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**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, 2005





o
            Transition
                Report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934
              for
                the transition period from ___to___





Commission
      File Number  [333-123431]




**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:




Common
      Stock, $0.001 par value per share








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 o




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 o




The
      issuer’s revenues for the fiscal year ended December 31, 2005 were **** Nil.




As
      of
      June 22, 2006 there were 47,667,615 outstanding shares of common stock, par
      value $.001 per share.




Transitional
      Small Business Disclosure Format: Yes o No
x









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          Statements**




**TABLE
      OF CONTENTS**




**Page****PART
                I**
            
            1**ITEM
                1.**
            DESCRIPTION
                OF BUSINESS
            1Overview
            1Corporate
                Structure
            2Technologies
            4N-Chlorotaurine
            4Chloroquine
                Diphosphate
            7Patents,
                Trademarks and Licenses
            9Forward-Looking
                Statements
            14Risk
                Factors
            15Risks
                Related to Our Financial Condition
            15Risks
                Related to Our Operations
            16Risks
                Related to Our Securities
            20**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
            24Overview
            24Liquidity
                And Capital Resources
            25Critical
                Accounting Policies
            26Recently
                Issued Accounting Standards
            26**ITEM
                7.**
            CONSOLIDATED
                FINANCIAL STATEMENTS
            27**ITEM
                8.**
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURE
            27**PART
                III**
            
            28**ITEM
                9.**
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
                ACT
            28Information
                Concerning Directors and Executive
                Officers
            28Section
                16(a) Beneficial Ownership Reporting
                Compliance
            29**ITEM
                10.**
            EXECUTIVE
                COMPENSATION
            29Compensation
                of Executive Officers
            29Long
                Term Incentive Plan Awards
            30Compensation
                of Directors
            30Employment
                Contracts and Termination of Employment and
                Change of Control Agreements
            30**ITEM
                11.**
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT
            31**ITEM
                12.**
            CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS
            31**ITEM
                13.**
            EXHIBITS
                LIST AND REPORTS ON FORM 8-K
            33






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**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. The Company
      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 Approval (“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, the Company 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 the Company’s securities, collaborative arrangements with
      third parties and other strategic alliances and business
      transactions.




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**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, the Company entered into an Agreement and Plan of Merger (the “Merger
      Agreement”) with Egenix, Inc. (“Egenix”), a Delaware corporation. The Merger
      Agreement provides that Egenix shall merge with and into Pathogenics (the
      "Merger") and the Company 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, the Company 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.




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Immediately
      prior to the Effective Date, the Company shall effect an approximately 100-for-1
      reverse split (the “Reverse Split”) of its outstanding capital stock such that
      the number of shares of the Company’s 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, issued as a part of or in
      connection with any financings 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 outstanding
      immediately prior to the Effective Date or convertible debt incurred by Egenix
      from affiliates thereof from and after the date hereof. The parties hereto
      agree
      that any convertible debt incurred by Egenix from its affiliates from and after
      the date hereof 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. Upon
      the consummation of the Merger, all shares of capital stock of Egenix, including
      shares of common and Series A Preferred Stock, shall be cancelled. The shares
      of
      Series A Preferred Stock issued by the Surviving Corporation will be restricted
      securities as defined in Regulation D and Rule 144 of the 1933 Act with the
      same
      ranking, rights and terms as the original Egenix shares of Series A Preferred
      Stock.





The
      Company’s obligations under the Merger Agreement are subject to the satisfaction
      of certain conditions at or before the Effective Date. As soon as possible
      between the date of the Merger Agreement and until successful completion of
      one
      or more Bridge Financing(s) (hereinafter defined), Egenix shall use commercially
      reasonable efforts to obtain financing by calling in its currently outstanding
      warrants to purchase common stock (“Warrant Call”). The proceeds of such Warrant
      Call shall be used to finance the continuing activities of the parties prior
      to
      the successful completion of such Bridge Financings. As soon as practicable
      after the proceeds from the Warrant Call are available, the Company shall
      receive the lesser of 28.5% or $100,000 of the proceeds of the Warrant Call.
      As
      soon as possible between the date of the Merger Agreement and prior to ninety
      (90) days after the execution of the Merger Agreement, Egenix and/or the Company
      shall use commercially reasonable efforts to obtain financings in the form
      of
      sales of equity securities or debt instruments for an aggregate of $5,000,000
      (“Bridge Financing”). Any debt instruments will, subject to market conditions,
      require interest thereon payable in kind in the form of the Surviving
      Corporation’s common stock. In addition to financing the parties’ continuing
      activities prior to the Closing, up to $150,000 of proceeds of such Bridge
      Financing may used immediately to repay and retire certain of the Company’s then
      outstanding current liabilities. Upon successful completion of one or more
      pre-Merger Bridge Financing(s) by the parties and as soon as practicable after
      the proceeds are available, the Company shall receive the lesser of 28.5% of
      the
      proceeds or $100,000 per month until the Closing, plus the sum of $50,000 as
      required for the payment of Registration Statement legal fees. Prior to or
      contemporaneously with the effectiveness of the Merger, the Surviving
      Corporation will privately offer and sell up to $10,000,000 - $15,000,000 of
      its
      capital stock (the “PIPE”). Payment of the parties’ transaction costs associated
      with the Letter of Intent, the Merger, the Warrant Call, the Bridge Financing
      and the PIPE (as such terms are hereinafter defined) shall be in addition to
      the
      aforementioned sums.





Ratification
      of this Agreement by a majority of the stockholders of the Company shall be
      a
      condition to closing of this Agreement as shall approval of an amendment to
      the
      Certificate of Incorporation of the Company 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 Company’s 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 presently is intended to be not later than December
      31, 2006.




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**TECHNOLOGIES**




**N-Chlorotaurine**




Pursuant
      the March 29, 2006 license agreement with Dr.
      Waldemar Gottardi and Dr. Markus Nagl , the
      Company 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**





The
      Company believes 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.






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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.





**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); and


(12)
            Protein
                sites of attack of N-Chlorotaurine in*Escheria
                coli*(2006).





The
      Company believes 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 the
      Company's IND application on N-chlorotaurine. Nonetheless, the Company believes
      it will 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 will 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.




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The
      researchers themselves have primarily funded their research work on
      N-chlorotaurine at limited cost to the Company ( performing
      medical research on promising compounds like N-chlorotaurine is part of their
      job responsibilities as research faculty at the University on
      Innsbruck). Additionally, 263,859
      euro (approximately US $326,130 as of August 16, 2005 of
      philanthropic  medical
      research grant assistance has been provided to the researchers by
      the
      Austrian Science Foundation and the Jubilee Fund of the Austrian National Bank
      from 1997 - 2004 (98,399 euro from ’97-’99 (approximately US $121,621 as of
      August 16, 2005); 1,400 euro from ’97-’98 (approximately US $1,730 as of August
      16, 2005); 27,761 euro from ’00-’01 (approximately US $34,313 as of August 16,
      2005); and 87,230 euro from ’01-’04 (approximately US $107,817 as of August 16,
      2005)). 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
      the
      Company 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 the Company’s 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 the Company’s 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, the Company 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 the Company 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 the Company
      has
      non-exclusive rights to this information for research and development activities
      outside the ophthalmic indications. The Company retains the exclusive worldwide
      rights to NCT for all indications other than  ophthalmic
      applications. As consideration for the license agreement, Acuity paid the
      Company 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.





Because
      of N-chlorotaurine’s demonstrated safety profile and broad spectrum activity
      established in preclinical and clinical studies conducted by the researchers
      to
      date, the Company plans on continuing the development of N-chlorotaurine as
      a
      topical agent for the treatment of several body cavity infections.





The
      Company 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 the Company can provide
      no
      assurance. As part of the development plan, the Company plans on conducting
      further preclinical studies, including formulation studies, to support the
      filing of the Company's 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.





The
      Company 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). The Company 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.




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**Chloroquine
      Diphosphate**




Pursuant
      the May 25, 2005 license agreement with Alpha Research Group, Inc. (“Alpha”) and
      Jodi A. Nelson, the Company 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 the Company 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.




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.




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**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.




The
      Company 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, the Company 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 the Company's
      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.





The
      Company 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, 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”). The Company 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**





The
      Company has two (2) employees, Frederic P. Zotos, the Company’s Chief Executive
      Officer, who works for the Company on a full-time basis and Michael Ferrari,
      the
      Company’s Vice President, who works for the Company on a part-time basis. All of
      the Company’s 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, the Company
      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 the Company and American
      clinical research contractors.




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**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 the Company. If the Company is able to bring N-chlorotaurine and/or
      Chloroquine Diphosphate to the marketplace, of which there can be no assurance,
      the Company will face product competition from firms in the United States,
      Europe, Canada, Australia, and elsewhere. Additionally, some of the Company’s
      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.





The
      Company believes 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 (“CDC”) and the
      U.S. FDA to campaign against overuse of the medications. Therefore, the Company
      believes 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. The Company believes 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
      dyskinesia’s 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**





The
      Company 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.




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Under
      the
      license, the Company 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 the Company in connection with the patents
      rights, a total of 20% of any payments which the Company 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. The Company
      has
      yet to patent or gain approval for any products based on N-chlorotaurine. When
      due, all of the payments required under the license are payable by the Company
      in cash or in shares of the Company’s registered Common Stock. Additionally, the
      Company 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) the Company 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 the Company remains
      more than 60 days in arrears in payment of royalties or expenses due pursuant
      to
      the license.




Under
      the
      license, the Company 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 patent applications covering N-chlorotaurine are either exclusively
      licensed or assigned to the Company by their inventors.





The
      Company currently has 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 the Company 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 the
      Company 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.”





**License
      Agreement for N-Chlorotaurine for Ophthalmic Indications**  **with
      Acuity Pharmaceuticals, Inc.**





On
      April
      13, 2006, the Company 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. The Company retains the exclusive worldwide rights to NCT for
      all
      indications other than  ophthalmic
      applications. As consideration for the license agreement, Acuity paid the
      Company 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.




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The
      Company 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 the Company
      to Acuity. In consideration for such efforts and services, the Company must
      pay
      QV a fee equal to a percentage of the amount of the total consideration paid
      by
      Acuity to the Company, 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.





**License
      Agreement for** **Chloroquine**





On
      May
      25, 2005, the Company 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, the
      Company paid Alpha $20,000 which was loaned to the Company by William Mackey
      and
      William L. Sklar, a Director of the Company (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, the Company agreed to pay Alpha 4% of the net
      sales
      of Chloroquine Diphosphate in each country that Chloroquine Diphosphate is
      sold,
      if the Company 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, the
      Company agreed to pay Alpha (a) $100,000 payable in cash or registered stock
      of
      the Company 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 the Company
      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 the Company 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 the Company to Alpha, or for cause. The Company 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, the Company received a notice of termination of the license agreement
      executed on May 25, 2005, between Alpha, Nelson and the Company. The Company
      believes 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. The Company 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.





On
      May
      25, 2005, the Company 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 the Company 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 the Company. On June 1, 2005, First Coventry entered into an
      indemnification agreement with Frederic P. Zotos, the Company’s 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.




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On
      May
      25, 2005, William K. Mackey and William L. Sklar, a Director of the Company,
      entered into a note and security agreement with the Company. Under the note
      and
      security agreement, Mr. Mackey and Mr. Sklar loaned the Company $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, the Company’s 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, the Company 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, the Company 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,
      the Company 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, the Company 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 Company has not
      paid
      Mr. Sklar and Mr. Mackey any monies under the note and security agreement,
      and
      is currently in default thereon. We plan to cure this default by paying Mr.
      Sklar and Mr. Mackey the $20,000 principal and 8% interest through debt and/or
      equity financing in connection with the Merger.





On
      March
      20, 2006, the Company 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
      the Company 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, the Company 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 the Company’s
      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 the Company 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 the Company’s default
      thereon.




Additionally,
      on May 25, 2005, the Company entered into a consultancy agreement with Jodi
      A.
      Nelson (“Nelson”). The consultancy agreement calls for Nelson to provide
      consulting services to the Company in connection with the therapeutic use and
      formulation of Chloroquine and its derivatives or analogs. The Company 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
      the
      Company. The Company 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 the Company’s 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 the Company’s 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. The Company
      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.





The
      Company 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 the Company, 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.”






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            Statements**




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,
      the Company plans to support ongoing clinical studies of Chloroquine
      Diphosphate, if the Company can raise additional financing.





**Confidentiality
      Agreements**





The
      Company has each company and consultant with whom the Company consults 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 the Company’s confidential information to anyone and to take all
      steps necessary to prevent the disclosure of the Company’s confidential
      information. Each Confidentiality Agreement is valid for the term of Five (5)
      years from the date entered into.





**Need
      for Government Approval**





The
      Company 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.




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.






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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 (“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. NDAs 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.




**FORWARD-LOOKING
      STATEMENTS**




The
      statements contained in this annual report on Form 10-KSB that are not
      historical are forward-looking statements within the meaning of Section 27A
      of
      the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended, including statements regarding the
      expectations, beliefs, intentions or strategies regarding the future. We intend
      that all forward-looking statements be subject to the safe harbor provisions
      of
      the Private Securities Litigation Reform Act of 1995.




In
      particular, the “Risk Factors” section and the “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations” section in Item 6 of
      this annual report include forward-looking statements that reflect our current
      views with respect to future events and financial performance. We use words
      such
      as we “expect,” “anticipate,” “believe,” and “intend” and similar expressions to
      identify forward-looking statements. Investors should be aware that actual
      results may differ materially from our expressed expectations because of risks
      and uncertainties inherent in future events, particularly those risks identified
      in the “Risk Factors” section of this annual report, and should not unduly rely
      on these forward looking statements.




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            Statements**




**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. The Company’s business is subject
      to many risk factors, including the following (references to “our,” “we,” and
      words of similar meaning in these Risk Factors refer to the Company). The
      Financial Information presented throughout this annual report is taken from
      the
      Company’s 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
      development stage company and as such has generated limited revenues and no
      profits to date. We depend to a great degree on the ability to attract external
      financing in order to develop the Company’s 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 $302,847 of liabilities
      and a total shareholders deficit of $302,563 as of December 31, 2005. Currently,
      the Company believes it will have enough money to continue its business
      operations until the end of the fourth quarter of 2006, 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 the Company’s 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, the Company would have a breach of contract claim against Egenix, which
      the Company would likely litigate. If any of these things were to happen, it
      could force the Company to suspend or abandon its business operations while
      the
      Company is in litigation, suspend or abandon the development of N-chlorotaurine
      and/or suspend or abandon the Company’s business plan, which could lead to any
      investment in the Company 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.**





The
      Company had $284 of cash on hand at December 31, 2005, and required $118,085
      for
      current liabilities. The Company had negative working capital of $302,563 at
      December 31, 2005. The Company believes it will be able to remain in operation
      until the end of the fourth quarter of 2006, assuming the receipt of funds
      from
      Egenix as part of the Agreement and Plan of Merger, as the Company believes
      it
      is currently successful in keeping its expenses low while still in the
      development stage of its technologies. If the Company is delayed in raising
      that
      money, as a result of the Company not consummating the Merger, or for any other
      reason, the Company could be forced to abandon or curtail its planned research
      and development activities, and/or abandon or curtail its operations, and any
      investment in the Company could be lost.





**Our
      Independent Public Accounting Firm Has Expressed Substantial Doubt As To Whether
      Our Company Can Continue As A Going Concern.**





Our
      Company is in its early development stage, as planned principal activities
      have
      not begun. We have generated little revenues since the Company’s change in
      business focus to a biopharmaceutical company focused on high value-added
      pharmaceutical clinical development and have incurred substantial losses. These
      factors indicate that the Company 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, the Company’s 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 the Company
      is
      not required pay the N-chlorotaurine or Chloroquine Diphosphate researchers
      any
      royalties until the Company is able to commercially market any products based
      on
      N-chlorotaurine or Chloroquine Diphosphate. However, if the Company is not
      able
      to continue as a going concern, any investment in the Company could become
      worthless.




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            Statements**





**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 not generated any
      revenues nor have we 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 U.S. Food and Drug Administration (“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 the Company 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 the Company will be able to realize
      any profits and/or be able to continue its business plan will be whether or
      not
      the Company is able to successfully compete in the biopharmaceutical industry.
      The biopharmaceutical industry is highly competitive and the Company may be
      competing against companies with greater resources and more experience in the
      biopharmaceutical industry. If the Company is unable to compete in the
      marketplace and fails to generate any profits, the Company 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:




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            Statements**





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;





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.






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            Statements**




**We
      Will Need Government Approval Before We Will Be Able to Market N-Chlorotaurine,
      Chloroquine or Other Technologies the Company 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 the Company
      to
      Cease Business Operations.**





The
      Company 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 the Company is able to commercially
      produce N-chlorotaurine and/or Chloroquine Diphosphate. The Company 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
      the
      Company is unable to obtain Regulatory Approval for N-chlorotaurine and/or
      Chloroquine Diphosphate, or runs out of money before the Company can obtain
      Regulatory Approval for N-chlorotaurine and/or Chloroquine Diphosphate, the
      Company will be unable to commercially market N-chlorotaurine and/or Chloroquine
      Diphosphate and the Company will likely fail. As a result, you will likely
      lose
      any investment in the Company 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,
      the Company 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 The Company May Be Unable To Find A Corporate
      Partner To Market N-chlorotaurine, Which Could Force the Company to Seek Other
      Business Opportunities and/or Cease Operations.**





While
      the
      Company 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 the Company to
      produce. Additionally, even if the Company does choose to market
      N-chlorotaurine, the Company 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, the Company 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 the Company could become worthless.




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            to Financial
            Statements**





**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 The Company May Be Unable To Find A Corporate Partner
      To Market Chloroquine Diphosphate, Which Could Force the Company 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 the Company to produce. Additionally, even if the Company
      does
      choose to market Chloroquine Diphosphate, the Company 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,
      the Company 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 the Company
      could become worthless.





**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.**





The
      Company believes 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 the
      Company's IND application on N-chlorotaurine. However, the Austrian researchers
      are under no obligation to allow the Company 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 the Company 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 the Company To Abandon
      Chloroquine as a Commercial Product, Which Could Force the Company to Seek
      Other
      Business Opportunities and/or Cease Operations.**





The
      Company believes in good faith that the notice of termination of the license
      agreement executed on May 25, 2005, between Alpha, Nelson and the Company 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. The Company 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 the Company 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 the Company 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 the Company to seek other
      business opportunities and/or cease operation. As a result, any investment
      in
      the Company 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, the Company’s Chief Executive Officer and Director and
      Michael L. Ferrari, the Company’s 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 the Company’s
      development activities. Mr. Zotos entered into an employment contract with
      the
      Company on March 15, 2005. Mr. Ferrari entered into a consulting contract with
      the Company on January 1, 2006. The Company does not hold “key man” insurance on
      either Mr. Zotos or Mr. Ferrari. Moving forward, should they be lost for any
      reason, the Company 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, the Company 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-
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            to Table of Contents**
 **Index
            to Financial
            Statements**





**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 the Company’s 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
      the
      Company’s 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**




The
      Company 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, the Company is given the use of a conference room
      and
      visitors office facilities. Under the terms of the lease, the Company 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, the Company received a notice of dispute of the consultancy agreement
      executed on May 25, 2005, between Jodi A. Nelson and the Company. The Company
      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, the Company received a notice of termination of the license agreement
      executed on May 25, 2005, between Alpha, Nelson and the Company. The Company
      believes 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. The Company 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-
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            to Table of Contents**
 **Index
            to Financial
            Statements**





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. We may become involved in material legal proceedings
      in the future.




**ITEM
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**




None.




-21-
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            to Table of Contents**
 **Index
            to Financial
            Statements**




**PART
      II**




**ITEM
              5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**




No
      established public trading market exists for the Company’s Common Stock. We have
      - 0 - shares of Common Stock subject to outstanding options or warrants to
      purchase the Company’s Common Stock. We currently have - 0 - shares of
      Convertible Preferred Stock outstanding. As of December 31, 2005, there were
      47,748,650 shares of Common Stock outstanding, held by 40 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.





We
      are
      required, in connection with our outstanding Convertible Preferred Stock, to
      pay
      the holders of our Convertible Preferred Stock quarterly dividends at 2.5%
      above
      the prime rate published by Citibank, N.A. (as of September 28, 2005, the prime
      rate was 6.75%) (“Dividends”). The Dividends are payable on the last day of
      April, July, October and January, in cash or additional shares of the Company’s
      Convertible Preferred Stock. To date, we have $4,521 of declared and unpaid
      Dividends on our Convertible Preferred Stock. Unpaid dividends accrue interest
      at a per annum rate equal to the lower of eighteen percent (18%) and the highest
      interest rate permitted by applicable law.





**RECENT
      SALES OF UNREGISTERED SECUCRITIES**




***Issuance
      to Members of Tyrol Therapeutics, LLC***





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 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. Frederic P. Zotos, the Company’s current Chief Executive Officer
      and a former Tyrol member exchanged his 48.9% interest in Tyrol for 20,000,000
      shares of the Company’s Common Stock, Michael L. Ferrari, the Company’s current
      Vice President and Director exchanged his 48.9% interest in Tyrol for 20,000,000
      shares of the Company’s Common Stock and William K. Mackey exchanged his 2.2%
      interest in Tyrol for 900,000 shares of the Company’s Common Stock. Issuance of
      these shares did not involve any public offering, and was made in reliance
      upon
      the exemption from registration provided by section 3(b) of the 1933 Act and
      the
      provisions of Regulation D Rule 504 promulgated under the 1933 Act (“Regulation
      D”).




***Securities
      Purchase Agreement***





On
      February 18, 2005, the Company entered into a Securities Purchase Agreement
      (the
“Securities Purchase Agreement) with five (5) entities, Manillo Investors
      Limited, Bayside Associates Limited, Castlegate Group Limited, Kensington Group
      Limited and Trufello Associates Limited (collectively the
“Purchasers”).





In
      connection with the Securities Purchase Agreement, the Purchasers agreed to
      purchase two hundred and seventy five thousand dollars ($275,000) of Convertible
      Preferred Stock of the Company, which was convertible into shares of the
      Company’s Common Stock at a per share conversion price of $0.029 per share. The
      Purchasers were to purchase the Convertible Preferred Stock of the Company
      in
      four (4) tranches, the first of which was February 23, 2005, at which time
      the
      Company received an aggregate of $45,000 from the Purchasers in return for
      1,637
      shares of the Company’s Convertible Preferred Stock (“First Tranche”), the
      second of which was March 31, 2005, at which time the Company received an
      aggregate of $50,000 from the Purchasers in return for 1,818 shares of the
      Company’s Convertible Preferred Stock (“Second Tranche”), the third of which was
      supposed to be received five (5) business days from the date the Company’s
      Registration Statement was declared effective with the Securities and Exchange
      Commission on October 6, 2005, at which time the Company was supposed to receive
      an aggregate of $60,000 from the Purchasers in return for 2,182 shares of the
      Company’s Convertible Preferred Stock (“Third Tranche”), and the fourth and
      final tranche which was supposed to be received the thirtieth (30) business
      day
      after the Company’s Registration Statement became effective with the Securities
      and Exchange Commission, at which time the Company was supposed to receive
      an
      aggregate of $120,000 from the Purchasers in return for 4,363 shares of the
      Company’s Convertible Preferred Stock (“Fourth Tranche”) (collectively the
“Tranches”). The Company received the Third Tranche late from the Purchasers in
      two equal partial payments of $30,000 each on October 25, 2005 and November
      9,
      2005, and never received the Fourth Tranche from the Purchasers. Issuance of
      these shares did not involve any public offering, and was made pursuant to
      the
      exemption from the registration provisions of the 1933 Act afforded by Section
      4(2), or Section 4(6) and Regulation S of the 1933 Act and Rule 506 of
      Regulation D promulgated thereunder.




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            to Table of Contents**
 **Index
            to Financial
            Statements**





The
      Securities Purchase Agreement contains penalties which the Company was required
      to pay to the Purchasers, since the Company did not obtain effectiveness of
      its
      Registration Statement within the time periods provided in the Securities
      Purchase Agreement (a “Non Registration Event”). Pursuant to the Securities
      Purchase Agreement, if (i) the Registration Statement is not declared effective
      on or before one hundred twenty (120) days from the date of the Securities
      Purchase Agreement, or (ii) this Registration Statement is filed and declared
      effective with the SEC, but shall thereafter cease to be effective, then the
      Company shall deliver to the Purchasers, as liquidated damages, an amount equal
      to one and one-half percent (1.5%) of the outstanding amount of the Convertible
      Preferred Stock for each thirty (30) days or part thereof during the initial
      sixty (60) days of the such Non-Registration Event and two percent (2%) for
      each
      thirty (30) days or part thereof, thereafter. As of the date the Company’s
      Registration Statement was declared effective with the Securities and Exchange
      Commission on October 6, 2005 the aggregate amount of purchased Preferred Stock
      was $95,000, thereby resulting in penalties of 1.5% ($1,425 or 49,138 shares
      of
      common stock) due after the expiration of the first two thirty day periods
      following the June 18, 2005 deadline, and 2% ($1,900 or 65,517 shares of common
      stock) at the expiration of each thirty day period thereafter, resulting in
      total penalties owed of approximately $6,650 or 229,310 shares of Common Stock
      as of the date the Company’s Registration Statement was declared effective with
      the Securities and Exchange Commission on October 6, 2005. Accordingly, on
      January 23, 2006 the Company issued 45,862 shares of common stock to each of
      the
      five Purchasers for a total authorized issuance of 229,310 unrestricted shares
      of common stock, thus paying in full all liquidated damages due to the
      Purchasers.  Issuance
      of these shares did not involve any public offering, and was made pursuant
      to
      the exemption from the registration provisions of the 1933 Act afforded by
      Section 4(2), or Section 4(6) and Regulation S of the 1933 Act and Rule 506
      of
      Regulation D promulgated thereunder.





On
      May 3,
      2006, the board of directors of the Company passed by majority vote a resolution
      terminating the Securities Purchase Agreement entered into on February 18,
      2005
      between the Company and the Purchasers. The Company terminated the Securities
      Purchase Agreement for the Purchasers’ material breach thereof due to the
      following material defaults: (1) the Purchasers’ failure to pay the Company a
      Fourth Tranche of one-hundred and twenty-thousand dollars ($120,000) on November
      17 th ,
      2005 -
      the thirtieth (30 th )
      business day after the actual effective date of the Company’s registration
      statement on October 6, 2005; (2) the Purchasers’ failure to comply with the
      November 18 th ,
      2005
      request of the Company’s NASD market maker, to execute an escrow agreement and
      place sixty-five percent (65%) of their free trading shares into an escrow
      account with the market maker’s clearing firm for a period of twelve months,
      thereby preventing the Company from effecting a listing on the OTC Bulletin
      Board; (3) the Purchasers’ subsequent refusal to cure their failure to pay the
      Fourth Tranche despite the Company’s numerous requests; and, (4) the Purchasers’
notification to the Escrow Agent on February 10, 2006 that they would not
      purchase the Fourth Tranche securities allegedly because the representations
      and
      warranties of the Company contained in the Agreement were not true and correct
      as of that date, and therefore the Purchasers instructed the Escrow Agent to
      return the Fourth Tranche funds previously deposited with him. On February
      16,
      2006, the Company subsequently cancelled the Fourth Tranche securities
      previously issued to the Purchasers for lack of payment. The Company believes
      that the Purchasers’ allegation is without merit that the representations and
      warranties of the Company contained in the Agreement were not true and correct
      as of February 10, 2006, and that the Purchasers were obligated to purchase
      the
      Fourth Tranche securities under the Agreement. The Company believes it may
      have
      a breach of contract claim against the Purchasers, which it may eventually
      litigate.




-23-
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 **Index
            to Financial
            Statements**





***Issuance
      to Shareholders of Vulcan Corporation***





Pursuant
      to the Reorganization Agreement, the Company agreed to distribute the 503,830
      shares of the Company’s Common Stock, which were held by Vulcan Corporation to
      the shareholders of Vulcan Corporation, on a one for one basis, with each
      shareholder of Vulcan Corporation common stock as of the record date of March
      9,
      2005, receiving one share of the Company’s Common Stock for each share of Vulcan
      which they held. Those shares were distributed on March 14, 2005. Issuance
      of
      these spin-off shares did not involve any public offering, and were distributed
      without registration under the Securities Act of 1933 in reliance on Staff
      Legal
      Bulletin No. 4 published by the Securities and Exchange Commission Division
      of
      Corporation Finance on September 16, 1997.




**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).





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.




-24-
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            to Table of Contents**
 **Index
            to Financial
            Statements**





**2005
      Versus 2004**




**Revenue**




The
      Company had no revenues since inception.





**Operating
      Expenses**





During
      the year ended December 31, 2005, the Company’s operating expenses increased by
      $392,837 or 2,303% to $409,896, compared to $17,059 for the year ended December
      31, 2004. The increase was attributable to increases of $295,953 in general
      and
      administrative expenses and $96,884 in research and development
      expenses.




During
      the period from December 16, 1997 (Inception) to December 31, 2005 the Company
      incurred operating expenses of $452,450.





**Net
      Loss**





The
      Company incurred a net loss of $415,909 for the year ended December 31, 2005,
      an
      increase in net loss of $398,850 from net loss of $17,059 for the year ended
      December 31, 2004, which increase was primarily due to our increased operating
      expenses as described above.





Loss
      per
      share was $(0.01) for the year ended December 31, 2005 and $(0.00) for the
      year
      ended December, 2004.





**LIQUIDITY
      AND CAPITAL RESOURCES**




The
      Company’s only asset as of December 31, 2005, was cash of $284, compared to $76
      at December 31, 2004.





We
      had
      total liabilities of $302,847 as of December 31, 2005, compared to $42,630
      at
      December 31, 2004, an increase of $260,217, and consisting of $118,085 (FY
      2004
      $6,676) of accounts payable and accrued expenses and $184,762 (FY 2004 $35,954)
      of loans payable to related parties.





We
      had
      negative working capital of $302,563 as of December 31, 2005, compared to
      negative working capital of $42,478 at December 31, 2004.





Co-incident
      with the merger of Tyrol with Pathogenics, 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.





We
      had a
      total accumulated deficit of $302,563 as of December 31, 2005 compared to
      $43,554 at December 31, 2004.





We
      had
      $153,575 used by operating activities for the year ended December 31, 2005,
      which included a net loss of $409,896, an increase in accounts payable and
      accrued expenses of $249,671, and stock payable of $6,650.





We
      had
      $153,783 in net cash provided by financing activities for the year ended
      December 31, 2005. This resulted from sale of common stock of $900 and proceeds
      from preferred stock of $155,000.





The
      Company is presently operating at a loss. The Company 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, the Company
      received $50,000 in cash from Acuity Pharmaceuticals, Inc. in connection with
      a
      license agreement for N-Chlorotaurine for ophthalmic indications. During June
      2006, the Company received $53,480 is cash from Egenix, Inc. in connection
      with
      the Agreement and Plan of Merger.




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 **Index
            to Financial
            Statements**





The
      Company believes it can satisfy its cash requirements until the end of the
      fourth quarter of 2006, assuming the receipt of funds from Egenix as part of
      the
      Agreement and Plan of Merger, as the Company believes it is currently successful
      in keeping its expenses low while still in the development stage of its
      technologies. In connection with the Agreement and Plan of Merger with Egenix,
      management has received $53,480 of the proceeds of the Egenix Warrant Call
      in
      June 2006, and expects to receive $150,000 of the proceeds of the Bridge
      Financing to repay and retire certain of the Company’s then outstanding current
      liabilities at the beginning of August 2006, and to receive $100,000 of the
      proceeds of the Bridge Financing per month commencing at the beginning of August
      2006 until the Closing, intended to be no later than December 31,
      2006.





If
      the
      Company does not have sufficient funds to continue its operations as planned,
      the Company 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 the Company after the
      receipt of funds from Egenix, if at all, or that adequate funds for the
      Company's operations, whether from the Company's financial markets, or other
      arrangements will be available when needed or on terms satisfactory to the
      Company. The Company has no commitments from officers, directors or affiliates
      to provide funding. The failure of the Company to obtain adequate additional
      financing may require the Company to delay, curtail or scale back some or all
      of
      its operations. Any additional financing may involve dilution to the Company's
      then-existing shareholders.





The
      Company’s independent accounting firm raised substantial doubt about
      Pathogenics’ 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 the Company
      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 euro (approximately $326,130 as of August 16, 2005) of medical
      research grant assistance provided by the by
      the
      Austrian Science Foundation and the Jubilee Fund of the Austrian National bank
      from 1997 - 2004 .
      Additionally, the Company has paid only a limited amount for the research and
      development of Chloroquine Diphosphate.





**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
      the company’s 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**





The
      Company 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.





**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)
      shall be effective for Pathogenics as of January 1, 2006. The adoption of this
      new accounting pronouncement is not expected to have a material impact on the
      financial statements of Pathogenics during the calendar year 2006.




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            to Table of Contents**
 **Index
            to Financial
            Statements**




**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.




**Evaluation
      of Controls and Procedures**




We
      maintain disclosure controls and procedures designed to provide reasonable
      assurance that information required to be disclosed in the reports we file
      with
      the Securities and Exchange Commission (the "SEC") is recorded, processed,
      summarized and reported within the time periods specified in the rules of the
      SEC. As of December 31, 2005, we carried out an evaluation, under the
      supervision and the participation of our management, including our President
      and
      Chief Executive Officer, of the design and operation of these disclosure
      controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that
      evaluation, our President and Chief Executive Officer concluded that our
      disclosure controls and procedures are effective in ensuring that the
      information required to be disclosed by the Company in the reports that it
      files
      or submits under the Exchange Act is accumulated and communicated to the
      Company's management, including its President and Chief Executive Officer,
      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.





**Changes
      in Internal Controls**





There
      were no significant changes in the Company's internal controls or in other
      factors that could significantly affect those controls since the most recent
      evaluation of such controls.




-27-
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            to Table of Contents**
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            to Financial
            Statements**




**PART
      III**




**ITEM
              9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(A) OF THE EXCHANGE ACT**




**INFORMATION
      CONCERNING DIRECTORS AND EXECUTIVE
      OFFICERS**




***Frederic
      P. Zotos***





Frederic
      P. Zotos, 40, has served as Chief Executive Officer, President, Secretary,
      Treasurer and Director of the Company since February 18, 2005. Mr. Zotos has
      served as managing member of the Company’s 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, 30, has served as Vice President and Director of the Company since
      February 18, 2005. Since its creation on November 19, 2002, Mr. Ferrari has
      served as a member of the Company’s 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 the Company are elected annually and hold office until the annual meeting
      of
      the shareholders of the Company 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 the Company’s officers and directors. Officers and directors of the
      Company may receive compensation as determined by the Company 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 the Company for expenses incurred in
      attending meetings of the Board of Directors.





There
      are
      no family relationships among the executive officers or directors of the
      Company.





**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 the Company 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.




-28-
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            Statements**





**SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTIN
      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 2005.




**ITEM
              10.**
            **EXECUTIVE
                COMPENSATION**




**COMPENSATION
      OF EXECUTIVE OFFICERS**




EXECUTIVE
      COMPENSATION


ANNUAL
                COMPENSATION
            
            LONG-TERM
                COMPENSATIONAWARDS
            
            
            
            PAYOUTSNAME
                AND
            
            
            
            
            
            
            
            OTHER
            
            RESTRICTEDPRINCIPAL
            
            FISCAL
            
            
            
            
            
            ANNUAL
            
            STOCK
            
            OPTIONS/
            
            LTIPPOSITION
            
            YEAR
            
            SALARY
            
            BONUS
                ($)
            
            COMPENSATION
            
            AWARDS
            
            SARS
                (#)
            
            PAYOUTFrederic
                P. Zotos
            
            
            2005(1
            )
            $
            173,000
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-CEO
                and PresidentWilliam
                L. Sklar
            
            
            2004
            
            $
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-President
                (2)Ronald
                Cole Jr.
            
            
            2003
            
            $
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-President
                (3)
            
            
            2002
            
            $
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-
            
            
            -0-





Salaries
      above do not include perquisites and other personal benefits in amounts less
      than 10% of the total annual salary and other compensation.





Other
      then the individuals listed above, the Company has no other executive employees
      who have received more than $100,000.00 in compensation, including bonuses
      and
      options, during each of the last three (3) fiscal years.







(1)
            The
                salary listed for Mr. Zotos is his expected salary for 2005. Mr.
                Zotos
                began as the Company's Chief Executive Officer on February 18, 2005,
                when
                Mr. Sklar resigned. Mr. Zotos has been accruing his salary as of
                April 1,
                2005. As of December 31, 2005, Mr. Zotos had accrued approximately
                $150,000 in salary.


(2)
            William
                L. Sklar served as the Company's President from January 27, 2005
                to
                February 18, 2005, at which time Frederic P. Zotos, was appointed
                President, Secretary, Treasurer and Chief Executive Officer of the
                Company
                by the Company's Board of
                Directors.


(3)
            Thomas
                V. Ackerly Served as the Company's sole officer from the Company's
                inception on December 16, 1997 to November 26, 2001, at which time
                Ronald
                Cole, Jr. was appointed sole officer and Director of the Company.
                On
                January 27, 2005, William L. Sklar was elected as sole officer and
                Director of the Company.






-29-
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**LONG
      TERM INCENTIVE PLAN AWARDS**




No
      long
      term incentive plan awards were made to a Named Officer during the last fiscal
      year.




**COMPENSATION
      OF DIRECTORS**




Board
      members are reimbursed for reasonable expenses incurred in connection with
      attending meetings of the board and of committees of the board.




**EMPLOYMENT
      CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF
      CONTROL AGREEMENTS**




**Employment
      Agreement**





Frederic
      P. Zotos entered into an employment agreement with the Company on March 15,
      2005, effective as of February 18, 2005, and subsequently amended on January
      1,
      2006. The employment agreement calls for Mr. Zotos to serve as the Company’s
      Chief Executive Officer and President. Under the agreement, Mr. Zotos is to
      receive $200,000 per year plus a bonus to be determined by the Company’s Board
      of Directors. The Company 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
      employment agreement shall be until terminated by the Company or Mr. Zotos.
      The
      employment agreement may be terminated by the Company for “cause,” including (i)
      conviction of any crime constituting a felony in the jurisdiction involved,
      (ii)
      engaging in any substantiated act involving moral turpitude, (iii) engaging
      in
      any act which subjects the Company to public ridicule or embarrassment, (iv)
      grossly negligent performance of duties under the Employment Agreement, (v)
      willful failure or refusal to perform duties under the Employment Agreement,
      or
      (vi) material breach of any provision of the agreement. 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’ retirement or
      by the Company for “cause,” Mr. Zotos will be entitled to only his salary earned
      through the date of the termination of his employment. Additionally, the Company
      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 the Company terminates Mr. Zotos’ employment for any
      other reason other than for “cause,” the Company shall pay Mr. Zotos a pro rata
      amount of his salary which he earned through the date of his termination and
      severance pay equal to the amount Mr. Zotos would have received during the
      period beginning on the date of termination and ending twelve (12) months from
      the date of his termination. Mr. Zotos agreed under the agreement not to compete
      with the Company during his employment or for one (1) year following the
      termination of his employment with the Company. Mr. Zotos has been accruing
      his
      salary as of April 1, 2005, until such time as the Company has sufficient funds
      to make payments, but in no event later than January 31, 2007, whereupon the
      Company shall pay all the deferred and accrued salary. As of May 31, 2006,
      Mr.
      Zotos had accrued approximately $241,666 in salary, and $13,118 in interest
      at
      10% per year. We plan to pay this accrued salary and interest through debt
      and/or equity financing in connection with the Merger.





**Consulting
      Agreement**





Michael
      L. Ferrari entered into a consultancy agreement with the Company on January
      1,
      2006. The consultancy agreement calls for Mr. Ferrari to provide consulting
      services to the Company in connection with the clinical, regulatory and business
      development of therapeutic drugs and the technical evaluation of commercial
      applications of such technologies. The Company agreed to pay Mr. Ferrari $5,000
      per month, for Mr. Ferrari’s first forty (40) hours of work per month and $100
      per hour thereafter and reimburse Mr. Ferrari for pre-approved business expenses
      in current in connection with the consulting services rendered to the Company.
      Payments are currently being deferred and accrued in accordance with the
      consultancy agreement until such time as the Company has sufficient funds to
      make payments, but in no event later than January 31, 2007, whereupon the
      Company shall pay all the deferred and accrued invoices, and shall cease to
      defer and accrue any future invoices. The consultancy agreement included a
      confidentiality provision, whereby Mr. Ferrari agreed not to disclose the
      Company’s confidential information other than in connection with the consulting
      services. The consultancy agreement is for a period of three (3) years 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) year prior written notice. The Company has not paid Mr. Ferrari in
      connection with the consulting agreement, and currently owes Mr. Ferrari $25,000
      in unpaid consulting fees. We plan to pay these consulting fees through debt
      and/or equity financing in connection with the Merger.




-30-
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**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) as of December
      31, 2005 and by the officers and directors, individually and as a group. Except
      as otherwise indicated, all shares are owned directly.




Beneficially
                OwnedPrior
                to OfferingName
                and Address of Beneficial Owner(1)
            
            Shares
            
            Percent(2)Frederic
                P. Zotos
            
            
            20,000,000
            
            
            42.8
            %Michael
                Ferrari
            
            
            20,000,000
            
            
            42.8
            %All
                the officers and directors as a group (2 persons)
            
            
            40,000,000
            
            
            85.6
            %





(1)
            The
                address of each of the Company’s officers and Directors is the Company’s
                principal executive offices at 99 Derby Street, Suite 200, Hingham,
                MA
                02043.


(2)
                Using
                    46,748,650 shares outstanding as of December 31, 2005.





**ITEM
              12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**




On
      February 10, 2005, the Company 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, the Company exchanged 40,900,000 restricted shares of the
      Company’s Common Stock for 100% of the membership interest of Tyrol. The Tyrol
      members included the Company’s Chief Executive Officer and the Company’s Vice
      President who each received 20,000,000 restricted shares of the Company’s Common
      Stock pursuant to the Reorganization.





In
      January 2005, Mr. Sklar entered into an Indemnification Agreement with the
      Company, and in February 2005, Mr. Zotos and Mr. Ferrari entered into an
      Indemnification Agreements with the Company. The Indemnification Agreements
      provide for the Company 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, the Company 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 the Company, unless the Company 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 the Company.




-31-
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On
      March
      15, 2005, the Company entered into an employment agreement with the Company’s
      Chief Executive Officer, Frederic P. Zotos, effective as of February 18, 2005,
      and subsequently amended on January 1, 2006. The Employment Agreement calls
      for
      Mr. Zotos to serve as the Company’s Chief Executive Officer and President. Under
      the agreement, Mr. Zotos is to receive $200,000 per year plus a bonus to be
      determined by the Company’s Board of Directors. The Company agreed to annually
      increase the Base Salary at a rate of ten percent (10%) above the rate for
      the
      preceding year. The Employment Agreement may be terminated by the Company for
      “cause,” by reason of Mr. Zotos’ death or Mr. Zotos’ voluntary retirement.
      Additionally, the Company can terminate Mr. Zotos’ employment under the
      Employment Agreement due to his incapacity due to physical or mental illness.
      Mr. Zotos agreed under the Employment Agreement not to compete with the Company
      during his employment or for One (1) year following the termination of his
      employment with the Company. The term of the Employment Agreement shall be
      until
      terminated by the Company or Mr. Zotos.





On
      May
      25, 2005, William K. Mackey and William L. Sklar, the Company’s Director,
      entered into a Note and Security Agreement with the Company. Under the Note
      and
      Security Agreement, Mr. Mackey and Mr. Sklar loaned the Company $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, the Company’s
      wholly-owned Delaware subsidiary.





On
      June
      1, 2005, the Company’s wholly-owned subsidiary, First Coventry Corporation
      (“First Coventry”) entered into an Indemnification Agreement with the Company’s
      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, the Company’s Director,
      provided accounting services to the Company in connection with preparing the
      Company’s 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 the
      Company’s 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.





On
      January 1, 2006, the Company entered into a consultancy agreement with the
      Company’s Vice-President and Director, Michael L. Ferrari. Under the agreement,
      Mr. Ferrari is to receive $5,000 per month for his first forty (40) hours of
      work per month and $100 per hour thereafter. The consultancy agreement is for
      a
      period of three (3) years 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) year prior written notice.





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.




-32-
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            Statements**




**ITEM
              13.**
            **EXHIBITS
                LIST****AND REPORTS ON FORM 8-K**




**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,
                20053.1(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, 2005.3.6(1)
            
            Bylaws
                of Pathogenics, Inc., as amended to date.5.1(1)
            
            Legal
                Opinion that Shares Covered by Form SB-2 Registration Statement are
                Validly Issued, Fully Paid and Non-Assessable dated March 18, 2005.10.1(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*
            
            First
                Amendment dated January 1, 2006 to Employment Agreement dated March
                15,
                2005 between Pathogenics, Inc. and Frederic P. Zotos,
                Esq.10.12*
            
            Consulting
                Agreement dated January 1, 2006 between Pathogenics, Inc. and Michael
                L.
                Ferrari.10.13*
            
            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*
            
            Revocation
                dated March 20, 2006 of Assignment Agreement dated May 25, 2005 between
                Pathogenics, Inc. and First Coventry Corporation.10.16*
            
            License
                Agreement dated March 29, 2006 among Pathogenics, Inc., Dr. Waldemar
                Gottardi and Dr. Markus Nagl.10.17+,*
            
            License
                Agreement dated April 13, 2006 between Pathogenics, Inc. and Acuity
                Pharmaceuticals, Inc.10.18(3)
            
            Agreement
                and Plan of Merger dated May 4, 2006 between Pathogenics, Inc. and
                Egenix,
                Inc.99.1(1)
            
            Frederic
                P. Zotos Salary Deferral Letter for Second and Third Quarterly Fiscal
                Periods April 1 - September 30, 2005, dated August 10,
                2005.99.2*
            
            Frederic
                P. Zotos Salary Deferral Letter for Fourth Quarterly Fiscal Periods
                October 1 - December 31, 2005, dated January 1, 2006.99.3*
            
            Frederic
                P. Zotos Salary Deferral Letter for First Quarterly Fiscal Period
                January
                1 - March 31, 2006, dated April 1, 2006.99.4*
            
            Certification
                required by Rule 13a-14(a) or Rule 15d-14(a).99.5*
            
            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.





+
            Confidential
                treatment has been 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.






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**REPORTS
      ON FORM 8-K**




On
      April
      4, 2006, we filed with the SEC a report on Form 8-K stating that, on that day,
      we entered into a mutual Letter of Intent with Egenix, Inc. to merge the
      companies. A copy of the Letter of Intent was attached thereto.




On
      April
      19, 2006, we filed with the SEC a report on Form 8-K stating that, on April
      13,
      2006, we entered into a patent License Agreement with Acuity Pharmaceuticals,
      Inc. A copy of a press release announcing the License Agreement was attached
      thereto, and a copy of the License Agreement is filed herewith.




On
      May 5,
      2006, we filed with the SEC a report on Form 8-K stating that, on May 4, 2006,
      we entered into an Agreement and Plan of Merger with Egenix, Inc. A copy of
      the
      Agreement was attached thereto.




On
      May 8,
      2006, we filed with the SEC a report on Form 8-K stating that, on May 3, 2006,
      we terminated a Securities Purchase Agreement entered into on February 18,
      2005
      between the Company and five (5) entities, Manillo Investors Limited, Bayside
      Associates Limited, Castlegate Group Limited, Kensington Group Limited and
      Trufello Associates Limited.




On
      May
      11, 2006, we filed with the SEC a report on Form 8-K stating that, on that
      day, the
      holders of a majority of the shares of currently issued and outstanding common
      stock of the Company entitled to vote at an election of directors approved
      by
      written consent a resolution removing William L. Sklar as a director of the
      Corporation.




On
      May
      15, 2006, we filed with the SEC a report on Form 8-K stating that, on May 9,
      2006, we received a Notice of Termination of License Agreement entered into
      on
      May 25, between the Company, Alpha Research Group, LLC and Jodi A. Nelson.
      We
      stated that 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 claims
      in
      support of termination are entirely without merit. The Company 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.




-34-
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            to Financial
            Statements**





**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 June 27, 2006.




**PATHOGENICS,
              INC.**By:
            /s/ FREDERIC
              P. ZOTOSName:  
                Frederic P. Zotos
              Title:    
                President, Chief Executive Officer and
                Director




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




Signature
            
            Title
            
            Date/s/
Frederic
              P. Zotos
            
            President,
                Chief Executive Officer and Director
            
            June
                27, 2006Frederic
              P. Zotos
            
            (Principal
                Financial and Accounting Officer)/s/
Michael
              L. Ferrari
            
            Vice-President
                and Director
            
            June
                27, 2006Michael
              L. Ferrari







-35-
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            to Financial
            Statements**


**PATHOGENICS,
      INC. AND SUBSIDIARIES**


(A
      Development Stage Company)




**INDEX
      TO CONSOLIDATED FINANCIAL
      STATEMENTS**




Independent
                Auditors’ Report
            F-1Consolidated
                Balance Sheet as of December 31,
                2005
            F-2Consolidated
                Statements of Expenses for the Years ended
                December 31, 2005 and 2004 and the Period from December 16, 1997
                (Inception) through December 31, 2005
            F-3Consolidated
                Statements of Changes in Stockholders’ Equity for
                the Years ended December 31, 2005 and 2004 and the Period from December
                16, 1997 (Inception) through December 31, 2005
            F-4Consolidated
                Statements of Cash Flows for the Years ended
                December 31, 2005 and 2004 and the Period from December 16, 1997
                (Inception) through December 31, 2005
            F-5Notes
                to Consolidated Financial Statements
            F-6






**Back
            to Table of Contents**
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            to Financial
            Statements**






REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
        FIRM
 
 To
        the
        Board of Directors
 Pathogenics,
        Inc
 (A
        Development Stage Company)
 Hingham,
        MA
 
 We
        have
        audited the accompanying consolidated balance sheet of Pathogenics, Inc.
        as of
        December 31, 2005, and the related consolidated statements of expenses,
        stockholder’s deficit and cash flows for the years ended December 31, 2005 and
        2004 and the period from December 16, 1997 (inception) Through December 31,
        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, 2005, and the results of its operations and its cash flows
        for
        the periods described above 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 is a development stage company
        which experienced significant losses since inception with no revenues. 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
 
 June
        15,
        2006


F-1
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              to Table of Contents**
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              to Financial
              Statements**




**PATHOGENICS,
      INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      BALANCE SHEET**


**As
      of December 31, 2005**


ASSETSCurrent
                AssetsCash
            
            $
            284TOTAL
                ASSETS
            
            $
            284LIABILITIES
                AND STOCKHOLDERS’ DEFICITLIABILITIESCurrent
                LiabilitiesAccounts
                payable and accrued liabilities
            
            $
            118,085Loans
                payable - related parties
            
            
            184,762TOTAL
                LIABILITIES
            
            
            302,847Stockholders’
                DeficitPreferred
                stock, $0.001 par value, 10,000,000shares
                authorized, none issued and outstanding
            
            
            —Common
                stock, $0.001 par value, 110,000,000 sharesauthorized,
                46,748,650 shares issued and outstanding
            
            
            46,749Additional
                paid-in capital
            
            
            109,151Deficit
                accumulated during the development stage
            
            
            (458,463
            )Total
                stockholders’ deficit
            
            
            (302,563
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            284





See
      summary of significant accounting policies


and
      notes
      to financial statements.




F-2
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**





**PATHOGENICS,
      INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF EXPENSES**


**Years
      Ended December 31, 2005 and 2004 and**


**the
      Period from December 16, 1997 (Inception) Through December 31,
      2005**


2005
            
            2004
            
            Inception
              Through
              December
                31,2005Operating
                Expenses:General
                & administrative
            
            $
            313,012
            
            $
            17,059
            
            $
            355,566Research
                & development
            
            
            96,884
            
            
            —
            
            
            96,884Total
                Operating Expenses
            
            
            409,896
            
            
            17,059
            
            
            452,450Net
                loss
            
            
            (409,896
            )
            
            (17,059
            )
            
            (452,450
            )Preferred
                dividends
            
            
            6,013
            
            
            —
            
            
            6,013Net
                loss attributable to common stockholders
            
            $
            (415,909
            )
            $
            (17,059
            )
            $
            (458,463
            )Basic
                and diluted net loss per common share
            
            $
            (0.01
            )
            $
            (0.00
            )Weighted
                average common shares outstanding
            
            
            42,019,186
            
            
            40,000,000





See
      summary of significant accounting policies


and
      notes
      to financial statements.




F-3
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**





**PATHOGENICS,
      INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT**


**Years
      Ended December 31, 2005 and 2004 and**


**the
      Period from December 16, 1997 (Inception) Through December 31,
      2005**


Convertible
                Preferred Stock
            
            
            
            Common
                Stock
            
            Additional
                Paid-In
            
            Deficit
                Accumulated During the Development
            
            Total
                Stockholder’s EquityShares
            
            Amount
            
            
            
            Shares
            
            Amount
            
            Capital
            
            Stage
            
            (Deficit)Stock
                issued for formation costs
            
            
            —
            
            $
            —
            
            
            
            
            40,000,000
            
            $
            40,000
            
            $
            (40,000
            )
            $
            —
            
            $
            —Net
                income
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            —
            
            $
            (269
            )
            $
            (269
            )Balance
                at December 31, 2002
            
            
            —
            
            
            —
            
            
            
            
            40,000,000
            
            
            40,000
            
            
            (40,000
            )
            
            (269
            )
            
            (269
            )Net
                loss
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            —
            
            
            (25,226
            )
            
            (25,226
            )Balance
                at December 31, 2003
            
            
            —
            
            
            —
            
            
            
            
            40,000,000
            
            
            40,000
            
            
            (40,000
            )
            
            (25,495
            )
            
            (25,495
            )Net
                loss
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            —
            
            
            (17,059
            )
            
            (17,059
            )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
            )








See
      summary of significant accounting policies


and
      notes
      to financial statements.




F-4
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**





**PATHOGENICS,
      INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**Years
      Ended December 31, 2005 and 2004 and**


**the
      Period from December 16, 1997 (Inception) Through December 31,
      2005**


2005
            
            2004
            
            Inception
              Through
              December
                31,2005CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (409,896
            )
            $
            (17,059
            )
            $
            (452,450
            )Adjustments
                to reconcile net loss to cash used in operating
                activities:Changes
                in:Accounts
                payable and accrued liabilities
            
            
            249,671
            
            
            6,676
            
            
            256,347Stock
                payable
            
            
            6,650
            
            
            —
            
            
            6,650Net
                Cash Used In Operating Activities
            
            
            (153,575
            )
            
            (10,383
            )
            
            (189,453
            )CASH
                FLOWS FROM FINANCING ACTIVITIESAdvances
                from related parties
            
            
            —
            
            
            10,459
            
            
            35,954Repayments
                of advances from related parties
            
            
            (2,117
            )
            
            —
            
            
            (2,117
            )Proceeds
                from issuance of common stock
            
            
            900
            
            
            —
            
            
            900Proceeds
                from issuance of preferred stock
            
            
            155,000
            
            
            —
            
            
            155,000Net
                Cash Provided By Financing Activities
            
            
            153,783
            
            
            10,459
            
            
            189,737NET
                CHANGE IN CASH
            
            
            208
            
            
            76
            
            
            284CASH
                AT BEGINNING OF PERIOD
            
            
            76
            
            
            —
            
            
            —CASH
                AT END OF PERIOD
            
            $
            284
            
            $
            76
            
            $
            284Supplemental
                Disclosures:Interest
                paid
            
            $
            —
            
            $
            —
            
            $
            —Income
                tax paid
            
            
            —
            
            
            —
            
            
            —Non-cash
                Transactions:Issuance
                of common shares to founders
            
            
            —
            
            
            —
            
            
            40,000Issuance
                of common shares for recapitalization
            
            
            504
            
            
            —
            
            
            504Dividends
                declared and unpaid
            
            
            6,013
            
            
            —
            
            
            6,013Conversion
                of preferred shares to common shares
            
            
            155,000
            
            
            —
            
            
            155,000





See
      summary of significant accounting policies


and
      notes
      to financial statements.




F-5
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**


**PATHOGENICS,
      INC.**


**(A
      Development Stage Company)**


**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 10, 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 own
      approximately 98.41% of the voting shares of Pathogenics. Due to the former
      members of Tyrol received 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.





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.





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.





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.





Development
      Stage And Going Concern .
      Pathogenics had no operations from inception until the reorganization on
      February 10, 2005 and is a development stage company. Pathogenics has not
      generated any revenues and there is no assurance of any future revenues. As
      of
      December 31, 2005, Pathogenics had an accumulated deficit of $458,463 and a
      working capital deficit of $302,563. 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.




F-6
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**





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. On November 8, 2005,
      the
      maturity date on the note agreement was extended to November 25, 2005. 
Pathogenics has not paid any monies under the note and is currently in
      default.





NOTE
      3 -
      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, 2005. 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.





NOTE
      4 -
      COMMON STOCK





On
      December 16, 1997, the company issued 1,000 common shares in recognition of
      the
      $1,000 of formation costs paid by its parent company Vulcan, Inc. (formerly
      GS
      Financial Services, Inc.)





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.





NOTE
      5 -
      CHORLOQUINE





On
      May
      25, 2005, Pathogenics acquired the rights to chorloquine 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 chorloquine and related compounds for treatment of various neurological,
      psychiatric, psychological and nervous system diseases and disorders to First
      Coventry.




F-7
 **Back
            to Table of Contents**
 **Index
            to Financial
            Statements**





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.





NOTE
      6 -
      SUBSEQUENT EVENT





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.




F-8