SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

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

                    For the fiscal year ended: March 31, 2006

                                       OR

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

             For the transition period from ________ to ____________

                        Commission file number: 2-87052-D
                                                ---------

                           COGENCO INTERNATIONAL, INC.
                           ---------------------------
                 (Name of small business issuer in its charter)

           Colorado                                               84-0914754
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                     Suite 1840, 6400 Fiddler's Green Circle
                        Greenwood Village, Colorado 80111
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (303) 221-3680

       Securities registered under Section 12(b) of the Exchange Act: None
       Securities registered under Section 12(g) of the Exchange Act: None

     Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. [ ]

     Indicate by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for at least the
past 90 days. Yes [ X ] No [ ].

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]

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

     Issuer's revenues for its most recent fiscal year: $1,391.

     Aggregate market value of voting stock held by non-affiliates as of May 31,
2006: $ -0-. There is currently no trading market for the Registrant's
securities.

     Number of shares of Common Stock, $.0l par value, outstanding as of May 31,
2006: 2,578,756.

     Documents incorporated by reference: None.

     Transitional Small Business Disclosure Format (check one):

         Yes [   ]  No [ X ]

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                           COGENCO INTERNATIONAL, INC.

                                   FORM 10-KSB

                                     PART I

Statements that we make in this Form 10-KSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions in the federal securities laws and judicial interpretations thereof.
These statements often can be identified by the use of terms such as "may,"
"will," "expect," "anticipate," "estimate," or "continue," or the negative
thereof. Such forward-looking statements speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important facts beyond the control of Cogenco that could cause
actual results and events to differ materially from historical results of
operations and events and those presently anticipated or projected. We disclaim
any obligation to revise any forward-looking statements to reflect events or
circumstances after the date of such statement or to reflect the occurrence of
anticipated or unanticipated events.

Item l.  Description of Business.
         ------------------------

(a)      Business Development.

         Cogenco International, Inc. was organized under the laws of the State
of Colorado on June 27, 1983, for the purpose of engaging in the cogeneration
business, which is the simultaneous production of power, either mechanical or
electrical, and useful thermal energy, such as steam, so that the waste heat
which is a by-product of one process becomes the energy source for the other.
Cogenco commenced active business operations after it completed its initial
public offering of securities in February 1985, pursuant to which Cogenco
realized total net proceeds of approximately $1,000,000.

         Cogenco was not successful in the cogeneration business, although it
completed one cogeneration facility in Arvada, Colorado, and investigated
numerous other cogeneration project opportunities. Cogenco eventually depleted
its financial resources and was not able to secure additional capital to
continue active business operations. Cogenco ceased active business operations
in early 1988. Cogenco has been attempting to locate a business opportunity
since that time, has maintained itself as a validly existing Colorado
corporation, and has continued to make filings required under the Securities
Exchange Act of 1934. Except for a series of equity financings in 2005 and 2006,
and the activities described below under "DMI BioSciences," Cogenco has not
engaged in any business operations for more than the past five years. Cogenco
has not received any revenues from operations for more than the past ten years.

         During our 2004 fiscal year, we entered into a letter of intent and
then an agreement with DMI BioSciences, Inc. ("DMI") by which we agreed to
participate in the development of a drug for the treatment of asthma in humans.
The letter of intent also included the parties' agreement to attempt to
negotiate a business combination between DMI and Cogenco. This agreement and the
subsequent amendments to this agreement are described in more detail below. At
the present time, Cogenco is delinquent with respect to payments under the
successor to this Agreement, and there can be no assurance that Cogenco will be
able to make the required payments or complete any transaction with DMI at any
time in the future.

         During our 2005 fiscal year, we raised $240,000 in equity financing
from accredited investors. These funds allowed us to make the first $100,000
payment to DMI and to continue to finance our general and administrative and
other expenses.

                                       1
<PAGE>


         During our 2006 fiscal year, we raised $3,700,000 in equity financing
from accredited investors. These funds allowed us to meet some (but not all) of
our payment obligations to DMI and to continue to finance our general and
administrative and other expenses.

         We do not have any subsidiary corporations. Given our default status
under our agreement with DMI, we may see our investment converted into a
minority ownership position in DMI. The address of our principal executive
offices and our telephone and facsimile numbers at that address are:

                           Cogenco International, Inc.
                           Suite 1840, 6400 So. Fiddler's Green Circle
                           Greenwood Village, CO 80111
                           Telephone No.: (303) 221-3680
                           Facsimile No.: (303) 759-3553

(b)      Business of Issuer.

         General Information. Since the time Cogenco ceased active business
operations in 1988, we have been actively seeking potential business
opportunities. Although we have had discussions with several potential
candidates, these discussions have not resulted in any agreements or business
combinations except as described below under "DMI BioSciences."

         We believe that there are many companies in our position which are
seeking business opportunities. In an effort to meet the competition, we have
maintained Cogenco's status as a corporation in good standing under Colorado law
and we have further filed all required reports with the Securities and Exchange
Commission. We will need a significant amount of additional financing in order
to identify and complete a business acquisition. To the extent that Cogenco does
become involved in business, Cogenco will compete with others in that industry
and may be subject to a significant amount of government regulation. The nature
of the competition and the amount of regulation will depend on the industry in
which Cogenco becomes engaged. We have no patents, patent applications, or other
material interest in intellectual property. We do not produce any products or
offer any services, and therefore Cogenco is not dependent on any material
customer relationships and we do not conduct any research and development,
expect for any payments tendered to DMI pursuant to the Old CODA (described
below). Since we do not own any real property or engage in any business
operations, environmental compliance is not material.

         Cogenco's President, Mr. David Brenman, is the only person who is
actively involved in day to day operations of Cogenco and he is also our only
employee, although Mr. Brenman is also actively involved in other businesses as
well. We anticipate that additional employees and/or consultants will be
retained as may be necessary to operate Cogenco in the future, whether in
connection with a business combination or otherwise. We believe that our current
arrangement is adequate to meet our needs during our current process of pursuing
business opportunities.

         DMI BioSciences. In August 2004, we entered into a letter agreement
with DMI Biosciences, Inc. ("DMI") of Englewood, Colorado. In November 2004, and
pursuant to the August 2004 letter agreement, we entered into a co-development
agreement (the "Old CODA") by which Cogenco agreed to participate in the
development of a drug for the treatment of asthma in humans. We amended the Old
CODA several times to extend Cogenco's payment obligations and other financial
commitments, and cancelled the Old CODA in February 2006 in favor of a new
co-development agreement (the "New CODA") for the development of a drug for the
treatment of multiple sclerosis. As described below, we have not made certain
payments required under the New CODA, and at the present time we do not have the
financial capability to make those payments.

                                       2

<PAGE>


         DMI Biosciences, Inc. DMI is a privately held biotechnology company
engaged in the commercial application of proteomics to discover, develop, and
commercialize small-molecule and peptide-based drugs and diagnostics for acute
and chronic inflammation in immunologic, vascular, and central nervous system
diseases that affect millions of individuals whose needs are currently unmet or
underserved. DMI's research efforts focus on the role of proteins and peptides
in key pathways of acute and chronic inflammation and involve identifying and
elucidating the function of proteins and peptides affecting the inflammatory
component of diseases such as acute coronary syndromes, multiple sclerosis,
Alzheimer's disease, asthma and cancer. DMI's principal objective is to develop
new, proprietary therapeutic products that treat inflammatory processes at their
root causes rather than treating only their symptoms. Using a variety of
technologies, DMI has isolated compounds based on naturally occurring proteins
and peptides implicated in inflammatory diseases, and has obtained a number of
patents and filed various patent applications. Screening these compounds has
resulted in a robust pipeline of product candidates that DMI expects to develop
in collaboration with partners or on its own.

         DMI's pipeline of potential products includes drug candidates targeting
multiple sclerosis, pulmonary fibrosis, and Alzheimer's disease, drug candidates
targeting inflammatory diseases such as asthma, compounds directed at
anti-angiogenic cancer therapy, and biomarkers for ischemia/reperfusion injury,
placental ischemia, and acute myocardial infarction. Significant product
development operations occur in the United Kingdom. Seven of DMI's eight
employees are engaged in research and development. Three of DMI's employees hold
a Ph.D. or M.D. degree.

         DMI's principal place of business is 3601 South Clarkson Street, Suite
420, Englewood, Colorado 80113-3948, telephone 303-798-1929; fax: 303-789-0510.
DMI's website is www.dmibio.com. DMI is a private company and does not file
reports under the Securities Exchange Act of 1934.

         The Old CODA. The parties modified the August 2004 letter agreement in
November 2004 and, pursuant to the modification, Cogenco paid DMI $100,000 and
entered into the Old CODA for the development of a drug for the treatment of
asthma in humans (the "Old CODA"). Under the terms of the Old CODA and its
amendments, Cogenco paid DMI $3,250,000. Under the Old CODA, Cogenco had
continuing funding obligations. Once Cogenco paid DMI the full $3,250,000 it had
the right to participate in revenues from sales of the asthma products but had
additional funding obligations as set forth in the Old CODA.

         The New CODA and the New LOI. Because Cogenco was not able to complete
its funding obligations and DMI was unwilling to negotiate the business
transaction by December 2005, in January and February 2006, Cogenco and DMI
negotiated a restated letter of intent (the "New LOI") and entered into the New
CODA for the development of a drug for the treatment of multiple sclerosis.
Cogenco and DMI signed the New CODA on February 20, 2006. The New CODA has a
stated effective date of January 30, 2006, the expiration date for the last
extension of the Old CODA and related LOI. The Old CODA was terminated when
Cogenco signed the New CODA (although the payments that Cogenco has made were
credited to Cogenco's obligations under the New CODA).

         As a result of the New CODA and the New LOI, Cogenco assumed some
additional payment obligations which required Cogenco to pay $1,000,000 to DMI
by February 28, 2006 and an additional $1,000,000 by March 31. Cogenco has made
neither payment to DMI and does not have the funds necessary to make either
payment. DMI has not yet given Cogenco notification of default. Assuming
(without assurance) that Cogenco is able to bring its payment obligation to DMI
current, the New CODA also obligated Cogenco to pay an additional $5,000,000 to
DMI as follows:

         $1,000,000 by July 31, 2006
         $1,000,000 by August 31, 2006
         $1,000,000 by September 30, 2006
         $1,000,000 by October 31, 2006
         $1,000,000 by November 30, 2006

                                       3
<PAGE>


         The New LOI also amended the parties' obligation in the August 2004
letter agreement to negotiate a business combination between DMI and Cogenco
(provided that Cogenco becomes adequately funded with at least $25,000,000). As
set forth in the New LOI, if the business combination does not occur by December
15, 2006, the $3,250,000 investment will be automatically converted into
1,000,000 shares of DMI common stock and Cogenco will become a minority
shareholder of DMI.

         Any additional payments made to DMI (up to the $7,000,000 discussed
above) will also be converted into DMI common stock at a price of $3.50 per
share. The parties have not achieved any agreement with respect to a business
transaction and are not likely to negotiate any such agreement until (if ever)
Cogenco becomes adequately funded.

         Compounds for the Treatment of Multiple Sclerosis. Under the New CODA,
DMI and Cogenco agreed to screen specific chemical compounds ("Compounds") for
the treatment of multiple sclerosis in humans, and to perform research and
development on these Compounds with the goal of commercializing any resulting
products. Under the New CODA, DMI's responsibilities relate primarily to
research and development and developing products for commercialization;
Cogenco's primary responsibility is to provide the necessary funding, including
$3,250,000 which has been paid to date. The New CODA also established an
Advisory Committee to supervise and coordinate, in accordance with the terms of
this Agreement, all of the activities contemplated by the New CODA, including
the screening of certain chemical substances, and the research, development and
commercialization of products developed for the treatment of multiple sclerosis
in humans. Under the New CODA, Cogenco is an equal member of the Advisory
Committee with DMI.

         Cogenco does not currently have sufficient capital to meet its
subsequent funding commitments to DMI under the New LOI or under the New CODA,
and there can be no assurance that adequate financing will be available to
Cogenco on reasonable terms when required.

         In addition to our payment obligations to DMI (which are delinquent as
described above), the New CODA also defined multi-million dollar payment
obligations as follows:

     o    Cogenco must fund all research and development activities and Phase 1,
          Phase 2, Phase 2a, Phase 2b, and Phase 3 preclinical and clinical
          trials of Product candidates and Phase 4 post-marketing studies of
          Products pursuant to a mutually agreed upon budget;

     o    Cogenco must pay DMI $1,000,000 not later than five days after DMI
          commences Phase 1 clinical trials of a product;

     o    Cogenco must pay DMI $2,500,000 not later than five days after DMI
          commences Phase 2 or Phase 2a clinical trials of a product;

     o    Cogenco must pay DMI $5,000,000 not later than five days after DMI
          files a new drug application for a product in a "Major Market Country"
          as defined in the Old and New CODA; and

     o    Cogenco must pay DMI $10,000,000 not later than five days after
          regulatory approval of a product in a Major Market Country.

         If there are any profits on sales of the product or license fees (which
we cannot assure) and assuming that we have completed our payment obligations,
we will share the profits equally with DMI. Even though the research and
development will be accomplished primarily with funds to be provided by Cogenco,

                                       4

<PAGE>


the New CODA provides that DMI will retain ownership of the intellectual
property relating to the Compounds and any products developed. As is indicated
above, our rights to participate in the New CODA depend on our ability to meet
our financial obligations. At the present time we do not have the ability to
meet our financial obligations and we cannot offer any assurance that we will be
able to do so.

         There are significant risks associated with Cogenco's participation in
the New CODA with DMI; some of these risks are described in further detail
directly below.

         Risks That Cogenco Will Not Be Able to Meet Its Financial Obligations.
As proven by Cogenco's inability to meet its financial obligations to DMI in the
past, there is a significant risk that Cogenco will not be able to meet its
future financial obligations to DMI. These obligations will likely exceed $20
million over a period of time that it takes DMI to continue to develop and test
the Compounds. Cogenco's only recourse if it fails to meet its financial
obligations is to become a minority shareholder in DMI - a position which, if it
occurs, may require Cogenco to consider the applicability of the Investment
Company Act of 1940 and the registration requirements and onerous compliance
thereunder.

         Risks of Regulatory Approval for Pharmaceuticals. DMI must comply with
extensive government regulations in order to obtain and maintain marketing
approval for its products in the United States and abroad. DMI must obtain
regulatory approvals for its ongoing development activities and before marketing
or selling any product. DMI may not receive regulatory approvals to conduct
clinical trials of its products or to manufacture or market its products. In
particular, DMI may not receive regulatory approval from the FDA or any other
regulatory authority to market DMI-7958, DMI's most advanced drug candidate. In
addition, regulatory agencies may not grant such approvals on a timely basis or
may revoke previously granted approvals.

         The process of obtaining FDA and other required regulatory approvals,
including approvals in other countries, is lengthy and expensive. The time
required for FDA and other clearances or approvals is uncertain and typically
takes a number of years, depending on the complexity and novelty of the product.
Any delay in obtaining or failure to obtain required clearance or approvals
could materially adversely affect DMI's ability to generate revenues from the
affected product. DMI has only limited experience in filing and prosecuting
applications necessary to gain regulatory approvals.

         Certain of the products that are likely to result from DMI's research
and development programs may be based on new technologies and new therapeutic
approaches that have not been extensively tested in humans. One example of such
a technology is protein therapy. The regulatory requirements governing these
types of products may be more rigorous than for conventional products. As a
result, DMI may experience a longer regulatory process in connection with any
products that it develops based on these new technologies or new therapeutic
approaches.

         DMI's analysis of data obtained from preclinical and clinical
activities is subject to confirmation and interpretation by regulatory
authorities, which could delay, limit or prevent regulatory approval. Any
regulatory approval to market a product may be subject to limitations on the
indicated uses for which DMI may market the product. These limitations may limit
the size of the market for the product.

         DMI is also subject to numerous and varying foreign regulatory
requirements governing the design and conduct of clinical trials and the
manufacturing and marketing of its future products. The approval procedure
varies among countries. The time required to obtain foreign approvals often
differs from that required to obtain FDA approval. Approval by the FDA does not
ensure approval by regulatory authorities in other countries.

         All of these regulatory risks also are applicable to development,
manufacturing and marketing undertaken by DMI's strategic partners or other
collaborators.

                                       5

<PAGE>


         DMI's product candidates will be subject to extensive and rigorous
domestic and foreign government regulation. The FDA regulates, among other
things, the development, testing, manufacture, safety, efficacy, record-keeping,
labeling, storage, approval, advertising, promotion, sale, and distribution of
pharmaceutical products. If DMI's product candidates are marketed outside the
United States, they will also be subject to similar extensive regulation by
foreign governments. DMI must provide the FDA and foreign regulatory
authorities, if applicable, with clinical data that appropriately demonstrate
the product candidate's safety and efficacy in humans before they can be
approved for the targeted indications. We cannot predict whether regulatory
approval will be obtained for any product candidate that DMI is developing or
plans to develop. The regulatory review and approval process can take many
years, is dependent upon the type, complexity, and novelty of the product,
requires the expenditure of substantial resources, involves post-marketing
surveillance, and may involve ongoing requirements for post-marketing studies.
In addition, we may encounter delays or rejections based upon additional
governmental regulation resulting from future legislative or administrative
action or changes in FDA policy or interpretation during the period of product
development. Delays or failures in obtaining regulatory approvals may:

     -    adversely affect the commercialization of any product candidates that
          DMI develops;

     -    diminish any competitive advantages that such product candidates may
          have or attain; and

     -    adversely affect revenues or receipt of royalties from the sale of the
          products.

         Furthermore, any required regulatory approvals, if granted, may be
withdrawn. If DMI fails to comply with applicable FDA and other regulatory
requirements at any stage during the regulatory process, it may be subject to
restrictions, including:

     -    delays in clinical trials or commercialization;

     -    refusal by the FDA to review pending applications or supplements to
          approved applications;

     -    product recalls or seizures;

     -    suspension of manufacturing;

     -    withdrawals of previously approved marketing applications; and

     -    fines, civil penalties, and criminal prosecutions.

         The ability to market a product outside of the United States is
contingent upon receiving a marketing authorization from the appropriate
regulatory authorities. Foreign regulatory approval processes typically involve
similar risks to those associated with obtaining FDA approval and may include
additional risks. In addition, the requirements governing the conduct of
clinical trials and marketing authorizations, and the time required to obtain
requisite approvals, may vary widely from country to country and differ from
that required for FDA approval.

         Under European Union regulatory systems, marketing authorizations may
be submitted either under a centralized or decentralized procedure. The
centralized procedure provides for the grant of a single marketing authorization
that is valid for all European Union member states. Under the decentralized
procedure, the holder of a national marketing authorization may submit an
application to the remaining member states. Within 90 days of receiving the
applications and assessment report, each member state must decide whether to
recognize approval. The mutual recognition process results in separate national

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marketing authorizations in the reference member state and each concerned member
state. The chosen regulatory strategy may not secure regulatory approvals or
approvals of the chosen product indications. In addition, these approvals, if
obtained, may take longer than anticipated. We cannot assure you that any of
DMI's product candidates will prove to be safe or effective, will receive
regulatory approvals, or will be successfully commercialized.

         Even if a product candidate receives regulatory approval, the approval
is typically limited to specific clinical indications. Further, even after
regulatory approval is obtained, subsequent discovery of previously unknown
problems with a product may result in restrictions on its use or even complete
withdrawal of the product from the market. Any FDA-approved products
manufactured or distributed by us are subject to continuing regulation by the
FDA, including record-keeping requirements and reporting of adverse events or
experiences. Further, drug manufacturers and their subcontractors are required
to register their establishments with the FDA and state agencies, and are
subject to periodic inspections by the FDA and state agencies for compliance
with current Good Manufacturing Processes ("cGMP"), which impose rigorous
procedural and documentation requirements upon us and our contract
manufacturers. We cannot be certain that we, or our present or future contract
manufacturers or suppliers, will be able to comply with cGMP regulations and
other FDA regulatory requirements. Failure to comply with these requirements may
result in, among other things, total or partial suspension of production
activities, failure of the FDA to grant approval for marketing, and withdrawal,
suspension, or revocation of marketing approvals.

         If the FDA approves one or more of DMI's product candidates, DMI and
their contract manufacturers must provide certain updated safety and efficacy
information. Product changes, as well as certain changes in the manufacturing
process or facilities where the manufacturing occurs or other post-approval
changes may necessitate additional FDA review and approval. The labeling,
advertising, promotion, marketing and distribution of a drug or biologic product
also must be in compliance with FDA and Federal Trade Commission ("FTC")
requirements which include, among others, standards and regulations for
direct-to-consumer advertising, off-label promotion, industry sponsored
scientific and educational activities, and promotional activities involving the
Internet. The FDA and FTC have very broad enforcement authority, and failure to
abide by these regulations can result in penalties, including the issuance of a
warning letter directing DMI to correct deviations from regulatory standards and
enforcement actions that can include seizures, fines, injunctions and criminal
prosecution.

         The manufacturer of products for which DMI obtains marketing approval
and the manufacturing facilities used to make such products will be subject to
continual review and periodic inspections by the FDA. The subsequent discovery
of previously unknown problems with the product, manufacturer or facility may
result in restrictions on the product or manufacturer, including withdrawal of
the product from the market.

         If DMI fails to comply with applicable regulatory requirements, it may
be subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecutions.

         The FDA's policies may change and additional government regulations may
be enacted which could prevent or delay regulatory approval of our product
candidates. Moreover, increased attention to the containment of health care
costs in the United States and in foreign markets could result in new government
regulations that could have a material adverse effect on our business.

         Risks Associated with DMI's Intellectual Property. Cogenco owns no
intellectual property. To the extent that we become involved with DMI pursuant
to the co-development agreement or otherwise, we may indirectly benefit from or
have an interest in intellectual property owned by, or being developed by, DMI.

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         DMI has advised us that it generally seeks United States and foreign
patent protection for the protein, peptide, and small-molecule drugs that it
discovers, as well as therapeutic and diagnostic products and processes, and
other inventions. DMI also has advised us that it seeks patent protection or
relies upon trade secret rights to protect certain other technologies which may
be used to discover and characterize proteins, peptides and small-molecules and
which may be used to develop novel therapeutic and diagnostic products and
processes.

         However, the patent positions of companies like DMI involve complex
legal and factual questions and, therefore, their enforceability cannot be
predicted with any certainty. DMI's issued patents, those licensed to DMI, and
those that may be issued to DMI in the future may be challenged, invalidated or
circumvented, and the rights granted thereunder may not provide DMI with
proprietary protection or competitive advantages against competitors with
similar technology. Furthermore, DMI's competitors may independently develop
similar technologies or duplicate any technology developed by DMI. Because of
the extensive time required for development, testing, and regulatory review of a
potential product, it is possible that, before any of DMI's product candidates
can be approved for sale and commercialized, DMI's relevant patent rights may
expire or remain in force for only a short period following commercialization.
Expiration of patents DMI owns or licenses could adversely affect our ability to
protect future product development and, consequently, our operating results and
financial position.

         DMI will be able to protect its proprietary intellectual property
rights from unauthorized use by third parties only to the extent that their
proprietary rights are covered by valid and enforceable patents or are
effectively maintained as trade secrets. The patent position of
biopharmaceutical companies involves complete legal and factual questions, and,
therefore, we cannot predict with certainty whether DMI will be able to
ultimately enforce its patents or proprietary rights. Any patents that DMI owns
or licenses may be challenged, invalidated, or circumvented and may not provide
us with the protection against competitors. The laws of certain foreign
countries do not protect intellectual property rights to the same extent as do
the laws of the United States. Accordingly, DMI may be forced to engage in
costly and time consuming litigation in order to protect their intellectual
property rights.

         DMI's pending patent applications, or those it may file or license from
third parties in the future, may not result in patents being issued. Until a
patent is issued, the claims covered by the patent may be narrowed or removed
entirely and therefore DMI may not obtain adequate patent protection. As a
result, DMI may face unanticipated competition, or conclude that without patent
rights the risk of bringing product candidates to the market is too great, thus
adversely affecting their operating results and our profitability.

         Patent expiration could adversely affect DMI's ability to protect
future product development and, consequently, DMI's operating results and
financial position. Because of the extensive time required for the development,
testing, and regulatory review of a product candidate, it is possible that
before any of DMI's product candidates can be approved for sale and
commercialized, their relevant patent rights may expire or remain in force for
only a short period following commercialization.

         In addition to patents, DMI advises us that it relies on trade secrets
and proprietary know-how. DMI seeks protection, in part, through confidentiality
and nondisclosure agreements. These agreements may not provide meaningful
protection or adequate remedies in the event of unauthorized use or disclosure
of confidential and proprietary information. Failure to protect DMI's trade
secrets and proprietary know-how could seriously impair DMI's competitive
position and harm their business. DMI may become involved in costly litigation
in order to enforce trade secrets or know-how that DMI owns or licenses.

         DMI's commercial success depends in part on their ability to operate
without infringing the patents and other proprietary rights of third parties.
The biotechnology and pharmaceutical industries are characterized by extensive
litigation regarding patents and other intellectual property rights. The defense
and prosecution of intellectual property claims, United States Patent and
Trademark Office interference proceedings and related legal and administrative

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proceedings in the United States and internationally involve complete legal and
factual questions. As a result, such proceedings are lengthy, costly and
time-consuming and their outcome is uncertain. DMI may become involved in
litigation in order to determine the enforceability, scope and validity of the
proprietary rights of others. If a third party claims that DMI is infringing on
its intellectual property rights, DMI could incur significant litigation or
licensing expenses, or be prevented from further developing or commercializing
their products.

         While DMI has advised us that it believes it is aware of the scientific
research that is being conducted in the areas in which DMI has focused its
research and development efforts, patent applications in the United States are,
in most cases, maintained in secrecy until the patent is issued. The publication
of discoveries in the scientific or patent literature frequently occurs
substantially later than the date on which the underlying discoveries were made.
Therefore, patent applications relating to products similar to DMI's product
candidates may have already been filed by others without their knowledge. In the
event an infringement claim is brought against DMI, DMI may be required to pay
substantial legal and other expenses to defend such a claim and, if they are
unsuccessful in defending the claim, DMI may be prevented from pursuing related
product development and commercialization and may be subject to damage awards.

         If DMI becomes involved in any patent litigation, interference or other
administrative proceedings, they will incur substantial expense and the efforts
of their technical and management personnel will be significantly diverted. A
detrimental outcome of such litigation or proceedings may expose DMI to loss of
their proprietary position or to significant liabilities, or require them to
seek licenses that may not be available from third parties on commercially
acceptable terms, if at all. DMI may be restricted or prevented from developing,
manufacturing and selling their product candidates in the event of an adverse
determination in a judicial or administrative proceeding or if they fail to
obtain necessary licenses.

         DMI's current and future product candidates may be covered by
third-party patents or other intellectual property rights, in which case DMI
would need to obtain a license or sublicense to these rights in order to develop
or commercialize them. Any required licenses may not be available to DMI on
acceptable terms, if at all. If DMI does not obtain any required licenses or
sublicenses, DMI could encounter delays in the development of the Compounds
under the New CODA or it could be prevented from manufacturing and
commercializing our products. If it is determined that DMI has infringed on an
issued patent, DMI could be compelled to pay significant damages, including
punitive damages. In cases where DMI has licensed intellectual property, their
failure to comply with the terms and conditions of such agreements could harm
our business.

         The validity and permissible scope of patent claims in the
pharmaceutical and biotechnology fields involve important unresolved legal
principles. For example, there is significant uncertainty both in the United
States and abroad regarding the scope of patent protection available for
full-length proteins and partial protein sequences. Moreover, certain groups
have made certain protein sequences available in publicly accessible databases.
These and other disclosures may adversely affect DMI's ability to obtain patent
protection for protein and peptide sequences claimed by DMI in patent
applications filed subsequent to such disclosures. There is also some
uncertainty as to whether human clinical data will be required for issuance of
patents for human therapeutics. If such data is required, DMI's ability to
obtain patent protection could be delayed or otherwise adversely affected.

         DMI's collaborators have certain rights to publish data and information
in which DMI has rights. While DMI believes that the limitations on publication
of data developed by its collaborators pursuant to its collaboration agreements
will be sufficient to permit DMI to apply for patent protection, there is
considerable pressure to publish discoveries. Such publication could affect
DMI's ability to obtain patent protection for some inventions in which it may
have an interest.

                                       9

<PAGE>


         If another party claims the same subject matter or subject matter
overlapping with subject matter that DMI has claimed in a United States patent
application or patent, DMI may decide or be required to participate in
interference proceedings in the United States Patent and Trademark Office in
order to determine priority of invention. Loss of such an interference
proceeding would deprive DMI of patent protection sought or previously obtained.
Participation in such proceedings could result in substantial costs, whether or
not the eventual outcome is favorable. Similarly, patents or applications that
DMI has licensed could become the subject of interference proceedings in the
United States Patent and Trademark Office, and loss of such an interference
proceeding would deprive DMI of licensed rights under patent protection sought
or previously obtained.

         In many foreign countries, other parties could oppose the issuance of
DMI patents, and DMI may be required to participate in opposition proceedings in
those countries in order to determine if DMI's inventions are patentable. Loss
of such an opposition proceeding would deprive DMI of patent protection sought
or previously obtained. Participation in such proceedings could result in
substantial costs, whether or not the eventual outcome is favorable. Similarly,
patent applications that DMI has licensed could become the subject of opposition
proceedings in foreign countries, and loss of such opposition proceedings would
deprive DMI of licensed patent rights.

         DMI may need to obtain rights under certain patents or applications in
the United States and abroad related to DMI's proposed products, processes or
technologies which are owned or controlled by third parties. Therefore, in some
cases, in order to develop, manufacture, sell, or import certain of DMI's
proposed products, processes or technologies, DMI or its strategic partners may
choose to seek or be required to seek licenses under third party patents issued
in the United States and abroad or those which might issue from United States
and foreign patent applications. If licenses are not available to DMI on
acceptable terms, DMI or its strategic partners may not be able to develop,
manufacture, sell or import these products, processes or technologies.

         Risks of Competition in the Biotechnology Industry. The biotechnology
industry is highly competitive and subject to rapid technological changes. As a
result we may be unable to compete successfully or develop innovative products,
which could jeopardize our investment in DMI.

         The biotechnology and pharmaceutical industries are highly competitive
and subject to significant and rapid technological change as researchers learn
more about diseases and develop new technologies and treatments. Significant
competitive factors in our industry include, among others, product efficacy and
safety; the quality and breadth of an organization's technology; the skill of an
organization's employees and its ability to recruit and retain key employees;
the timing and scope of regulatory approvals; the government reimbursement rates
for and the average selling price of products; the availability of raw materials
and qualified manufacturing capacity; manufacturing costs; intellectual property
and patent rights and their protection; and sales and marketing capabilities.
DMI's current and potential competitors generally include, among others, major
multinational pharmaceutical companies, biotechnology firms, universities and
other research institutions. Some of these companies and institutions, either
alone or together with their collaborators, have substantially greater financial
resources and larger research and development staffs than we do. In addition,
many of these competitors, either alone or together with their collaborators,
have significantly greater experience than DMI does in discovering, developing,
manufacturing, and marketing products. As a result, we may face competitive
disadvantages relative to these organizations should they develop or
commercialize a competitive product. Therefore, we cannot assure you that any of
our product candidates, if approved for sale, will compete successfully and that
another organization will not succeed in developing and commercializing products
that render our technology or product candidates non-competitive or obsolete.

         DMI faces, and will continue to face, intense competition from other
companies for collaborative arrangements with pharmaceutical and biotechnology
companies, for establishing relationships with academic and research

                                       10

<PAGE>


institutions, for attracting investors and sites capable of conducting our
clinical trials, and for licenses of proprietary technology. These competitors,
either alone or with their collaborators, may succeed in developing technologies
or products that are more effective, less expensive or easier to administer than
DMI's. Accordingly, DMI's competitors may succeed in obtaining FDA or other
regulatory approvals for their product candidates more rapidly than DMI can.
Companies that complete clinical trials, obtain required regulatory approvals,
and commercialize their drugs before DMI may achieve a significant competitive
advantage, including certain patent and FDA marketing exclusivity rights, which
could delay the ability of competitors to market certain products. We cannot
assure you that product candidates resulting from DMI's research and development
efforts, or from joint efforts with collaborators, will be able to compete
successfully with DMI's competitors' existing products or products under
development.

         DMI's management believes that the quality and breadth of DMI's
technology platform, the skill of DMI's employees and DMI's ability to recruit
and retain skilled employees, DMI's aggressive program of seeking patent
protection for DMI's discoveries and DMI's capabilities for early stage research
and drug discovery are competitive strengths. Many large pharmaceutical and
biotechnology companies have significantly larger intellectual property estates
and greater capabilities than DMI in preclinical and clinical development,
sales, marketing, manufacturing, and regulatory affairs.

         If DMI's future products do not gain meaningful acceptance in their
intended markets, we are not likely to generate significant revenues or become
profitable.

         Even if DMI successfully develops their product candidates and obtains
the requisite regulatory approvals to sell them in the future, they may not gain
market acceptance or utilization among physicians and patients and reimbursement
and support from third-party payors. The degree of market acceptance for any
product that we commercialize will depend on a number of factors, including:

     -    the product's potential advantages over existing or alternative
          therapies;

     -    the actual or perceived safety of similar classes of products;

     -    the effectiveness of our sales, marketing, and distribution
          capabilities; and

     -    the scope of the product label approved by the FDA.

         There can be no assurance that hospitals or physicians will choose to
administer DMI's products to the entire intended market, if at all. If DMI's
products do not achieve meaningful market acceptance or if the market for DMI's
products proves to be smaller than anticipated, we are not likely to generate
significant revenues or become profitable.

         Many of DMI's competitors are substantially larger and have
substantially greater capital resources, research and development staffs, and
facilities than DMI, even with the funds to be provided by Cogenco (assuming,
without assurance, that Cogenco will be able to provide the required funds).
Furthermore, many competitors are more experienced in drug discovery,
development and commercialization, obtaining regulatory approvals, and product
manufacturing and marketing. As a result, DMI's competitors may identify
proteins associated with diseases or discover, develop, and commercialize
products based on such proteins before DMI. In addition, competitors may
discover, develop, and commercialize products which render non-competitive or
obsolete the products that DMI or its strategic partners are seeking to develop
and commercialize.

         Under the Orphan Drug Act, a sponsor of an application to the FDA may
seek to obtain a seven-year period of marketing exclusivity for a drug intended
to treat a rare disease or condition, which is defined as a disease or condition

                                       11

<PAGE>


that occurs in fewer than 200,000 patients. In the event that a competitor
receives orphan drug designation and obtains the FDA marketing exclusivity for a
drug intended to treat the same rare disease or condition before DMI obtains
such approval, DMI would not be permitted by the FDA to market its product in
the United States for the same use during the exclusivity period. If DMI
receives an orphan drug designation, it may be very expensive to assert its
rights under the Orphan Drug Act. In addition, if DMI receives seven-year
marketing exclusivity, the FDA may rescind the period of exclusivity under
certain circumstances, including DMI's failure to assure a sufficient quantity
of the drug.

         Risks of Product Liability. If we are to complete our co-development
agreement with DMI or otherwise engage in the biotechnology industry, there is a
risk that the products development may result in exposure to product liability
claims. Such claims could materially and adversely affect Cogenco's and its
business partners' working capital, shareholders' equity, and profitability. The
manufacture and sale of any product for human consumption raises the risk of
product liability claims if a customer has an adverse reaction after using the
product. These claims may derive from the product itself or a contaminant found
in the product from the manufacturing, packaging, or sales process. While these
risks can be protected in part through product liability insurance, we do not
have any such insurance at the present time and such insurance will not be
available until, if ever, we have a product to market. Even then, we cannot
offer any assurance that such insurance will be available at a reasonable price
or with sufficient coverage. Furthermore, even if we are able to obtain product
liability insurance, there will be a risk that insurance will not cover
completely or would fail to cover a claim, in which case we may not have the
financial resources to satisfy such claims, and the payment of claims would
require us to use funds that are otherwise needed to conduct our business and
make our products. If a product liability claim is successfully brought for
uninsured liabilities or exceeding our insurance coverage, we could be forced to
pay substantial damage awards.

         We also understand that DMI's research and manufacturing activities
involve the controlled use of certain hazardous materials, medical waste, and
various radioactive materials. To the extent that we are engaged in a business
arrangement with DMI, we may become subject to the risks of accidental
contamination or injury from those materials, or an accidental environmental
discharge or exposure. If the use of hazardous materials results in
contamination or injury, we could suffer significant financial loss.

         Risks of Clinical Trials. There are significant uncertainties and
complexities present in development stage biopharmaceutical companies such as
Cogenco (with respect to the New CODA) and DMI. In order to receive regulatory
approval for the commercialization of the Compounds under the New CODA or any
other product that we may seek to develop with DMI or any other business, the
person developing the product must conduct extensive clinical trials to
demonstrate any developed product's safety and efficiency. Clinical testing is
expensive and can take many years to complete, and its outcome is uncertain.
Delays or clinical setbacks may occur at any time. If the clinical trials for
product candidates are unsuccessful or delayed, we could be delayed or precluded
from further developing or selling the product candidates.

         In addition, clinical trials are dependent on the willingness of people
to participate. If the enrollment of patients in clinical trials is delayed or
proceeds at a slower pace than expected, the clinical trials will take longer
and cost more to complete. Patient enrollment is a function of many factors,
including the size of the patient population, the nature of the protocol, the
availability of alternative treatments, the proximity of patients to clinical
sites, and the eligibility criteria for the study. Delays in planned patient
enrollment may result in increased costs and program delays.

         Furthermore, a purpose of clinical trials is to identify risks and
shortcomings in the product. The results of preclinical studies and early
clinical trials of the product candidates may not predict the results of
later-stage clinical trials. Product candidates in later stages of clinical
trials may fail to show the desired safety and efficacy traits despite having
progressed through initial clinical testing. The data collected from clinical

                                       12

<PAGE>


trials of product candidates may not be sufficient to support the submission of
a new drug application ("NDA") or to obtain regulatory approval in the United
States or elsewhere.

         DMI has limited experience in conducting and managing large clinical
trials. To date, we understand that all of DMI's clinical trials have been
conducted by third parties under contract, and we understand that this is a
standard procedure for smaller biotechnology companies. If third-party vendors
do not perform or fail to comply with strict regulations, the clinical trials
for product candidates may be delayed or unsuccessful.

         New Legislation. Domestic and foreign governments continue to propose
and pass legislation designed to reduce the cost of healthcare, including drugs.
In some foreign markets, governments control prescription pharmaceuticals'
pricing and profitability. In the United States, we expect that there will
continue to be federal and state proposals to implement similar governmental
control. In addition, increasing emphasis on managed care in the United States
will continue to put pressure on the pricing of pharmaceutical products. Cost
control initiatives could decrease the price that we receive for any products in
the future, which would limit our revenues and profitability. Legislation and
regulations affecting the pricing of pharmaceutical products may change before
our product candidates are approved for sale, which could further limit or
eliminate reimbursement rates for our products. We cannot predict the
likelihood, nature, or extent of adverse governmental regulation that might
arise from future legislative or administrative action, either in the United
States or abroad.

         No Research and Development Expenditures. Cogenco has spent no funds
for research and development activities during the past two fiscal years, expect
for any payments tendered to DMI pursuant to the Old CODA (described above).
Under the New CODA (described above), we are responsible for funding certain of
DMI's research and development activities.

         Employees. Mr. David Brenman is currently our only employee pursuant to
an employment agreement that became effective on September 30, 2005, as
described in Item 10 below.

Item 2.  Description of Property.
         -----------------------

         Cogenco currently maintains its offices at Suite 1840, 6400 South
Fiddler's Green Circle, Greenwood Village, CO 80111. Rent is paid to the
unaffiliated landlord at $5,350 per month. Cogenco's office space includes
approximately 3,210 square feet and is subject to a lease that expires December
30, 2008. Cogenco shares the leased premises with certain companies related to
Mr. David Brenman who reimburse Cogenco for a portion of the rent. See Item 12 -
"Certain Relationships and Related Transactions." Management believes that this
arrangement will be suitable for its needs for the immediate future.

         Cogenco owns no real property and no material personal property.

Item 3.  Legal Proceedings.
         -----------------

         Cogenco is not a party to any legal proceedings and no such proceedings
are known to be contemplated.

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

         None.

                                       13
<PAGE>


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.
         --------------------------------------------------------

(a)      Market Information.

         Our common stock is not eligible for listing on the NASDAQ system.
Trading, if any, has been strictly limited to the over-the-counter market. In
the past, the Common Stock has been quoted from time to time in the "Pink
Sheets" maintained by the National Quotation Bureau, Inc. Since 1988, we do not
believe that any established trading market has existed for our common stock. We
are not aware of any public sales of our common stock for more than the past two
years, and consequently we are unable to report any market information.

(b)      Holders.

         The approximate number of record holders of our $.0l par value common
stock as of May 31, 2006 was 767. This figure does not reflect an indeterminable
number of shareholders whose shares may be held in "street name."

(c)      Dividends.

         Cogenco has not paid a dividend with respect to its common stock since
its incorporation. We do not expect to pay a dividend on our common stock in the
foreseeable future.

         Our ability to pay dividends is restricted by provisions of the
Colorado Business Corporation Act which provides that a Colorado corporation may
only pay dividends if, after giving effect to the dividend, the corporation
would be able to pay its debts as they become due in the usual course of
business, or the corporation's total assets would be less than its total
liabilities plus the amount that would be needed (if dissolution were to occur
at the time of the dividend) to satisfy the preferential rights upon dissolution
of shareholders whose preferential rights are superior to those receiving the
dividend. At the present time, there are no shareholders who have any
preferential rights.

(d)      Securities Authorized for Issuance under Equity Compensation Plans

         At the present time, we have no securities authorized for issuance
under any equity compensation plan.

(e)      Sales of Unregistered Securities (Item 701 information).

         On May 13, 2005, we received subscriptions from a single, offshore,
European accredited investor in exchange for his investment of $2,000,000. The
following sets forth the information required by Item 701 in connection with
that transaction:

(a) The transaction was completed effective May 13, 2005. We issued 200,000
shares of our common stock to one offshore, European accredited investor.

(b) There was no placement agent or underwriter for the transaction. We paid a
finder's fee of 7 1/2% of the total amount raised (a total of $150,000) to a
Lichtenstein-based fund manager, MJM Asset Managers. The fund manager paid
one-third of the finder's fee to David W. Brenman, president of Cogenco, in
accordance with an oral agreement between them. Pursuant to that oral agreement,
Mr. Brenman will be entitled to receive one-quarter of the fund manager's
profits from making the investment in Cogenco.

                                       14

<PAGE>


(c) The total offering price was $2,000,000. No underwriting discounts or
commissions were paid. We paid a finder's fee as described above.

(d) We relied on the exemption from registration provided by Sections 4(2) and
4(6) under the Securities Act of 1933 for this transaction, as well as
Regulation D and Regulation S. We did not engage in any public advertising or
general solicitation in connection with this transaction. We provided the
accredited investor with disclosure of all aspects of our business, including
providing the accredited investor with our reports filed with the Securities and
Exchange Commission, our press releases, access to our auditors, and other
financial, business, and corporate information. Based on our investigation, we
believe that the accredited investor obtained all information regarding Cogenco
it requested, received answers to all questions it posed, and otherwise
understood the risks of accepting our securities for investment purposes.

(e) The common stock issued is not exercisable, exchangeable, or convertible. We
have no registration obligation relating to the shares of common stock.

(f) We paid $1,500,000 to DMI Biosciences in accordance with the Old CODA
described in the DMI BioSciences Section above.

         On September 15 and 20, 2005, we received subscriptions from an
offshore, European accredited investor in exchange for a total investment of
$1,700,000. The following sets forth the information required by Item 701 in
connection with that transaction:

(a) The transaction was completed effective September 15, 2005 (as to
$1,300,000) and September 20, 2005 (as to $400,000). We issued 170,000 shares of
our common stock to an offshore, European accredited investor whose investment
was directed by MJM for certain European clients, each of whom are accredited
investors and none of whom are U.S. persons. None of the European clients are
otherwise affiliated with Cogenco. As a result of his control of both Genesis
Investment Funds Limited and MJM, Mr. Herald A.M.A. Janssen of Lichtenstein
controls the right to vote and to dispose of more than 51% of Cogenco's common
stock. . (b) There was no placement agent or underwriter for the transaction. We
paid a finder's fee of 7 1/2 % of the total amount raised (a total of $127,500)
to a Lichtenstein-based fund manager, MJM. The fund manager paid one-third of
the finder's fee to David W. Brenman, president of Cogenco, in accordance with
an oral agreement between them. Pursuant to that oral agreement, Mr. Brenman
will be entitled to receive one-quarter of the fund manager's profits from
making the investment in Cogenco.

(c) The total offering price was $1,700,000. No underwriting discounts or
commissions were paid. We paid a finder's fee as described above.

(d) We relied on the exemption from registration provided by Sections 4(2) and
4(6) under the Securities Act of 1933 for this transaction, as well as
Regulation D and Regulation S. We did not engage in any public advertising or
general solicitation in connection with this transaction. We provided the
accredited investor with disclosure of all aspects of our business, including
providing the accredited investor with our reports filed with the Securities and
Exchange Commission, our press releases, access to our auditors, and other
financial, business, and corporate information. Based on our investigation, we
believe that the accredited investor obtained all information regarding Cogenco
it requested, received answers to all questions it posed, and otherwise
understood the risks of accepting our securities for investment purposes.

(e) The common stock issued is not exercisable, exchangeable, or convertible. We
have no registration obligation relating to the shares of common stock.

(f) We used substantially all of the proceeds received to meet our obligation to
pay $1,650,000 to DMI Biosciences, Inc., on September 30, 2005.

                                       15
<PAGE>


(f)      Purchases of Equity Securities by Cogenco and its Affiliates (Item 703
information).

         Not applicable since Cogenco's common stock is not registered under
Section 12 of the Securities Exchange Act of 1934.

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

Going Concern Qualification

         Because of our lack of revenues, lack of working capital, our inability
to meet certain of our contractual obligations, and lack of any assured
financing sources, our financial statements raise doubt about our ability to
continue as a going concern because of our financial condition, and substantial
losses. The opinion of our auditors for the year ended March 31, 2006, expresses
the following concerns about our ability to continue as a going concern if we do
not receive the Minimum proceeds of this offering:

         "...the Company has suffered recurring losses from operations that
         raises substantial doubt about its ability to continue as a going
         concern."

(the "Going Concern Qualification"). This condition has continued since those
financial statements, and we expect that these conditions will continue for the
foreseeable future unless we are able to raise a substantial amount of
additional financing. In view of the matters described herein and in Note 1 to
our financial statements, our ability to continue to pursue our plan of
operations as described herein is dependent upon our ability to raise the
capital necessary to meet our financial requirements on a continuing basis.


Results of Operations

Years Ended March 31, 2006 and 2005.

         As stated above, Cogenco has been essentially inactive since early 1988
until the 2006 fiscal year. During this time we investigated investment
alternatives in the oil and gas and biotechnology industries but, to date, we
have been unsuccessful in completing any such transaction. Even though we
recently increased our activity with additional funding and our agreements with
DMI, we have still not engaged in any business operations or received revenues
for more than the past ten years.

         We have recognized net losses of $(3,237,630) for the fiscal year ended
March 31, 2006 and $(59,052) for the fiscal year ended March 31, 2005. Our
losses in 2005 and 2006 have increased substantially over losses recognized
during earlier years because of the increased activity in connection with our
financing activities and negotiations with DMI. We anticipate that our
expenditures and, consequently, our net loss from operations, will continue to
increase as we become more active in pursuing the business opportunity with DMI
and other possibilities, provided that we have sufficient financing available to
us.

         Ultimately, our ability to survive will depend on achieving positive
cash flow from operations in sufficient amount to finance our continuing
operations and other business activities. We cannot offer any assurance that we
will be able to achieve this goal.

                                       16

<PAGE>


Liquidity and Capital Resources

         Cogenco has been without adequate funds since 1987 through the 2006
fiscal year and subsequently. At the time we ceased active business operations,
Cogenco was essentially out of money. We did not raise any substantial amounts
of money for Cogenco until the 2005 fiscal year during which we raised $240,000
and the 2006 fiscal during which we raised $3,700,000, these funds were invested
by accredited and offshore (non-U.S.) investors.

         At March 31, 2006, Cogenco had current assets of $183,318 and working
capital of $179,641, as compared to current assets and working capital of
$95,460 at March 31, 2005. The increased working capital was entirely due to
funds provided by accredited and offshore investors in May and September 2005.

         As stated above under "Going Concern Qualification" and in the Risk
Factors, below, we do not believe that the working capital currently available
is sufficient to maintain our activities for more than several months, at best.
Our available capital is insufficient to permit us to meet our obligations to
DMI as required by the New CODA or to engage in any other business opportunity.
If we were to hold a shareholders' meeting, actively pursue a business
opportunity, or engage in business operations, we will be required to raise a
significant amount of additional capital to pay for these activities. There can
be no assurance that we will be able to raise any such capital, or that the
terms on which we can raise any capital will be commercially reasonable.

Plan of Operations

         Cogenco is not engaged in any business operations at the present time.
Although we receive proposals for business opportunities from third parties and
we seek out business opportunities with others, we have not actively pursued any
such business opportunity in more than the past two years except for the
business transaction being pursued with DMI. Even though we are pursuing the
business transaction with DMI at the present time, we will continue reviewing
other opportunities in the biotechnology industry and in other industries as we
become aware of appropriate opportunities.

         As is evidenced by the funds necessary to complete our obligations to
DMI under the New CODA, we will not be able to pursue any business opportunity
without a substantial amount of funding provided from third parties.
Consequently, we cannot offer any assurance that we will be able to complete our
obligations with respect to DMI or obtain the funds necessary to invest in other
business opportunities.

Off Balance Sheet Arrangements

         None.

Risk Factors

         An investment in and ownership of our common stock is one of high risk.
You should carefully consider the risks described below in connection with any
decision whether to acquire, hold or sell our securities. If any of the
contingencies discussed in the following paragraphs or other materially adverse
events actually occurs, the business, financial condition and results of
operations could be materially and adversely affected. In such case, the trading
price of our common stock could decline, and you could lose all or part of your
investment.

We have no business operations, and only limited prospects for business
operations.

         We currently are not engaged in any business operations. Although we
have reviewed several possibilities for business operations during the past
several years, we have not found an opportunity for a business combination that
was attractive to management other than the opportunity to participate in a
co-development agreement with DMI. We cannot offer any assurance that:

                                       17

<PAGE>


     o    we will be able to finance our obligations to DMI to complete our
          participation in the co-development agreement we have negotiated;

     o    if we do fund our obligations to DMI, that we will ever develop a
          product that will pass the necessary regulatory approvals or
          thereafter can be marketed at a profit, much less at a profit that
          would return any significant portion of our investment; or

     o    we will ever find another business opportunity that management
          determines to be worth pursuing, or that if we do, we are able to
          complete the business combination on commercially-reasonable terms in
          a manner that could be advantageous to our shareholders.

We have had little working capital available for any operations.

         We have had little working capital for more than the past five years.
Although we raised $240,000 during our fiscal 2005 and $3,700,000 during our
fiscal 2006, our payment obligations to DMI, as discussed above, have resulted
in significantly greater expenses. We may be required by lack of funds to reduce
our operations to our previous level of only nominal operations to minimize our
corporate general and administrative expenses.

         Our available working capital is not sufficient for us to engage in any
business operations, or to complete a merger, acquisition, or other business
combination. We cannot offer any assurance that we will be able to obtain the
necessary working capital on commercially-reasonable terms, if at all, should
circumstances arise requiring us to have additional working capital available.
Specifically, we do not have sufficient funds to meet our obligations to DMI,
and we cannot offer any assurance that we will be able to obtain the necessary
funds.

Our financial statements reflect a "going concern" qualification.

         Because of our lack of revenues, lack of working capital, our inability
to meet certain of our contractual obligations, and lack of any assured
financing sources, our financial statements raise doubt about our ability to
continue as a going concern because of our financial condition, and substantial
losses. The opinion of our auditors for the year ended March 31, 2006, expresses
the following concerns about our ability to continue as a going concern if we do
not receive the Minimum proceeds of this offering:

         "...the Company has suffered recurring losses from operations that
         raises substantial doubt about its ability to continue as a going
         concern."

(the "Going Concern Qualification"). This condition has continued since those
financial statements, and we expect that these conditions will continue for the
foreseeable future unless we are able to raise a substantial amount of
additional financing. In view of the matters described herein and in Note 1 to
our financial statements, our ability to continue to pursue our plan of
operations as described herein is dependent upon our ability to raise the
capital necessary to meet our financial requirements on a continuing basis.

We are currently delinquent on payments due to DMI and, if DMI declares default,
we will lose our opportunity to participate in the development of drugs for the
treatment of multiple sclerosis, for which we have paid $3,250,000.

         For the reasons set forth under "Going Concern Qualification," above,
we are delinquent in our payment obligation to DMI since March 1, 2006. Although
DMI has not declared us to be in default, it has the right to do so on ten days'
notice. Such a default would terminate our interest in the New CODA and,

                                       18

<PAGE>


ultimately, result in our payments being converted into a minority interest in
DMI. At that point, we will have little opportunity to influence DMI's
operations or business, and we will be dependent on DMI for any return on our
investment. At the present time we do not have any capability of making up the
missed payments totaling $2,000,000 at present, or making any payments in the
future. We are wholly dependent on additional financing and we cannot be assured
that it will be available.

         Even if we make the $7,000,000 in payments to DMI due through November
30, 2006 (as to which we can offer no assurance), we will still have significant
financial obligations to DMI which we may not be able to meet.

If our investment in the New CODA is converted into a minority interest in DMI,
we may become subject to regulation under the Investment Company Act of 1940,
regulation that will impose significant responsibilities and restrictions on our
ability to do business.

         If our investment in the New CODA is converted into shares of DMI
common stock, we will likely become an investment company as that term is
defined in the Investment Company Act of 1940 (the "Company Act"). As an
investment company, we will be subject to a significant amount of additional
regulation, significant restrictions in our ability to do business, and
significant restrictions on any relationship with affiliates. We will also be
subject to more detailed SEC scrutiny and subject to the registration and
reporting requirements of the Company Act in addition to the reporting
requirements of the 1934 Act.

Even if we are able to complete our arrangement with DMI, we cannot offer any
assurance that we will be successful in generating any return.

         The proteomics industry is new and evolving rapidly. To date, DMI has
not commercialized any pharmaceutical products. In addition, relatively few
products based on protein discoveries have been developed and commercialized by
others. Rapid technological development by DMI or by others may result in
compounds, products or processes becoming obsolete before DMI recovers its
development expenses.

         Specifically, the subject of our New CODA, Compounds, are a new
application which may or may not successfully treat multiple sclerosis. There is
a significant amount of work that needs to be accomplished before we will know
whether we have a product that merits testing. Even if the testing is successful
and we are able to obtain regulatory approval for any product in the United
States or elsewhere, we cannot offer any assurance that we will be able to
market the product successfully or profitably.

We have a history of losses and have never engaged in the profitable operation
of our business.

         We have had a history of operating losses and cash flow deficits, and
our financial statements reflect a Going Concern Qualification as described
above. We have never engaged in the profitable operation of a business, and
there can be no assurance that we will ever be able to do so.

         Cogenco has not been involved in active business operations since 1988.
To date, we have failed to implement a successful business plan. Although we
have been reviewing several possibilities for business operations during the
past several years, they have not found an opportunity (prior to the DMI
Proposal) for a business combination that was attractive to us.

It is likely that any efforts we may make to raise capital will result in
substantial additional dilution to our shareholders.

         It is likely that if we raise capital for any operations in the future
or if we complete a business combination with DMI or any other party, such
action will require the issuance of equity or debt securities which will result
in substantial dilution to our existing shareholders. Although we will attempt

                                       19

<PAGE>


to minimize the dilutive impact of any future capital-raising activities, we
cannot offer any assurance that we will be able to do so because of the lack of
any historical operations or profitability, as well as the lack of any trading
market for our publicly-held securities. If we are successful in raising
additional working capital, we will likely have to issue additional shares of
our Common Stock and Common Stock purchase warrants at prices that may be a
discount from the then-current market price of our common stock.

Because we are dependent upon our key personnel for our future success, if we
fail to retain or attract key personnel, our business will be adversely
affected.

         David W. Brenman is the only person who has devoted a substantial
amount of time to our business during the past five years, and his father has
acted as legal counsel. If we are to succeed in any activity (which cannot be
assured), it will be as a result of the efforts of Messrs. Brenman. Albert
Brenman does not have any employment agreement or any obligation to continue
providing services to Cogenco, and there can be no assurance that he will
continue to do so. David Brenman's employment Agreement with Cogenco became
effective on September 30, 2005; although we have paid Mr. David Brenman's
salary through May 31, 2006, we do not have sufficient funds to pay Mr.
Brenman's salary through the remainder of our current fiscal year. As described
above under "Going Concern Qualification," we cannot offer any assurance that we
will be able to raise such funds when necessary.

We are controlled by only a few officers and directors and, consequently,
purchasers of our shares will have very little ability to elect or control our
management.

         Our directors and officers beneficially own approximately 37.4% of the
outstanding shares of Common Stock as of June 15, 2006, and, accordingly, may
have the ability to elect a majority of our directors of Cogenco and otherwise
to control Cogenco. As a result, such persons, acting together, will have the
ability to substantially influence all matters submitted to stockholders for
approval, including the election and removal of directors and any merger,
consolidation or sale of substantially all of our assets, and to control our
management and affairs. Such concentration of ownership may have the effect of
delaying, deferring or preventing a change in control, impeding a merger,
consolidation or takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our business, even if such a transaction would
be beneficial to other stockholders.

Our common stock is vulnerable to pricing and purchasing actions that are beyond
our control and, therefore, persons acquiring our shares may be unable to resell
their shares at a profit as a result of this volatility.

         No market exists for our common stock, and we cannot offer any
assurance that any market will develop. As a result, the trading price of our
securities can be impacted by very low sales volumes, general market conditions,
and other events and factors. The securities markets themselves have from time
to time and recently experienced significant price and volume fluctuations that
may be unrelated to the operating performance of particular companies. In
                                                                       --
addition, the realization of any of the risks described in these "Risk Factors"
-------------------------------------------------------------------------------
could have a significant and adverse impact on such market prices.
-----------------------------------------------------------------

SEC penny stock regulations limit the ability to trade our securities.

         Our common stock is subject to additional disclosure requirements for
penny stocks mandated by the Securities Enforcement Remedies and Penny Stock
Reform Act of 1990. The SEC Regulations generally define a penny stock to be an
equity security that is not traded on the Nasdaq Stock Market and has a market
price of less than $5.00 per share. We are included within the SEC Rule 3a-51
definition of a penny stock. As a "penny stock", trading in our stock is covered
by Rule 15g-9 promulgated under the Securities Exchange Act of 1934, for
non-Nasdaq and non-national securities exchange listed securities.

                                       20
<PAGE>


         Under this rule, broker-dealers who recommend such securities to
persons other than established customers and accredited investors must make a
special written disclosure to, and suitability determination for, the purchaser
and receive the purchaser's written agreement to a transaction prior to sale.
The regulations on penny stocks limit the ability of broker-dealers to sell our
common stock and thus the ability of purchasers of our common stock to sell
their securities in the secondary market and adversely impact the willingness of
investors to purchase our common stock on either a private or open market basis.

Future sales of our common stock may cause our stock price to decline.

         Our stock price may decline by future sales of our shares or the
perception that such sales may occur. As of June 15, 2006, all of the shares of
Common Stock held by our officers, directors, and our principal stockholder
constitute "restricted shares" or "control shares" as defined in Rule 144 under
the Securities Act. The restricted shares may only be sold if they are
registered under the Securities Act, or sold under Rule 144, or another
exemption from registration under the Securities Act.

         All of the restricted shares of our Common Stock are either eligible
for sale pursuant to Rule 144 or have been registered under the Securities Act
for resale by the holders. We are unable to estimate the amount, timing, or
nature of future sales of outstanding common stock. Sales of substantial amounts
of our Common Stock in the public market may cause the stock's market price to
decline if such a market should develop in the future. See "Shares Available for
Future Sale."

Provisions in our charter documents could prevent or delay a change in control,
which could delay or prevent a takeover.

         Our articles of incorporation authorize the issuance of "blank check"
preferred stock with such designations, rights, and preferences, as may be
determined by our Board of Directors. Accordingly, the Board of Directors may,
without shareholder approval, issue shares of preferred stock with dividend,
liquidation, conversion, voting, or other rights that could adversely affect the
voting power or other rights of the holders of our common stock. Preferred stock
could also be issued to discourage, delay, or prevent a change in our control,
although we do not currently intend to issue any additional series of our
preferred stock.

         Provisions in our bylaws provide for indemnification of officers and
directors to the full extent permitted by Colorado law, which could require us
to direct funds away from our business and products.

We do not expect to pay dividends in the foreseeable future.

         We have never paid cash dividends on our common stock. We do not expect
to pay cash dividends on our common stock at any time in the foreseeable future.
The future payment of dividends directly depends upon our future earnings,
capital requirements, financial requirements and other factors that our board of
directors will consider. Since we do not anticipate paying cash dividends on our
common stock, return on your investment, if any, will depend solely on an
increase, if any, in the market value of our common stock.

Our prior sale of unregistered securities may create certain risks.

         We cannot offer any assurance that our prior sales of unregistered
securities were in compliance with the law. To the extent that our prior sales
were not strictly in compliance with all legal requirements, we may have some
contingent liabilities of which we are unaware. The availability of an exemption
from registration is conditional upon numerous facts and circumstances over
which we have no control, including the investment intent of the purchasers, the
accuracy of the purchasers' representations that they were accredited investors,
and whether others involved in the transaction utilized any form of general
solicitation. To the extent that any securities were offered or sold at a time
when there was no exemption from registration available and a person makes a
claim for rescission, we may have a liability which has not been included in our
financial statements.

                                       21
<PAGE>


Indemnification of officers and directors may result in unanticipated expenses.

         Colorado Revised Statutes and our articles of incorporation and bylaws
provide for the indemnification of our directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with us or activities on our behalf. We also will bear the
expenses of such litigation for any of their directors, officers, employees, or
agents, upon such person's promise to repay them if it is ultimately determined
that any such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by us that we
may be unable to recoup and could direct funds away from our business and
products (if any).

Our president, Mr. David Brenman, is involved in other concurrent business
opportunities.

         The board of directors by resolution dated May 5, 2005, agreed to
permit Mr. David Brenman to pursue a business opportunity with respect to
certain imaging devices that are being developed by members of the Edwin L.
Adair family individually and through a family corporation, Micro-Imaging
Solutions, Inc. ("MIS"). MIS is involved in the research and development of
small scale high resolution medical devices.

         The board of directors by resolution dated April 3, 2006, also agreed
to permit Mr. Brenman to pursue a business opportunity in the oil and gas
industry with respect to Western Pacific Energy, LLC, in which he has invested
and participates as a manager ("WPE").

         Mr. Brenman's activities with respect to MIS and WPE could cause time
conflicts and other various conflicts of interest with respect to his duties and
obligations to Cogenco. In addition, Mr. Brenman's association with MIS and WPE
could diminish his ability to obtain additional financing on behalf of Cogenco
if he is also providing such assistance to MIS and/or WPE.

We have significant obligations under the Securities Act of 1934.

         Because we are a public company filing reports under the Securities
Exchange Act of 1934, as amended, we are subject to increased regulatory
scrutiny and extensive and complex regulation. The Securities and Exchange
Commission has the right to review the accuracy and completeness of our reports,
press releases, and other public documents. In addition, we are subject to
extensive requirements to institute and maintain financial accounting controls
and for the accuracy and completeness of their books and records. Normally these
activities are overseen by an audit committee consisting of qualified
independent directors. We have not appointed any independent directors.
Consequently, the protections normally provided to shareholders by independent
directors are not available. Although we hope to appoint qualified independent
directors in the future, we cannot offer any assurance that we will locate any
person willing to serve in that capacity, or that we will be able to acquire the
directors' and officers' liability insurance that will be a pre-condition to any
such person's willingness to serve.

Forward-looking statements may prove to be inaccurate.

         In our effort to make the information in this report more meaningful,
this report contains both historical and forward-looking statements. All
statements other than statements of historical fact are forward-looking
statements within the meanings of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
in this report are not based on historical facts, but rather reflect the current
expectations of our management concerning future results and events. It should
be noted that because we are a "penny stock," the protections provided by
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934 do not apply to us. We have attempted to qualify our
forward-looking statements with appropriate cautionary language to take
advantage of the judicially-created doctrine of "bespeaks caution" and other
protections.

                                       22
<PAGE>


         The forward-looking statements generally can be identified by the use
of terms such as "believe," "expect," "anticipate," "intend," "plan," "foresee,"
"likely," "will" or other similar words or phrases. Furthermore, statements that
describe our objectives, plans, or goals are, or may be, forward-looking
statements.

         Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
and achievements to be different from any future results, performance and
achievements expressed or implied by these statements.

         These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements in this prospectus. Other unknown or unpredictable
factors also could have material adverse effects on our future results.


Item 7.  Financial Statements.
         --------------------

The following financial statements are filed as a part of this Form 10-KSB
immediately following the signature page:
                                                                   Page No
                                                                   -------
         Report of Independent Certified Public
           Accountants                                               F-1

         Balance Sheet - March 31, 2006 and 2005                     F-2

         Statement of Operations - For the Years Ended
           March 31, 2006 and 2005 and Cumulative Amounts
           from Inception of the Development Stage (July 26,
           1990) through March 31, 2006                              F-3

         Statement of Stockholders' Equity
         For the Period from Inception of the Development
         Stage (July 26, 1990) through March 31, 2006                F4-F7

         Statement of Cash Flows - For the Years
           Ended March 31, 2006 and 2005 and
           Cumulative Amounts from Inception of
           the Development Stage (July 26, 1990) through
           March 31, 2006                                            F-8

         Notes to Financial Statements
           March 31, 2006 and 2005                                    F-9 - F17



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

         Since inception, Cogenco has not filed a Form 8-K reporting a change of
accountants, nor has there been any material disagreement with its accountants
on any matter regarding accounting or financial disclosure.

                                       23

<PAGE>


Item 8A. Controls and Procedures.
         -----------------------

(a)      Evaluation of Disclosure Controls and Procedures.

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
within the 90 days prior to the filing date of this report, we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of our principal executive officer (who also serves
as our principal financial officer), who concluded that our disclosure controls
and procedures are effective.

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Securities Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to management, including our
principal executive officer and our principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure.

(b)      Changes in Internal Controls.
         ----------------------------

         There were no changes in our internal controls or in other factors that
could significantly affect these internal controls subsequent to the date of
their evaluation.

PART III

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

(a)      Identification of Directors and Executive Officers.

         The directors of Cogenco are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of Cogenco are elected by the Board of Directors
and hold office until their successors are elected and qualified.

         The current sole officer and directors of Cogenco are:

Name                       Age         Position
----                       ---         --------

David W. Brenman           50          Director, President, Secretary and
                                       Treasurer since 1985

Albert Brenman             80          Director, since 2004

Robert A. Melnick          50          Director, since 2004

The directors intend to appoint additional directors when appropriate.

         David W. Brenman has been since 1988 engaged as an independent
financial consultant and beginning in September 2005, Mr. Brenman is now an
employee of Cogenco. From 1984 until the present Mr. Brenman has served as
President and Director of Cogenco and also serves as Treasurer and Secretary of
Cogenco. From 1987 to 1988, Mr. Brenman was a Vice President of Lloyds
International Corporation, the merchant banking subsidiary of Lloyds Bank Plc.
From 1979 until 1984, Mr. Brenman was an associate with the law firm of Brenman
Raskin & Friedlob, P.C. of Denver, Colorado, where he specialized in the fields
of taxation and securities law. Mr. Brenman received a B.A. degree from the
University of Washington in accounting, a J.D. degree from the University of
Denver, College of Law, and an L.L.M. in taxation from New York University.

                                       24

<PAGE>


Since 1994 and until March 2003, he served as President of Taltos S.p.A., a
Company engaged in the production of light-weight stone products. As described
below under "Certain Relationships and Related Party Transactions," Mr. Brenman
is also engaged in business through Micro-Imaging, Inc. and Western Pacific
Energy, LLC.

         Mr. Brenman and his wife have been named as a defendant in litigation
brought in Arapahoe County, Colorado, state court, which alleges corporate
malfeasance by him in connection with certain activities related to corporations
owned by his wife and her siblings. Mr. Brenman and his wife filed an answer in
that court in January 2005 denying all material allegations against them and
alleging seventeen counterclaims against the plaintiffs. Mr. and Mrs. Brenman
intend to defend the litigation which they believe to be spurious efforts by
certain of Mrs. Brenman's family members to gain absolute control over the
family's business and to avoid liability on certain indebtedness owed to a trust
of which Mr. Brenman's wife is a beneficiary.

         Albert Brenman, father of David W. Brenman, has been a Director of
Cogenco since March 10, 2004. He and the law firms with which he was associated
have represented Cogenco since its inception in June of 1983. Mr. Brenman
graduated from the University of Denver where he received a BSBA with a major in
accounting and the University of Denver College of Law, receiving a J.D. degree.
Mr. Brenman has practiced law in Denver, Colorado with various law firms from
1953 until his retirement in August of 2001. Mr. Brenman's law specialty is
corporate, business and securities law. Mr. Brenman will devote such time as may
be necessary to the affairs of Cogenco.

         Robert A. Melnick has been engaged in the field of automotive finance
since 1995. Mr. Melnick served in the capacity as Finance Director for Chesrown
Automotive, which was acquired by AutoNation in 1997. Mr. Melnick continued to
serve in that capacity for AutoNation until January 2004. Since January 2004,
Mr. Melnick has been an independent consultant in the financial services area of
the automotive industry. Since August, 2004, Mr. Melnick has served as Business
Manager for Prestige Imports, Inc., Lakewood, Colorado. Mr. Melnick received his
B.A. from Drake University and M.S. from Carnegie-Mellon University.

(b)      Significant Employees.

         Other than Mr. David Brenman, we have no significant employees at the
present time.

(c)      Family Relationships.

         Mr. Albert Brenman is the father of David W. Brenman and Robert A.
Melnick's father-in-law.

(d)      Involvement in Certain Legal Proceedings.

         During the past five years, no director, executive officer, promoter or
control person has:

(1) Had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that date;

(2) Been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);

(3) Been subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; or

                                       25

<PAGE>


(4) Been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, where the judgment has not been
reversed, suspended, or vacated.

(e)-(f) No Audit Committee or Audit Committee Financial Expert.

         Our board of directors has not appointed an audit committee.

(g)      Material Changes to Nomination Procedures

         We have not held a meeting of Cogenco's shareholders for more than the
past ten years. Shareholders may recommend nominees to the board of directors by
addressing correspondence to the President.

(h)      Compliance with Section 16(a) of the Exchange Act.

         Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires all directors, executive officers and persons who own more than 10% of
a registered class of securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of Cogenco. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. Since our common stock is not registered pursuant
to Section 12 of the Securities Exchange Act of 1934, our directors, executive
officers, and significant shareholders are not subject to the Section 16 filing
obligations.

(i)      No Code of Ethics

         We have not adopted a code of ethics or a code of conduct that applies
to its principal executive officer, principal financial officer, principal
accounting officer, controller, or to persons performing similar functions. We
have not done so because its board of directors believes that its nominal
activities and nominal financial resources do not merit the expense of
preparing, adopting and administering a code of ethics. The board of directors
intends to adopt a code of ethics or a code of conduct when circumstances
warrant.

Item 10.  Executive Compensation.
          ----------------------

Cash Compensation.

         In November 2004, we entered into an employment contract with David
Brenman which became effective on or about September 30, 2005, when we paid DMI
$3,250,000 for participation in the co-development agreement. The employment
agreement was approved by our board of directors, including David Brenman's
father and brother-in-law. The material terms of David Brenman's employment
agreement are as follows:

          o    Annual salary of $150,000;

          o    Employment for a 5 year term;

          o    The employee is subject to
               confidentiality/non-competition/protection of trade
               secrets/non-solicitation provisions;

          o    The employment agreement provides for premature termination in
               certain circumstances; and

          o    Mr. Brenman has certain rights in the event of a change of
               control of Cogenco including a two year extension of his
               employment term and a requirement that his full salary (through

                                       26

<PAGE>


               the term of the agreement) be paid to him within 30 days of such
               change of control. Change of control can also constitute a basis
               on which the employee can terminate the agreement prematurely.

          o    The employment agreement does not prohibit David Brenman from
               receiving compensation from MJM.

         We have paid Mr. Brenman his salary as due under the employment
agreement through May 31, 2006, but unless we obtain a substantial amount of
additional financing, we will be unable to make future payments to him as
required under his employment agreement.

Compensation Under Plans.

         There are no currently effective stock option or bonus plans.

Other Compensation.

         We pay Albert Brenman a retainer of $500 per month ($6,000 per year)
for supervising our accounting and legal matters. Other than as described above,
we have not paid compensation to any officer or director for services rendered
during the last three fiscal years.

Compensation of Directors.

         We do not pay our directors for their services in that capacity. We do
reimburse our officers and directors for out-of-pocket expenses incurred by them
in connection with our business. Currently, we do not pay any directors fees for
attendance at board meetings.

         We have no other arrangements pursuant to which any of our directors
was compensated during the fiscal year ended March 31, 2006 for services as a
director.

Termination of Employment and Change in Control.

         We have no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's employment
except as described above for the employment agreement with David Brenman.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.
          --------------------------------------------------------------

(a) (b) Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth information as of May 31, 2006, as to
the beneficial ownership of shares of our only outstanding class of securities,
our common stock, by each person who, to our knowledge at that date, was a
beneficial owner of 5% or more of the outstanding shares of our common stock, by
each person who is an officer and/or director, and by all of our officers and
directors as a group. The table does not include information regarding shares of
common stock held in the names of certain depositories/clearing agencies as
nominee for various brokers and individuals. No such broker or individual is
believed to hold greater than 5% of our common stock. The percent of class is
based on 2,578,756 shares outstanding as of June 26, 2006.

                                       27

<PAGE>


                                          Amount of Beneficial
                                                Ownership
Name and Address of                        (ownership is direct      Percent
Beneficial Owner                        unless otherwise noted)      of Class

--------------------------------------------------------------------------------
David W. Brenman                                497,042               19.3%
4085 So. Dexter Street
Englewood, CO 80113
--------------------------------------------------------------------------------
Genesis Investment Funds Limited               1,083,334              42.0%
Pflugstrasse 28, P.O. Box 1143
FL-9490 Vaduz, Liechtenstein
(1, 2, 3, 4, 6)
--------------------------------------------------------------------------------
MJM Asset Management C.E.                       390,000               15.2%
Meirhofstrasse 116
FL-9495 Triesen, Liechtenstein
(1,2, 5, 6)
--------------------------------------------------------------------------------
Albert Brenman                                  367,247               14.3%
4400 East Oxford Place
Englewood, CO 80110
--------------------------------------------------------------------------------
Robert A. Melnick                               100,000               3.8%
--------------------------------------------------------------------------------
Officers and directors as a group
(three persons)                                 964,289               37.4%
--------------------------------------------------------------------------------

(1) Genesis Investment Funds Limited is controlled by Genesis Capital Management
Limited, a company controlled by Herald A.M.A. Janssen and Peter H. Jacobs. Mr.
Janssen and Mr. Jacobs co-founded Genesis Investment Funds Limited and Genesis
Capital Management Limited, and appointed Genesis Capital Management as the
investment advisor for Genesis Investment Funds Limited. Pursuant to a
discretionary investment management agreement, Genesis Capital Management has
discretionary investment and voting control over the assets of Genesis Capital
Management Limited, including the shares of Cogenco common stock that Genesis
Investment Funds Limited owns.

(2) Mr. Janssen also controls MJM Asset Management Company Establishment, a
company he founded in 1997. MJM Asset Management serves private investors and
institutional clients with its main focus on biotechnology investments. Cogenco
has paid MJM Asset Management a finders' fee of 7 1/2% of the $2,000,000 in
funds raised by MJM Asset Management for Cogenco to date. Mr. Janssen's address
is Matschils 23, LI-9495 Triesen, Liechtenstein.

(3) Genesis Investment Funds Limited is also controlled by Peter H. Jacobs, a
licensed European property manager who holds a degree in engineering from the
Technical Institute, Heerlen, Netherlands. He is a certified appraiser by the
court in the Netherlands. Mr. Jacobs has been working as an asset manager in
Europe since the 1980's and has from time-to-time worked with Mr. Janssen and
MJM Asset Management. Mr. Jacobs co-founded Genesis Investment Funds Limited
with Mr. Janssen. Mr. Jacob's address is Meirhofstrasse 85, LI-9495 Triesen,
Liechtenstein.

(4) The address set forth above is the Administrator's European representative
office for Genesis Investment Funds Limited. Genesis Investment Funds Limited is
established under the laws of Saint Vincent, and its registered office is Trust
House, 112 Bonadie Street, Kingstown, Saint Vincent.

(5) MJM Asset Management holds these shares in accounts for four European
clients, including 200,000 shares (8.3%) owned by Wojciech Hajduk, Ciepielowek
1, 67-413 Krzepielow, Poland, and 170,000 shares (6.6%) owned by Hypo Investment
Bank Liechtenstein AG. Mr. Janssen has signature authority and thus the ability
to direct investment decisions and voting on behalf of these European clients.

(6) As a result of his control of both Genesis Investment Funds Limited and MJM
Asset Management Company Establishment, Mr. Janssen controls the right to vote
and to dispose of more than 51% of Cogenco's common stock.

                                       28

<PAGE>


(c) Changes in Control.

         Management is not aware of any arrangements which may result in a
change of control of Cogenco.


(d)      Securities Authorized for Issuance under Equity Compensation Plans

         At the present time, we have no securities authorized for issuance
under any equity compensation plan.

Item 12. Certain Relationships and Related Transactions.
         ----------------------------------------------

(a) (b) (c) Transactions with Management and Others.

         Compensation Arrangements. We pay Albert Brenman a retainer of $500 per
month ($6,000 per year) for supervising our accounting and legal matters and for
storage of our records.

         In November 2004, our board of directors approved an employment
agreement with our president, David W. Brenman. That employment agreement became
effective on or about September 30, 2005, and contains the terms and conditions
described above.

         On May 13, 2005, we raised $2,000,000, and again on September 15 and
20, 2005, we raised a total of $1,700,000, from offshore private placements
using a Liechtenstein-based fund manager, MJM, as a finder which have resulted
in compensation paid and (in the future) payable by MJM to David W. Brenman, our
president. MJM is operated by Herald A.M.A. Janssen, who, through MJM and
Genesis Investment Funds Limited., is our principal shareholder and has had
prior personal relationships with David Brenman.

         The finder's agreements between Cogenco and MJM contain our agreement
to engage MJM as a finder, on a non-exclusive basis, with an obligation to pay
it a finder's fee of 7 1/2% of the funds raised from MJM's European clients. We
also agreed to mutual indemnification obligations and to reimburse MJM for
certain expenses. As a result of the finder's fee agreements, we have paid
approximately $287,000 to MJM from the funds raised to date.

         At the time the disinterested directors of Cogenco approved the
arrangements with MJM, they understood that MJM has an obligation to pay
one-third of the finder's fee to David W. Brenman, president of Cogenco, in
accordance with an oral agreement between them. Pursuant to that oral agreement,
Mr. Brenman will also be entitled to receive one-fifth of the fund manager's
future profits (if any) from making the investment in Cogenco.

         The board of directors by resolution dated May 5, 2005, agreed to
permit Mr. David Brenman to pursue a business opportunity with respect to CMOS
imaging devices that are being developed by members of the Edwin L. Adair family
individually and through a family corporation, MIS. MIS is involved in the
research and development of small scale high resolution medical devices. The
Board of Directors determined that the business opportunity with MIS is not a
corporate opportunity of Cogenco, and that David Brenman is entitled to pursue
such opportunity outside of his employment responsibilities with Cogenco,
provided that such activities do not unreasonably interfere with his employment
activities with Cogenco or compromise any trade secrets or confidential or
non-public information relating to Cogenco.

         The board of directors by resolution dated April 3, 2006, agreed to
permit Mr. David Brenman to pursue a business opportunity in the oil and gas
industry with respect to WPE, in which he wants to invest and participate as a
manager. WPE is in the process (as of May 31, 2006) of attempting to acquire
certain producing properties located in North Dakota. The Board of Directors
determined that the business opportunity with WPE is not a corporate opportunity
of Cogenco, and that David Brenman is entitled to pursue such opportunity

                                       29

<PAGE>


outside of his employment responsibilities with Cogenco, provided that such
activities do not unreasonably interfere with his employment activities with
Cogenco or compromise any trade secrets or confidential or non-public
information relating to Cogenco.

         In October 2005, Cogenco entered into an office lease with an
unaffiliated party for approximately 3,210 square feet at the rate of $5,350 per
month over its term of 38 months. Commencing April 1, 2006, Cogenco has
subleased a portion of the space (approximately 1,605 square feet) to another
company (Micro-Imaging Solutions, Inc. or "MIS") for $2,675 per month (Cogenco's
cost). MIS will also be responsible for its pro-rata share of other expenses
incurred under the lease. The sublease is on a month-to-month basis, and Cogenco
expects that MIS' use of the office space will continue during the remaining
term of Cogenco's lease, depending on MIS's financial capabilities. An affiliate
of David Brenman has a significant equity interest in MIS. The lease and
sublease was approved by the remaining members of the Cogenco board of
directors, including Mr. David Brenman's father and his brother-in-law. A
certificate of deposit of $78,120 has been pledged as collateral on a letter of
credit in the amount of $70,000 securing the lease.

(d)      Transactions with Promoters.

         Not applicable.

PART IV

Item 13. Exhibits and Reports on Form 8-K.
         --------------------------------

(a) Exhibits required to be filed are listed below and, except where
incorporated by reference, immediately follow the Financial Statements.

Number  Description
------  -----------

3.1     Articles of Incorporation, as amended, incorporated by reference from
        the Annual Report on Form 10-KSB for the five fiscal years ended
        March 31, 1992.

3.2     Bylaws, incorporated by reference from the Annual Report on Form 10-KSB
        for the five fiscal years ended March 31, 1992.

3.3     Articles of Amendment to the Articles of Incorporation, incorporated by
        reference from the Form 8-K dated August 16, 1993 filed August 26, 1993.

10.1    Employment Agreement with David W. Brenman, incorporated by reference
        from the Form 10-KSB for the year ended March 31, 2005, filed June 24,
        2005.

10.2    Amended letter of intent with DMI BioSciences dated November 5, 2004,
        incorporated by reference from the Form 10-KSB for the year ended
        March 31, 2005, filed June 24, 2005.

10.3    Co-development agreement with DMI BioSciences, Inc. dated November 21,
        2004 (confidential treatment requested) (incorprated by reference from
        the Form 10-KSB for the year ended March 31, 2005, filed June 24, 2005.

10.4    Extension agreement with DMI BioSciences, Inc. dated January 21, 2005,
        incorporated by reference from the Form 10-KSB for the year ended
        March 31, 2005, filed June 24, 2005.

10.5    Second extension agreement with DMI BioSciences, Inc. dated
        February 22, 2005 incorporated by reference from the Form 10-KSB for the
        year ended March 31, 2005, filed June 24, 2005.

10.6    Third extension agreement and second amendment to letter of intent with
        DMI BioSciences, Inc. dated June 7, 2005, incorporated by reference from
        the Form 10-KSB for the year ended March 31, 2005, filed June 24, 2005.

                                       30

<PAGE>


Number  Description
------   ----------

10.7    Co-development agreement with DMI BioSciences, Inc. dated
        February 20, 2006 (confidential treatment requested), incorporated by
        reference from the Form 8-K dated February 20, 2006, filed
        February 23, 2006.

31*     Certification pursuant to Rule 13a-14(a).

32*     Certification pursuant to 18 U.S.C. ss.1350.

*       Filed herewith.

Item 14. Principal Accountant Fees and Services.
         --------------------------------------

(a)      Audit Fees.

         Our principal accountant, Causey, Demgen & Moore, Inc., billed us
aggregate fees in the amount of approximately $6,400 for the fiscal year ended
March 31, 2005 and $11,865 for the fiscal year ended March 31, 2006. These
amounts were billed for professional services that Causey, Demgen & Moore, Inc.
provided for the audit of our annual financial statements, review of the
financial statements included in our report on Form 10-QSB, and other services
typically provided by an accountant in connection with statutory and regulatory
filings or engagements for those fiscal years.

(b)      Audit-Related Fees.

         Causey, Demgen & Moore, Inc. billed us aggregate fees in the amount of
$370 for the fiscal year ended March 31, 2005 and $923 for the fiscal year ended
March 31, 2006, for assurance and related services that were reasonably related
to the performance of the audit or review of our financial statements.

(c)      Tax Fees

         Causey, Demgen & Moore, Inc. billed us aggregate fees in the amount of
$595 for the fiscal year ended March 31, 2005 and approximately $695 for the
fiscal year ended March 31, 2006, for tax compliance, tax advice, and tax
planning.

(d)      All Other Fees

         Causey, Demgen & Moore, Inc. billed us aggregate fees in the amount of
$-0- for the fiscal years ended March 31, 2006 and 2005, for other fees.

(e)      Audit Committee's Pre-Approval Practice

         Section 10A(i) of the Securities Exchange Act of 1934 prohibits our
auditors from performing audit services for us as well as any services not
considered to be "audit services" unless such services are pre-approved by the
audit committee of the Board of Directors (or the Board of Directors as a whole
if there is no audit committee appointed), or unless the services meet certain
de minimis standards. Since Cogenco has no audit committee, the Board of
Directors pre-approved the audit services and tax services that Causey, Demgen &
Moore, Inc. performed for Cogenco during the fiscal years ended March 31, 2005
and 2006, and has pre-approved that firm's continuation of those services.


         The percentage of the fees for audit, audit-related, tax and other
services were as set forth in the following table:

                                       31

<PAGE>


                            Percentage of total fees paid to
                             Causey, Demgen & Moore, Inc.
------------------------------------------------------------ -------------------

                                     Fiscal Year 2006      Fiscal Year 2005
--------------------------------------------------------------------------------

Audit fees                                 88%                  87%
--------------------------------------------------------------------------------
Audit-related fees                          7%                   5%
--------------------------------------------------------------------------------
Tax fees                                    5%                   8%
--------------------------------------------------------------------------------
All other fees                              0%                   0%
--------------------------------------------------------------------------------


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE EXCHANGE ACT:

         We have not sent to our security holders any annual report or proxy
material during the last fiscal year. If such report or proxy material is
furnished to security holders subsequent to the filing of this Form 10-KSB, we
will furnish copies of such material to the Commission when it is sent to
security holders.


SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date:    June 28, 2006
                                    COGENGO INTERNATIONAL, INC.



                                    By:  /s/ David W. Brenman
                                         ------------------------------
                                             David W. Brenman, President

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following person on behalf of the Registrant and in the
capacities and on the date indicated.

Date:    June 28, 2006
                                 By:            /s/ David W. Brenman
                                       -----------------------------------------
                                       David W. Brenman, President, Principal
                                       Executive Officer, Principal Accounting
                                       Officer, principal Financial Officer and
                                       Director

Date:    June 28, 2006
                                 By:            /s/ Albert Brenman
                                       -----------------------------------------
                                       Albert Brenman, Director


Date:    June 28, 2006
                                 By:            /s/ Robert A. Melnick
                                       -----------------------------------------
                                       Robert A. Melnick, Director

                                       32

<PAGE>




                           COGENCO INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2006

                                      WITH
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Shareholders
Cogenco International, Inc.


We have audited the accompanying balance sheets of Cogenco International, Inc.
(a development stage company) as of March 31, 2005 and 2006, and the related
statements of operations, stockholders' equity and cash flows for the years then
ended and for the period from inception of the development stage (July 26, 1990)
through March 31, 2006. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based upon our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cogenco International, Inc. as
of March 31, 2005 and 2006, and the results of its operations and its cash flows
for the years then ended and the period from inception of the development stage
(July 26, 1990) through March 31, 2006, in conformity with U.S. generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred significant losses from inception
to date and does not have sufficient funds on hand to continue to fund
operations without a capital infusion. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters also are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


Denver, Colorado                                     CAUSEY DEMGEN & MOORE INC.
June 28, 2006


                                      F-1

<PAGE>

<TABLE>
<CAPTION>

                                         COGENCO INTERNATIONAL, INC.
                                        (A Development Stage Company)
                                               BALANCE SHEET
                                          March 31, 2005 and 2006



                                                   ASSETS
                                                   ------

                                                                    2005                     2006
                                                                    ----                     ----
<S>                                                              <C>                       <C>
Current asset:
    Cash ($28,531 in interest bearing accounts)                  $    95,460              $    99,738
    Certificate of deposit (Note 4)                                     --                     78,120
    Prepaid expense                                                     --                      5,460
                                                                 -----------              -----------

      Total current assets                                            95,460                  183,318

Computer equipment, at cost, net of accumulated
    depreciation of $3,572 (2005) and $363 (2006)                       --                      3,137
Stand still fee and codevelopment payments (Note 5)                  100,000                  197,527
                                                                 -----------              -----------

Total assets                                                     $   195,460              $   383,982
                                                                 ===========              ===========

                                                 LIABILITIES
                                                 -----------

Current Liabilities:
    Accounts payable                                             $      --                $     3,677

                                            STOCKHOLDERS' EQUITY
                                            --------------------

Preferred stock, $.01 par value; 10,000,000 shares
    authorized, no shares issued and outstanding                        --                       --
Common stock, $.01 par value; 50,000,000 shares
    authorized, 2,208,756 (2005) and 2,578,756 (2006)
    shares issued and outstanding                                     22,088                   25,788
Additional paid-in capital                                         2,275,200                5,693,975
Accumulated deficit (including $3,969,997 deficit
    accumulated during the development stage at
    March 31, 2006)                                               (2,101,828)              (5,339,458)
                                                                 -----------              -----------

Total stockholders' equity                                           195,460                  380,305
                                                                 -----------              -----------

Total liabilities and stockholders' equity                       $   195,460              $   383,982
                                                                 ===========              ===========

                                             See accompanying notes.
                                                      F-2

<PAGE>


                                            COGENCO INTERNATIONAL, INC.
                                          (A Development Stage Company)
                                             STATEMENT OF OPERATIONS

                    For the Years Ended March 31, 2005 and 2006 and Cumulative Amounts from
                   Inception of the Development Stage (July 26, 1990) Through March 31, 2006


                                                                                                    Cumulative
                                                                                                   amounts from
                                                        2005                    2006                 Inception
                                                        ----                    ----                 ---------

Revenues:
    Interest income                                 $       156             $     1,391             $    43,501

Costs and expenses:
    Research and development                               --                 3,052,473               3,052,473
    Salary - officer                                       --                    75,000                  75,000
    Legal fees - related party (Note 4)                   6,000                   6,000                 202,770
    Legal fees                                           30,611                  27,448                  58,059
    Consulting and travel expenses -
      related party                                       6,696                  16,260                 175,336
    Dry hole costs                                         --                      --                   123,086
    General and administration                           14,983                  33,772                 292,056
    Rent and storage expenses                               918                  27,705                  30,783
    Depreciation                                           --                       363                   3,935
                                                    -----------             -----------             -----------

      Total costs and expenses                           59,208               3,239,021               4,013,498
                                                    -----------             -----------             -----------

        Net loss (Note 3)                           $   (59,052)            $(3,237,630)            $(3,969,997)
                                                    ===========             ===========             ===========

Basic and diluted loss per common share             $     (0.03)            $     (1.31)            $     (2.53)
                                                    ===========             ===========             ===========

Weighted average number of common
    shares outstanding                                2,050,400               2,476,098               1,570,290
                                                    ===========             ===========             ===========

                                                      See accompanying notes.
                                                                   F-3
<PAGE>


                                                  COGENCO INTERNATIONAL, INC.
                                                 (A Development Stage Company)
                                               STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 2006


                                                              Common stock           Additional                       Total
                                                         --------------------         paid-in     Accumulated     stockholders'
                                                         Shares        Amount         capital        deficit         equity
                                                         ------        ------         -------        -------         ------

Balance at July 25, 1990                                   72,415    $       724    $ 1,358,508    $(1,369,461)    $   (10,229)

Sale of common stock to employees of the
    related law firm for cash ($.50 per share)
    July 26, 1990                                          13,600            136          6,664           --             6,800

Sales of common stock to an unrelated entity
    for cash ($.50 per share) July 26, 1990                12,000            120          5,880           --             6,000

Shares of common stock issued in settlement
    of an account payable to the related law
    firm in October 1990 ($.50 per share)                   1,985             20            973           --               993

Net loss for the period ended March 31, 1991                 --             --             --          (11,922)        (11,922)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1991                                 100,000          1,000      1,372,025     (1,381,383)         (8,358)

Shares of common stock issued in settlement
    of an account payable to the related law
    firm in February 1992 ($.50 per share)                 28,756            288         13,975           --            14,263

Net loss for the period ended March 31, 1992                 --             --             --          (13,545)        (13,545)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1992                                 128,756          1,288      1,386,000     (1,394,928)         (7,640)

Sale of common stock to two individuals for cash
    and cash payments to the Company's president
    in March 1993 ($.11 per share) (Note 2)             1,610,000         16,100        158,900           --           175,000

                                                      (Continued on following page)
                                                         See accompanying notes.
                                                                   F-4

<PAGE>


                                                  COGENCO INTERNATIONAL, INC.
                                                 (A Development Stage Company)
                                               STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 2006


                                                              Common stock           Additional                       Total
                                                         --------------------         paid-in     Accumulated     stockholders'
                                                         Shares        Amount         capital        deficit         equity
                                                         ------        ------         -------        -------         ------

Net loss for the period ended March 31, 1993                 --             --             --         (100,291)       (100,291)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1993                               1,738,756         17,388      1,544,900     (1,495,219)         67,069

Capital contribution of two shareholders
    consisting of cash payments to the
    Company's president in April 1993  (Note 2)              --             --           10,000           --            10,000

Sale of stock to an individual for cash ($10.00
    per share) (Note 2)                                    50,000            500        499,500           --           500,000

Net loss for the period ended March 31, 1994                 --             --             --         (368,020)       (368,020)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1994                               1,788,756         17,888      2,054,400     (1,863,239)        209,049

Net loss for the period ended March 31, 1995                 --             --             --          (42,581)        (42,581)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1995                               1,788,756         17,888      2,054,400     (1,905,820)        166,468

Net loss for the period ended March 31, 1996                 --             --             --          (25,813)        (25,813)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1996                               1,788,756         17,888      2,054,400     (1,931,633)        140,655

Net loss for the period ended March 31, 1997                 --             --             --          (12,021)        (12,021)
                                                      -----------    -----------    -----------    -----------     -----------
Balance at March 31, 1997                               1,788,756         17,888      2,054,400     (1,943,654)        128,634

Net loss for the period ended March 31, 1998                 --             --             --           (9,234)         (9,234)
                                                      -----------    -----------    -----------    -----------     -----------
Balance at March 31, 1998                               1,788,756         17,888      2,054,400     (1,952,888)        119,400

                                                    (Continued on following page)
                                                      See accompanying notes.
                                                               F-5

<PAGE>


                                                  COGENCO INTERNATIONAL, INC.
                                                 (A Development Stage Company)
                                               STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 2006


                                                             Common stock           Additional                       Total
                                                        --------------------         paid-in     Accumulated     stockholders'
                                                        Shares        Amount         capital        deficit         equity
                                                        ------        ------         -------        -------         ------

Net loss for the period ended March 31, 1999                --             --             --          (23,662)        (23,662)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 1999                              1,788,756         17,888      2,054,400     (1,976,550)         95,738

Net loss for the period ended March 31, 2000                --             --             --           (8,177)         (8,177)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2000                              1,788,756         17,888      2,054,400     (1,984,727)         87,561

Net loss for the period ended March 31, 2001                --             --             --          (13,986)        (13,986)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2001                              1,788,756         17,888      2,054,400     (1,998,713)         73,575

Net loss for the period ended March 31, 2002                --             --             --          (11,601)        (11,601)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2002                              1,788,756         17,888      2,054,400     (2,010,314)         61,974

Net loss for the period ended March 31, 2003                --             --             --          (15,745)        (15,745)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2003                              1,788,756         17,888      2,054,400     (2,026,059)         46,229

Net loss for the period ended March 31, 2004                --             --             --          (16,717)        (16,717)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2004                              1,788,756         17,888      2,054,400     (2,042,776)         29,512

Sale of common stock in a private placement              420,000          4,200        220,800           --           225,000

Net loss for the period ended March 31, 2005                --             --             --          (59,052)        (59,052)
                                                     -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2005                              2,208,756    $    22,088    $ 2,275,200    $(2,101,828)    $   195,460

Sale of common stock in a private placement              370,000          3,700      3,418,775           --         3,422,475


                                                    (Continued on following page)
                                                      See accompanying notes.
                                                               F-6

<PAGE>


                                                  COGENCO INTERNATIONAL, INC.
                                                 (A Development Stage Company)
                                               STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 2006


                                                              Common stock           Additional                       Total
                                                         --------------------         paid-in     Accumulated     stockholders'
                                                         Shares        Amount         capital        deficit         equity
                                                         ------        ------         -------        -------         ------


Net loss for the period ended March 31, 2006                 --             --             --       (3,237,630)     (3,237,630)
                                                      -----------    -----------    -----------    -----------     -----------

Balance at March 31, 2006                               2,578,756    $    25,788    $ 5,693,975    $(5,339,458)    $   380,305
                                                      ===========    ===========    ===========    ===========     ===========


                                                    (Continued on following page)
                                                      See accompanying notes.
                                                               F-7


<PAGE>


                                               COGENCO INTERNATIONAL, INC.
                                              (A Development Stage Company)
                                                 STATEMENT OF CASH FLOWS
                          For the Years Ended March 31, 2005 and 2006 and Cumulative Amounts from
                          Inception of the Development Stage (July 26, 1990) Through March 31, 2006


                                                                                                          Cumulative
                                                                                                         amounts from
                                                                      2005                2006             Inception
                                                                      ----                ----             ---------
Cash flows from operating activities:
    Net loss                                                      $   (59,052)        $(3,237,630)        $(3,969,997)
    Adjustment to reconcile net loss to net
      cash used in operating activities:
        Research and development expenses                                --             3,052,473           3,052,473
        Depreciation expense                                             --                   363               3,935
        Consulting fees paid directly by
          common stock purchasers                                        --                  --                50,000
        Increase in prepaid expense                                      --                (5,460)             (5,460)
        Increase in accounts payable                                     --                 3,677               8,674
                                                                  -----------         -----------         -----------

        Net cash used in operations                                   (59,052)           (186,577)           (860,375)

Cash flows from investing activities:
    Contract payments                                                (100,000)         (3,150,000)         (3,250,000)
    Purchase of certificate of deposit                                   --               (78,120)            (78,120)
    Purchase of computer equipment                                       --                (3,500)             (7,072)
                                                                  -----------         -----------         -----------

        Net cash used in investing activities                        (100,000)         (3,231,620)         (3,335,192)

Cash flows from financing activities:
    Proceeds from sale of common stock                                225,000           3,422,475           4,295,275
    Short-term borrowings                                                --                  --               100,000
    Repayments of short-term borrowings                                  --                  --              (100,000)
                                                                  -----------         -----------         -----------

        Net cash provided by financing
          activities                                                  225,000           3,422,475           4,295,275
                                                                  -----------         -----------         -----------

Net increase in cash                                                   65,948               4,278              99,708

Cash and cash equivalents at
    beginning of year                                                  29,512              95,460                  30
                                                                  -----------         -----------         -----------

Cash and cash equivalents at
    end of year                                                   $    95,460         $    99,738         $    99,738
                                                                  ===========         ===========         ===========

Supplemental disclosure of non-cash financing activities:

    Consulting fees paid directly by
      common stock purchasers                                     $      --           $      --           $    50,000
                                                                  ===========         ===========         ===========

    Stock issued in settlement of an account
      payable to a related party                                  $      --           $      --           $    15,256
                                                                  ===========         ===========         ===========

                                                       See accompanying notes.
                                                                 F-8
</TABLE>

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


1.   Significant accounting policies
     -------------------------------

     Organization:

     Cogenco International, Inc. (the "Company") was incorporated in the State
     of Colorado on June 27, 1983. Prior to July 26, 1990, the Company was
     engaged in the development of cogeneration of electricity and the sale of
     the electricity to end-users on site or to public utilities. The Company is
     currently considered to be in the development stage as more fully defined
     in the Financial Accounting Standards Board Statement No. 7. The Company
     has engaged in limited activities in the oil and gas business, but has not
     generated significant revenues to date. The Company is currently seeking
     business opportunities. In August 2004, Cogenco entered into a letter
     agreement with DMI BioSciences, Inc. ("DMI") for an agreement by which
     Cogenco would participate in the development of a drug for the treatment of
     asthma in humans. The parties modified this agreement in November 2004 and,
     pursuant to the modification, Cogenco paid DMI $100,000 and entered into a
     co-development agreement with DMI for the development of a drug for the
     treatment of asthma in humans (the "Old CODA"). Under the terms of the
     agreements, as amended, Cogenco paid DMI $3,250,000 by September 30, 2005.
     Once Cogenco paid DMI the full $3,250,000 it had the right to participate
     in revenues from sales of the asthma products.

     In January and February 2006, Cogenco and DMI negotiated a restated letter
     of intent (the "New LOI") which contemplates additional payments of
     $1,000,000 to DMI at the end of February, March, July, August, September,
     October, and November 2006, for a total of $7,000,000 in additional
     payments. In addition, the parties negotiated a new co-development
     agreement (the "New CODA") for the development of a drug for the treatment
     of multiple sclerosis. Upon signing the New CODA, the Old CODA was
     terminated (although the payments that Cogenco has made will be credited to
     the New CODA). As of March 31, 2006, the Company had missed two payments
     totaling $2,000,000 and at the present time does not have the ability to
     make up the missed payments.

     The New LOI also amended the suggestion in the August 2004 letter agreement
     that the parties will attempt to negotiate a business combination between
     DMI and Cogenco (provided that Cogenco becomes adequately funded with at
     least $25,000,000). As set forth in the New LOI, if the business
     combination does not occur by September 30, 2006 (subject to an extension
     to November 30, 2006 if Cogenco has provided notice to its shareholders of
     a meeting to approve the combination), the $3,250,000 investment will be
     automatically converted into 1,000,000 shares of DMI common stock and
     Cogenco will become a minority shareholder of DMI. If the business
     combination does not occur because Cogenco was not able to raise the
     required financing, Cogenco will have to opportunity to convert its
     additional investment into shares of DMI common stock based on the value of
     the DMI shares and the amount of additional payments ultimately made to
     DMI. If the business combination does not occur for any other reason,
     Cogenco will have the option to convert the additional payments on those
     terms or to maintain its interest in the New CODA.

     Of the total payments of $3,250,000 made to DMI, we included $3,052,473 in
     research and development costs for the year ended March 31, 2006. This
     figure represents the amount of funds received by DMI from Cogenco which
     had been expended by DMI as of March 31, 2006 on research and development
     expenses and related expenses.

                                      F-9
<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


1.   Significant accounting policies (continued)
     -------------------------------------------

     Basis of presentation:

     The financial statements have been prepared on a going concern basis which
     contemplates the realization of assets and liquidation of liabilities in
     the ordinary course of business. As shown in the accompanying financial
     statements, the Company has incurred significant losses from inception to
     date and does not have sufficient funds on hand to continue to fund
     operations. As a development stage company, the Company continues to rely
     on infusions of equity capital to fund operations. As a result, substantial
     doubt exists about the Company's ability to continue to fund future
     operations using its existing resources. The Company continues to seek
     equity investments of which there can be no assurance.

     Use of estimates:

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from those estimates.

     Fair value of financial instruments:

     The carrying amounts of cash, cash equivalents, the certificate of deposit,
     prepaid expenses and accounts payable are assumed to approximate fair value
     because of the short maturities of those instruments.

     Loss per share:

     Net loss per common share is based on the weighted average number of shares
     outstanding during each period.

     Income taxes:

     The Company accounts for income taxes using a liability approach under
     which deferred income taxes are provided based upon enacted tax laws and
     rates applicable to the periods in which the taxes become payable.

     Cash flows:

     For purposes of the statement of cash flows, the Company considers all
     highly liquid debt instruments purchased with a maturity of three months or
     less to be cash equivalents.

                                      F-10

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


1.   Significant accounting policies (continued)
     -------------------------------------------
     Restricted investments:

     At March 31, 2006, restricted investments consist of $78,120 in a
     certificate of deposit set aside to secure a letter of credit of $70,000.

     Concentrations of credit risk:

     Financial instruments which potentially subject the Company to
     concentrations of credit risk consist principally of cash and a certificate
     of deposit. The Company places its cash and certificate of deposit with
     high quality financial institutions, which deposits are insured up to
     $100,000 per institution by the Federal Deposit Insurance Corporation
     (FDIC). At various times during the year, the balance at one financial
     institution may exceed FDIC limits.

     Computer equipment:

     Computer equipment is stated at cost. Depreciation is provided by the
     Company on straight-line and accelerated methods over estimated useful
     lives of three to five years.

     Research and development:

     The Company expenses research and development costs as incurred.

     Recent accounting pronouncements:

     In December 2004, the FASB revised SFAS No. 123, Accounting for Stock-Based
     Compensation, and superseded Accounting Principles Board Opinion No. 25,
     Accounting for Stock Issued to Employees. SFAS No. 123R requires a public
     entity to measure the cost of employee services received in exchange for an
     award of equity instruments based on the grant-date fair value of the
     award. That cost will be recognized over the period in which an employee is
     required to provide service in exchange for the award. SFAS No. 123R
     requires a public entity to initially measure the cost of employee services
     rendered in exchange for an award of liability instruments at its current
     fair value. The fair value of that award is to be remeasured subsequently
     at each reporting date through the settlement date. Changes in the fair
     value during the required service period are to be recognized as an
     increase or decrease in the amount of compensation cost recognized during
     the period. SFAS No. 123R is not expected to have a material impact on the
     Company's financial statements. We will adopt SFAF No. 123R on April 1,
     2006.

     In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary
     Assets," an amendment to Opinion No. 29,"Accounting for Nonmonetary
     Transactions". Statement No. 153 eliminates certain differences in the
     guidance in Opinion No. 29 as compared to the guidance contained in
     standards issued by the International Accounting Standards Board.

                                      F-11
<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


1.   Significant accounting policies (continued)
     -------------------------------------------

     The amendment to Opinion No. 29 eliminates the fair value exception for
     nonmonetary exchanges of similar productive assets and replaces it with a
     general exception for exchanges of nonmonetary assets that do not have
     commercial substance. Such an exchange has commercial substance if the
     future cash flows of the entity are expected to change significantly as a
     result of the exchange. SFAS No. 153 is effective for nonmonetary asset
     exchanges occurring in periods beginning after June 15, 2005. Earlier
     application is permitted for nonmonetary asset exchanges occurring in
     periods beginning after December 16, 2004. Management does not expect
     adoption of SFAS No. 153 to have a material impact on the Company's
     financial statements.

     In May, 2005 the FASB issued SFAS No. 154, "Accounting Changes and Error
     Corrections - a replacement of APB Opinion No. 20 and FASB Statement No.
     3." SFAS No. 154 replaces APB Opinion ("APB") No. 20, "Accounting Changes",
     and SFAS No. 3, "Reporting Accounting Changes in Interim Financial
     Statements," and changes the requirements for the accounting for and
     reporting of a change in accounting principle. SFAS No. 154 will apply to
     all voluntary changes in accounting principle as well as to changes
     required by an accounting pronouncement in the unusual instance that the
     pronouncement does not include specific transition provisions. APB No. 20
     previously required that most voluntary changes in accounting principle be
     recognized by including in net income of the period of the change the
     cumulative effect of changing to the new accounting principle. SFAS No. 154
     requires retrospective application to prior periods' financial statements
     of changes in accounting principle, unless it is impracticable to determine
     either the period-specific effects or the cumulative effect of the change.
     When it is impracticable to determine the period-specific effects of an
     accounting change on one or more individual prior periods presented, SFAS
     No. 154 requires that the new accounting principle be applied to the
     balances of assets and liabilities as of the beginning of the earliest
     period for which retrospective application is practicable and that a
     corresponding adjustment be made to the opening balance of retained
     earnings (or other appropriate components of equity or net assets in the
     statement of financial position). Management does not expect adoption of
     SFAS No. 154 to have a material impact on the Company's financial
     statements.

2.   Stockholders' equity
     --------------------

     Stock issuances:

     On March 4, 1993, the Company entered into a letter of intent with two
     individuals, previously unrelated to the Company, pursuant to which the
     individuals agreed to provide funding to the Company of $175,000. 1,610,000
     shares of common stock were issued for the $175,000 subscription price
     (approximately $.11 per share). These individuals have sold 483,334 shares
     to the Company's president, 40,000 shares to a former director of the
     Company, transferred 543,333 shares to a non affiliated company and
     transferred 543,333 shares to the Company's law firm for services performed
     for that individual.

     On July 6, 1993, the Company issued 50,000 shares of its $.01 par value
     common stock to a previously unrelated individual for cash consideration of
     $500,000, in a private offering.

                                      F-12

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006

2.   Stockholders' equity (continued)
     --------------------------------

     On July 29, 2004, the Company issued 400,000 shares of its $.01 par value
     common stock to four accredited investors in exchange for their investment
     of $40,000. On November 10, 2004, the Company issued 10,000 shares of its
     $.01 par value common stock to a single, offshore, European accredited
     investor in exchange for its investment of $100,000. On November 22, 2004,
     the Company issued an additional 10,000 shares of its $.01 par value common
     stock to a single, offshore, European accredited investor in exchange for
     its investment of $100,000.

     On May 13, 2005, the Company issued 200,000 shares of its $.01 par value
     common stock to one offshore, European accredited investor in exchange for
     it's investment of $2,000,000. On September 14, 2005, the Company issued
     130,000 shares of its $.01 par value common stock to one offshore, European
     accredited investors in exchange for it's investment of $1,300,000. On
     September 26, 2005, the Company issued an additional 40,000 shares of its
     $.01 par value common stock to one offshore, European accredited investor
     in exchange for it's investment of $400,000

3.   Income taxes
     ------------

     No provision for income taxes is required for the years ended March 31,
     2005 and 2006 or the period from inception of the development stage (July
     26, 1990) through March 31, 2006 because the Company has incurred net
     operating losses for the periods. The net operating losses generated may be
     carried forward to offset future taxable income. The amount of
     carryforwards from 1993 and prior years that may be used in the future will
     be limited pursuant to Sections 382 and 383 of the Internal Revenue Code of
     1986, as amended. The 1993 and prior aggregate net operating loss
     carryforward for Federal income tax reporting purposes is limited to
     approximately $236,000, of which only $11,800 may be used in any one year.
     If not used to offset future taxable income, the carryforwards will expire
     as follows:


                      2008                            $136,000
                      2009                              42,000
                      2010                              26,000
                      2011                              11,000
                      2012                              12,000
                      2013                               9,000
                      2019                              24,000
                      2020                               8,000
                      2021                              14,000
                      2022                              12,000
                      2023                              16,000
                      2024                              16,000
                      2025                              59,000
                      2026                             184,000
                                                      --------
                                                      $569,000
                                                      ========

                                      F-13

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


3.   Income taxes (continued)
     ------------------------

     As of March 31, 2005 and 2006, total deferred tax assets and valuation
     allowance are as follows:

                                                       2005           2006
                                                       ----           ----

        Deferred tax assets resulting from:
          Loss carryforward                       $   143,600      $  212,200
          Future deduction for research
           and development                               --         1,138,600
          Valuation allowance                        (143,600)     (1,350,800)
                                                  -----------      ----------
                                                  $      --        $     --
                                                  ===========      ==========

     A 100% valuation allowance has been established against the deferred tax
     asset, as utilization of the loss carryforwards cannot be reasonably
     assured.

4.   Related party transactions
     --------------------------

     For the period from inception of the development stage to March 31, 2006,
     the Company incurred legal costs $88,221, from a law firm which was
     formerly a principal stockholder. A former principal of that law firm is a
     relative of an officer and director of the Company.

     For the years ended March 31, 2005 and 2006 and during the period from
     inception of the development stage, the Company incurred legal costs of
     $6,000, $6,000 and a total of $114,549, respectively, from two law firms in
     which a principal of each law firm is a relative of an officer and director
     of the Company and currently is a director of the Company.

     In November 2004 Cogenco's Board of Directors approved an employment
     agreement with its president, David W. Brenman. The material terms of the
     employment agreement are as follows:

          o    Annual salary shall be $150,000;
          o    Employment is for a 5 year term;
          o    The employee is subject to
               Confidentiality/non-competition/protection of trade
               secrets/non-solicitation provisions;
          o    The employment agreement provides for premature termination in
               certain circumstances; and
          o    The employee has certain rights in the event of a change of
               control of Cogenco including a two year extension of his
               employment term and a requirement that his full salary (through
               the term of the agreement) be paid to him within 30 days of such
               change of control. Change of control can also constitute a basis
               on which the employee can terminate the agreement prematurely.

                                      F-14

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


4.   Related party transactions (continued)
     --------------------------------------

     The Employment Agreement commenced September 30, 2005 when Cogenco paid a
     total of $3,250,000 to DMI pursuant to a co-development agreement. The
     employment agreement does not prohibit Mr. D. Brenman from receiving
     compensation from MJM Asset Management Company Establishment "MJM". The
     employment agreement was approved by the remaining members of the Cogenco
     board of directors, including Mr. D. Brenman's father and his
     brother-in-law.

     During and subsequent to the fiscal years 2005 and 2006, Cogenco has raised
     $3,900,000 from offshore private placements using a Liechtenstein-based
     fund manager, MJM as a finder. MJM and Cogenco have entered into a Finder's
     Agreement containing the following terms: Cogenco agrees to engage MJM on a
     non-exclusive basis; Cogenco shall pay MJM a finder's fee of 7 1/2% of the
     funds raised from MJM's European clients; each party shall be entitled to
     indemnification under certain circumstances; and Cogenco shall reimburse
     MJM for related expenses. As a result, Cogenco has paid MJM a finder's fee
     of $292,500. The fund manager paid one-third of the finder's fee to David
     W. Brenman, president of Cogenco, in accordance with an oral agreement
     between them. Pursuant to that oral agreement, Mr. Brenman will be entitled
     to receive one-fifth of the fund manager's profits from making the
     investment in Cogenco. MJM is owned and operated by Harold Janssen, who,
     through MJM and Genesis Investment Funds Limited, is a principal
     shareholder of Cogenco and has had prior personal relationships with Mr.
     Brenman.

     In October 2005, Cogenco entered into an office lease with an unaffiliated
     party for approximately 3,210 square feet at a rate of $5,350 per month
     over its term of 38 months. With the consent of the unaffiliated landlord,
     Cogenco has agreed to sublease a portion of the space (approximately 1,605
     square feet) to another company (Micro-Imaging Solutions, Inc. or "MIS")
     for $2,675 per month (Cogenco's cost). MIS will also be responsible for its
     pro-rata share of other expenses incurred under the lease. An affiliate of
     David Brenman has a significant equity interest in MIS. The lease and
     sublease was approved by the remaining members of the Cogenco board of
     directors, including Mr. David Brenman's father and his brother-in-law. A
     certificate of deposit of $78,120 has been pledged as collateral on a
     letter of credit in the amount of $70,000 securing the lease.

5.   Contract payment
     ----------------

     In August 2004, Cogenco entered into a letter agreement with DMI
     BioSciences, Inc. ("DMI") for an agreement by which Cogenco would
     participate in the development of a drug for the treatment of asthma in
     humans. The parties modified this agreement in November 2004 and, pursuant
     to the modification, Cogenco paid DMI $100,000 and entered into a
     co-development agreement with DMI for the development of a drug for the
     treatment of asthma in humans (the "Old CODA"). Under the terms of the
     agreements, as amended, Cogenco paid DMI $3,250,000 by September 30, 2005.
     Once Cogenco paid DMI the full $3,250,000 it had the right to participate
     in revenues from sales of the asthma products.

                                      F-15
<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


5.   Contract payment (continued)
     ----------------------------

     In February 2006, Cogenco and DMI negotiated a restated letter of intent
     (the "New LOI") which contemplates additional payments of $1,000,000 to DMI
     at the end of February, March, July, August, September, October and
     November 2006, for a total of $7,000,000 in additional payments. In
     addition, the parties negotiated a new co-development agreement (the "New
     CODA") for the development of a drug for the treatment of multiple
     sclerosis. Upon signing the New CODA, the Old CODA was terminated (although
     the payments that Cogenco has made will be credited to the New CODA). As a
     result of the New CODA and the New LOI, Cogenco assumed some additional
     payment obligations which required Cogenco to pay $1,000,000 to DMI by
     February 28, 2006 and an additional $1,000,000 by March 31. Cogenco has
     made neither payment to DMI and does not have the funds necessary to make
     either payment. DMI has not yet given Cogenco notification of default.
     Assuming (without assurance) that Cogenco is able to bring its payment
     obligation to DMI current, the New CODA also obligated Cogenco to pay an
     additional $5,000,000 to DMI as follows:

         $1,000,000 by July 31, 2006
         $1,000,000 by August 31, 2006
         $1,000,000 by September 30, 2006
         $1,000,000 by October 31, 2006
         $1,000,000 by November 30, 2006

     The New LOI also amended the suggestion in the August 2004 letter agreement
     that the parties will attempt to negotiate a business combination between
     DMI and Cogenco (provided that Cogenco becomes adequately funded with at
     least $25,000,000). As set forth in the New LOI, if the business
     combination does not occur by September 30, 2006 (subject to an extension
     to November 30, 2006 if Cogenco has provided notice to its shareholders of
     a meeting to approve the combination), the $3,250,000 investment will be
     automatically converted into 1,000,000 shares of DMI common stock and
     Cogenco will become a minority shareholder of DMI. If the business
     combination does not occur because Cogenco was not able to raise the
     required financing, Cogenco will have to opportunity to convert its
     additional investment into shares of DMI common stock based on the value of
     the DMI shares and the amount of additional payments ultimately made to
     DMI. If the business combination does not occur for any other reason,
     Cogenco will have the option to convert the additional payments on those
     terms or to maintain its interest in the New CODA.

     Of the total payments of $3,250,000 made to DMI, we included $3,052,473 in
     research and development costs for the year ended March 31, 2006. This
     figure represents the amount of funds received by DMI from Cogenco which
     had been expended by DMI as of March 31, 2006 on research and development
     expenses and related expenses.

6.   Operating Lease
     ---------------

     Cogenco entered into an office lease with an unaffiliated party for
     approximately 3,210 square feet at a rate of $5,350 per month over its term
     of 38 months from November 2005 through December 2008. A certificate of
     deposit of $78,120 has been pledged as collateral on a letter of credit in
     the amount of $70,000 securing the lease. The Company also rents two
     parking spaces on a month to month basis for $110 per month.

                                      F-16

<PAGE>


                           COGENCO INTERNATIONAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                             March 31, 2005 and 2006


6.   Operating Lease (continued)
     ---------------------------
     Future minimum lease obligations at March 31, 2006 are as follows:

         For the years ended March 31,
                  2007                               $  64,200
                  2008                                   64,200
                  2009                                   48,150
                                                     ----------

                                                     $  176,550
                                                     ==========

                                      F-17