**UNITED
      STATES 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 December 31, 2006[  
                   ]
              Transition
                  Report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the transition period from
                  ___to___




Commission
        File Number  [333-123431]
  **PATHOGENICS,
        INC.**
 (Exact
        name of issuer as specified in its charter)
 Delaware
                  (State
                    or other jurisdiction of incorporation or organization)
                
                43-2078278
                  (IRS
                    Employer Identification
                    No.)




99
        Derby Street, Suite 200, Hingham, MA 02043
 (Address
        of principal executive offices, including zip code)
  (781)
        556-1090
 (Issuer’s
        telephone number)
  Securities
        registered pursuant to Section 12(b) of the Exchange Act: None
  Securities
        registered pursuant to Section 12(g) of the Exchange Act: None
 Indicate
          by check mark whether the issuer (1) has filed all reports required to
          be filed
          by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
          preceding 12 months (or for such shorter period that the issuer was required
          to
          file such reports) and (2) has been subject to such filing requirements
          for the
          past 90 days. Yes X No
          _ _ _
  Indicate
          by check mark if disclosure of delinquent filers pursuant to Item 405 of
          Regulation S-B is not contained herein, and will not be contained, to the
          best
          of issuer’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. Yes X No
          __
  Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act) Yes __ No X
  The
          issuer’s revenues for the fiscal year ended December 31, 2006 were **** $153,830.
  The
          aggregate market value of the issuer’s common stock held by non-affiliates as of
          March 12, 2007 was $956,761. There is no public market for the issuer’s common
          stock and, for the purposes of the foregoing calculation, the issuer has
          assumed
          a market value of $ 0.10 per share of common stock.
  As
          of
          March 12, 2007 there were 49,567,615 outstanding shares of common stock,
          par
          value $.001 per share.
  Transitional
          Small Business Disclosure Format: Yes __ No X




**TABLE
        OF CONTENTS** ****
 
 **PART
                        I**
                    
                    1**ITEM
                        1.**
                    DESCRIPTION
                        OF BUSINESS
                    1Overview
                    1Corporate
                        Structure
                    2Technologies
                    4N-Chlorotaurine
                    4Chloroquine
                        Diphosphate
                    7Patents,
                        Trademarks and
                        Licenses
                    9Risk
                        Factors
                    15Risks
                        Related to Our Financial
                        Condition
                    15Risks
                        Related to Our
                        Operations
                    16Risks
                        Related to Our
                        Securities
                    19**ITEM
                        2.**
                    DESCRIPTION
                        OF PROPERTY
                    20**ITEM
                        3.**
                    LEGAL
                        PROCEEDINGS
                    20**ITEM
                        4.**
                    SUBMISSION
                        OF MATTERS TO A VOTE OF SECURITY
                        HOLDERS
                    21**PART
                        II**
                    
                    22**ITEM
                        5.**
                    MARKET
                        FOR COMMON EQUITY AND RELATED STOCKHOLDER
                        MATTERS
                    22Recent
                        Sales of Unregistered
                        Securities
                    22**ITEM
                        6.**
                    MANAGEMENT'S
                        DISCUSSION AND ANALYSIS OF
                      FINANCIAL
                        CONDITION AND RESULTS OF
                        OPERATIONS
                    22Overview
                    22Liquidity
                        And Capital
                        Resources
                    23Critical
                        Accounting
                        Policies
                    25Recently
                        Issued Accounting
                        Standards
                    25**ITEM
                        7.**
                    CONSOLIDATED
                        FINANCIAL STATEMENTS
                    25**ITEM
                        8.**
                    CHANGES
                        IN AND DISAGREEMENTS WITH
                        ACCOUNTANTS
                      ON
                        ACCOUNTING AND FINANCIAL DISCLOSURE
                    25**PART
                        III**
                    
                    27**ITEM
                        9.**
                    DIRECTORS,
                        EXECUTIVE OFFICERS, PROMOTERS
                        AND
                      CONTROL
                        PERSONS; COMPLIANCE WITH SECTION
                        16(A)
                      OF
                        THE EXCHANGE ACT
                    27Information
                        Concerning Directors
                        and Executive Officers
                    27Section
                        16(a) Beneficial Ownership Reporting
                        Compliance
                    28**ITEM
                        10.**
                    EXECUTIVE
                        COMPENSATION
                    28Summary
                        Compensation
                        Table
                    28Outstanding
                        Equity
                        Awards
                    28Employment
                        Agreements
                    28Director
                        Compensation
                    29**ITEM
                        11.**
                    SECURITY
                        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                        MANAGEMENT
                    30**ITEM
                        12.**
                    CERTAIN
                        RELATIONSHIPS AND RELATED
                        TRANSACTIONS
                    30**ITEM
                        13.**
                    EXHIBITS
                    32




i




References
        to the “Company,” “Pathogenics,” the “Registrant,” “we,” “us,” “our” or in this
        Annual Report on Form 10-KSB refer to Pathogenics, Inc., a Delaware corporation.
 
 **Forward-Looking
        Statements**
 
 This
        Annual Report on Form 10-KSB includes forward-looking statements. These
        forward-looking statements involve a number of risks and uncertainties. Such
        forward-looking statements include statements about our strategies, intentions,
        expectations, goals, objectives, discoveries, collaborations, clinical programs,
        future achievements and other statements that are not historical facts. These
        forward-looking statements can generally be identified as such because the
        context of the statement will include words such as “may,” “will,” “intends,”
“plans,” “believes,” “anticipates,” “expects,” “estimates,” “predicts,”
“potential,” “continue,” “likely,” or “opportunity,” the negative of these words
        or other similar words. Readers of this Annual Report on Form 10-KSB are
        cautioned not to place undue reliance on these forward-looking statements,
        which
        speak only as of the time this Annual Report on Form 10-KSB was filed with
        the
        Securities and Exchange Commission, or SEC. These forward-looking statements
        are
        based largely on our expectations and projections about future events and
        future
        trends affecting our business, and are subject to risks and uncertainties
        that
        could cause actual results to differ materially from those anticipated in
        the
        forward-looking statements. These risks and uncertainties include, without
        limitation, those discussed under the heading “Risk Factors” following “Item 1.
        Description of Business,” and in “Item 6. Management’s Discussion and Analysis
        of Financial Condition and Results of Operations or Plan of Operation” of this
        Annual Report on Form 10-KSB. In addition, past financial or operating
        performance is not necessarily a reliable indicator of future performance
        and
        you should not use our historical performance to anticipate results or future
        period trends. We can give no assurances that any of the events anticipated
        by
        the forward-looking statements will occur or, if any of them do, what impact
        they will have on our results of operations and financial condition. Except
        as
        required by law, we undertake no obligation to publicly revise our
        forward-looking statements to reflect events or circumstances that arise
        after
        the filing of this Annual Report on Form 10-KSB or documents incorporated
        by
        reference herein that include forward-looking statements
  ii




**PART
        I**
  **ITEM
                  1.**
              **DESCRIPTION
                  OF BUSINESS**
  **Overview**
  We
        are a
        biopharmaceutical company engaged in the acquisition, development and
        commercialization of novel therapeutics that have potential significant
        commercial viability and that target certain unmet market needs. Pathogenics
        does not initiate any in-house research or development programs but instead
        outsources as many activities as possible, thereby minimizing fixed costs
        and
        maximizing development flexibility. We believe that this business model allows
        a
        flexible approach to partnering during the development process.
 
 We
        currently own the rights to the two following technologies:
 
 o
              N-chlorotaurine,
                  a novel anti-microbial agent that has been shown to produce broad
                  spectrum
                  activity against bacteria, fungi, and viruses in preclinical animal
                  models
                  and in small-scale clinical studies for various topical body-cavity
                  infections; and
 o
              Chloroquine
                  Diphosphate based formulations to reduce motor complications provoked
                  by
                  current dopamine replacement therapy in Parkinson’s diseases patients and
                  as a treatment for arresting the progression of Parkinson’s
                  Disease.
 
 We
        are
        primarily focused on developing these two technologies. Our core business
        strategy is to add value to our technologies by developing them up to the
        point
        they demonstrate efficacy in small-scale clinical trials and we obtain US
        Food
& Drug Administration (“FDA”) approval of an Investigational New Drug
        (“IND”) application. We then plan to license them out to larger pharmaceutical
        companies for FDA approved larger-scale clinical efficacy trials (Phase I,
        II
        and III trials), FDA New Drug Application (“NDA”), and sales and marketing, in
        return for upfront and milestone payments and royalties. To date, neither
        product candidate has completed the pre-clinical development necessary to
        support an FDA IND application which is required to conduct FDA approved
        clinical trials. Furthermore, Pathogenics has out-licensed only one product
        to
        date, and we have only recently received any commercial revenues.
 
 All
        of the
        research and development which has been completed on N-chlorotaurine has
        been
        completed by the researchers in Austria. The researchers have completed studies
        on the impact of N-chlorotaurine on the Candida virus; studies on the chemical
        properties of N-chlorotaurine and how it is a key compound in the human defense
        system to infections; research on N-chlorotaurine for the treatment of infected
        leg ulcers; a study of the influence of N-chlorotaurine on nasal mucous;
        the
        application of N-chlorotaurine to combat sinus infections complicated by
        immune
        suppression; the tolerability of N-chlorotaurine in the middle ear of a guinea
        pig; the efficacy and tolerability of N-chlorotaurine in treating swimmers
        ear;
        the efficacy and tolerability of N-chlorotaurine in treating pink eye; and
        the
        tolerability of N-chlorotaurine in treating sinus infections.
 
 All
        of the
        research and development on Chloroquine Diphosphate has been conducted by
        Alpha
        Research Group, LLC. Alpha Research Group, LLC has conducted
        a ten (10) patient clinical study using less than one half of the conventional
        malarial treatment dose of commercially available Chloroquine Diphosphate
        in a
        time-released formula with a brain targeting agent. Data from this study
        showed
        that Alpha Research Group, LLC’s novel Chloroquine Diphosphate formulation
        alleviated both Parkinson's
        Disease motor
        symptoms in patients diagnosed with Parkinson's
        Disease ,
        as well
        as the manifestation of involuntary jerky
        motions in patients and was
        generally well tolerated even after several months of continual use.
 
 Because
        all of our potential products are currently in research, preclinical development
        or the early or middle stages of clinical testing, revenues from the sales
        of
        any of our products will not occur for at least the next several years, if
        at
        all. As a result, we will need to raise substantial additional funds in the
        future to continue our research and development programs and to commercialize
        our potential products. We hope to obtain means of financing our operations
        through debt and/or equity financing in connection with a proposed merger
        with
        Egenix, Inc. and will continue to seek funding through various sources,
        including the sale of our securities, collaborative arrangements with third
        parties and other strategic alliances and business transactions.




**Corporate
        Structure**
  The
        Company was incorporated in Delaware on December 16, 1997 as “Niktronic, Inc.”
On that same day, the Company’s Board of Directors approved a change in the
        Company’s name to “Needle Impulse Technologies, Inc.” and on January 20, 1998,
        the Company filed a Certificate of Amendment with the Delaware Secretary
        of
        State to affect the name change to “Needle Impulse Technologies Corp.” On
        February 28, 2002, the Company’s corporate charter with the State of Delaware
        was revoked for non-payment of taxes. On February 2, 2005, the Company filed
        a
        Certificate for Renewal and Revival of Charter with Delaware to restore,
        renew
        and revive the Company’s corporate charter, which was granted by the Secretary
        of State of Delaware.
 
 On
        February 8, 2005, the Company affected a 503.83:1 forward stock split.
 
 On
        February 9, 2005, the Company filed a Certificate of Amendment with the Delaware
        Secretary of State to change the Company’s name to “Pathogenics, Inc.” and to
        authorize 110,000,000 share of stock of which 100,000,000 are shares of Common
        Stock, $.001 par value per share, and of which 10,000,000 are shares of serial
        Preferred Stock, $.001 par value per share.
 
 From
        December 16, 1997, until February 10, 2005, the date of the Reorganization
        (defined below), the Company had no business operations and was wholly owned
        by
        First Vulcan Corporation, a Delaware corporation (“Vulcan”).
 
 On
        February 10, 2005, the Company entered into an Agreement and Plan of
        Reorganization with Tyrol Therapeutics, LLC, formerly Pathogenics, LLC, a
        Delaware limited liability company (“Tyrol”) and the members of Tyrol, whereby
        each member of Tyrol exchanged all of their interest in Tyrol for shares
        of the
        Company’s Common Stock (the “Reorganization Agreement” and the
“Reorganization”). As a result of the Reorganization, Tyrol became a wholly
        owned subsidiary of the Company, and the Company ceased to be a wholly owned
        subsidiary of Vulcan Corporation. Henceforth throughout this annual report,
        unless otherwise stated, all references to the “Company” include “Tyrol
        Therapeutics, LLC.”
 
 **Agreement
        and Plan of Merger with Egenix, Inc.**
 
 On
        May 4,
        2006, Pathogenics entered into an Agreement and Plan of Merger (the “Merger
        Agreement”) with Egenix, Inc. (“Egenix”), a Delaware corporation, and
        subsequently amended on November 28, 2006. The Merger Agreement provides
        that
        Egenix shall merge with and into Pathogenics (the "Merger") and Pathogenics
        shall become the surviving corporation (the “Surviving Corporation") and shall
        change its name to Egenix, Inc.
 
 Upon
        the
        effectiveness of the Merger, all of the outstanding capital stock of Egenix
        will
        be converted into capital stock of Surviving Corporation (the "Surviving
        Corporation Capital Stock") on a one-for-one basis. The Surviving Corporation
        will assume all outstanding options, warrants and rights to purchase shares
        of
        capital stock of Egenix. Pending consummation of the Merger, Pathogenics
        shall
        use commercially reasonable efforts to register the Common Stock of Surviving
        Corporation (the “Surviving Corporation Common Stock”) issued in the Merger
        pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
        pursuant to a registration statement filed with and declared effective by
        Securities and Exchange Commission (the “SEC”) and either to effect (i) a
        listing of the Surviving Corporation Common Stock on the American Stock Exchange
        (the "Exchange") or (ii) the continuing quotation of the Surviving Corporation
        Common Stock on the “Bulletin Board” and to prepare a disclosure statement
        containing the necessary information to comply with Rule 15(c)2(11) promulgated
        by the SEC pursuant to the Securities Exchange Act of 1934, as amended, and
        file
        such forms with one or more firms who are members of the National Association
        of
        Securities Dealers, Inc. (the “NASD”) and with the NASD as are necessary to
        effect the foregoing. The shares of preferred stock of the Surviving Corporation
        issued pursuant to the Merger into which shares of preferred stock of Egenix
        have been converted will be “restricted securities” within the meaning of the
        Securities Act.
  2




Immediately
        prior to the Effective Date, Pathogenics shall effect a reverse split (the
        “Reverse Split”) of its outstanding capital stock such that the number of shares
        of Pathogenics Common Stock outstanding immediately prior to the Effective
        Time
        shall equal six percent (6%) of the issued and outstanding shares of Common
        Stock and common equivalents of the Surviving Corporation outstanding
        immediately after the effectiveness of the Merger after giving effect to
        any
        shares, or rights to acquire shares including warrants, issued as a part
        of or
        in connection with any financings (Bridge Financing, PIPE, etc.) contemplated
        in
        connection with the Merger, any shares of common stock underlying the Series
        A
        preferred stock and all convertible debt on an as converted to common stock
        basis, but not including options or warrants to acquire shares of Egenix
        capital
        stock that were not issued as a part of or in connection with any financings
        contemplated in connection with the Merger and are outstanding immediately
        prior
        to the Effective Date. The parties hereto agree that any convertible debt
        incurred by Egenix from its affiliates from and after May 4, 2006 will be
        converted, if at all, at a price of not less than $2.00 per share of Egenix
        Common Stock, or common stock equivalent, or Surviving Corporation Common
        Stock,
        or common stock equivalent, as the case may be.
 
 Ratification
        of this Agreement by a majority of the stockholders of Pathogenics shall
        be a
        condition to closing of this Agreement as shall approval of an amendment
        to the
        Certificate of Incorporation of Pathogenics to approve the Reverse Split
        which
        shall be effective immediately prior to the Effective Date. In the alternative,
        this Agreement may be approved by the written consent of the persons holding
        a
        majority of the votes represented by shares of Pathogenics Common Stock entitled
        to vote thereon.
 
  Ratification
        of this Agreement by a majority of the stockholders of Egenix shall be a
        condition to closing of this Agreement. In the alternative, this Agreement
        may
        be approved by the written consent of the persons holding a majority of the
        votes represented by shares of Egenix Common Stock and Preferred Stock entitled
        to vote thereon.
 
 The
        Closing of this transaction shall be held at such date place and time on
        the
        Effective Date which presently is intended to be not later than March 31,
        2007.
  3




**Technologies**
  **N-Chlorotaurine**
  Pursuant
        the March 29, 2006 license agreement with Dr.
        Waldemar Gottardi and Dr. Markus Nagl , Pathogenics
        owns rights to N-Chlorotaurine, a chemical substance produced within the
        body by
        white blood cells during an inflammatory reaction. N-chlorotaurine is known
        to
        play an important role in the part of the immune system that helps ward of
        infection and disease because of its antimicrobial properties against a broad
        spectrum of microorganisms and immune regulatory functions. N-chlorotaurine
        was
        initially developed by researchers at the University Hospital of Innsbruck
        and
        the Institute of Hygiene and Social Medicine, Leopold-Franzens-University
        of
        Innsbruck, Austria.
 
 In
        pre-clinical studies conducted by the researchers, N-chlorotaurine demonstrated
        the ability to kill bacteria, viruses, parasitic intestinal worms, and destroy
        or inhibit the growth of fungi.
 
 Additional
        pre-clinical studies conducted by the researchers showed that when
        N-chlorotaurine was applied in the presence of human nasal mucus, its ability
        to
        destroy microorganisms was increased.
  Despite
        its broad-spectrum ** activity,
        the toxicity of N-chlorotaurine against human cells is extremely low. Its
        breakdown products are the amino acids taurine and chloride, simple organic
        compounds that are the building blocks of proteins. These amino acids are
        found
        in the human body and therefore represent virtually no toxic potential and
        do
        not induce allergic reactions. A standard test to screen for potential
        toxicities was performed by PanLabs Incorporated (78 single tests, 41 thereof
        in
        vivo (in a living organism) with a total of 240 mice). Results of the test
        revealed no signs of toxicity.
 
 These
        features encouraged the researchers to investigate the usability of
        N-chlorotaurine as a topical agent for the treatment of infections in human
        medicine. The researchers completed several clinical trials testing the safety,
        tolerance and efficacy of N-chlorotaurine as a topical agent for the treatment
        of infections. The
        research done on N-chlorotaurine to date has demonstrated the usability of
        N-chlorotaurine as a topical treatment for infections, and has produced initial
        data on efficacy and safety to justify the further development of the compound.
 .
 The
        clinical trials conducted by the researchers to date have proved
        N-chlorotaurine’s tolerability on the skin and mucous membranes and have
        demonstrated initial signs of efficacy in:
 
 o
              outer
                  ear infections;
 o
              infected
                  leg ulcers;
 o
              eye
                  infections; and
 o
              inflammation
                  of the sinuses caused by infections
 
 **Potential
        Market for N-chlorotaurine**
 
 We
        believe
        that there are solid commercial justifications for pursuing new antimicrobial
        treatments because:
 
 1.
              This
                  field is considered the third largest in terms of annual sales,
                  surpassed
                  only by drugs for treating central nervous system disorders and
                  cardiovascular disease. Anti-infectives are the third largest segment
                  of
                  the pharmaceutical industry, with annual sales totaling $45 billion.
                  Of
                  the $45 billion in the anti-infectives markets, 62% is for antibacterials,
                  12% is for HIV, 6% is for other viral infections, 7% is for antifungals,
                  and 13% is for vaccines and immunology. The 4-year compounded growth
                  rate
                  for anti-infectives is strong at 10%. The best markets for anti-infectives
                  are the United States (48%), Europe (22%), and Japan (13%).
 2.
              A
                  higher percentage of anti-infectives make it to the market due
                  to the fact
                  that safety issues are well defined and preclinical models are
                  more
                  predictive for optimal efficacy.
 3.
              Broad-spectrum,
                  multi-indication anti-infective drugs generally have potential
                  annual
                  sales of $1 billion within three years of market introduction. 4.
              Treatment
                of sinus and ear infections are the most common reason for outpatient
                antibiotic prescriptions, and conjunctivitis (eye infections commonly
                referred to as “pink eye”) is considered the most common reason for
                non-traumatic eye complaints.
  4




**Research
        and Development of N-chlorotaurine**
 
 All
        of the
        research and development which has been completed on N-chlorotaurine has
        been
        completed by the researchers in Austria. Since October 2001, the following
        research and development works have been completed and published by the
        researchers:
 
 (1)
              The
                  impact of N-chlorotaurine on the Candida virus (2002);
 (2)
              Explanation
                  of the chemical properties of N-chlorotaurine and how it is a key
                  compound
                  in the human defense system to infections (2002);
 (3)
              Comparison
                  of N-chlorotaurine with another treatment - chloramine T - for
                  the
                  treatment of infected leg ulcers (2003);
 (4)
              Study
                  of influence of N-chlorotaurine on nasal mucous (2003);
 (5)
              Application
                  of N-chlorotaurine to sinus infections complicated by immune suppression
                  (2003);
 (6)
              Down-regulatory
                  effect of N-chlorotaurine (2004);
 (7)
              Tolerability
                  of N-chlorotaurine shown in the middle ear of a guinea pig (2004);
 (8)
              Efficacy
                  and tolerability of N-chlorotaurine in treating Otitis Externa
                  (“swimmers
                  ear”) (2004)
 (9)
              Chlorine
                  Covers on Living Bacteria: The Initial Step in Antimicrobial Action
                  of
                  Active Chlorine Compounds (2005);
 (10)
              Tolerability
                  and efficacy of N-chlorotaurine in epidemic keratoconjunctivitis
                  (“pink
                  eye”) (2005);
 (11)
              Tolerability
                  of N-chlorotaurine in chronic rhinosinusitis applied via yamik
                  catheter
                  (2005);
 (12)
              Protein
                  sites of attack of N-Chlorotaurine in*Escheria
                  coli*(2006); and
 (13)
              N-Chlorotaurine
                  is an effective antiviral agent against adenovirus in vitro and
                  in the
                  Ad5/NZW rabbit ocular model (2006).
 
 We
        believe
        that most, if not all, of the pre-clinical studies conducted by the researchers
        should be admissible to the FDA to support the filing of Pathogenics’ IND
        application on N-chlorotaurine. Nonetheless, we believe it may be necessary
        for
        it to conduct further preclinical studies, including formulation and toxicology
        studies, in order to complete an IND application on N-chlorotaurine. Although
        the researchers are under no contractual obligation to permit us to use their
        pre-existing research in support of our IND application, we have no reason
        to
        believe they would deny our use of this research as the researchers stand
        to
        benefit from our IND application. In the event that the researchers do not
        permit us to use their pre-existing research in support of our IND application,
        we will have to duplicate it at substantial and unknown additional cost of
        time
        and expense, which amounts we do not currently have.
 
 All
        the
        clinical trials conducted to date by the researchers were conducted according
        to ** Good
        Clinical Practice (“GCP”) guidelines under the approval of the University of
        Innsbruck Ethics Committee and Austrian Ministry of Health and Women. GCP
        guidelines are internationally accepted (including the USA) ethical and
        scientific quality standards for designing, conducting, recording, monitoring,
        auditing, recording, analyzing and reporting clinical trials that involve
        the
        participation of human subjects. Compliance with these standards provides
        public
        assurance that the rights, safety, and well-being of trial subjects are
        protected, and that the clinical trial data are credible. Although t he
        clinical trials to date have been conducted according to GCP guidelines,
        they
        have not been conducted under the auspices of an
        FDA
        approved IND  application
        and as a result, these clinical studies may have to be reproduced under an
        FDA
        approved IND before
        they can be submitted to the FDA
        as
        part of an NDA application for any particular indication.
  5




The
        researchers themselves have primarily funded their research work on
        N-chlorotaurine at limited cost to Pathogenics ( performing
        medical research on promising compounds like N-chlorotaurine is part of their
        job responsibilities as research faculty at the University on
        Innsbruck). Additionally, €423,859
        (approximately US $559,049 as of March 12, 2007) of philanthropic medical
        research grant assistance has been provided and/or awarded to the researchers by
        the
        Austrian Science Foundation and the Jubilee Fund of the Austrian National
        Bank
        from 1997 - present (€98,399 from ’97-’99 (approximately US $129,778 as of March
        12, 2007); €1,400 from ’97-’98 (approximately US $1,846 as of March 12, 2007);
€27,761 from ’00-’01 (approximately US $36,313 as of March 12, 2007); €87,230
        from ’01-’04 (approximately US $115,048 as of March 12, 2007); and €160,000 from
’07-’08 (approximately US $211,016 as of March 12, 2007)). The
        researchers continue to apply for research grants from philanthropic
        organizations, but there can be no assurance they will receive additional
        grants
        in the future.
 
 While
        Pathogenics is under no contractual obligation to provide current or future
        research support to the researchers, it believes the researchers’ ongoing
        research of N-chlorotaurine contributes to further the scientific development
        of
        N-chlorotaurine as an effective human topical medication. Accordingly, the
        researchers have requested, and our management has indicated their intention
        to
        provide the researchers funding to partially support their ongoing research
        on
        N-chlorotaurine, through debt and/or equity financing in connection with
        the
        Merger, if available after paying off our then liabilities. The planned clinical
        studies in progress are focused on obtaining additional safety and efficacy
        data
        on N-chlorotaurine as well as to further define optimal dosing parameters
        for
        future large-scale clinical studies in several topical body cavity infections.
 
 On
        April
        13, 2006, Pathogenics entered into a patent license agreement with Acuity
        Pharmaceuticals, Inc. (“Acuity”), a Delaware corporation. As part of the license
        agreement, Acuity gains exclusive worldwide development and commercialization
        rights to N-Chlorotaurine, or NCT, a novel anti-infective compound for the
        treatment of ophthalmic
        diseases and infections, such as viral conjunctivitis, bacterial conjunctivitis
        and herpetic keratitis. Acuity is now responsible for clinical development,
        regulatory activities and commercialization of this compound in ophthalmic
        indications. Acuity is contractually obligated to provide Pathogenics with
        any
        data generated in the course of such activities and all applications and
        data
        submitted to any regulatory agency (e.g. the FDA or EMEA), and Pathogenics
        has
        non-exclusive rights to this information for research and development activities
        outside the ophthalmic indications. Pathogenics retains the exclusive worldwide
        rights to NCT for all indications other than  ophthalmic
        applications. As consideration for the license agreement, Acuity paid
        Pathogenics an up-front licensing fee, and is obligated to pay minimum annual
        license fees, as well as potentially multiple millions of dollars worth of
        development milestones and royalties.
 
 In
        the
        fourth quarter of 2006, Pathogenics completed an open label phase 1 study
        with
        13 healthy volunteers studied the safety of the new N-Chlorotaurine formulation
        for the treatment of viral conjunctivitis. The N-Chlorotaurine formulation
        proved to be safe and well tolerated with no indication of ocular toxicity
        or
        sever adverse events. Pathogenics and Acuity jointly concluded that the results
        of the trial support further development of the compound.
 
 Because
        of
        N-chlorotaurine’s demonstrated safety profile and broad spectrum activity
        established in preclinical and clinical studies conducted by the researchers
        to
        date, Pathogenics plans on continuing the development of N-chlorotaurine
        as a
        topical agent for the treatment of several body cavity infections.
 
 Pathogenics
        plans to prepare and file an IND application with the FDA and reproduce some
        or
        all of these trials under FDA approval in an effort to gain FDA approval
        for
        N-chlorotaurine in the United States, of which Pathogenics can provide no
        assurance. As part of the development plan, Pathogenics plans on conducting
        further preclinical studies, including formulation studies, to support the
        filing of Pathogenics’ IND application on N-chlorotaurine. Once we begin the IND
        support studies, we anticipate them taking approximately 24 months to complete,
        at a total direct cost of approximately $400,000. We plan to raise the $400,000
        to fund this program through debt and/or equity financing in connection with
        the
        Merger, which may have a dilutive effect on our then shareholders, and which
        we
        can give no assurance will be raised. We intend to start this development
        program once we receive all, or a significant portion of these additional
        funds.
        Assuming that there are no unusual findings during the balance of the IND
        support studies and that we raise sufficient funds, we will proceed to file
        the
        IND.
 
 Pathogenics
        plans to use the information put together for the IND, if funding permits
        its
        completion, to show the potential value of N-chlorotaurine to larger pharmaceutical
        companies. During this process, we intend to license
        the N-chlorotaurine patents to additional larger
        pharmaceutical companies for FDA approved clinical trials (Phase I, II and
        III
        trials), FDA New Drug Approval (“NDA”), and sales and marketing in return for
        upfront and milestone payments and royalties (the FDA approval process is
        described below in further detail under the subheading “Need for Government
        Approval” later in this section). Pathogenics intends for any present and future
        licensee to first obtain regulatory approval in the US, and thereafter seek
        regulatory approval outside the US in as many countries as deemed economically
        justifiable.
  6




**Chloroquine
        Diphosphate**
  Pursuant
        the May 25, 2005 license agreement with Alpha Research Group, Inc. (“Alpha”) and
        Jodi A. Nelson, Pathogenics owns rights to novel derivatives and formulations
        of
        Chloroquine Diphosphate for the treatment of Parkinson’s disease and as an agent
        to reduce the debilitating side effects caused by current Parkinsonian drug
        therapies. Additionally,
        although Pathogenics hopes to develop these products in the future, it has
        not
        paid for any research and/or development on Chloroquine Diphosphate to date,
        and
        is not currently involved in any developmental activities regarding this
        compound.
 
 Chloroquine
        Diphosphate is
        a
        synthetically manufactured agent that has been used for both preventing and
        treating malaria.
 
 After
        examining the available work related to chloroquine, investigators at Alpha
        discovered that Chloroquine Diphosphate has certain biological properties
        that
        rendered it potentially beneficial for treating persons afflicted with
        Parkinson's Disease. Based on their research, they have patented novel derivates
        and formulations of Chloroquine Diphosphate for alleviating motor symptoms,
        involuntary or jerky movements and arresting the progression of Parkinson’s
        disease and associated neurological disorders.
 
 Parkinson's
        disease is
        a
        progressive neurodegenerative disorder in which dopamine cells responsible
        for
        normal motor movement irreversibly degenerate to the point of inducing severe
        disability. In advanced stages of Parkinson's disease, wide spread
        neurodegeneration encompasses multiple other neurotransmitter systems, rendering
        most treatments ineffectual. Parkinson’s disease was the first disease treated
        by drugs that act to replace the deficient neurotransmitter, dopamine. Symptoms
        usually begin to manifest in middle to later life with mild symptoms such
        as
        trembling of the lips and hands, loss of facial expression, and muscular
        rigidity; however, cases juvenile or ‘early onset’ Parkinson’s Disease, can
        afflict persons in their late 30’s and early 40’s. As the disease progresses, it
        brings on debilitating symptoms such as body tremors, particularly in muscles
        at
        rest. Movements become slow and difficult; walking degrades to a shuffle.
        After
        5-10 years, physical incapacity sets in. Non-motor symptoms, such as dementia
        occurs in at least 50% of the patients; depression is also very common.
  Levodopa,
        the chemical precursor of dopamine, has been used in the treatment of
        Parkinson’s disease for more than 30 years. While levodopa remains the standard
        treatment for Parkinson’s disease, over time its side effects oftentimes become
        more debilitating than symptoms of the disease itself. Invariably, sustained
        levodopa use produces impairment of voluntary movements resulting in fragmented
        or jerky motions in patients (“dykinesia”). Dyskinesia is the most common form
        of drug-induced movement disorder and virtually all patients with Parkinson’s
        disease who take levodopa are susceptible to developing these long-term
        complications, with about 50-75 percent of patients developing such
        complications within 5-10 years. Dyskinesia is a severely disabling condition
        characterized by involuntary movements, chaotic and uncontrollable movements
        of
        limbs, face, and mouth that oftentimes necessitate long-term hospitalization
        or
        even lifetime nursing home care. Moreover, there are no pharmaceuticals
        presently approved by the FDA for the treatment of dyskinesia.
  Based
        on
        Alpha’s and Jodi A Nelson’s research on Chloroquine Diphosphate (suggesting it
        as a potentially useful approach for the treatment of Parkinson’s Disease),
        Alpha filed and was issued US Patent # 6,417177 and has filed corresponding
        patent applications in other major countries around the world. Alpha and
        Jodi A.
        Nelson believe
        that the biological properties of chloroquine are ideal for its development
        as
        treatment to reduce motor complications provoked by current dopamine replacement
        therapy in Parkinson’s diseases patients and as a treatment for arresting the
        progression of Parkinson’s disease.
  7




The
        currently marketed formulations of Chloroquine Diphosphate are used to treat
        malaria and other non-neurological disorders and are unlikely to be useful
        in
        Parkinson’s disease. Chloroquine Diphosphate is rapidly metabolized by the body,
        following which it is incapable of accumulating in the brain in amounts needed
        to effectively treat Parkinson’s disease. For this reason, investigators at
        Alpha have defined novel formulations having the potential to surmount these
        limitations. Thus Alpha has devised novel formulations of Chloroquine
        Diphosphate that inhibit its rapid peripheral metabolism and increase its
        incorporation into the brain. These novel compositions represent a unique
        and
        much safer strategy for exploiting Chloroquine Diphosphate’s beneficial central
        nervous system effects.
 
 **Research
        and Development of Chloroquine Diphosphate**
 
 Alpha
        conducted a ten (10) patient clinical study using less than one half a
        conventional malarial treatment dose of commercially available Chloroquine
        Diphosphate in a time-released formula with a brain targeting agent. Data
        from
        this study showed that Alpha’s novel Chloroquine Diphosphate formulation
        alleviated both Parkinson’s disease motor symptoms in patients diagnosed with
        Parkinson’s disease, as well as abolished the manifestation of involuntary jerky
        motions in patients and was generally well tolerated even after several months
        of continual use. The licensors believe that Alpha’s more novel formulas,
        entailing the use of select Chloroquine Diphosphate derivatives, will further
        improve Chloroquine Diphosphate’s safety and tolerability profile, rendering it
        a beneficial treatment for Parkinson’s disease and other serious neurological
        disorders.
 
 Pathogenics
        plans on further developing novel therapies based upon Alpha’s intellectual
        property for the application of Parkinson’s disease, levodopa induced
        dyskinesias and other debilitating neurological disorders. As part of the
        development plan, Pathogenics plans on conducting further preclinical studies,
        including formulation and efficacy studies in rodent and non-human primate
        models for Parkinson’s disease, to support the filing of Pathogenics’ IND
        application. Following the IND approval, we intend to undertake and complete
        Federal Drug Administration approved Phase I and II clinical trials. Assuming
        we
        begin the development program studies, we anticipate it taking approximately
        30
        months to complete such studies, at a total direct cost of approximately
        $2,000,000. We plan to raise the $2,000,000 through debt and/or equity financing
        in connection with the Merger. We intend to start this development program
        once
        we receive all, or a significant portion of these additional funds. Assuming
        that there are no unusual findings during the balance of the development
        program
        studies and that we raise sufficient additional funds to begin and complete
        such
        studies, we plan to proceed to complete the studies through a Phase II clinical
        trial.
 
 Pathogenics
        will use the clinical trail data to show the potential value of Chloroquine
        Diphosphate to larger pharmaceutical companies. Following the completion
        of
        Phase II trial, we intend to license the Chloroquine Diphosphate patents
        to
        larger pharmaceutical companies for Federal Drug Administration approved
        Phase
        III clinical trials, to seek FDA approval, and sales and marketing in return
        for
        upfront and milestone payments and royalties (the FDA approval process is
        described below in further detail under the subheading “Need for Government
        Approval”). Pathogenics intends any future licensee to first obtain regulatory
        approval in the US, and thereafter seek regulatory approval outside the US
        in as
        many countries as deemed economically justifiable by the future
        licensee.
 
 **Potential
        Market for Chloroquine**
 
 Parkinson's
        disease is a common progressive neurological disorder resulting from the
        degeneration of nerve cells (neurons) in a region of the brain that controls
        normal motor movement. A great majority of Parkinson’s patients suffer from
        dyskinesia and a wearing-off of drugs used to treat the disease in both moderate
        to advanced stages of the disease. Dyskinesia is a severely disabling condition
        with chaotic and uncontrollable movements that often necessitates
        hospitalization, neurosurgery or even lifetime nursing home care.
 
 **Employees**
 
 Pathogenics
        has one (1) employee, Frederic P. Zotos, our Chief Executive Officer, who
        works
        for Pathogenics on a full-time basis. Michael Ferrari, our Vice President,
        consults for Pathogenics on a part-time basis. All of our research is conducted
        by N-chlorotaurine’s inventors in Austria and/or outsourced to private research
        contractors, and there is currently no research being done on Chloroquine
        Diphosphate. Moving forward, Pathogenics anticipates most of the European
        clinical work to continue to be conducted by the Austrian inventors, with
        the
        majority of the U.S. Food and Drug Administration clinical work to be conducted
        by Pathogenics and American clinical research contractors.
  8




**Competition**
 
 Competition
        among biotechnology, pharmaceutical, and other companies that research, develop,
        manufacture, or market pharmaceuticals is intense and is only expected to
        increase. Some competitors, principally large pharmaceutical companies, have
        greater clinical, research, regulatory, and marketing resources and experience
        than Pathogenics. If Pathogenics is able to bring N-chlorotaurine and/or
        Chloroquine Diphosphate to the marketplace, of which there can be no assurance,
        Pathogenics will face product competition from firms in the United States,
        Europe, Canada, Australia, and elsewhere. Additionally, some of Pathogenics’
competitors, including biotechnology and pharmaceutical companies, are actively
        engaged in research and development to create products with similar features
        as
        N-chlorotaurine and/or Chloroquine Diphosphate.
 
 We
        believe
        that there are solid commercial justifications for pursuing a new antimicrobial
        treatment such as N-chlorotaurine. Current treatments for sinus infections
        include antibiotics such as Amoxil, Avelox, Bactrim, Tequin, or cephalosporin.
        Additionally, Factive,
        a
        new antibiotic developed by Oscient Pharmaceuticals, is currently in Phase
        III
        clinical trial for the treatment of acute bacterial sinusitis (sinus
        infections). Current
        treatment for ear infections consists of antibiotics, including such drugs
        as
        ampicillin, amoxicillin, erythromycin, one of the cephalosporin antibiotics,
        Floxin Otic, or the combination drug trimethoprim/sulfamethoxazole (Bactrim).
        However, antibiotic resistance has emerged as a major public health threat,
        prompting the U.S. Centers for Disease Control and Prevention and the U.S.
        FDA
        to campaign against overuse of the medications. Therefore, we believe that
        there
        is currently a strong need for the development of novel broad spectrum
        antimicrobial agents that do not promote the development of drug resistance.
        We
        believe that N-chlorotaurine has
        the
        potential to meet the needs of these markets.
 
 At
        this
        time, no treatment has been shown to slow or stop the progression of Parkinson’s
        disease. Instead, therapy is directed at treating the symptoms that are most
        bothersome to an individual with Parkinson’s disease. Levodopa
        is the most effective and most widely used symptomatic Parkinson’s disease
        treatment and has remained the "gold standard" of care for nearly 40 years.
        The
        vast majority of people with Parkinson’s disease eventually require levodopa
        treatment to control their symptoms, even if they begin their therapy with
        another drug. However, after several years of treatment with levodopa, patients
        often begin to experience motor complications, such as "wearing-off" (when
        the
        effect of one dose of medication does not last until the next scheduled dose)
        and impairment of voluntary movements resulting in fragmented or jerky motions
        (known as “dyskinesia”). Sometimes its
        side
        effects of levodopa therapy become more debilitating than symptoms of the
        disease itself. Over
        the
        years, a number of substitutes for levodopa have been developed that are
        used in
        the place of levodopa or in combination with it. One such product is Stalevo,
        developed by Orion Pharma and marketed by Novartis and Orion
        Pharma.
 
 To
        our
        knowledge, other drugs being developed for the treatment of levodopa induced
        dyskinesias include Fipamaezole and Sarizotan. Fipamaezole is being developed
        by
        Juvantia Pharma and has completed a phase II clinical trial in 2004. Sarizotan
        is being developed by EMD Pharmaceuticals and is in Phase III clinical trials.
        We believe however that the disease currently lacks a treatment that is safe
        and
        effective for most patient groups, and that Chloroquine Diphosphate has the
        potential to meet the needs of this market.
 
  **Patents,
        Trademarks and
        Licenses**
  **License
        Agreement for Patent Rights In Connection with
        N-Chlorotaurine**
 
 Pathogenics
        holds rights under a license agreement entered into March 29, 2006 (replacing
        the previous license agreement of October 18, 2001) with Dr. Waldemar Gottardi
        and Dr. Markus Nagl, to worldwide exclusive license patent rights in connection
        with patents relating to N-Chlorotaurine and any technology relating to those
        patent rights or improvements.
  9




Under
        the
        license, Pathogenics must pay the licensors jointly and severally during
        the
        term of the license (described below), a total royalty of 4% of the gross
        sales
        of all licensed products sold by Pathogenics in connection with the patents
        rights, a total of 20% of any payments which Pathogenics receives from any
        sublicenses, a one-time payment of $100,000, payable upon the first-time
        issuance of the first patent of each patent family for a licensed product
        or
        licensed process, a one-time payment of $250,000 payable upon successful
        completion of a Phase III clinical trial for each licensed product or licensed
        process, and a one-time milestone payment of $1,000,000 payable upon receiving
        new drug approval for each licensed product or licensed process. Pathogenics
        has
        yet to gain approval for any products based on N-chlorotaurine. When due,
        all of
        the payments required under the license are payable by Pathogenics in cash
        or in
        shares of our registered Common Stock. Additionally, Pathogenics must maintain
        the patents covered under the license and provide reports to the licensors
        within 60 days after June 30 and December 31, setting forth the amount of
        licensed products sold, net proceeds and royalties due. The license will
        remain
        in effect until a) the patents expire, or b) Pathogenics ceases selling any
        products in connection with the license, revokes all sublicenses, gives notice
        to the licensors of its intent to terminate the license, and tenders payments
        of
        all royalties, and c) in the event that Pathogenics remains more than 60
        days in
        arrears in payment of royalties or expenses due pursuant to the license.
        In
        connection with the license agreement for N-Chlorotaurine, Pathogenics paid
        the
        licensors $10,000 in cash and 999,999 shares of registered common stock in
        2006,
        and $20,000 in January of 2007.
  Under
        the
        license, Pathogenics agreed to indemnify the licensors, heirs and their assigns
        against any liability, damage, loss or expenses incurred in connection with
        claims, suits, actions, demands or judgments arising out of any theory of
        product liability concerning any product, process or service made, used or
        sold
        pursuant to any right or license granted under the license.
 
 All
        the
        following patents and patent applications covering N-chlorotaurine are either
        exclusively licensed or assigned to Pathogenics by their inventors.
 
 Pathogenics
        has one issued European patent and currently pending four German patent
        applications, two Patent Cooperation Treaty (“PCT”) applications, an
        international treaty currently signed by 112 contracting countries (including
        the US) that provides a mechanism by which a person can file a single patent
        application that, when certain requirements have been fulfilled, is equivalent
        to a regular national patent application in each of the designated contracting
        countries, and one US patent application pending, which Pathogenics can provide
        no assurance will be granted, which cover the use of N-chlorotaurine for
        the
        treatment of chronic sinus infections, for treating oozing tissue deficiencies
        (e.g. outer ear infections, infected skin ulcers) and its use as a fungicidal
        agent and against protozoa,  as
        well as
        an improved therapeutic formulation for the treatment of conjunctivitis (“pink
        eye”). All of the patent applications listed below are pending and Pathogenics
        is awaiting responses from the respective patent offices.
 
 o
              DE
                  10045868.8; Filing Date: September 14, 2000; entitled “Remedy for
                  treatment of acute and chronic Rhinosinusitis and its application.”
 o
              DE
                  10144819.8; Priority Application: DE 10045868.8; Filing Date September
                  11,
                  2001 (New Matter Added regarding Otitis Externa and Crural Ulcers);
                  entitled “Fungicidal substance and its
                  application.”
 o
              WO
                  02/22118; Priority Application: DE 10045868.8; Filing Date September
                  10,
                  2001; entitled “Fungicidal agent containing N-Chlorotaurine and use
                  thereof.”
 o
              US
                  2004/0116521 A1; Priority Application: DE 10045868.8; Filing Date
                  September 10, 2001; entitled “Fungicidal agent containing N-Chlorotaurine
                  and use thereof.”
 o
              WO
                  2004/052355 A1; Filing Date: December 6, 2002; entitled “Use of
                  N-Chlorotaurine for treatment of oozing tissue
                  deficiencies.”
 o
              DE
                  102005023198.5; Filing Date: May 14, 2005; entitled “Aqueous solutions
                  containing chloramine which are free from di- and trichloroamine,
                  as well
                  as from ammonia.”
 o
              DE
                  102005038992.9; Filing Date: August, 16, 2005; entitled “Substance against
                  protozoa and its
                  application.”




10




**License
        Agreement for N-Chlorotaurine for Ophthalmic Indications**  **with
        Acuity Pharmaceuticals, Inc.**
 
 On
        April
        13, 2006, Pathogenics entered into a patent license agreement with Acuity
        Pharmaceuticals, Inc., a Delaware corporation (“Acuity”). As part of the license
        agreement, Acuity gains exclusive worldwide development and commercialization
        rights to N-Chlorotaurine, or NCT, a novel anti-infective compound for the
        treatment of ophthalmic
        diseases and infections, such as viral conjunctivitis, bacterial conjunctivitis
        and herpetic keratitis. Acuity is now responsible for clinical development,
        regulatory activities and commercialization of this compound in ophthalmic
        indications. Pathogenics retains the exclusive worldwide rights to NCT for
        all
        indications other than  ophthalmic
        applications. As consideration for the license agreement, Acuity paid
        Pathogenics an up-front licensing fee, and is obligated to pay minimum annual
        license fees, as well as potentially multiple millions of dollars worth of
        development milestones and royalties. Acuity paid Pathogenics $153,830 in
        2006
        in connection with the license agreement for N-Chlorotaurine for ophthalmic
        indications.
 
 Pathogenics
        engaged the services of Qualified Ventures, LLC (“QV”) on February 17, 2006 as a
        consultant in connection with the patent license agreement with Acuity
        Pharmaceuticals, Inc. In the capacity as a consultant, QV introduced Pathogenics
        to Acuity. In consideration for such efforts and services, Pathogenics must
        pay
        QV a fee equal to a percentage of the amount of the total consideration paid
        by
        Acuity to Pathogenics, its employees, former or current equity holders in
        connection with the license agreement according to the following formula:
        (1)
        Five percent (5%) of the first $1,000,000 received; (2) Four percent (4%)
        of the
        second $1,000,000 received; (3) Three percent (3%) of the third $1,000,000
        received; (4) Two percent (2%) of the fourth $1,000,000 received; and (5)
        One
        percent (1%) of any amount received thereafter. Pathogenics paid QV $2,500
        in
        2006, and $5,000 in January of 2007 as a consultant in connection with the
        patent license agreement with Acuity Pharmaceuticals, Inc.
 
 **License
        Agreement for** **Chloroquine**
 
 On
        May 25,
        2005, Pathogenics entered into an exclusive license agreement with Alpha
        Research Group, LLC, a Nevada limited liability corporation (“Alpha”) and Jodi
        A. Nelson (“Nelson”). In connection with the exclusive license agreement,
        Pathogenics paid Alpha $20,000 which was loaned to Pathogenics by William
        Mackey
        and William L. Sklar, a Director of Pathogenics (as described in further
        detail
        below), and agreed to provide sufficient funding for the protection and
        continued clinical development of products stemming from certain patents
        in
        connection with the novel therapeutic use or formation of Chloroquine
        Diphosphate and any of its derivatives.
 
 Under
        the
        exclusive license agreement, Pathogenics agreed to pay Alpha 4% of the net
        sales
        of Chloroquine Diphosphate in each country that Chloroquine Diphosphate is
        sold,
        if Pathogenics uses the licensing rights obtained in connection with the
        exclusive license agreement to sell Chloroquine Diphosphate, beginning on
        the
        date that Chloroquine Diphosphate is commercially sold. Additionally,
        Pathogenics agreed to pay Alpha (a) $100,000 payable in cash or registered
        stock
        of Pathogenics upon the successful completion of a phase II clinical trial
        for
        each product derived in connection with the patent rights for Chloroquine
        Diphosphate, (b) $250,000 payable in cash or registered stock of Pathogenics
        upon the successful completion of each phase III clinical trial for each
        product
        derived in connection with the patent rights for Chloroquine Diphosphate,
        and
        (c) $1,000,000 payable in cash or registered stock of Pathogenics upon the
        receipt of each new drug approval for each product derived in connection
        with
        the patent rights for Chloroquine Diphosphate. The term of the exclusive
        license
        agreement is until the expiration of the last patent right associated with
        Chloroquine Diphosphate under the exclusive license agreement, upon 30 days
        written notice from Pathogenics to Alpha, or for cause. Pathogenics has not
        paid
        Alpha any monies under the exclusive license agreement, as Chloroquine
        Diphosphate is still in the research and development stage.
 
 On
        May 9,
        2006, Pathogenics received a notice of termination of the license agreement
        executed on May 25, 2005, between Alpha, Nelson and Pathogenics. We believe
        in
        good faith that the notice of termination is entirely ineffective, that the
        license agreement has not been terminated and remains
        in
        full-force and effect ,
        and that
        the Alpha’s and Nelson’s claims
        in
        support of termination are entirely without merit. Pathogenics has elected
        to
        seek relief through application of the formal dispute resolution process in
        accordance with the clear provisions of license agreement ,
        and
        intends to vigorously defend its position.
  11




On
        May 25,
        2005, Pathogenics entered into an assignment agreement with First Coventry
        Corporation, which was incorporated under the laws of Delaware on May 24,
        2005
        (“First Coventry”), to assign the license agreement which Pathogenics received
        previously from Alpha to First Coventry in return for all the issued and
        outstanding shares of First Coventry. This made First Coventry a wholly-owned
        subsidiary of Pathogenics. On June 1, 2005, First Coventry entered into an
        indemnification agreement with Frederic P. Zotos, our Chief Executive Officer
        and Director, to indemnify Mr. Zotos against personal liability in connection
        with the advancing of expenses to First Coventry and/or any liability Mr.
        Zotos
        may have as a result of being the sole Director, President, Chief Executive
        Officer, Secretary and Treasurer of First Coventry.
 
 On
        May 25,
        2005, William K. Mackey and William L. Sklar, a Director of Pathogenics,
        entered
        into a note and security agreement with Pathogenics. Under the note and security
        agreement, Mr. Mackey and Mr. Sklar loaned Pathogenics $20,000. Mr. Mackey
        and
        Mr. Sklar immediately paid to Alpha the $20,000 upon signing the note and
        security agreement in connection with the exclusive license agreement, discussed
        above. Until the date due, the amount outstanding bears interest calculated
        at
        the rate of 8% per year. The note was secured by 3,000 shares of First Coventry
        Corporation, our wholly-owned Delaware subsidiary. The $20,000 note was
        originally due within ninety (90) days of the date of the note and security
        agreement was entered into, or August 23, 2005; however on August 1, 2005,
        Pathogenics entered into an amended agreement with Mr. Sklar and Mr. Mackey,
        whereby the due date of the note was extended to one hundred and five (105)
        days
        from the date the note and security agreement was entered into, or September
        7,
        2005; and on August 19, 2005, Pathogenics entered into another amended agreement
        with Mr. Sklar and Mr. Mackey, whereby they agreed to extend the due date
        of the
        note for one hundred and twenty days from the date of the note and security
        agreement, or September 22, 2005; and on September 21, 2005, Pathogenics
        entered
        into another amended agreement with Mr. Sklar and Mr. Mackey, whereby they
        agreed to extend the due date of the note for one hundred and thirty-five
        days
        from the date of the note and security agreement, or October 7, 2005; and
        on
        November 8, 2005, Pathogenics entered into another amended agreement with
        Mr.
        Sklar and Mr. Mackey, whereby they agreed to extend the due date of the note
        for
        one hundred and eighty-four days from the date of the note and security
        agreement, or November 25, 2005. The maturity date on the note agreement
        was
        extended to November 25, 2006. In consideration for this extension, Pathogenics
        issued 689,656 shares of common stock with a value of $20,000 on August 1,
        2006.
        Pathogenics repaid the note in January 2007.
 
 On
        March
        20, 2006, Pathogenics and First Coventry mutually revoked (retroactively
        effective as of June 1, 2005) the assignment agreement with First Coventry
        previously entered into on May 25, 2005, to assign the license agreement
        which
        Pathogenics received previously from Alpha to First Coventry in return for
        all
        the issued and outstanding shares of First Coventry. In consideration for
        all
        the issued and outstanding shares of First Coventry, Pathogenics agreed to
        instruct its transfer agent on June 1, 2006, to issue First Coventry $20,000
        worth of its common stock, the value of which is attributed by the parties
        to be
        $0.029 per share on June 1, 2005, for a total of 689,655 shares of our common
        stock, together with an appropriate instruction and opinion of counsel directing
        the delivery of these shares of common stock without any restrictive legends
        pursuant to Rule 144 under the 1933 Act. In further consideration, First
        Coventry allowed Pathogenics to grant of a security interest in the Shares
        in
        accordance with the terms of the Note and Security Agreement, and allow their
        unrestricted assignment or transfer in the event of Pathogenics’ default
        thereon.
  Additionally,
        on May 25, 2005, Pathogenics entered into a consultancy agreement with Jodi
        A.
        Nelson (“Nelson”). The consultancy agreement calls for Nelson to provide
        consulting services to Pathogenics in connection with the therapeutic use
        and
        formulation of Chloroquine and its derivatives or analogs. Pathogenics agreed
        to
        pay Nelson $3,000 per month, for Nelson’s first forty (40) hours of work per
        month and $75 per hour thereafter and reimburse Nelson for pre-approved business
        expenses in current in connection with the consulting services rendered to
        Pathogenics. Pathogenics paid Nelson the first month’s retainer of $3,000 upon
        execution of the consultancy agreement, and is deferred and accrued subsequent
        payments in accordance with the consultancy agreement until our stock
        registration statement was declared effective by the SEC on October 6, 2005.
        The
        consultancy agreement included a confidentiality provision, whereby Nelson
        agreed not to disclose Pathogenics’ confidential information other than in
        connection with the consulting services. The consultancy agreement is for
        a
        period of one (1) year from the date of the agreement and is renewable upon
        written agreement of the parties. The consultancy agreement may be terminated
        by
        either party at any time upon one (1) month prior written notice. Pathogenics
        paid Nelson $15,000 in 2005 in connection with the consulting agreement,
        and
        currently owes Nelson $18,000 in unpaid consulting fees. We plan to pay these
        consulting fees through debt and/or equity financing in connection with the
        Merger.
  12




Pathogenics
        obtained the worldwide exclusive rights to the following patent and patent
        applications in connection with Chloroquine Diphosphate, pursuant to the
        licensing agreement entered into between Pathogenics, Alpha and
        Nelson:
 
 o
              US
                  Patent No. 6,417,177; Issue Date: 7/0/2002; Filing Date: 7/13/2000;
                  entitled “Chloroquine Derivatives for the Treatment of Parkinson’s
                  Disease.”
 o
              US
                  60/175,051; Filing Date 1/7/2000; entitled “Chloroquine and Related
                  Compounds Treatment and Prevention of Parkinson’s
                  Disease.”
 o
              AU
                  73865/00; Filing Date 7/13/2000; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              CA
                  2,416,233; Filing Date 7/13/2000; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              EP
                  961993.3; Filing Date 7/13/2000; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              JP
                  2001-508933; Filing Date 7/13/2000; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              WO
                  00/40385; Filing Date 7/13/2000; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              US
                  10/192,414; Filing Date 7/9/2002; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              US
                  10/616,692; Filing Date 7/9/2003; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              WO
                  03/21463; Filing Date 7/9/2003; entitled “Compositions and Methods for the
                  Treatment of Parkinson’s Disease.”
 o
              US
                  60/479,748; Filing Date 6/19/2003; entitled “Compositions and Methods for
                  the Treatment of Parkinson’s
                  Disease.”
 o
              US
                  60/202,140; Filing Date 5/5/2000; entitled “Pharmaceutical Uses of
                  Neuromelanin-Binding Compounds.”
 o
              US
                  60/143,767; Filing Date 7/13/1999; entitled “The Administration of
                  Chloroquine and/or Related
                  Compounds.”
 
 Additionally,
        Pathogenics plans to support ongoing clinical studies of Chloroquine
        Diphosphate, if Pathogenics can raise additional financing.
 
 **Confidentiality
        Agreements**
 
 Pathogenics
        has each company and consultant with whom we consult in connection with
        N-chlorotaurine and Chloroquine Diphosphate sign a Confidentiality Agreement
        (“Confidentiality Agreement”). Each Confidentiality Agreement calls for the
        party receiving the confidential information to refrain from disclosing our
        confidential information to anyone and to take all steps necessary to prevent
        the disclosure of our confidential information. Each Confidentiality Agreement
        is valid for the term of Five (5) years from the date entered into.
 
 **Need
        for Government Approval**
 
 Pathogenics
        or its future licensee will need to obtain U.S. Food and Drug Administration
        (“FDA”), regulatory approval before it is able to market N-chlorotaurine or
        Chloroquine Diphosphate commercially in the US.
 
 The
        Steps
        a company must normally take to obtain FDA approval to sell the drug
        commercially include:
  1.
              Pre-clinical
                  (animal) testing.
  2.
              An
                  investigational new drug application (“IND”), which outlines what the
                  sponsor of a new drug proposes for human testing in clinical
                  trials.
  13
  3.
              Phase
                  I studies typically involve 20 to 80 people and deal with the initial
                  introduction of an investigational new drug into humans. These
                  studies are
                  closely monitored and may be conducted in patients, but are usually
                  conducted in healthy volunteer subjects. These studies are designed
                  to
                  determine the metabolic and pharmacologic actions of the drug in
                  humans,
                  the side effects associated with increasing doses, and, if possible,
                  to
                  gain early evidence on drug effectiveness. During Phase I, sufficient
                  information about the drug's pharmacokinetics and pharmacological
                  effects
                  should be obtained by the sponsor to permit the design of well-controlled,
                  scientifically valid, Phase II studies. Phase I studies also evaluate
                  drug
                  metabolism, structure-activity relationships, and find out how
                  the drug
                  works in humans. These studies also determine which investigational
                  drugs
                  are used as research tools to explore biological phenomena or disease
                  processes. The total number of subjects included in Phase I studies
                  varies
                  with the drug, but is generally in the range of twenty to
                  eighty.
  4.
              Phase
                  II studies typically involve from a few dozen to 300 people, and
                  include
                  the early controlled clinical studies conducted to obtain some
                  preliminary
                  data on the effectiveness of the new drug for a particular indication
                  or
                  indications in patients with the disease or condition. This phase
                  of
                  testing also helps determine the common short-term side effects
                  and risks
                  associated with the drug. Phase II studies are typically well-controlled
                  and closely monitored.
  5.
              Phase
                  III studies typically involve a few hundred to about 3,000 people.
                  Phase
                  III studies are expanded controlled and uncontrolled trials. They
                  are
                  performed after preliminary evidence suggesting effectiveness of
                  the drug
                  has been obtained in Phase II, and are intended to gather the additional
                  information about effectiveness and safety that is needed to evaluate
                  the
                  overall benefit-risk relationship of the drug. Phase III studies
                  also
                  provide an adequate basis for extrapolating the results to the
                  general
                  population and transmitting that information in the physician labeling.
                  Phase III studies usually include several hundred to several thousand
                  people.
  6.
              The
                  pre-NDA period, just before a new drug application, or NDA, is
                  submitted.
  A
        common
        time for the FDA and drug sponsors to meet.
  7.
              Submission
                  of a new drug application is the formal step asking the FDA to
                  consider a
                  drug for marketing approval. Following the completion of all three
                  phases
                  of clinical trials, the sponsor analyzes all of the data and files
                  an NDA
                  with FDA if the data successfully demonstrate the safety and effectiveness
                  of the drug. The NDA must contain all of the scientific information
                  that
                  the sponsor has gathered. NDA's are typically 100,000 pages or
                  more. By
                  law, the FDA is allowed six months to review an NDA, however in
                  almost all
                  cases, the period between the first submission of an NDA and final
                  FDA
                  approval exceeds that limit.
  8.
              After
                  an NDA is received, the FDA has 60 days to decide whether to file
                  it so it
                  can be reviewed.
  9.
              If
                  the FDA files the NDA, an FDA review team is assigned to evaluate
                  the
                  sponsor's research on the drug's safety and
                  effectiveness.
  10.
              The
                  FDA reviews information that goes on a drug's professional labeling,
                  guidance on how to use the drug.
  11.
              The
                  FDA inspects the facilities where the drug will be manufactured
                  as part of
                  the approval process.
  12.
              FDA
                  reviewers will approve the drug or find it either "approvable"
                  or "not
                  approvable."
  13.
              Assuming
                  the FDA approves the NDA, the new drug becomes available for physicians
                  to
                  prescribe. The sponsor must then continue to submit periodic reports
                  to
                  the FDA, including any cases of adverse reactions and appropriate
                  quality-control records. For some medicines, the FDA requires additional
                  studies, Phase IV studies, which evaluate the long-term effects
                  of a
                  drug.
  14




**Risk
        Factors**
  Our
        securities are highly speculative and should only be purchased by persons
        who
        can afford to lose their entire investment in Pathogenics, Inc. You should
        carefully consider the following risk factors and other information in this
        annual report before deciding to become a holder of our Common Stock. If
        any of
        the following risks actually occur, our business and financial results could
        be
        negatively affected to a significant extent. Our business is subject to many
        risk factors, including the following. The Financial Information presented
        throughout this annual report is taken from our audited financial statements,
        provided under the heading “Financial Statements,” unless otherwise
        stated.
 
 **Risks
        Related to Our Financial
        Condition**
  **We
        May Not be Able to Continue Our Business Operations Unless We Raise Additional
        Financing.**
 
 We
        are a
        biopharmaceutical company that has out-licensed only one product to date,
        and we
        have only recently received limited commercial revenues have generated no
        profits to date. We depend to a great degree on the ability to attract external
        financing in order to develop our patent rights in connection with
        N-Chlorotaurine and to develop therapeutic uses for Chloroquine Diphosphate.
        We
        anticipate the need for approximately $2,400,000 in additional financing
        to
        perform research and development on N-chlorotaurine and Chloroquine Diphosphate
        and obtain FDA approval of an IND for each drug. We had $228,564 of total
        assets, $639,696 of liabilities and total shareholders deficit of $411,132
        as of
        December 31, 2006. Currently, we believe it will have enough money to continue
        its business operations until the end of the fourth quarter of 2007, assuming
        Egenix provides funding as it is required to pursuant to the Agreement and
        Plan
        of Merger. However, there is a risk that the Merger will not be consummated
        and/or that we will not be able to meet our current and future liabilities
        and
        remain in operation until we are able to receive additional money in connection
        with the Merger. Additionally, there is a risk that the money we receive
        as a
        result of the Merger will not be enough to pay our future obligations. Finally,
        there is a risk that Egenix does not provide funds in accordance with the
        Agreement and Plan of Merger, even though it is obligated to. If this were
        to
        happen, Pathogenics would have a breach of contract claim against Egenix,
        which
        Pathogenics would likely litigate. If any of these things were to happen,
        it
        could force Pathogenics to suspend or abandon its business operations while
        Pathogenics is in litigation, suspend or abandon the development of
        N-chlorotaurine and/or suspend or abandon our business plan, which could
        lead to
        any investment in Pathogenics being lost.
 
 **We
        May Not Be Able to Meet Our Current and Future Liabilities and Remain in
        Operation Until We Receive The Money In Connection With the
        Merger.**
 
 Pathogenics
        had $86,686 of cash at December 31, 2006, and $639,696 for current liabilities.
        Pathogenics had negative working capital of $411,132 at December 31, 2006.
        We
        believe it will be able to remain in operation until the end of the fourth
        quarter of 2007, assuming the receipt of funds from Egenix as part of the
        Agreement and Plan of Merger, as we believe it is currently successful in
        keeping its expenses low while still in the beginning stage of its technologies.
        If Pathogenics is delayed in raising that money, as a result of Pathogenics
        not
        consummating the Merger, or for any other reason, Pathogenics could be forced
        to
        abandon or curtail its planned research and development activities, and/or
        abandon or curtail its operations, and any investment in Pathogenics could
        be
        lost.
 
 **There
        is Substantial Doubt As To Whether Our Company Can Continue As A Going
        Concern.**
 
 Our
        Company has only recently generated limited revenues since our change in
        business focus to a biopharmaceutical company focused on high value-added
        pharmaceutical clinical development and we have incurred substantial losses.
        These factors indicate that Pathogenics may be unable to continue as a going
        concern, particularly in the event that it cannot generate sufficient cash
        flow
        to conduct its operations and/or obtain additional sources of capital and
        financing. Currently, our management believes that it will be able to continue
        as a going concern, due to the fact that Egenix is required to provide funding
        pursuant to the Agreement and Plan of Merger, and because Pathogenics is
        not
        required pay the N-chlorotaurine or Chloroquine Diphosphate researchers any
        royalties until Pathogenics is able to commercially market any products based
        on
        N-chlorotaurine or Chloroquine Diphosphate. However, if Pathogenics is not
        able
        to continue as a going concern, any investment in Pathogenics could become
        worthless.
  15




**We
        Lack an Operating History Which You Can Use to Evaluate Us, Making Any
        Investment in Our Company Risky.**
 
 Our
        Company lacks an operating history which investors can use to evaluate our
        Company’s previous earnings. This makes it harder for you as an investor to
        predict how our Company may do in the future. Therefore, an investment in
        our
        Company is risky because we have no business history and it is hard to predict
        what kind of return our stock will have in the future, if at all.
 
 **We
        Have a Poor Financial Position and If We Do Not Generate Revenues, We May
        Be
        Forced to Abandon Our Business Plan.**
 
 Our
        Company currently has a poor financial position. We have only recently generated
        limited revenues but we have not yet obtained any of the government approval
        we
        will require for N-Chlorotaurine or Chloroquine. There is a possibility we
        will
        never obtain government approval from the FDA and the European Medicines
        Agency
        (“EMEA”) and we will therefore not generate enough profits for your investment
        in our Company to appreciate. If we never generate any revenues, our Company
        may
        be forced to abandon its business plan and any investment in Pathogenics
        could
        become worthless.
 
 **Our
        Industry Is Competitive and As Such Competitive Pressures Could Prevent Us
        From
        Obtaining Profits, Forcing Us to Abandon or Curtail Our Business Plan and
        Possibly Liquidate Our Assets.**
 
 One
        of the
        main factors in determining in whether Pathogenics will be able to realize
        any
        profits and/or be able to continue its business plan will be whether or not
        Pathogenics is able to successfully compete in the biopharmaceutical industry.
        The biopharmaceutical industry is highly competitive and Pathogenics may
        be
        competing against companies with greater resources and more experience in
        the
        biopharmaceutical industry. If Pathogenics is unable to compete in the
        marketplace and fails to generate any profits, Pathogenics may be forced
        to
        liquidate its assets and any investment in our Company could be
        lost.
 
 **Risks
        Related to Our
        Operations**
  **To
        Develop N-chlorotaurine and Chloroquine Diphosphate and/or Other Technologies
        We
        May In-License In The Future, or We May Need To Enter Into Collaborative
        Agreements with Other Companies Which May Limit Our Control of Our Technologies,
        Which Would Decrease Any Potential Fees We Ultimately Receive in Connection
        with
        N-chlorotaurine and/or Chloroquine Diphosphate.**
 
 **** We
        do not
        have the resources to directly conduct full clinical development, obtain
        regulatory approvals, or manufacture or commercialize any products, and we
        have
        no current plans to acquire such resources. Therefore, we depend upon others
        to
        carry out such activities. As a result, we anticipate that we may enter into
        collaborative agreements with third parties able to contribute to developing
        our
        technologies. Such agreements may limit our control over any or all aspects
        of
        development of N-chlorotaurine, Chloroquine Diphosphate and/or other
        technologies.
 
 To
        be
        profitable, we must successfully commercialize our technologies. They are
        however in the early stages of development and will require significant further
        research, development and testing, and are subject to the risks of failure
        inherent in the development of products based on innovative or novel
        technologies. They are also rigorously regulated by the federal government,
        particularly the U.S. Food and Drug Administration (the "FDA") and by comparable
        agencies in state and local jurisdictions and in foreign countries. Each
        of the
        following is possible with respect to any one of our products:
 
 o
              that,
                  in the case of N-chlorotaurine and Chloroquine Diphosphate and
                  other
                  pharmaceutical technologies we may choose to develop, we will not
                  be able
                  to enter into human clinical trials because of scientific, governmental
                  or
                  financial reasons, or that we will encounter problems in clinical
                  trials
                  that will cause us to delay or suspend development of one of the
                  technologies;
  16
  o
              that
                  any of our products will be found to be ineffective or
                  unsafe;
 
 o
              that
                  government regulation will delay or prevent any product's marketing
                  for a
                  considerable period of time and impose costly procedures upon our
                  activities;
 
 o
              that
                  the FDA or other regulatory agencies will not approve a given product
                  or
                  will not do so on a timely basis;
 
 o
              that
                  the FDA or other regulatory agencies may not approve the process
                  or
                  facilities by which a given product is
                  manufactured;
 
 o
              that
                  our dependence on others to manufacture our products may adversely
                  affect
                  our ability to develop and deliver the products on a timely and
                  competitive basis;
 
 o
              that,
                  if we are required to manufacture our own products, of which we
                  have no
                  current plans, we will be subject to similar risks regarding delays
                  or
                  difficulties encountered in manufacturing the products, will require
                  substantial additional capital, and may be unable to manufacture
                  the
                  products successfully or in a cost-effective
                  manner;
 
 o
              that
                  the FDA's policies may change and additional government regulations
                  and
                  policies may be instituted, both of which could prevent or delay
                  regulatory approval of our potential products; or
 
 o
              that
                  we will be unable to obtain, or will be delayed in obtaining, approval
                  of
                  a product in other countries, because the approval process varies
                  from
                  country to country and the time needed to secure approval may be
                  longer or
                  shorter than that required for FDA
                  approval.
 
 Similarly,
        it is possible that, for the following reasons, we may be unable to
        commercialize, or receive royalties from the sale of, any given technology,
        even
        if it is shown to be effective:
 
 o
              if
                  it is uneconomical;
 
 o
              if,
                  in the case of N-chlorotaurine and Chloroquine Diphosphate or other
                  pharmaceutical technologies we may attempt to develop in the future,
                  it is
                  not eligible for third-party reimbursement from government or private
                  insurers;
 
 o
              if
                  others hold proprietary rights that preclude us from commercializing
                  it;
 
 o
              if
                  others have brought to market equivalent or superior
                  products;
 
 o
              if
                  others have superior resources to market similar products or
                  technologies;
 
 o
              if
                  government regulation imposes limitations on the indicated uses
                  of a
                  product, or later discovery of previously unknown problems with
                  a product
                  results in added restrictions on the product or results in the
                  product
                  being withdrawn from the market; or
 
 o
              if
                  we are able to gain patent rights on our products and technologies,
                  we may
                  lose these rights for failure to pay maintenance
                  fees;
 
 o
              if
                  it has undesirable or unintended side effects that prevent or limit
                  its
                  commercial use.
 
 17


**We
        Will Need Government Approval Before We Will Be Able to Market N-Chlorotaurine,
        Chloroquine or Other Technologies Pathogenics May Choose to Develop In the
        Future, and If We Are Unable to Obtain Government Approval, We May Be Forced
        To
        Abandon N-chlorotaurine as a Commercial Product, Which May Force Pathogenics
        to
        Cease Business Operations.**


Pathogenics
        will need to have U.S. Food and Drug Administration (“FDA”), European Medicines
        Agency (“EMEA”) approval, and/or may need other state and national regulatory
        approval before it is able to market N-Chlorotaurine and/or **** Chloroquine
        Diphosphate commercially, assuming that Pathogenics is able to commercially
        produce N-chlorotaurine and/or Chloroquine Diphosphate. Pathogenics may be
        unable to obtain the approval of the FDA, EMEA and state and national regulatory
        approval because those entities may feel that N-chlorotaurine and/or Chloroquine
        Diphosphate are not safe, have side effects, or in the case of N-chlorotaurine
        has limited or no anti-microbial properties. **** If
        Pathogenics is unable to obtain Regulatory Approval for N-chlorotaurine and/or
        Chloroquine Diphosphate, or runs out of money before Pathogenics can obtain
        Regulatory Approval for N-chlorotaurine and/or Chloroquine Diphosphate,
        Pathogenics will be unable to commercially market N-chlorotaurine and/or
        Chloroquine Diphosphate and Pathogenics will likely fail. As a result, you
        will
        likely lose any investment in Pathogenics could become worthless.
 
 **We
        May Be Unable To Successfully Compete Against Companies with Resources Greater
        Than Ours, If We Are Unable To Protect Our Patent Rights And Trade Secrets,
        Or
        If We Infringe On The Proprietary Rights Of Third Parties.**
 
 Additionally,
        Pathogenics will need to obtain patents on its technology to protect its
        rights
        to that technology. To obtain a patent on an invention, one must be the first
        to
        invent it or the first to file a patent application for it. We cannot be
        sure
        that the inventors of subject matter covered by patents and patent applications
        that we own or license were the first to invent, or the first to file patent
        applications for, those inventions. Furthermore, patents we own or license
        may
        be challenged, infringed upon, invalidated, found to be unenforceable, or
        circumvented by others, and our rights under any issued patents may not provide
        sufficient protection against competing drugs or otherwise cover commercially
        valuable drugs or processes.
 
 We
        seek to
        protect trade secrets and other un-patented proprietary information, in part
        by
        means of confidentiality agreements with our collaborators, employees, and
        consultants. If any of these agreements is breached, we may be without adequate
        remedies. Also, our trade secrets may become known or be independently developed
        by competitors.
 
 **N-chlorotaurine
        May Not Be Effective As An Anti-Infective, May Cause Side Effects, Be Too
        Expensive To Produce, Have Other Complications Which Render It Unprofitable
        Or
        Useless As An Anti-Infective Or Pathogenics May Be Unable To Find A Corporate
        Partner To Market N-chlorotaurine, Which Could Force Pathogenics to Seek
        Other
        Business Opportunities and/or Cease Operations.**
 
 While
        Pathogenics has conducted small-scale clinical studies (to assess safety
        and
        efficacy in humans) N-chlorotaurine has yet to be found to be effective as
        an
        anti-infective by any regulatory authority or not to cause side effects which
        would make it unsafe to produce by any regulatory authority, not to be too
        expensive to produce in commercial quantities, and/or not to have any other
        complications which render N-chlorotaurine unprofitable for Pathogenics to
        produce. Additionally, even if Pathogenics does choose to market
        N-chlorotaurine, Pathogenics may not be able to find a corporate partner
        to
        partner with and be unable to produce commercial quantities of N-chlorotaurine
        and/or bring N-chlorotaurine to market. If N-chlorotaurine were found to
        have
        any of the qualities listed above, Pathogenics will be forced to abandon
        its
        business plan and will be forced to abandon or curtail its business plan.
        As a
        result, any investment in Pathogenics could become worthless.
 
 **Chloroquine
        Diphosphate May Not Be Effective As A Treatment for Parkinson’s Disease, May
        Cause Side Effects, Be Too Expensive To Produce, Have Other Complications
        Which
        Render It Unprofitable Or Pathogenics May Be Unable To Find A Corporate Partner
        To Market Chloroquine Diphosphate, Which Could Force Pathogenics to Seek
        Other
        Business Opportunities and/or Cease Operations.**
 
 Chloroquine
        Diphosphate has yet to be found to be effective as a treatment for Parkinson’s
        Disease by any government regulatory body, nor has it been sufficiently tested
        to determine whether it causes any side effects which would make it unsafe
        to
        produce, not to be too expensive to produce in commercial quantities, and/or
        not
        to have any other complications which may render Chloroquine Diphosphate
        unprofitable for Pathogenics to produce. Additionally, even if Pathogenics
        does
        choose to market Chloroquine Diphosphate, Pathogenics may not be able to
        find a
        corporate partner to partner with and be unable to produce commercial quantities
        of Chloroquine Diphosphate and/or bring Chloroquine Diphosphate to market.
        If
        Chloroquine Diphosphate were found to have any of the qualities listed above,
        Pathogenics will be forced to abandon its business plan and will be forced
        to
        abandon or curtail its business plan. As a result, any investment in Pathogenics
        could become worthless.
  18




**The
        Austrian Researchers May Not Permit Us To Use the Research and Development
        Studies They Have Conducted on N-chlorotaurine In Support of Our Investigational
        New Drug Application.**
 
 We
        believe
        that most, if not all of the pre-clinical studies conducted by the researchers
        should be admissible to the FDA to support the filing of Pathogenics’ IND
        application on N-chlorotaurine. However, the Austrian researchers are under
        no
        obligation to allow Pathogenics to use their pre-existing research in support
        of
        its investigational new drug application. If the Austrian researchers do
        not
        permit us to use their pre-existing research in support of our IND application,
        we will be forced to duplicate their studies and results at a substantial
        additional expense, which funds we do not currently have. Additionally, if
        it
        becomes necessary to duplicate the Austrian researcher’s studies, it will cause
        us substantial additional delays in the process of obtaining FDA approval
        for
        N-chlorotaurine. If we are unable to raise the additional funds needed to
        duplicate the Austrian researcher’s studies and results on N-chlorotaurine, we
        could be forced to abandon our plans to obtain FDA approval for N-chlorotaurine
        and/or scale back or abandon our business plan, which could cause any investment
        in Pathogenics to become worthless.
 
 **We
        May Not Successfully Resolve Our Current Dispute With Alpha Research Group,
        LLC
        and Jodi A. Nelson Over Their Claimed Termination of the License Agreement
        for
        Chloroquine Diphosphate, Or May Not Prevail To Have the Termination Declared
        Ineffective in an Arbitration Hearing, Which Would Force Pathogenics To Abandon
        Chloroquine as a Commercial Product, Which Could Force Pathogenics to Seek
        Other
        Business Opportunities and/or Cease Operations.**
 
 We
        believe
        in good faith that the notice of termination of the license agreement executed
        on May 25, 2005, between Alpha, Nelson and Pathogenics is entirely ineffective,
        that the license agreement has not been terminated and remains in full-force
        and
        effect, and that the Alpha’s and Nelson’s claims in support of termination are
        entirely without merit. Pathogenics has elected to seek relief through
        application of the formal dispute resolution process in accordance with the
        clear provisions of license agreement, and intends to vigorously defend its
        position. However, if Pathogenics is unable to successfully resolve this
        current
        dispute directly with Alpha and Nelson, the dispute would first be referred
        to
        mediation, and if the parties still have not reached a settlement, then to
        arbitration. The arbitrators have the authority to grant specific performance.
        If Pathogenics loses the arbitration and the termination of the license
        agreement for Chloroquine is declared effective, we would be forced to abandon
        our plans to commercialize Chloroquine and/or scale back or abandon our business
        plan, which could force Pathogenics to seek other business opportunities
        and/or
        cease operation. As a result, any investment in Pathogenics could become
        worthless.
 
 **We
        Rely Upon Key Personnel and If They Leave Our Company Our Business Plan and
        Our
        Business Operations Could Be Adversely Effected.**
 
 We
        rely on
        Frederic P. Zotos, our Chief Executive Officer and Director and Michael L.
        Ferrari, our Vice President and Director for the success of our Company.
        Their
        experience and inputs create the foundation for our business and they are
        responsible for the directorship and control over our development activities.
        Mr. Zotos entered into an employment contract with Pathogenics on March 15,
        2005. Mr. Ferrari entered into a consulting contract with Pathogenics on
        January
        1, 2006. Pathogenics does not hold “key man” insurance on either Mr. Zotos or
        Mr. Ferrari. Moving forward, should they be lost for any reason, Pathogenics
        will incur costs associated with recruiting replacement personnel and could
        face
        potential delays in operations. If we are unable to replace them with other
        suitably trained individuals, Pathogenics may be forced to scale back or
        curtail
        our business plan. As a result of this, your securities in our Company could
        become devalued.
  19




**Risks
        Related to Our
        Securities**
  **We
        Lack a Market For Our Common Stock, Which Makes an Investment in Our Securities
        Speculative.**
 
 We
        currently lack a market for our Common Stock. Because of this, it is hard
        to
        determine exactly how much our securities are worth. This makes an investment
        in
        our Company very speculative. As a result of the lack of market, it is hard
        to
        judge how much the securities you may purchase are worth and it is possible
        that
        they could become worthless.
 
 **Investors
        May Face Significant Restrictions on the Resale of Our Common Stock Due to
        Federal Regulations of Penny Stocks.**
 
 If
        our
        Common Stock is listed on the OTC Bulletin Board, it will be subject to the
        requirements of Rule 15(g)9, promulgated under the Securities Exchange Act
        as
        long as the price of our Common Stock is below $5.00 per share. Under such
        rule,
        broker-dealers who recommend low-priced securities to persons other than
        established customers and accredited investors must satisfy special sales
        practice requirements, including a requirement that they make an individualized
        written suitability determination for the purchaser and receive the purchaser's
        consent prior to the transaction. The Securities Enforcement Remedies and
        Penny
        Stock Reform Act of 1990, also requires additional disclosure in connection
        with
        any trades involving a stock defined as a penny stock. Generally, the Commission
        defines a penny stock as any equity security not traded on an exchange or
        quoted
        on NASDAQ that has a market price of less than $5.00 per share. The required
        penny stock disclosures include the delivery, prior to any transaction, of
        a
        disclosure schedule explaining the penny stock market and the risks associated
        with it. Such requirements could severely limit the market liquidity of the
        securities and the ability of purchasers to sell their securities in the
        secondary market.
  **ITEM
                  2.**
              **DESCRIPTION
                  OF PROPERTY**
  Pathogenics
        entered into a lease for office space on March 1, 2005, with SFKM&B d/b/a
        Stratis Business Centers (“Stratis”), which operates a suite of offices with
        support services located at 99 Derby Street, Hingham, MA 02043. Under the
        office
        service agreement, Pathogenics is given the use of a conference room and
        visitors office facilities. Under the terms of the lease, Pathogenics agreed
        to
        pay Stratis $275.00 per month.
 
  We
        believe
        that our existing facilities are adequate to meet our current requirements.
        We
        do not own any real property.
  **ITEM
                  3.**
              **LEGAL
                  PROCEEDINGS**
  From
        time
        to time, we may become party to litigation or other legal proceedings that
        we
        consider to be a part of the ordinary course of our business.
 
 On
        April
        18, 2006, Pathogenics received a notice of dispute of the consultancy agreement
        executed on May 25, 2005, between Jodi A. Nelson and Pathogenics. Pathogenics
        currently owes Nelson $18,000 in unpaid consulting fees. We plan to pay these
        consulting fees through debt and/or equity financing in connection with the
        Merger.
 
 On
        May 9,
        2006, Pathogenics received a written notice from Alpha and Nelson that purported
        to terminate the May 2005 license agreement with Pathogenics. According to
        this
        letter, the basis for the termination was Pathogenics’ alleged failure to pay
        for previously unpaid patent costs incurred by Alpha and Nelson before the
        effective date of the license agreement with Pathogenics. We believe that
        the
        purported termination by Nelson and Alpha is invalid, that there is no basis
        for
        terminating the license agreement, that the license agreement remains
        in
        full-force and effect ,
        and that
        the Alpha’s and Nelson’s claims
        in
        support of termination are entirely without merit. Pathogenics has elected
        to
        seek relief through application of the formal dispute resolution process in
        accordance with the clear provisions of license agreement ,
        and
        intends to vigorously defend its position.
 20




Other
        than
        as described above, we are not currently involved in legal proceedings that
        could reasonably be expected to have a material adverse effect on our business,
        prospects, financial condition or results of operations, nor are we aware
        of any
        such threatened litigation.
 
 
  **ITEM
                  4.**
              **SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS**
  None.
  21




**PART
        II**
  **ITEM
                  5.**
              **MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS**
  **Market
        Information**
 
 No
        established public trading market exists for our Common Stock. We have no
        shares
        of Common Stock subject to outstanding options or warrants to purchase our
        Common Stock. We currently have no shares of Convertible Preferred Stock
        outstanding. As of March 12, 2007, there were 49,567,615 shares of Common
        Stock
        outstanding, held by 43 shareholders of record.
 
 **Dividend
        Policy**
 
 To
        date,
        we have not declared or paid any dividends on our outstanding Common Stock.
        We
        currently do not anticipate paying any cash dividends in the foreseeable
        future
        on our Common Stock. Although we intend to retain our earnings to finance
        our
        operations and future growth, our Board of Directors will have discretion
        to
        declare and pay dividends in the future. Payment of dividends in the future
        will
        depend upon our earnings, capital requirements and other factors, which our
        Board of Directors may deem relevant.
 
 **Recent
        Sales of Unregistered
        Securities**
  On
        August
        1, 2006, we issued to William K. Mackey and William L. Sklar an aggregate
        of
        689,656 shares of our common stock, at an aggregate value of $20,000, in
        consideration for their agreement to extend the maturity date of a promissory
        note in the principal amount of $20,000 issued by us in their favor. We relied
        on the exemption from the registration requirements of federal securities
        laws
        provided by Section 4(2) of the Securities Act as the issuance of the sale
        was
        made to two, sophisticated purchasers, did not involve any general solicitation
        and did not otherwise involve a public offering.
  **ITEM
                  6.**
              **MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS**
  
 **Overview**
  The
        Company was incorporated in Delaware on December 16, 1997, and had no business
        operations until the date of the Reorganization (defined below). We are a
        biopharmaceutical company engaged in the acquisition, development and
        commercialization of novel therapeutics that have potential significant
        commercial viability and that target certain unmet market needs. We currently
        own the rights to N-chlorotaurine, a novel anti-microbial agent we believe
        may
        be useful in the treatment of a variety of diseases, and Chloroquine Diphosphate
        based formulations we believe may be useful in the treatment of symptoms
        and
        arresting the progression of Parkinson’s disease.  We
        have
        been unprofitable since inception and expect to incur substantial additional
        operating losses over the next several years. The following discussion and
        analysis should be read in conjunction with the consolidated financial
        statements and notes thereto appearing elsewhere in this Form
        10-KSB.
 
 **Combination
        with Tyrol**
 
 On
        February 10, 2005, the Company and Tyrol Therapeutics, LLC (“Tyrol”) entered
        into an Agreement and Plan of Reorganization, in which Pathogenics acquired
        all
        assets of and assumed all of the liabilities of Tyrol for 40,900,000 shares
        of
        common stock of Pathogenics (the “Reorganization Agreement” and the
“Reorganization”). As a result, after the closing of the Reorganization, the
        former members of Tyrol owned approximately 98.41% of the voting shares of
        Pathogenics. Due to the facts that the former members of Tyrol received the
        majority of the voting shares of Pathogenics, the then President of Tyrol
        became
        the President of the Company and representatives of Tyrol held two of the
        three
        seats on the Company’s Board of Directors, the merger was accounted for as a
        recapitalization of Tyrol, whereby Tyrol was the accounting acquirer (legal
        acquiree) and Pathogenics was the accounting acquiree (legal
        acquirer).
  22




Accordingly,
        at the closing, Pathogenics was a non-operating shell corporation unable
        to meet
        the definition of a business as defined in EITF Consensus 98-3. Therefore,
        the
        transaction was accounted for as a recapitalization of Tyrol. This transaction
        is equivalent to Tyrol issuing stock for the net liabilities of Pathogenics,
        accompanied by a recapitalization. The accounting is identical to that resulting
        from a reverse acquisition, except that there are no adjustments to the historic
        carrying values of the assets and liabilities.
 
 Since
        our
        combination with Tyrol was accounted for as a recapitalization of Tyrol,
        our
        management’s discussion and analysis is based upon the financial condition and
        results of operation of Tyrol for the years ended December 31, 2004 and 2003
        and
        for the Period from November 19, 2002 (Inception of Tyrol) through
        December 31, 2005. Our management’s discussion and analysis of financial
        condition and results of operations contain forward-looking statements, which
        involve risks and uncertainties. Actual results could differ materially from
        those anticipated in these forward-looking statements as a result of certain
        factors, including those set forth in the section entitled “Risk Factors” of
        this Form 10-KSB.
 
 **2006
        Versus 2005**
  **Revenue**
  During
        the
        year ended December 31, 2006, we had revenues of $153,830 for license fees
        received. Prior to 2006, Pathogenics had no revenues since
        inception.
 
 **Operating
        Expenses**
 
 During
        the
        year ended December 31, 2006, our operating expenses decreased by $20,873
        or 5%
        to $389,023, compared to $409,896 for the year ended December 31, 2005. The
        decrease was primarily attributable to the note receivable entered into in
        November 2006 with Egenix for $140,705 for the reimbursement of expenses
        and a
        decrease in legal expenses. This was partially offset by increase of $46,235
        in
        compensation costs, license payments of $129,999 in 2006 and increase of
        $21,782
        in research and development expenses.
 
 **Interest
        Expense**
 
 We
        incurred interest expense of $28,818 during 2006 for notes payable. No interest
        expense was incurred during 2005.
 
 **Net
        Loss**
 
 Pathogenics
        incurred a net loss of $261,118 for the year ended December 31, 2006, a decrease
        in net loss of $148,778 from net loss of $409,896 for the year ended December
        31, 2005, which decrease was primarily due to our revenue recognized in 2006
        as
        described above.
 
 Loss
        per
        share was $(0.01) for the year ended December 31, 2006 and $(0.01) for the
        year
        ended December, 2005.
 
 **Liquidity
        And Capital Resources**
  We
        had
        cash of 86,686 as of December 31, 2006, compared to $284 at December 31,
        2005.
 
 We
        had
        total assets of $228,564 and total liabilities of $639,696 as of December
        31,
        2006. This resulted in a negative working capital of $411,132 as of December
        31,
        2006.
 
 Co-incident
        with the merger of Tyrol with Pathogenics in 2005, we sold shares to investors
        through a private placement offering which provided operating capital of
        approximately $155,000 to pay expenses incurred in the issuance of a
        Registration Statement and provide further support for general and
        administrative costs, and new product development.
  23




We
        had a
        total accumulated deficit of $719,581 as of December 31, 2006.
 
 We
        had
        $10,773 provided by operating activities for the year ended December 31,
        2006,
        which compares to $153,575 used in operating activities in 2005.
 
 We
        had
        $75,629 in net cash provided by financing activities for the year ended December
        31, 2006, compared to $153,783 for 2005. The amount for 2006 resulted from
        advances from Egenix and related parties and the amount for 2005 resulted
        from
        sale of common stock of $900 and proceeds from preferred stock of
        $155,000.
 
 Pathogenics
        is presently operating at a loss. Pathogenics will need to raise additional
        capital, either debt or equity capital, to fund future operation and ultimately
        to attain profitable operation. On April 14, 2006, Pathogenics received $50,000
        in cash from Acuity Pharmaceuticals, Inc. in connection with a license agreement
        for N-Chlorotaurine for ophthalmic indications. On September 29, 2006
        Pathogenics received a promissory note for $90,000 at an interest rate equal
        to
        the prime rate published by the Wall Street Journal with a maturity date
        of
        December 31, 2006 from Acuity Pharmaceuticals, Inc. in connection with a
        license
        agreement for N-Chlorotaurine for ophthalmic indications. On October 2, 2006
        Pathogenics received $10,000 in cash from Acuity Pharmaceuticals, Inc. in
        connection with a license agreement for N-Chlorotaurine for ophthalmic
        indications. During 2006, Pathogenics received $85,545 in cash from Egenix,
        Inc.
        in connection with the Agreement and Plan of Merger. On November 28, 2006
        Pathogenics received a promissory note for $140,705 at 10% interest with
        a
        maturity date of July 31, 2007 from Egenix, Inc. in connection with the
        Agreement and Plan of Merger.
 
 We
        believe
        we can satisfy its cash requirements until the end of the fourth quarter
        of
        2007, assuming the receipt of funds from Egenix as part of the Agreement
        and
        Plan of Merger, as We believe it is currently successful in keeping its expenses
        low while still in the beginning stage of its technologies. In connection
        with
        the Agreement and Plan of Merger with Egenix, management has received $85,545
        and a promissory note for $140,705 at 10% interest with a maturity date of
        July
        31, 2007 from Egenix, Inc. We received $195,000 in January, February and
        March
        2007 from Egenix, Inc. in connection with the Agreement and Plan of
        Merger.
 
 If
        Pathogenics does not have sufficient funds to continue its operations as
        planned, Pathogenics plans to scale down its operations and/or accrue salaries
        and expenses until additional financing can be raised. However, there can
        be no
        assurance that any new capital will be available to Pathogenics after the
        receipt of funds from Egenix, if at all, or that adequate funds for our
        operations, whether from our financial markets, or other arrangements will
        be
        available when needed or on terms satisfactory to Pathogenics. Pathogenics
        has
        no commitments from officers, directors or affiliates to provide funding.
        The
        failure of Pathogenics to obtain adequate additional financing may require
        Pathogenics to delay, curtail or scale back some or all of its operations.
        Any
        additional financing may involve dilution to our then-existing
        shareholders.
 
 Several
        conditions raise substantial doubt about our ability to continue as a going
        concern, and the financial statements as presented do not include any
        adjustments relating to the classification of the liabilities that might
        be
        necessary should we be unable to continue as a going concern.
 
 **Amounts
        Spent During Each of the Last Two Fiscal Years on Research and Development
        Activities**
  Research
        and Development over the past two (2) years, described above under “Clinical
        Development of N-chlorotaurine to Date,” has been completed by the
        N-chlorotaurine inventors in Austria. The inventors themselves have primarily
        funded this work ( performing
        medical research on promising compounds like N-chlorotaurine is part of the
        job
        responsibilities for the N-chlorotaurine inventors at the University on
        Innsbruck) ,
        with an
        additional €263,859 (approximately $348,017 as of March 12, 2007) of medical
        research grant assistance provided by the by
        the
        Austrian Science Foundation and the Jubilee Fund of the Austrian National
        bank
        from 1997 - 2005 .
        Additionally, Pathogenics has paid only a limited amount for the research
        and
        development of Chloroquine Diphosphate.
  24




**Critical
        Accounting
        Policies**
  In
        December 2001, the SEC requested that all registrants discuss their most
        “critical accounting policies” in management’s discussion and analysis of
        financial condition and results of operations. The SEC indicated that a
“critical accounting policy” is one which is both important to the portrayal of
        our financial condition and results and requires management’s most difficult,
        subjective or complex judgments, often as a result of the need to make estimates
        about the effect of matters that are inherently uncertain. Our significant
        accounting policies are described in Note 1 to our consolidated financial
        statements included in this annual report, however, we believe that none
        of them
        are considered to be critical.
 
 **Revenue
        Recognition**
 
 We
        recognize revenue when persuasive evidence of an arrangement exists, services
        have been rendered, the sales price is fixed or determinable, and collectibility
        is reasonably assured.
 
  **Recently
        Issued Accounting
        Standards**
  In
        December 2004, the FASB issued SFAS No. 123(R), “Accounting for
        Stock-Based Compensation” SFAS No. 123(R) establishes standards for the
        accounting for transactions in which an entity exchanges its equity instruments
        for goods or services. This Statement focuses primarily on accounting for
        transactions in which an entity obtains employee services in share-based
        payment
        transactions. SFAS No. 123(R) requires that the fair value of such equity
        instruments be recognized as expense in the historical financial statements
        as
        services are performed. Prior to SFAS No. 123(R), only certain pro forma
        disclosures of fair value were required. SFAS No. 123(R) was effective for
        Pathogenics as of January 1, 2006. The adoption of this new accounting
        pronouncement did not have a material impact on our financial statements
        during
        2006.
 
  **ITEM
                  7.**
              **CONSOLIDATED
                  FINANCIAL STATEMENTS**
  For
        a list
        of the consolidated financial statements filed as part of this report, see
        the
        Index to Consolidated Financial Statements following the exhibits to this
        annual
        report.
  **ITEM
                  8.**
              **CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE**
  None.
  **ITEM
                8A.**
              ******CONTROLS
                  AND PROCEDURES**
  **Evaluation
        of Controls**
 
 We
        maintain disclosure controls and procedures designed to provide reasonable
        assurance that information required to be disclosed in the reports we file
        with
        the SEC is recorded, processed, summarized and reported within the time periods
        specified in the rules of the SEC. As of December 31, 2006, we carried out
        an
        evaluation, under the supervision and the participation of our President,
        Chief
        Executive Officer and Treasurer, of the effectiveness of the design and
        operation of our disclosure controls and procedures (as defined in Rules
        13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended).
        Based upon that evaluation, our President, and Chief Executive Officer and
        Treasurer concluded that our disclosure controls and procedures were effective
        as of that date in ensuring that the information required to be disclosed
        by
        Pathogenics in the reports that it files or submits under the Exchange Act
        is
        accumulated and communicated to the Company's management, including its
        President, Chief Executive Officer and Treasurer, as appropriate to allow
        timely
        decisions regarding required disclosure. Additionally, that evaluation showed
        that our controls and procedures are designed to ensure that information
        required to be disclosed by the us in our reports that we file with the
        Securities and Exchange Commission are recorded, processed, summarized and
        reported, within the time periods specified in the Securities and Exchange
        Commission's rules and forms, and that they are effective in accomplishing
        those
        goals.
  25




**Changes
        in Internal Controls**
 
 There
        were
        no changes in our internal controls over financial reporting during the quarter
        ended December 31, 2006 that have materially affected, or are likely to
        materially affect, our internal controls over financial reporting.
 
 **ITEM
                8B.**
              **OTHER
                  INFORMATION**
  None.
  26




**PART
        III**
  **ITEM
                  9.**
              **DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTOERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION 16(A) OF THE EXCHANGE
                  ACT**
  **Information
        Concerning Directors and
        Executive Officers**
  ***Frederic
        P. Zotos***
 
 Frederic
        P. Zotos, age 41, has served as Chief Executive Officer, President, Secretary,
        Treasurer and Director of Pathogenics since February 18, 2005. Mr. Zotos
        has
        served as managing member of our wholly owned subsidiary Pathogenic, LLC,
        since
        its creation on November 19, 2002. Mr. Zotos served as Director of Atlantic
        Technology Ventures, Inc. (“Atlantic”) from May 1999 to February 2003, President
        of Atlantic from April 2000 to February 2003, and Chief Executive Officer
        of
        Atlantic from February 2001 to February 2003. From June 1999 to March 2000,
        Mr.
        Zotos served as Director of due diligence for Licent Capital LLC. From November
        1996 to August 1998, Mr. Zotos served as Assistant to the President and Patent
        Counsel for Competitive Technologies, Inc. From June 1994 to October 1996,
        Mr.
        Zotos served as an Associate Attorney at Law with the law firm of Pepe and
        Hazard in Connecticut. Mr. Zotos received a Bachelors degree in Mechanical
        Engineering from Northeastern University in 1988 and a Masters Degree in
        Business Administration and a Juris Doctorate from Northeastern University
        in
        1993. Mr. Zotos is a current member of the Licensing Executive Society and
        the
        Boston Patent Law Association.
 
 ***Michael
        Ferrari***
 
 Michael
        Ferrari, age 32, has served as Vice President and Director of Pathogenics
        since
        February 18, 2005, and consultant since January 1, 2006. Since its creation
        on
        November 19, 2002, Mr. Ferrari has served as a member of our wholly owned
        subsidiary Pathogenic, LLC. Since March 2004, Mr. Ferrari has been employed
        by
        Clinical Advisors, LLC, as head of operations, sales and project management.
        From August 2003 to February 2004, Mr. Ferrari served as a private equity
        associate with Maxim Group, LLC. From January 2001 to January 2003, Mr. Ferrari
        served as Vice President of Business Development for Atlantic Technology
        Ventures. From September 1998 to January 2001, Mr. Ferrari served as Manager
        of
        Business Development at Corporate Technology Development, Inc. From September
        1997 to September 1998, Mr. Ferrari worked for Aetna U.S. Healthcare as an
        Account Executive. Mr. Ferrari received his Bachelors degree in Biology from
        Villanova University in 1997. Mr. Ferrari holds series 7 and 63 securities
        licenses. He has also been a member of the Licensing Executive Society since
        1999.
 
 Directors
        of Pathogenics are elected annually and hold office until the annual meeting
        of
        the shareholders of Pathogenics and until their successors are elected and
        qualified. Officers will hold their positions at the pleasure of the Board
        of
        Directors, absent any employment agreement. There are no family relationships
        among our officers and directors. Officers and directors of Pathogenics may
        receive compensation as determined by Pathogenics from time to time by vote
        of
        the Board of Directors. Vacancies in the Board are filled by majority vote
        of
        the remaining directors. Such compensation might be in the form of stock
        options. Directors may be reimbursed by Pathogenics for expenses incurred
        in
        attending meetings of the Board of Directors.
 
 There
        are
        no family relationships among the executive officers or directors of
        Pathogenics.
 
 **Recent
        Changes in Officers and Directors**
 
 On
        May 11,
        2006, the
        holders of a majority of the shares of currently issued and outstanding common
        stock of Pathogenics entitled to vote at an election of directors approved
        by
        written consent a resolution removing William L. Sklar as a director of the
        Corporation, in accordance with the applicable provisions of Sections 141
        and
        228 of the General Corporation Law of Delaware and effective as of the date
        of
        the approval of the resolution.
  27




**Section
        16(a) Beneficial Ownership Reporting
        Compliance**
  Section
        16(a) of the Securities Exchange Act of 1934, as amended, requires our officers,
        directors and persons who are the beneficial owners of more than 10% of our
        common stock to file with the SEC initial reports of ownership and reports
        of
        changes in ownership of our common stock. Officers, directors and beneficial
        owners of more than 10% of our common stock are required by SEC regulations
        to
        furnish us with copies of all Section 16(a) forms they file. Each of our
        directors and executive officers filed the forms that Section 16(a) of the
        Exchange Act required them to file during fiscal year 2006.
  **ITEM
                  10.**
              **Executive
                  Compensation**
  Compensation
        of Executive Officers and
        Directors
 
 Summary
        Compensation Table
  The
        following table sets forth information all of the compensation awarded to,
        earned by or paid to (i) each individual serving as our principal executive
        officer during 2006, and (ii) each other individual that served as an executive
        officer at the conclusion of 2006 and whose total compensation was in excess
        of
        $100,000 for such year (the “named executives”).
  Name
                  and
                    Principal
                  Position
                Year
                Salary
                  ($)
                All
                    Other
                  Compensation
                  ($)
                Total
                    ($)(a)
                (b)
                (c)
                (i)
                (j)Frederic
                    P. Zotos (1)
                  *President,
                    Chief Executive Officer and Treasurer*
                2006
                220,000
                27,418
                247,418




(1)
              Mr.
                  Zotos became President and Chief Executive Officer of Pathogenics
                  on
                  February 18, 2005. On May 11, 2006, Mr. Zotos was also appointed
                  our
                  treasurer (principal financial officer). Pursuant to his February
                  18, 2005
                  employment agreement with Pathogenics, Mr. Zotos was entitled to
                  an annual
                  salary of $200,000, which automatically increased each year by
                  10% over
                  the salary to which he was entitled in a preceding year. Accordingly,
                  for
                  2006, Mr. Zotos was entitled to an annual salary of $220,000. However,
                  Mr.
                  Zotos agreed to defer the salary to which he was entitled under
                  his
                  employment agreement for the period from April 1, 2005 to September
                  30,
                  2006, a total of $315,000. The amounts reflected above under column
                  (c)
                  reflect the salary amount earned by Mr. Zotos for 2006, including
                  amounts
                  he agreed to defer. In consideration of his deferral of portions
                  of his
                  salary, Mr. Zotos is entitled to interest on such amounts at a
                  rate equal
                  to 10% per annum, which amounted to $27,418 during 2006 and is
                  included
                  under column (i) above. As of December 31, 2006, the total remaining
                  unpaid and deferred salary owing to Mr. Zotos was $315,000, of
                  which
                  $165,000 represents 2006 deferred salary.
  **O****utstanding
        Equity Awards**
  The
        Company has not granted equity awards to any named executive
        officer.
 
 28




Employment
        Agreements
  *President
        and Chief Executive Officer*
 
 Frederic
        P. Zotos entered into an employment agreement with Pathogenics on March 15,
        2005, effective as of February 18, 2005, and subsequently first amended on
        January 1, 2006 and second amended on January 1, 2007. The employment agreement
        calls for Mr. Zotos to serve as our Chief Executive Officer and President.
        Under
        the agreement, Mr. Zotos is to receive $200,000 per year plus a bonus to
        be
        determined by our Board of Directors. Pathogenics agreed to annually increase
        the Base Salary at a rate of ten percent (10%) above the rate for the preceding
        year. The term of the agreement commenced on February 18, 2005 and shall
        continue from January 1, 2007, for a period of forty-eight (48) consecutive
        months or until the date Mr. Zotos’ employment is terminated in accordance with
        the terms of the agreement. The employment agreement may be terminated by
        Pathogenics for “cause,” which is defined as conviction of a felony that results
        in material and demonstrable damage to the business or reputation of
        Pathogenics. If the agreement is terminated by Pathogenics for “cause,” Mr.
        Zotos will be entitled to only his salary earned through the date of the
        termination of his employment. Additionally, the agreement may be terminated
        by
        reason of Mr. Zotos’ death or Mr. Zotos’ voluntary retirement. If the agreement
        is terminated by Mr. Zotos’ death or retirement, Mr. Zotos or his estate will be
        entitled to the base salary, compensation and benefits for the balance of
        the
        term, and severance pay equal to twelve (12) months of the base salary on
        such
        date of termination, which severance pay shall be paid in full within thirty
        (30) days of such date of termination. Additionally, Pathogenics can terminate
        Mr. Zotos’ employment under the agreement due to his incapacity due to physical
        or mental illness, if he is absent from his duties on a full time basis for
        one
        hundred and twenty (180) days within any three hundred and sixty-five (365)
        period. If Pathogenics terminates Mr. Zotos’ employment for any other reason
        other than for “cause,” Pathogenics shall pay Mr. Zotos his base salary,
        compensation and benefits for the balance of the term, and severance pay
        equal
        to twelve (12) months of the base salary on such date of termination, which
        severance pay shall be paid in full within thirty (30) days of such date
        of
        termination. Mr. Zotos agreed under the agreement not to compete with
        Pathogenics during his employment or for one (1) year following the termination
        of his employment with Pathogenics. Mr. Zotos accrued his salary from April
        1,
        2005 to September 30, 2006. As of March 12, 2007, Mr. Zotos had accrued
        approximately $315,000 in salary. We plan to pay this accrued salary through
        debt and/or equity financing in connection with the Merger.
 
 *Consulting
        Agreement*
 
 Michael
        L.
        Ferrari entered into a consultancy agreement with Pathogenics on January
        1,
        2006, and subsequently amended on January 1, 2007. The consultancy agreement
        calls for Mr. Ferrari to provide consulting services to Pathogenics in
        connection with the clinical, regulatory and business development of therapeutic
        drugs and the technical evaluation of commercial applications of such
        technologies. Pathogenics agreed to pay Mr. Ferrari a retainer of $10,000
        per
        month commencing January 1, 2007, and reimburse Mr. Ferrari for pre-approved
        business expenses in current in connection with the consulting services rendered
        to Pathogenics. Pathogenics agreed to annually increase the retainer at a
        rate
        of ten percent (10%) above the rate for the preceding year. The consultancy
        agreement included a confidentiality provision, whereby Mr. Ferrari agreed
        not
        to disclose our confidential information other than in connection with the
        consulting services. The consultancy agreement is for a period of forty-eight
        (48) months from January 1, 2007. The agreement may be terminated by either
        party at any time upon one (1) month’s prior written notice. In the event
        Pathogenics terminates the agreement, it shall pay Mr. Ferrari his retainer
        for
        the balance of the term, and severance pay equal to twelve (12) months of
        the
        retainer on such date of termination, which severance pay shall be paid in
        full
        within thirty (30) days of such termination. Mr. Ferrari accrued his consulting
        fees from January 1, 2006 to December 1, 2006. As of March 12, 2007, Mr.
        Ferrari
        had accrued approximately $60,000 in consulting fees. We plan to pay these
        accrued consulting fees through debt and/or equity financing in connection
        with
        the Merger.
 
 **Director
        Compensation**
  Pathogenics
        currently has two directors on its board of directors, Mr. Zotos and Michael
        Ferrari, although William Sklar served as a director until July 2006. Directors
        are not paid for their services as directors, although they are reimbursed
        for
        their out-of-pocket expenses incurred in order to attend board meetings.
        The
        following table shows the compensation earned by each of director for the
        year
        ended December 31, 2006, except for Mr. Zotos whose total compensation earned
        from the Company during 2006 is reflected in above:
  29




**Name**
              **All
                  Other**
                **Compensation
                  ($)**
              **Total
                  ($)**Michael
                  Ferrari (1)
              60,000
              60,000William
                  Sklar (2)
              10,000
              10,000


(1)
            Pursuant
                to a consulting agreement, Mr. Ferrari earned $60,000 during 2006
                for
                consulting services rendered to the Company, which were separate
                from his
                services as a director. Mr. Ferrari has agreed to defer his consulting
                fees, which have not yet been paid.





(2)
            The
                amount paid to Mr. Sklar during 2006 reflect a payment made as
                consideration for Mr. Sklar’s agreement to extend the maturity date of a
                promissory note payable by the Company. The Company satisfied this
                payment
                by issuing to Mr. Sklar 344,828 shares of its common
                stock.




**ITEM
                  11.**
              **Security
                  Ownership of Certain Beneficial Owners and
                  Management**
  The
        following table provides the names and addresses of each person known to
        own
        directly or beneficially more than a 5% of the outstanding Common Stock (as
        determined in accordance with Rule 13d-3 under the Exchange Act) and by the
        officers and directors, individually and as a group. Except as otherwise
        indicated, all shares are owned directly.
  Name
                    and Address of -Beneficial
                    Owner(1)
                
                Shares
                
                Percent(2)Frederic
                    P. Zotos
                
                
                20,000,000
                
                
                40.3
                %Michael
                    Ferrari
                
                
                20,000,000
                
                
                40.3
                %All
                    the officers and
                
                
                40,000,000
                
                
                80.6
                %directors
                    as a group(2
                    persons)




(1)
        The
        address of each of our officers and Directors is our principal executive
        offices
        at 99 Derby Street, Suite 200, Hingham, MA 02043.
 (2)
        Using
        49,567,615 shares outstanding as of March 12, 2007.
 
 **ITEM
                  12.**
              **Certain
                  Relationships and Related
                  Transactions**
  On
        February 10, 2005, Pathogenics entered into an Agreement and Plan of
        Reorganization with Tyrol Therapeutics, LLC, a Delaware limited liability
        company (“Tyrol”) and the members of Tyrol (the “Reorganization”). Pursuant to
        the Reorganization, Pathogenics exchanged 40,900,000 restricted shares of
        our
        Common Stock for 100% of the membership interest of Tyrol. The Tyrol members
        included our Chief Executive Officer and our Vice President who each received
        20,000,000 restricted shares of our Common Stock pursuant to the Reorganization.
 
 In
        January
        2005, Mr. Sklar entered into an Indemnification Agreement with Pathogenics,
        and
        in February 2005, Mr. Zotos and Mr. Ferrari entered into an Indemnification
        Agreements with Pathogenics. The Indemnification Agreements provide for
        Pathogenics to indemnify each individual if any are or become a party to
        or a
        witness to any threatened, pending or completed action, suit, investigation
        or
        proceeding. Additionally, Pathogenics shall advance to each individual any
        and
        all expenses in connection with any indemnification, provided, however that
        each
        individual must have obtained prior approval of the Board of Directors of
        Pathogenics, unless Pathogenics had previously experienced a “change in
        control,” in which case an independent counsel selected by the individual, and
        approved by a majority of the disinterested directors, shall determine whether
        and to what extent the individual is permitted to be indemnified by Pathogenics.
  30




On
        March
        15, 2005, Pathogenics entered into an employment agreement with our Chief
        Executive Officer, Frederic P. Zotos, effective as of February 18, 2005,
        and
        subsequently first amended on January 1, 2006 and second amended on January
        1,
        2007. The employment agreement calls for Mr. Zotos to serve as our Chief
        Executive Officer and President. Under the agreement, Mr. Zotos is to receive
        $200,000 per year plus a bonus to be determined by our Board of Directors.
        Pathogenics agreed to annually increase the Base Salary at a rate of ten
        percent
        (10%) above the rate for the preceding year. The term of the agreement commenced
        on February 18, 2005 and shall continue from January 1, 2007, for a period
        of
        forty-eight (48) consecutive months or until the date Mr. Zotos’ employment is
        terminated in accordance with the terms of the agreement. The employment
        agreement may be terminated by Pathogenics for “cause,” which is defined as
        conviction of a felony that results in material and demonstrable damage to
        the
        business or reputation of Pathogenics. If the agreement is terminated by
        Pathogenics for “cause,” Mr. Zotos will be entitled to only his salary earned
        through the date of the termination of his employment. Additionally, the
        agreement may be terminated by reason of Mr. Zotos’ death or Mr. Zotos’
voluntary retirement. If the agreement is terminated by Mr. Zotos’ death or
        retirement, Mr. Zotos or his estate will be entitled to the base salary,
        compensation and benefits for the balance of the term, and severance pay
        equal
        to twelve (12) months of the base salary on such date of termination, which
        severance pay shall be paid in full within thirty (30) days of such date
        of
        termination. Additionally, Pathogenics can terminate Mr. Zotos’ employment under
        the agreement due to his incapacity due to physical or mental illness, if
        he is
        absent from his duties on a full time basis for one hundred and twenty (180)
        days within any three hundred and sixty-five (365) period. If Pathogenics
        terminates Mr. Zotos’ employment for any other reason other than for “cause,”
Pathogenics shall pay Mr. Zotos his base salary, compensation and benefits
        for
        the balance of the term, and severance pay equal to twelve (12) months of
        the
        base salary on such date of termination, which severance pay shall be paid
        in
        full within thirty (30) days of such date of termination. Mr. Zotos agreed
        under
        the agreement not to compete with Pathogenics during his employment or for
        one
        (1) year following the termination of his employment with Pathogenics. Mr.
        Zotos
        accrued his salary from April 1, 2005 to September 30, 2006. As of March
        12,
        2007, Mr. Zotos had accrued approximately $315,000 in salary. We plan to
        pay
        this accrued salary through debt and/or equity financing in connection with
        the
        Merger.
 
 On
        May 25,
        2005, William K. Mackey and William L. Sklar, our Director, entered into
        a Note
        and Security Agreement with Pathogenics. Under the Note and Security Agreement,
        Mr. Mackey and Mr. Sklar loaned Pathogenics $20,000, which is due within
        ninety
        (90) days of the date of the Note and Security Agreement, or August 23, 2005.
        The due date of the Note was subsequently amended by a First Amendment to
        Note
        and Security Agreement, which moved the due date to 105 days of the date
        of Note
        and Security Agreement, then again by a Second Amendment to Note and Security
        Agreement, which moved the due date of the Note to 120 days from the date
        of the
        Note and Security Agreement, or September 22, 2005, then again by a Third
        Amendment to Note and Security Agreement, which moved the due date of the
        Note
        to 135 days from the date of the Note and Security Agreement, or October
        7,
        2005, and then again by a Fourth Amendment to Note and Security Agreement,
        which
        moved the due date of the Note to 184 days from the date of the Note and
        Security Agreement, or November 25, 2005. Until the note is paid, the amount
        outstanding bears interest calculated at the rate of 8% per year. The note
        was
        secured by 3,000 shares of First Coventry Corporation, our wholly-owned Delaware
        subsidiary.
 
 On
        June 1,
        2005, First Coventry Corporation (“First Coventry”) entered into an
        Indemnification Agreement with our Chief Executive Officer and Director,
        Frederic P. Zotos, to indemnify Mr. Zotos against personal liability in
        connection with the advancing of expenses to First Coventry and/or any liability
        Mr. Zotos may have as a result of being the sole Director, President, Chief
        Executive Officer, Secretary and Treasurer of First Coventry.
  During
        the
        year ending December 31, 2005, William L. Sklar, our Director, provided
        accounting services to Pathogenics in connection with preparing our Registration
        Statement and quarterly reports. Mr. Sklar completed tasks requiring 74 billable
        hours, at an hourly rate of $350, resulting in a total of $25,900. Mr. Sklar
        indicated that he would accept shares of our registered (S-8) common stock
        in
        lieu of cash at the price of $.029/share, resulting in a total of 900,000
        shares
        of common stock.
  31




On
        January
        1, 2006, Pathogenics entered into a consultancy agreement with our
        Vice-President and Director, Michael L. Ferrari, and subsequently amended
        on
        January 1, 2007. The consultancy agreement calls for Mr. Ferrari to provide
        consulting services to Pathogenics in connection with the clinical, regulatory
        and business development of therapeutic drugs and the technical evaluation
        of
        commercial applications of such technologies. Pathogenics agreed to pay Mr.
        Ferrari a retainer of $10,000 per month commencing January 1, 2007, and
        reimburse Mr. Ferrari for pre-approved business expenses in current in
        connection with the consulting services rendered to Pathogenics. Pathogenics
        agreed to annually increase the retainer at a rate of ten percent (10%) above
        the rate for the preceding year. The consultancy agreement included a
        confidentiality provision, whereby Mr. Ferrari agreed not to disclose our
        confidential information other than in connection with the consulting services.
        The consultancy agreement is for a period of forty-eight (48) months from
        January 1, 2007. The agreement may be terminated by either party at any time
        upon one (1) month’s prior written notice. In the event Pathogenics terminates
        the agreement, it shall pay Mr. Ferrari his retainer for the balance of the
        term, and severance pay equal to twelve (12) months of the retainer on such
        date
        of termination, which severance pay shall be paid in full within thirty (30)
        days of such termination. Mr. Ferrari accrued his consulting fees from January
        1, 2006 to December 1, 2006. As of March 12, 2007, Mr. Ferrari had accrued
        approximately $60,000 in consulting fees. We plan to pay these accrued
        consulting fees through debt and/or equity financing in connection with the
        Merger.
 
 Pursuant
        to our restated certificate of incorporation and bylaws, we have entered
        into
        indemnification agreements with each of our directors and executive
        officers.
  All
        transactions between us and our officers, directors, principal stockholders
        and
        their affiliates are approved by a majority of the board of directors, including
        a majority of the independent and disinterested outside directors on the
        board
        of directors. We believe that the transaction set forth above was made on
        terms
        no less favorable to us than could have been obtained from unaffiliated third
        parties.
  **Director
        Independence**
  We
        currently have two directors serving on our Board of Directors, Mr. Zotos
        and
        Mr. Ferrari. Neither director is independent.
  **ITEM
                    13.**
                **Exhibits******The
                    following documents are referenced or included in this
                    report.
  Exhibit
                    No.
                Description2.1(1)
                Agreement
                    and Plan of Reorganization Among Pathogenics, Inc., Tyrol Therapeutics,
                    LLC and Members of Tyrol Therapeutics, LLC dated February 10,
                    2005.2.2(5)
                First
                    Amended and Restated Agreement and Plan of Merger dated November
                    28, 2006
                    between Pathogenics, Inc. and Egenix, Inc.3.1(1)
                Certificate
                    of Incorporation of Niktronic, Inc. dated December 16,
                    1997.3.2(1)
                Certificate
                    of Amendment of Certificate of Niktronic, Inc. dated January
                    13,
                    1998.3.3(1)
                Certificate
                    for Renewal and Revival of Charter of Needle Impulse Technologies
                    Corp.
                    (formerly Niktronic, Inc.) dated February 2, 2005.3.4(1)
                Restated
                    Certificate of Incorporation of Needle Impulse Technologies Corp.
                    dated
                    February 3, 2005.3.5(1)
                Certificate
                    of Designations of Convertible Preferred Stock of Pathogenics
                    Inc.
                    (formerly Needle Impulse Technologies Corp.) dated February 18,
                    2005.
  32
  3.6(1)
                Bylaws
                    of Pathogenics, Inc., as amended to date.10.1(1)
                Securities
                    Purchase Agreement dated February 18, 2005 among Pathogenics,
                    Inc, Manillo
                    Investors Limited, Bayside Associates Limited, Castlegate Group
                    Limited,
                    Kensington Group Limited and Trufello Associates
                    Limited.10.2(1)
                License
                    Agreement dated October 18, 2001 among Atlantic Technology Ventures,
                    Inc.,
                    Dr. Waldemar Gottardi, Dr. Markus Nagl and Dr. Andreas
                    Neher.10.3(1)
                Assignment
                    Agreement dated December 18, 2002 between Atlantic Technology
                    Ventures,
                    Inc., and Pathogenics, LLC.10.4(1)
                Consent
                    to Assignment of License Agreement by Atlantic Technology Ventures,
                    Inc.
                    to Pathogenics, LLC dated January 10, 2003.10.5(1)
                Registration
                    Rights Agreement dated February 18, 2005 between Pathogenics,
                    Inc. and
                    William K. Mackey.10.6(1)
                Consulting
                    Agreement dated September 29, 2004 between Pathogenics, LLC and
                    William K.
                    Mackey.10.7(1)
                Employment
                    Agreement dated March 15, 2005 between Pathogenics, Inc. and
                    Frederic P.
                    Zotos, Esq.10.8(1)
                ExclusiveLicense
                    Agreement dated May 25, 2005 among Pathogenics, Inc., Alpha Research
                    Group, LLC and Jodi A. Nelson.10.9(1)
                Assignment
                    Agreement dated May 25, 2005 between Pathogenics, Inc. and First
                    Coventry
                    Corporation.10.10(1)
                Consulting
                    Agreement dated May 25, 2005 between Pathogenics, Inc. and Jodi
                    A.
                    Nelson.10.11(4)
                First
                    Amendment dated January 1, 2006 to Employment Agreement dated
                    March 15,
                    2005 between Pathogenics, Inc. and Frederic P. Zotos,
                    Esq.10.12(4)
                Consulting
                    Agreement dated January 1, 2006 between Pathogenics, Inc. and
                    Michael L.
                    Ferrari.10.13(4)
                Consulting
                    Agreement datedFebruary
                    17, 2006between
                    Pathogenics, Inc.Qualified
                    Ventures, LLC (“QV”).10.14(2)
                Letter
                    of Intent dated April 4, 2006 between Pathogenics, Inc. and Egenix,
                    Inc.10.15(4)
                Revocation
                    dated March 20, 2006 of Assignment Agreement dated May 25, 2005
                    between
                    Pathogenics, Inc. and First Coventry Corporation.10.16(4)
                License
                    Agreement dated March 29, 2006 among Pathogenics, Inc., Dr. Waldemar
                    Gottardi and Dr. Markus Nagl.10.17+,(4)
                License
                    Agreement dated April 13, 2006 between Pathogenics, Inc. and
                    Acuity
                    Pharmaceuticals, Inc.10.18*
                First
                    Amendment dated August 2, 2006 to License Agreement dated April
                    13, 2006
                    between Pathogenics, Inc. and Acuity Pharmaceuticals,
                    Inc.
  33
  10.19*
                Second
                    Amendment dated January 1, 2007 to Employment Agreement dated
                    March 15,
                    2005 between Pathogenics, Inc. and Frederic P. Zotos,
                    Esq.10.20*
                First
                    Amendment datedJanuary
                    1, 2007 toConsulting
                    Agreement dated January 1, 2006 between Pathogenics, Inc. and
                    Michael L.
                    Ferrari.10.21*
                Second
                    Amendment dated March 8, 2007 to License Agreement dated April
                    13, 2006
                    between Pathogenics, Inc. and Acuity Pharmaceuticals,
                    Inc.10.22(1)
                Frederic
                    P. Zotos Salary Deferral Letter for Second and Third Quarterly
                    Fiscal
                    Periods April 1 - September 30, 2005, dated August 10,
                    2005.10.23(4)
                Frederic
                    P. Zotos Salary Deferral Letter for Fourth Quarterly Fiscal Periods
                    October 1 - December 31, 2005, dated January 1, 2006.10.24(4)
                Frederic
                    P. Zotos Salary Deferral Letter for First Quarterly Fiscal Period
                    January
                    1 - March 31, 2006, dated April 1, 2006.31.1*
                Certification
                    required by Rule 13a-14(a) or Rule 15d-14(a).31.2*
                Certification
                    required by Rule 13a-14(b) or Rule 15d-14(b) and section 906
                    of the
                    Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.23.1*
                Consent
                    of Malone & Bailey, PC.______+
                Confidential
                    treatment is being requested as to certain portions of these
                    exhibits.*
                Filed
                    herewith.(1)
                Incorporated
                    by reference to exhibits of Pathogenics, Inc.’s registration statement on
                    Form SB-2 (No. 333-123431), as filed with the Securities and Exchange
                    Commission (the “SEC”) on March 18, 2005 and as amended by Amendment No.
                    1, and Amendment No. 2 as filed with the Commission on July 5,
                    2005 and
                    August 29, 2005, respectively.(2)
                Incorporated
                    by reference to exhibits of Pathogenics, Inc.’s Form 8-K filed on April 6,
                    2006.(3)
                Incorporated
                    by reference to exhibits of Pathogenics, Inc.’s Form 8-K filed on May 5,
                    2006.(4)
                Incorporated
                    by reference to exhibits of Pathogenics, Inc.’s Form 10-KSB filed on June
                    27, 2006.(5)
                Incorporated
                    by reference to exhibits of Pathogenics, Inc.’s Form 8-K filed on December
                    4, 2006.




34




**SIGNATURES**
  In
        accordance with Section 13 or 15(d) of the Securities Exchange Act, Atlantic
        has
        duly caused this report to be signed on its behalf by the undersigned, thereunto
        duly authorized, on March 15, 2007.


Pathogenics,
                  Inc./s/
                  Frederic P. ZotosFrederic
                  P. ZotosPresident
                  and Chief Executive Officer




In
        accordance with the Securities Exchange Act, this report has been signed
        below
        by the following persons on behalf of Pathogenics and in the capacities and
        on
        the dates indicated.
  Signature
              
              Title
              
              Date/s/
                  Frederic P. Zotos
              
              President,
                  Chief Executive Officer, Treasurer
              
              March
                  15, 2007Frederic
                  P. Zotos
              
              and
                  Director (principal executive, financial
                and
                  accounting officer)/s/
                  Michael L. Ferrari
              
              Vice-President
                  and Director
              
              March
                  15, 2007Michael
                  L. Ferrari




35




**PATHOGENICS,
                  INC. AND SUBSIDIARIES****INDEX
                  TO CONSOLIDATED FINANCIAL STATEMENTS**Report
                  of Independent Registered Public Accounting
                  Firm
              F-2Consolidated
                  Balance Sheet as of December 31,
                  2006
              F-3Consolidated
                  Statements of ExpensesYears
                  ended December 31, 2006 and
                  2005
              F-4Consolidated
                  Statements of Changes in Stockholders’
                  EquityYears
                  ended December 31, 2006 and
                  2005
              F-5Consolidated
                  Statements of Cash FlowsYears
                  ended December 31, 2006 and
                  2005
              F-6Notes
                  to Consolidated Financial
                  Statements
              F-7











REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
        FIRM
 
 To
        the
        Board of Directors
 Pathogenics,
        Inc
 Hingham,
        MA
 
 We
        have
        audited the accompanying consolidated balance sheet of Pathogenics, Inc.
        as of
        December 31, 2006, and the related consolidated statements of expenses,
        stockholders’ deficit and cash flows for the years ended December 31, 2006 and
        2005. These financial statements are the responsibility of Pathogenic, Inc.'s
        management. Our responsibility is to express an opinion on these financial
        statements based on our audits.
 
 We
        conducted our audits in accordance with 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 consolidated financial position of Pathogenics, Inc.
        as
        of December 31, 2006, and the results of its operations and its cash flows
        for
        the years ended December 31, 2006 and 2005 in conformity with accounting
        principles generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        consolidated financial statements, the Company has experienced significant
        losses since inception. Also discussed in Note 1 to the consolidated financial
        statements, a significant amount of additional capital will be necessary
        to
        advance the development of the Company's products to the point at which they
        may
        become commercially viable. Those conditions, among others, raise substantial
        doubt about the Company's ability to continue as a going concern. Management's
        plans regarding these matters are also described in Note 1. The accompanying
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
 
 
 
 Malone
        & Bailey, PC
 Houston,
        Texas
 www.malone-bailey.com
 
 March
        12,
        2007
  F-2




**PATHOGENICS,
        INC.**
 **CONSOLIDATED
        BALANCE SHEET**
 **As
        of December 31, 2006**
 
 ASSETSCurrent
                  AssetsCash
              
              $
              86,686Note
                  receivable
              
              
              140,705Interest
                  receivable
              
              
              1,173TOTAL
                  ASSETS
              
              $
              228,564LIABILITIES
                  AND STOCKHOLDERS’ DEFICITLIABILITIESCurrent
                  LiabilitiesAccounts
                  payable and accrued liabilities
              
              $
              530,230Advances
                  from Egenix
              
              
              85,545Loans
                  payable - related parties
              
              
              23,921TOTAL
                  LIABILITIES
              
              
              639,696Shareholders’
                  DeficitPreferred
                  stock, $0.001 par value, 10,000,000shares
                  authorized, none issued and outstanding
              
              
              -Common
                  stock, $0.001 par value, 100,000,000 shares authorized,50,257,270
                  shares issued and 49,567,615 shares outstanding
              
              
              50,257Additional
                  paid-in capital
              
              
              278,192Accumulated
                  deficit
              
              
              (719,581
              )Treasury
                  stock, 689,655 shares
              
              
              (20,000
              )Total
                  shareholders’ deficit
              
              
              (411,132
              )TOTAL
                  LIABILITIES AND SHAREHOLDERS’ DEFICIT
              
              $
              228,564
 
 See
        notes
        to consolidated financial statements.
  F-3




**PATHOGENICS,
        INC.**
 **CONSOLIDATED
        STATEMENTS OF EXPENSES**
 **Years
        Ended December 31, 2006 and 2005**
 
 2006
              
              2005Revenues
              
              $
              153,830
              
              $
              -Operating
                  Expenses:General
                  & administrative
              
              
              270,357
              
              
              313,012Research
                  & development
              
              
              118,666
              
              
              96,884Total
                  Operating Expenses
              
              
              389,023
              
              
              409,896Loss
                  from operations
              
              
              (235,193
              )
              
              (409,896
              )Other
                  Income (Expense):Interest
                  income
              
              
              2,893
              
              
              -Interest
                  expense
              
              
              (28,818
              )
              
              -Total
                  Other Income (Expense)
              
              
              (25,925
              )
              
              -Net
                  loss
              
              
              (261,118
              )
              
              (409,896
              )Preferred
                  dividends
              
              
              -
              
              
              6,013Net
                  loss attributable to common stockholders
              
              $
              (261,118
              )
              $
              (415,909
              )Basic
                  and diluted net loss per common share
              
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  average common shares outstanding
              
              
              47,512,627
              
              
              42,019,186
  See
        notes
        to consolidated financial statements.
  F-4




**PATHOGENICS,
        INC.**
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT**
 **Years
        Ended December 31, 2006 and 2005**
 Convertible
                    Preferred Stock
                
                Common
                    Stock
                
                Additional
                  Paid-In
                
                Accumulated
                
                Treasury
                
                Total
                    Stockholder’sShares
                
                Amount
                
                Shares
                
                Amount
                
                Capital
                
                Deficit
                
                Stock
                
                (Deficit)Balance
                    at
                  December 31,
                    2004
                
                
                -
                
                
                -
                
                
                40,000,000
                
                
                40,000
                
                
                (40,000
                )
                $
                (42,554
                )
                $
                -
                
                
                (42,554
                )Common
                    shares
                  issued
                    for cash
                
                
                -
                
                
                -
                
                
                900,000
                
                
                900
                
                
                -
                
                
                -
                
                
                -
                
                
                900Issuance
                    of common
                  shares
                    to
                  Pathogenics’
                  shareholder
                    for
                  recapitalization
                
                
                -
                
                
                -
                
                
                503,830
                
                
                504
                
                
                (504
                )
                
                -
                
                
                -
                
                
                -Preferred
                    shares
                  issued
                    for cash
                
                
                5,636
                
                
                155,000
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -Conversion
                    of
                  preferred
                    stock to
                  common
                    stock
                
                
                (5,636
                )
                
                (155,000
                )
                
                5,344,820
                
                
                5,345
                
                
                149,655
                
                
                -
                
                
                -
                
                
                155,000Accrual
                    of preferred
                  dividends
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                $
                (6,013
                )
                
                -
                
                
                (6,013
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                $
                (409,896
                )
                
                -
                
                $
                (409,896
                )Balance
                    at
                  December 31,
                    2005
                
                
                -
                
                $
                -
                
                
                46,748,650
                
                $
                46,749
                
                $
                109,151
                
                $
                (458,463
                )
                $
                -
                
                $
                (302,563
                )Common
                    shares
                  issued
                    for penalty
                
                
                -
                
                
                -
                
                
                229,310
                
                
                229
                
                
                6,421
                
                
                -
                
                
                -
                
                
                6,650Common
                    shares
                  issued
                    to First
                  Coventry
                    for
                  collateral
                    on note
                  payable
                
                
                -
                
                
                -
                
                
                689,655
                
                
                689
                
                
                19,311
                
                
                -
                
                
                (20,000
                )
                
                -Common
                    shares
                  issued
                    for extension
                  of
                    note agreement
                
                
                -
                
                
                -
                
                
                689,656
                
                
                690
                
                
                19,310
                
                
                -
                
                
                -
                
                
                20,000Common
                    shares
                  issued
                    for services
                
                
                -
                
                
                -
                
                
                1,899,999
                
                
                1,900
                
                
                123,999
                
                
                
                
                
                -
                
                
                125,899Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (261,118
                )
                
                -
                
                
                (261,118
                )Balance
                    at December 31, 2006
                
                
                -
                
                $
                -
                
                
                50,257,270
                
                $
                50,257
                
                $
                278,192
                
                $
                (719,581
                )
                $
                (20,000
                )
                $
                (411,132
                )




See
        notes
        to consolidated financial statements.
  F-5




**PATHOGENICS,
        INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **Years
        Ended December 31, 2006 and 2005**
 
 
 2006
              
              2005CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (261,118
              )
              $
              (409,896
              )Adjustments
                  to reconcile net loss to cash used in
                operating
                  activities:Shares
                  issued for extension of debt
              
              
              20,000
              
              
              -Shares
                  issued for services
              
              
              132,549
              
              
              -Note
                  receivable received for reimbursement of
                expenses
              
              
              (140,705
              )
              
              -Changes
                  in:Interest
                  receivable
              
              
              (1,173
              )
              
              -Accounts
                  payable and accrued liabilities
              
              
              261,220
              
              
              249,671Stock
                  payable
              
              
              -
              
              
              6,650Net
                  Cash Used In Operating Activities
              
              
              10,773
              
              
              (153,575
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESAdvances
                  from related parties
              
              
              7,607
              
              
              -Repayments
                  of advances from related parties
              
              
              (17,523
              )
              
              (2,117
              )Advanced
                  from Egenix
              
              
              85,545
              
              
              -Proceeds
                  from issuance of common stock
              
              
              -
              
              
              900Proceeds
                  from issuance of preferred stock
              
              
              -
              
              
              155,000Net
                  Cash Provided By Financing Activities
              
              
              75,629
              
              
              153,783NET
                  CHANGE IN CASH
              
              
              86,402
              
              
              208CASH
                  AT BEGINNING OF PERIOD
              
              
              284
              
              
              76CASH
                  AT END OF PERIOD
              
              $
              86,686
              
              $
              284Supplemental
                  Disclosures:Interest
                  paid
              
              $
              -
              
              $
              -Income
                  tax paid
              
              
              -
              
              
              -Non-cash
                  Transactions:Issuance
                  of common shares to First Coventry for
                collateral
                  on note payable
              
              $
              20,000
              
              $
              -Issuance
                  of common shares for recapitalization
              
              
              -
              
              
              504Dividends
                  declared and unpaid
              
              
              -
              
              
              6,013Conversion
                  of preferred shares to common shares
              
              
              -
              
              
              155,000
 
 See
        notes
        to consolidated financial statements.
  F-6




**PATHOGENICS,
        INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 NOTE
        1 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Nature
        of Business .
        Pathogenics, Inc. ("Pathogenics") was incorporated in Delaware on
        December 16, 1997 as Niktronic, Inc. On the same day it changed its name to
        Needle Impulse Technologies, Corp. On February 8, 2005, the company changed
        its
        name to Pathogenics, Inc. From the date of inception until February 8, 2005,
        the
        company was inactive and had no commercial operations.
 
 On
        February 10, 2005, Pathogenics, Inc. (“Pathogenics”) and Tyrol Therapeutics, LLC
        (“Tyrol”) entered into an Agreement and Plan of Reorganization (the
“Agreement”), in which Pathogenics acquired all assets of and assumed all of the
        liabilities of Tyrol for 40,900,000 shares of common stock of Pathogenics.
        As a
        result, after the closing of the Agreement, the former members of Tyrol owned
        approximately 98.41% of the voting shares of Pathogenics. Upon receiving
        the
        majority of the voting shares of Pathogenics, the current President of Tyrol
        became the President of the Company and representatives of Tyrol hold two
        of the
        seats on the Company’s Board of Directors, the merger was accounted for as a
        recapitalization of Tyrol, whereby Tyrol was the accounting acquirer (legal
        acquiree) and Pathogenics was the accounting acquiree (legal
        acquirer).
 
 Accordingly,
        at the closing, Pathogenics was a non-operating shell corporation unable
        to meet
        the definition of a business as defined in EITF Consensus 98-3. Therefore,
        the
        transaction was accounted for as a recapitalization of Tyrol. This transaction
        is equivalent to Tyrol issuing stock for the net liabilities of Pathogenics,
        accompanied by a recapitalization. The accounting is identical to that resulting
        from a reverse acquisition, except that there are no adjustments to the historic
        carrying values of the assets and liabilities.
 
 In
        January
        2005, Tyrol sold an equity interest to an individual for $900 that resulted
        in
        900,000 shares of Pathogenics. These shares are included in the shares issued
        to
        the Tyrol founders as a result of the merger.
 
 Basis
        of presentation .
        The
        consolidated financial statements include the accounts of Pathogenics and
        its
        wholly-owned subsidiaries, Tyrol Therapeutics, LLC and First Coventry
        Corporation. Significant inter-company accounts and transactions have been
        eliminated.
 
 Development
        Stage .
        Pathogenics had no operations from inception until the reorganization on
        February 10, 2005 and was a development stage company. As of the fourth
        quarter of 2006, Pathogenics is no longer considered a development stage
        company.
 
 Use
        of
        Estimates .
        In
        preparing financial statements, management makes estimates and assumptions
        that
        affect the reported amounts of assets and liabilities in the balance sheet
        and
        revenue and expenses in the income statement. Actual results could differ
        from
        those estimates.
 
 Revenue
        Recognition .
        Pathogenics recognizes revenue when persuasive evidence of an arrangement
        exists, services have been rendered, the sales price is fixed or determinable,
        and collectibility is reasonably assured. Milestone payments on license fees
        are
        recognized as revenue under long-term contracts upon the occurrence of
        contract-specified events if those events coincide with the achievement of
        a
        substantive element in a multi-element arrangement.
 
 Research
        and Development .
        Research
        and development expenses include consulting fees, facility costs, and laboratory
        costs. All costs for research and development activities are expensed as
        incurred. Pathogenics expenses the costs of licenses of patents until the
        issuance of such patents and the commercialization of related products is
        reasonably assured.
  F-7




Recently
        Issued Accounting Pronouncements .
        Pathogenics does not expect the adoption of recently issued accounting
        pronouncements to have a significant impact on Pathogenics results of
        operations, financial position or cash flow.
 
 Going
        Concern .
        As of
        December 31, 2006, Pathogenics had an accumulated deficit of $719,581 and
        a
        working capital deficit of $411,132. In addition, Pathogenics did not generate
        any cash from operations and had no cash reserve dedicated to fund expenditures.
        These factors create a substantial doubt as to Pathogenics' ability to continue
        as a going concern.
 
 Pathogenics
        will require substantial additional funding for continuing research and
        development, obtaining regulatory approval and for the commercialization
        of its
        products. Management expects to be able to raise enough funds to meet its
        working capital requirements through through debt and/or equity financing
        in
        connection with a proposed merger with Egenix, Inc. There is no assurance
        that
        Pathogenics will be able to obtain sufficient additional funds when needed,
        or
        that such funds, if available, will be obtainable on terms satisfactory to
        Pathogenics. The financial statements do not include any adjustments that
        might
        be necessary should the Company be unable to continue as a going
        concern.
 
 NOTE
        2 -
        LOANS PAYABLE TO RELATED PARTIES
 
 Pathogenics
        borrowed $20,000 on May 25, 2005 from two related parties at 8% interest,
        to be
        repaid in a single combined payment of interest and principal, 184 days from
        the
        receipt of funds. As security for the note payable, Pathogenics assigned
        the
        3,000 shares in First Coventry to the two noteholders. The maturity date
        on the
        note agreement was extended to November 25, 2006. In consideration for this
        extension, Pathogenics issued 689,656 shares of common stock with a value
        of
        $20,000 on August 1, 2006. Pathogenics repaid the note in January
        2007.
 
 NOTE
        3 -
        CONTINGENT LIABILITY
 
 On
        September 29, 2004, Tyrol entered into a consulting agreement with a third
        party
        to assist Tyrol with financing of at least $250,000. The consulting agreement
        is
        for a period of 12 months. Under the consulting agreement, the consultant
        is to
        be paid $7,500 for each of the first three months and $6,000 for each month
        of
        the financing thereafter. The consulting fee is to be paid after the receipt
        of
        at least $250,000 in financing. The amount of the fee has not been accrued
        due
        to contingency of the payment as only $95,000 has been received from the
        financings as of December 31, 2006.
 
 NOTE
        4 -
        PREFERRED STOCK
 
 On
        February 8, 2005, Pathogenics entered into a Securities Purchase Agreement
        to
        sell convertible preferred stock in the aggregate principal amount of $275,000,
        convertible into shares of common stock at a per share conversion price of
        $0.029. The agreement provided for the sale to take place in four tranches.
        During the 12 months ended December 31, 2005, Pathogenics issued 5,636 shares
        of
        Convertible Preferred Stock for $155,000 cash. The Convertible Preferred
        Stock
        has cumulative dividends at 2.5% above the prime rate. The prime rate was
        7.25%
        at December 31, 2005.
 During
        the
        fourth quarter of 2005, the shareholders of the Convertible Preferred Stock
        converted 5,636 shares of Convertible Preferred Stock into 5,344,820 shares
        of
        Common Stock. There is no Convertible Preferred Stock issued and outstanding
        at
        December 31, 2006. The stock purchase agreement was terminated on May 3,
        2006.
 
 The
        Securities Purchase Agreement contains penalties which Pathogenics was required
        to pay to the purchasers, since Pathogenics did not obtain effectiveness
        of its
        registration statement within the time periods provided in the Securities
        Purchase Agreement. On January 23, 2006, Pathogenics issued 45,862 shares
        of
        common stock to each of the five preferred stock purchasers for a total
        authorized issuance of 229,310 shares of common stock, thus paying in full
        all
        liquidated damages due to the Purchasers.
  F-8




NOTE
        5 -
        COMMON STOCK
 
 On
        February 8, 2005, Pathogenics increased the number of outstanding common
        shares
        from 1,000 to 503,830 in order to effectuate what is generally referred to
        as a
“forward split” on a 503.83 to one basis. The impact of this forward split has
        been reflected in the accompanying financial statements retroactive to
        inception.
 
 In
        January
        2006, Pathogenics issued 229,310 shares of common stock with a value of $6,650
        for a penalty accrued in 2005 related to the preferred stock.
 
 In
        June
        2006, Pathogenics issued 689,655 shares of common stock with a value of $20,000
        to our subsidiary, First Coventry, as collateral on the $20,000 note payable.
        As
        security for the note payable, Pathogenics assigned the 3,000 shares in First
        Coventry to the two noteholders in 2005.
 
 In
        August
        2006, Pathogenics issued 689,656 shares of common stock with a value of $20,000
        for extension on a note agreement.
 
 In
        September 2006, Pathogenics issued 900,000 shares of common stock with a
        value
        of $25,900 for services rendered by a former officer.
 
 In
        December 2006, Pathogenics issued 999,999 shares of common stock with a value
        of
        $100,000 for services rendered by three individuals.
 
 NOTE
        6 -
        CHORLOQUINE
 
 On
        May 25,
        2005, Pathogenics acquired the rights to Chloroquine and related compounds
        for
        treatment of various neurological, psychiatric, psychological and nervous
        system
        diseases and disorders from Alpha Research Group, LLC and Jodi A. Nelson.
        In
        return, Pathogenics is required to provide a 4% royalty on future net sales,
        and
        the payments of $100,000, $250,000 and $1,000,000 when certain milestones
        are
        met. Pathogenics first acquired the rights to the treatment, incorporated
        a new
        subsidiary, First Coventry Corporation, and then in exchange for the 3,000
        issued and outstanding shares of First Coventry, Pathogenics assigned the
        rights
        to Chloroquine and related compounds for treatment of various neurological,
        psychiatric, psychological and nervous system diseases and disorders to First
        Coventry.
 
 On
        March
        20, 2006, the assignment to First Coventry was revoked. In consideration
        for all
        the issued and outstanding shares of First Coventry, Pathogenics issued 689,655
        shares of common stock with a value of $20,000 to First Coventry.
 
 On
        May 9,
        2006, Pathogenics received a written notice from Alpha and Nelson that purported
        to terminate the May 2005 license agreement with Pathogenics. We believe
        that
        the purported termination by Nelson and Alpha is invalid, that there is no
        basis
        for terminating the license agreement, that the license agreement remains
        in
        full-force and effect, and that the Alpha’s and Nelson’s claims in support of
        termination are entirely without merit. Pathogenics has elected to seek relief
        through application of the formal dispute resolution process in accordance
        with
        the clear provisions of license agreement, and intends to vigorously defend
        its
        position.
  F-9




NOTE
        7 -
        MERGER WITH EGENIX
 
 On
        May 4,
        2006, Pathogenics entered into an Agreement and Plan of Merger with Egenix,
        Inc.
        (“Egenix”), a Delaware corporation. The agreement provides that Egenix shall
        merge with and into Pathogenics and Pathogenics shall become the surviving
        corporation and shall change its name to Egenix, Inc. In June and July 2006,
        Pathogenics received a total of $69,545 from Egenix, Inc. in connection with
        the
        Agreement and Plan of Merger. In August 2006, Egenix paid $16,000 on behalf
        of
        Pathogenics to an attorney for a retainer. Total advances from Egenix at
        December 31, 2006 was $85,545.
 
 On
        November 28, 2006 Egenix issued Pathogenics a promissory note in the amount
        of
        $140,705 at 10% interest with a maturity date of July 31, 2007. The promissory
        note is for the reimbursement of expenses incurred by Pathogenics.
 
 NOTE
        8 -
        CONCENTRATIONS
 
 All
        license fee revenue recognized during 2006 was from one customer.
    F-10