | (106) |
| Prepaid      and other expenses                           |                       | (60)    |                               |   | (6)                                                            |   |   | (74) |
| Accounts      payable                                     |                       | 148     |                               |   | 4                                                              |   |   | 154 |
| Accrued      liabilities                                  |                       | (83)    |                               |   | 40                                                             |   |   | 30 |
| Deferred      grant revenue and expense                   |                       | (23)    |                               |   | (116)                                                          |   |   |   |
| Deferred      revenue                                     |                       | 177     |                               |   | 338                                                            |   |   | 515 |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Net      cash provided (used) by operating activities     |                       | (649)   |                               |   | 174                                                            |   |   | (999) |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Cash      flows from investing activities:                |                       |    |                               |   |                                                           |   |   |   |
| Capital      expenditures                                 |                       | (169)   |                               |   | (131)                                                          |   |   | (650) |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Net      cash used by investing activities                |                       | (169)   |                               |   | (131)                                                          |   |   | (650) |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Cash      flows from financing activities:                |                       |    |                               |   |                                                           |   |   |   |
| Proceeds      from issuance of common stock, net          |                       | 4,356   |                               |   | -                                                              |   |   | 4,356 |
| Proceeds      from issuance of preferred stock            |                       | -       |                               |   | -                                                              |   |   | 860 |
| Proceeds      from sale of equipment                      |                       |    |                               |   | 82                                                             |   |   | 82 |
| New      borrowings                                       |                       | 160     |                               |   | -                                                              |   |   | 640 |
| Principal      payments, capital leases and notes payable |                       | (177)   |                               |   | (108)                                                          |   |   | (630) |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Net      cash provided (used) by financing activities     |                       | 4,339   |                               |   | (26)                                                           |   |   | 5,308 |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Net      increase in cash and cash equivalents            |                       | 3,521   |                               |   | 17                                                             |   |   | 3,659 |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Cash      at beginning of period                          |                       | 138     |                               |   | 121                                                            |   |   | - |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Cash      at end of period                                | $                          | 3,659   |                               | $      | 138                                                            |   | $ | 3,659 |
|                                                      |                       |    |                               |   |                                                           |   |   |   |
| Supplemental      disclosures:                            |                       |    |                               |   |                                                           |   |   |   |
| Cash      paid for interest                               | $                          | 5       |                               | $      | 5                                                              |   | $ | 29 |
| Cash      paid for income taxes                           | $                          | -       |                               | $      | -                                                              |   | $ | - |

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Notes to FinancialStatements

| ·   | Each      share of Znomics Delaware common stock issued and outstanding immediately      prior to the closing of the Merger was converted into the right to receive      one share of common stock.  As a result, the shareholders of      Znomics Delaware received 5,740,849 newly issued shares of common      stock. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 3,253,333      shares of common stock were issued to investors as a result of closing a      private offering exempt from registration under Rule 506 of Regulation D      of the Securities Act of 1933. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Outstanding      options under the Znomics Delaware stock option plan to purchase 672,346      shares of Znomics Delaware common stock   have been      converted into options to purchase 672,346 shares of common stock on the      same terms and conditions, including varying exercise prices between $0.41      per share to $1.11 per share and exercise termination dates between June      2015 and September 2017.  The assumed stock option plan allows      the issuance of options to purchase a maximum of 2,193,258 shares of our      common stock, inclusive of theseissuances. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Outstanding      warrants of Znomics Delaware entitling holders to purchase 65,893 shares      of Znomics Delaware common stock were assumed.  These warrants      will be converted into warrants to acquire 65,893 shares of common      stock.  Of these warrants, 56,131 shares are held at an exercise      price of $0.82 per share and exercisable until October 17, 2008 and 9,762      shares are held at an exercise price of $1.50 per share and exercisable      until June 30, 2012.  In addition, the Company issued warrants      to purchase 227,733 shares of common stock at a price of $1.50 per share      to the placement agent in the private offering, as partial payment, in      exchange for their services. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Following      the closing of the merger, in a separate transaction, the former PSRI      Chief Executive Officer and sole director and certain other shareholders      agreed to cancel and return a portion or all of their PSRI common stock      into treasury.  In total, these shareholders retired 4,731,085      shares of common stock. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As      a result, following these events, there were 11,072,560 shares of the      Company’s common stock issued and outstanding at November 5,      2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The board      of directors was reconstituted to consist of Roger D. Cone, Richard      A.  Sessions, Stephen E. Kurtz, and Dwight A. Sangrey, who prior      to the Merger were the directors of Znomics  Delaware. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Znomics      Delaware provided customary representations and warranties and closing      conditions, including approval of the Merger by a majority of its voting      stockholders. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Risk      free interest rate              | 4.1%  |
|-------------------------------------------|-------|
| Expected      life in years               | 8.4   |
| Expected      dividend yield              | 0.0%  |
| Expected      volatility                  | 49.0% |
| Estimated      annualized forfeiture rate | 0.0%  |

|                                                                                   | Year EndedDecember 31, 2007 |
|----------------------------------------------------------------------------------------|-----------------------------|
| Cost      of sales and services                                                        | $                           | 199 |
| General      and administrative                                                        |                        | 95 |
|                                                                                   |                        |   |
| Total      stock-based compensation expense included in loss from      operations | $                           | 294 |

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|                                                  | December 31, 2007As PreviouslyReported |    | Adjustments |   | December 31, 2007As Restated |
|-------------------------------------------------------|-------------------------------------------------------|---------|-------------|--------|---------------------------------------------|
|                                                  |                                                  |    |        |   |                                        |
| Deferred      Revenue                                 | $                                                     | 460     |        | $      | 54                                          |   | $ | 514 |
| Total      Current Liabilities                        |                                                  | 654     |        |   | 54                                          |   |   | 708 |
|                                                  |                                                  |    |        |   |                                        |   |   |   |
| Deficit      accumulated during the development stage |                                                  | (2,130) |        |   | (54)                                        |   |   | (2,184) |
| Total      Shareholders’ Equity                 |                                                  | 3,506   |        |   | (54)                                        |   |   | 3,452 |

|                                                  | December 31, 2006As Previously Reported |   | Adjustments |   | December 31, 2006As Restated |
|-------------------------------------------------------|-------------------------------------------------------------|--------|-------------|--------|---------------------------------------------|
|                                                  |                                                        |   |        |   |                                        |
| Deferred      Revenue                                 | $                                                           | 284    |        | $      | 54                                          |   | $ | 338 |
| Total      Current Liabilities                        |                                                        | 442    |        |   | 54                                          |   |   | 496 |
|                                                  |                                                        |   |        |   |                                        |   |   |   |
| Deficit      accumulated during the development stage |                                                        | (938)  |        |   | (54)                                        |   |   | (992) |
| Total      Stockholders’ Equity (deficit)       |                                                        | 11     |        |   | (54)                                        |   |   | (43) |
|                                                  |                                                        |   |        |   |                                        |   |   |   |
| Sales      related to products and services           |                                                        | 274    |        |   | (54)                                        |   |   | 220 |
| Net      loss                                         |                                                        | (75)   |        |   | (54)                                        |   |   | (129) |
| Net      loss per share (basic and diluted)           |                                                        | (0.05) |        |   | (0.04)                                      |   |   | (0.09) |

|                                        | September      13, 2001 (inception) to December 31, 2007As PreviouslyReported |    | Adjustments |   | September      13, 2001 (inception) to December 31, 2007As Restated |
|---------------------------------------------|----------------------------------------------------------------------------------------------|---------|-------------|--------|------------------------------------------------------------------------------------|
|                                        |                                                                                         |    |        |   |                                                                               |
| Sales      related to products and services | $                                                                                            | 678     |        | $      | (54)                                                                               |   | $ | 624 |
| Selling,      general and administrative    |                                                                                         | 505     |        |   | 39                                                                                 |   |   | 544 |
| Loss      from operations                   |                                                                                         | (2,052) |        |   | (93)                                                                               |   |   | (2,145) |

| Net      loss                                  |   | (2,091) |   |   | (93)   |   |   | (2,184) |
|------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|---------|
|                                           |   |    |   |   |   |   |   |    |
| Net      cash used by operating activities     |   | (961)   |   |   | (38)   |   |   | (999)   |
| Net      cash used by investing activities     |   | (511)   |   |   | (139)  |   |   | (650)   |
| Net      cash provided by financing activities |   | 5,131   |   |   | 177    |   |   | 5,308   |

|                           | December 31 |
|--------------------------------|-------------|
|                           | 2007        |   | 2006 |
| Receivable      for fish lines | $           | 100 |   | $ | 72 |
| Receivable      - Harvard      |        | 5 |   |   | - |
| Other                     |        | 1 |   |   | - |
|                           |        |   |   |   |   |
|                           | $           | 106 |   | $ | 72 |

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|                                     | Useful Lives |   | December 31,       2007                                  2006 |
|------------------------------------------|--------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Compound      Library                    | 3 years      |   | $                                                                                                                                                                                                                                            | 17 |   | $ | - |
| Office      equipment               | 2-3 years    |   |                                                                                                                                                                                                                                         | 91 |   |   | 47 |
| Laboratory      equipment                | 3-5 years    |   |                                                                                                                                                                                                                                         | 366 |   |   | 257 |
| Donated      laboratory equipment        | 2-5 years    |   |                                                                                                                                                                                                                                         | 23 |   |   | 23 |
| Equipment      under capital leases      | 5 years      |   |                                                                                                                                                                                                                                         | 40 |   |   | 40 |
|                                     |         |   |                                                                                                                                                                                                                                         |   |   |   |   |
|                                     |         |   |                                                                                                                                                                                                                                         | 537 |   |   | 367 |
| Less      accumulated depreciation  |         |   |                                                                                                                                                                                                                                         | (216) |   |   | (129) |
|                                     |         |   |                                                                                                                                                                                                                                         |   |   |   |   |
| Property      and equipment, net         |         |   | $                                                                                                                                                                                                                                            | 321 |   | $ | 238 |

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| Series      A  | 660,000      shares |
|---------------------|---------------------|
| Series      B  | 130,000      shares |

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|                                       | Number of        Options                               Warrants |   | ExercisePrice perShare |
|--------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|
|                                       |                                                                                                                                                                                                                                 |   |                   |   |   |
| Outstanding      at December 31, 2005 | 212,500                                                                                                                                                                                                                              |   | 23,000                 |   | $ | 1.00 – 2.25 |
| Granted                               | 32,500                                                                                                                                                                                                                               |   | -                      |   |   | 2.50 |
| Exercised              | -                                                                                                                                                                                                                                    |   | -                      |   |   |   |
| Expired                          | -                                                                                                                                                                                                                                    |   | -                      |   |   |   |
| Forfeited                             | (20,000)                                                                                                                                                                                                                             |   | -                      |   |   |   |
|                                       |                                                                                                                                                                                                                                 |   |                   |   |   |   |
| Outstanding      at December 31, 2006 | 225,000                                                                                                                                                                                                                              |   | 23,000                 |   |   | 0.82 – 2.50 |
| Granted                               | 296,189                                                                                                                                                                                                                              |   | 237,495                |   |   | 1.00 – 2.80 |
| Repriced                                   | 410,571                                                                                                                                                                                                                              |   | 33,131                 |   |   | 0.41-1.15 |
| Exercised                                  | -                                                                                                                                                                                                                                    |   | -                      |   |   |   |
| Expired                                    | -                                                                                                                                                                                                                                    |   | -                      |   |   |   |
| Forfeited                                  | (48,812)                                                                                                                                                                                                                             |   | -                      |   |   | 0.98 |
|                                       |                                                                                                                                                                                                                                 |   |                   |   |   |   |
| Outstanding      at December 31, 2007 | 882,948                                                                                                                                                                                                                              |   | 293,626                |   | $ | 0.41 –1.50 |

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|                                     | 2007 |   | 2006   |
|------------------------------------------|------|--------|--------|
| Research      expenses paid by contracts | $    | 110    |   | $ | 338 |
| Research      expenses paid by grants    | $    | 383    |   | $ | 746 |
| Costs      charged to operations         | $    | 17     |   | $ | - |

|                     | December 31,2007                                        2006 |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Payroll      liabilities | $                                                                                                                                                                                                                                      | 23 |   | $ | 19 |
| Accrued      vacation    | $                                                                                                                                                                                                                                      | 7 |   | $ | 10 |
| Legal      fees payable  |                                                                                                                                                                                                                                   | - |   |   | 84 |
|                     |                                                                                                                                                                                                                                   |   |   |   |   |
|                     | $                                                                                                                                                                                                                                      | 30 |   | $   | 113 |

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|                                                  | December 31 |
|-------------------------------------------------------|-------------|
|                                                  | 2007        |   | 2006 |
|  Tax      computed at the federal statutory rate | $           | (405) |   | $ | (25) |
|  State      income taxes, net of federal benefit |        | (58) |   |   | (5) |
|  Stock-based      compensation                   |        | 99 |   |   | - |
|  Permanent      differences and other       |        | 13 |   |   | - |
|  Change      in valuation allowance         |        | 351 |   |   | 30 |
|                                                  |        |   |   |   |   |
|  Income      tax provision                       | $           |   |   | $ | - |

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|                                                             | December 31 |
|------------------------------------------------------------------|-------------|
|                                                             | 2007        |   | 2006 |
| Deferred      tax assets:                                        |        |   |   |
| Accrued      expenses and other                             | $           | 182 |   | $ | 133 |
| Net      operating loss carryforwards                            |        | 563 |   |   | 250 |
| Valuation      allowance                                         |        | (712) |   |   | (361) |
| Total      deferred tax assets, net of valuation allowance  |        | 33 |   |   | 22 |
| Deferred      tax liabilities:                                   |        |   |   |   |   |
| Fixed      assets                                           |        | 33 |   |   | 22 |
|                                                             |        |   |   |   |   |
| Net      deferred tax assets                                     | $           | - |   | $ | - |

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|                                                                                                                                                                                                                                                                       | December 31,2007                     2006 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
| Loan      from Washington Mutual Bank for a fish tank system payable in monthly      principal installments of $833 plus computed interest at a variable rate      adjusted daily of the prime rate plus 2% maturing January 1, 2009,      guaranteed by two      officers | $                                                                                                                    | 9 |   | $ | 19 |

|  2008                | $  | 9      |
|--------------------------------|---------|--------|
|  2009      and thereafter |    | -      |
|                           |    |   |
|                           | $       | 9      |

|                                                                                                                                                                                                                  | December 31,2007                                   2006 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Capital      lease from US Filter for a pump system and maintenance contract payable in      monthly installments of $211 maturing December 31, 2007 with $1 buyout,      secured by the equipment.    | $                                                                                                                                                                                                        | - |   | $ | 2 |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                     |   |   |   |   |
| Capital      lease from Beckman Coulter for a centrifuge payable in monthly      installments of $687 maturing May 15, 2007 with $1      buyout, secured by the equipment.                                       |                                                                                                                                                                                                     | - |   |   | 3 |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                     |   |   |   |   |
| Capital      lease from Integra for an NEC telephone system payable in monthly      installments of $183 maturing May 2008 with $1 buyout, secured by the      equipment.          |                                                                                                                                                                                                     |  1 |   |   | 3 |
|                                                                                                                                                                                                                  |                                                                                                                                                                                                     |   |   |   |   |
|                                                                                                                                                                                                                  | $                                                                                                                                                                                                        | 1 |   | $ | 8 |

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| 2008                | $      | 1      |
|--------------------------|--------|--------|
| 2009      and thereafter |   | -      |
|                     |   |   |
|                     | $      | 1      |

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|  | Each      share of Znomics Delaware common stock issued and outstanding immediately      prior to the closing of the Merger was converted into the right to receive      one share of common stock with no additional consideration.  As      a result, the shareholders of Znomics Delaware received 5,740,849 newly      issued shares of common stock. |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3,253,333      shares of common stock were issued to investors as a result of closing a      private offering for $4.88 million exempt from registration under Rule 506      of Regulation D of the Securities Act of1933. |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Shares     | Held      By:                           | Percentage of Issued      and Outstanding |
|------------|-----------------------------------------|-------------------------------------------|
| 5,740,849  | Znomics      Delaware Shareholders      | 51.85%                                    |
| 3,253,333  | New      investors in private placement | 29.38%                                    |
| 2,078,365  | Existing      Shareholders of PSRI      | 18.77%                                    |
| 11,072,560 | All      Shareholders                   | 100%                                      |

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Item8.   Changes In and Disagreements with Accountants on Accountingand Financial Disclosure

| 1.   | The      audit reports for the years ended May 31, 2006 and May 31, 2007 contained      an uncertainty about the Company’s ability to continue as a going      concern. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 8A.  Controls and Procedures

| • | Pertain      to the maintenance of records that, in reasonable detail, accurately and      fairly reflect the transactions and dispositions of the assets of the      Company; |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Provide      reasonable assurance that transactions are recorded as necessary to permit      preparation of financial statements in accordance with U.S. GAAP, and that      receipts and expenditures of the Company are being made only in accordance      with authorizations of management and directors of the      Company; and |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | 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. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      financial statement closing process lacked adequate prevent controls      including timely general ledger account  reconciliation. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |  No      stock compensation accounting processesexisted. |
|--------------------|---------------------------------------------------------------|

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| ·   | Use      of standard general ledger entries. |
|--------------------|----------------------------------------------|

| ·   | Creation      of procedures for subsidiary accounting system  cut-off. |
|--------------------|------------------------------------------------------------------------|

| ·   | Use      of a disclosure control checklist. |
|--------------------|---------------------------------------------|

| ·   | Completion      of timely general ledger reconciliations in standard  form. |
|--------------------|-----------------------------------------------------------------------------|

| ·   | Use      of an independent consultant to establish tools for use of the      Black-Scholes valuation model and review of management analysis and      assumptions. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Improvement      of detail stock option activityrecords. |
|--------------------|----------------------------------------------------------|

| ·   | A      Chief Financial Officer was hired during November 2007 experienced in      internal control environment evaluation and  improvement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      fixed asset accounting software was implemented automating a previously      manual process. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | A      Disclosure Control Committee was formed to ensure all business events are      communicated timely. |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | Certain      steps to further the segregation of duties were    implemented. |
|--------------------|------------------------------------------------------------------------------|

| ·   | Improvements      in documentation of accounting transactions were    implemented. |
|--------------------|------------------------------------------------------------------------------------|

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Item9.  Directors, Executive Officers, Promoters and Control Persons;Compliance with Section16(a) of the Exchange Act

| Name                     | Age | Position      Held with the Company                   |
|--------------------------|-----|-------------------------------------------------------|
| Dwight      A. Sangrey   | 67  | Chairman      of the Board of Directors               |
| Richard      A. Sessions | 68  | Director,      Chief Executive Officer                |
| Roger      D. Cone       | 50  | Director,      President and Chief Scientific Officer |
| Stephen      E. Kurtz    | 51  | Director,      Director of Operations                 |
| Kerry      D. Rea        | 49  |  Chief      Financial Officer                    |

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Item 10.  Executive Compensation

| SUMMARY      COMPENSATION TABLE                |
|------------------------------------------------|
| Name      andprincipalposition                 | Year | Salary      (1) |  Bonus | StockAwards |   | OptionAwards(2) |   | Non-EquityIncentive      PlanCompensation | NonqualifiedDeferredCompensation | All otherCompensation    (3) |   | Total |
| Richard      Sessions                          | 2007 |   |   |   |   |   |   |   |   | $ | 12,000 |   | $ | 12,000 |
| Chief Executive      Officer                   | 2006 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Roger Cone                                     | 2007 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| President and      Chief Science Officer  | 2006 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kerry Rea                                      | 2007 | $ | 21,288 |   |   |   | $ | 79,986 |   |   |   |   |   |   | $ | 101,274 |
| Chief Financial      Officer                   | 2006 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stephen    Kurtz                               | 2007 | $ | 21,700 |   |   |   |   |   |   |   |   |   |   |   | $ | 21,700 |
| Secretary and      Director of Operations | 2006 | $ | 10,717 |   |   |   |   |   |   |   |   |   |   |   | $ | 21,700 |

| (1)    | Roger Cone serves on      an approximate 20% part-time basis and has agreed to do so without      compensation.                                                                                                                                                                                                                                                                 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                            |
| (2)    | Amounts      reflect the expense recognized for accounting purposes calculated in      accordance with SFAS 123R.                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                            |
|   | Assumptions used in      calculating expense as required by SFAS 123R are described in Note B to      our Consolidated Financial Statements included in our 2007      Form 10-KSB. Additional details regarding the terms of awards under      the Stock Option Plan are described in the following table “Outstanding      Equity Awards at Fiscal Year-End.” |
|   | Mr.      Rea’s options are exercisable ratably over 5 years on the option      anniversary date, beginning on 12/14/08.                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                            |
| (3)    | Richard      Sessions received $12,000 as consulting fees in 2007 and 2006 based upon a      verbal agreement approved by the Board of  Directors.                                                                                                                                                                                                                              |

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| OUTSTANDING      EQUITY AWARDS AT FISCAL YEAR-END                                                                    |
|----------------------------------------------------------------------------------------------------------------------|
| OPTION      AWARDS                                                                                                   | STOCK      AWARDS |
| Name                                                                                                                 | Number      of Securities Underlying Unexercised Options (#)    Exercisable |   | Number      of Securities Underlying Unexercised Options (#)    Unexercisable |   | Equity      Incentive      Plan      Awards:  Number      of Securities Underlying Unexercised Unearned Options      (#) |   | OptionExercise      Price      ($) |   | Option      Expiration      Date | Number      of Shares or Units of Stock that have Not Vested (#) | Market      Value      of      Shares      or      Units of      Stock that      have      Not      Vested ($) | Equity      Incentive      Plan      Awards:  Number      of Unearned Shares,  Units      or Other      Rights      that have Not Vested    (#) | Equity      Incentive      Plan      Awards:  Market      or Payout Value      of Unearned Shares,  Units      or Other      Rights      that      have Not      Vested    ($) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Richard      Sessions                                                                                                |   | 73,218 |   |   |   |   |   | $ | 0.82 |   | 7/2/2015 |   |   |   |   |
| Richard      Sessions                                                                                                |   | 48,812 |   |   |   |   |   | $ | 0.92 |   | 7/3/2015 |   |   |   |   |
| Kerry      Rea                                                                                                       |   | - |   |   | 100,000(1) |   |   |   | $ | 1.50 |   | 12/14/2017 |   |   |   |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Options      vest as follows: one-fifth annually on December 14, 2008, 2009, 2010,      2011 and 2012. |   |   |   |   |

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| DIRECTOR      COMPENSATION |
|----------------------------|
|        Name           | Fees      Earned or      paid in      cash(1) |   |        Stock      Awards |        Option      Awards | Non-Equity      Incentive      Plan Compensation | Nonqualified      Deferred      Compensation |        All      other Compensation |        Total |
| Richard      Sessions      | $ | - |   |   |   |   |   |   | $ | - |
| Roger      Cone            | $ | - |   |   |   |   |   |   | $ | - |
| Stephen      Kurtz         | $ | - |   |   |   |   |   |   | $ | - |
| Dwight      Sangrey        | $ | - |   |   |   |   |   |   | $ | - |

Item11.  Security Ownership of Certain Beneficial Owners and Managementand Related StockholderMatters

| Name      and Address of Beneficial Owner (1)  | Amount      and Nature of Beneficial      Ownership (2) | Percent      of Class (3) |
|------------------------------------------------|---------------------------------------------------------|---------------------------|
|                                           |                                                    |                      |
| Roger      Cone (4)                            | 909,428                                                 | 8.2%                      |
| Richard      Sessions (5)                      | 896,916                                                 | 8.1%                      |
| Stephen      Kurtz (6)                         | 762,645                                                 | 6.9%                      |
| Dwight      Sangrey                            | 744,340                                                 | 6.7%                      |
| Kerry      Rea                                 | -                                                       | -                         |
| 5      Officers and Directors as a Group-Total | 3,313,329                                               | 29.9%                     |
|                                           |                                                    |                      |
| Wenbiao      Chen                              | 732,138                                                 | 6.6%                      |
| 5%      Shareholders-Total                | 732,138                                                 | 6.6%                      |

| (1) | The      following table sets forth certain information regarding beneficial      ownership of our common shares as of February 15, 2008, by      (i) each person or entity who is known by us to own beneficially more      than 5% of our common shares, (ii) each of our directors,      (iii) each of the named executive officers listed in the Summary      Compensation Table on page (state page number), and (iv) all our      directors and executive officers as agroup. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (2) | Includes shares      issuable upon exercise of currently vested stock options and stock options      that will vest within 60 days of February 15, 2008, as      follows:  Roger Cone, 12,000, Richard Sessions, 125,630, Stephen      Kurtz, 24,406, and all officers and directors as a group,    162,036. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | All percentages are      based on 11,072,560 shares issued and outstanding as of February 15,      2008.                                                                                                                                                                                                                         |
| (4) |  Includes a      warrant to purchase 12,215 shares that is exercisable at $0.82 per      share.                                                                                                                                                                                                                             |
| (5) | Includes options to      purchase 73,214 shares of Common Stock and a warrant to purchase 3,666      shares of Common Stock at an exercise price of $0.82 per share and an      option to purchase 48,809 shares of Common Stock at an exercise price of      $0.9220 per share, all of which are vested.                        |
| (6) | Includes options to      purchase 24,405 shares at an exercise price of $0.82 per share, all of      which are vested.                                                                                                                                                                                                           |

Item 12.   Certain Relationships and RelatedTransactions

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Item 13.   Exhibits

| Exhibit      Number | Description                                                                                                                                                                              |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                 | Articles      of Incorporation, as amended (1)                                                                                                                                           |
| 3.2                 | Bylaws,      as amended (1)                                                                                                                                                              |
| 10.1           | Research and License Agreement, dated November 15,      2005                                                                                                                        |
| 23.1                | Consent of Moore & Associates, Chartered Independent      Registered Public Accounting Firm                                                                                          |
| 31.1                | Certification of Chief Executive Officer pursuant to      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002    |
| 31.2                | Certification of Chief Financial Officer pursuant to      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002    |
| 32.1                | Certification of Chief Executive Officer and Chief      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant      to Section 906 of the Sarbanes-Oxley Act of  2002 |

| (1)   | Incorporated      by reference to the Registration Statement on Form SB-2 filed with the      Securities and Exchange Commission on August 14, 2006.  On      November 6, 2007, we further amended our articles and bylaws solely to      reflect the change in the Company’s name to “Znomics,  Inc.” |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 14.   Principal Accountant Fees andServices 

| Financial      Statements for the Year Ended December 31 | Audit      Services |   | Audit      Related Fees |   | Tax      Fees |   | Other      Fees |
|----------------------------------------------------------|---------------------|--------|-------------------------|--------|---------------|--------|-----------------|
| 2007      (1)                                            | $                   | 11,500 |                    | $      | 0             |   | $               | 0 |   | $ | 0 |
| 2006      (2)                                            | $                   | 21,000 |                    | $      | 0             |   | $               | 0 |   | $ | 0 |

| (1)   | 2007      audit services billed by Moore & Associates, the Company’s current      independent auditor. |
|-----------------|------------------------------------------------------------------------------------------------------------------|

| (2)   | Includes      $15,000 billed by Moore & Associates, the Company’s current      independent auditor and $6,000 billed to PSRI by Dale Matheson Carr-Hilton      Labonte, LLP. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| By:    | /s/Richard A.      Sessions                          |
|--------|------------------------------------------------------|
|   | Richard      A. SessionsChief      Executive Officer |
|   | July      23 , 2008                                  |

| By:    | /s/Kerry D.  Rea                              |
|--------|-----------------------------------------------|
|   | Kerry      D. ReaChief      Financial Officer |
|   | July      23 , 2008                      |