**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington
      D.C. 20549





**FORM
      10-QSB**





**QUARTERLY
      REPORT UNDER SECTION 13 or 15 (d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended June 30, 2006


*Commission
      file number 333-63432*





**Organetix,
      Inc.**


(Exact
      name of small business issuer as specified in its charter)


Delaware
              73-1556428(State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  No.)


Suite
      200, 603 – 7 th Avenue
      S.W., Calgary, Alberta, Canada T2P 2T5


(Address
      of principal executive offices) (Zip Code)


Issuer's
      telephone number: (403) 261-8888 ext# 224


(Address
      of principal executive offices)




(Former
      name, former address and former fiscal year, if changed since last
      report.)




Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days. Yes x   No o




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date.




The
      number of shares of the issuer’s outstanding common stock, which is the only
      class of its common equity, on August 14, 2006, was 86,382,447.






See
      accompanying notes








**ORGANETIX,
      INC.**


**A
      Development Stage Company**







**PAGE(S)****PART
                I**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements:Balance
                Sheets – June 30, 2006 and December 31, 2005
            3.Statements
                of Operations – Six months and three months ended June 30, 2006 and
                2005 and thePeriod
                from Inception (May 28, 2003) to June 30, 2006
            4.Statements
                of Cash Flows – Six months ended June 30, 2006 and 2005 and
                thePeriod
                from Inception (May 28, 2003) to June 30, 2006
            5.Notes
                to Interim Financial Statements
            6.Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            13.Item
                3.
            Controls
                and Procedures
            17.**PART
                II**
            **OTHER
                INFORMATION**Signatures
            18.Exhibits
            18.






See
      accompanying notes


2


**PART
        1 – FINANCIAL INFORMATION**
 
 **ITEM
        1 – FINANCIAL STATEMENTS**


**ORGANETIX,
      INC.**


**(A
      Development Stage Company)**


**BALANCE
      SHEETS**





**June
                30, 2006 (Unaudited)**
            
            **December
                31, 2005 (Audited)****ASSETS****CURRENT
                ASSETS:**Cash
            
            $
            2,312
            
            $
            3,279Research
                and development supplies
            
            
            0
            
            
            0Prepaid
                expenses
            
            
            43,413
            
            
            18,859**TOTAL
                CURRENT ASSETS**
            
            $
            45,725
            
            $
            22,138**FIXED
                ASSETS:**Transportation
                equipment - Net accumulated depreciation of $20,000 and $15,000
                respectively
            
            
            10,000
            
            
            15,000**OTHER
                ASSETS:**License
                agreement - net of accumulated amortization of $180,625 and $153,250
                respectively
            
            
            2,009,375
            
            
            2,036,750**TOTAL
                ASSETS**
            
            $
            2,065,100
            
            $
            2,073,888**LIABILITIES
                AND SHAREHOLDERS' EQUITY****CURRENT
                LIABILITIES:**Convertible
                Note Payable
            
            $
            150,000
            
            $
            150,000Note
                payable to an individual
            
            
            16,200
            
            
            16,200Accounts
                payable
            
            
            352,453
            
            
            157,152Accrued
                salaries to officers
            
            
            633,966
            
            
            483,966Interest
                Payable
            
            
            23,116
            
            
            15,720Due
                to related parties
            
            
            204,273
            
            
            161,480**TOTAL
                CURRENT LIABILITIES**
            
            $
            1,380,008
            
            $
            984,518**COMMITMENTS
                AND CONTINGENCIES****SHAREHOLDERS’
                EQUITY:**Common
                stock, $.0001 par value; 150,000,000 shares authorized; 86,382,447
                and
                84,962,447 shares issued and outstanding in 2005 and 2004,
                respectively
            
            $
            8,638
            
            $
            8,638Additional
                paid-in capital
            
            
            3,985,099
            
            
            3,985,099Deficit
                accumulated during the development stage
            
            
            (3,308,645
            )
            
            (2,904,367
            )**TOTAL
                SHAREHOLDERS EQUITY**
            
            $
            685,092
            
            $
            1,089,370**TOTAL
                LIABILITIES AND SHAREHOLDERS EQUITY**
            
            $
            2,065,100
            
            $
            2,073,888





See
      accompanying notes


3




**ORGANETIX,
      INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF OPERATIONS**


**(Unaudited)**





**Three
                months ended June 30, 2006**
            
            **Three
                months ended June 30, 2005**
            
            **Six
                months ended June 30, 2006**
            
            **Six
                months ended June 30, 2005**
            
            **For
                the Period From Inception (May 28, 2003) to June 30,
                2006****REVENUES**
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —**COSTS
                AND EXPENSES:**Operating
                expenses – research facility
            
            
            18,000
            
            
            18,000
            
            
            36,600
            
            
            40,626
            
            
            247,659Research
                and development expenses
            
            
            66,000
            
            
            95,930
            
            
            132,139
            
            
            209,747
            
            
            1,249,157Consulting
                fees
            
            
            45,000
            
            
            45,000
            
            
            90,000
            
            
            90,000
            
            
            468,528Professional
                fees
            
            
            18,916
            
            
            53,880
            
            
            30,296
            
            
            68,408
            
            
            340,796Travel
                and accommodations
            
            
            6,122
            
            
            5,045
            
            
            9,654
            
            
            18,246
            
            
            130,362Telephone
            
            
            576
            
            
            992
            
            
            2,828
            
            
            3,606
            
            
            35,300Interest
                expense
            
            
            1,627
            
            
            0
            
            
            9,157
            
            
            0
            
            
            47,547Insurance
            
            
            11,490
            
            
            10,770
            
            
            22,816
            
            
            22,907
            
            
            104,188Rent
            
            
            3,844
            
            
            3,653
            
            
            7,545
            
            
            7,134
            
            
            40,611Shipping
                expense
            
            
            326
            
            
            352
            
            
            1,112
            
            
            912
            
            
            7,255Office
                and other expense
            
            
            15,048
            
            
            15,389
            
            
            29,079
            
            
            35,461
            
            
            164,717Marketing
                and public relations
            
            
            250
            
            
            471
            
            
            676
            
            
            61,013
            
            
            271,900Depreciation
                and amortization expense
            
            
            16,187
            
            
            16,187
            
            
            32,375
            
            
            32,375
            
            
            200,625$
            203,386
            
            $
            265,669
            
            $
            404,277
            
            $
            590,435
            
            $
            3,308,645**NET
                LOSS**
            
            $
            (203,386
            )
            $
            (265,669
            )
            $
            (404,277
            )
            $
            (590,435
            )
            $
            (3,308,645
            )**LOSS
                PER SHARE:**Basic
                and diluted
            
            
            (0.01
            )
            
            (0.01
            )
            
            (0.01
            )
            
            (0.01
            )
            
            (0.05
            )Weighted
              average number of common shares outstanding
            
            
            86,382,447
            
            
            84,962,447
            
            
            86,382,447
            
            
            84,962,447
            
            
            64,773,574








See
      accompanying notes


4




**ORGANETIX,
      INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF CASH FLOWS**


**(Unaudited)**





**Six
                Months Ended June 30, 2006**
            
            **Six
                Months Ended June 30, 2005**
            
            **For
                the Period From Inception (May 28, 2003) to June 30,
                2006****INCREASE
                (DECREASE) IN CASH AND CASH EQUIVALENTS:****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (404,277
            )
            $
            (590,435
            )
            $
            (3,308,645
            )*Adjustment
                to reconcile net loss to net cash utilized by operating
                activities:*Depreciation
                and amortization
            
            
            32,375
            
            
            32,375
            
            
            200,625Compensatory
                shares
            
            
            0
            
            
            0
            
            
            324,111*Changes
                in assets and liabilities:*Research
                and development supplies
            
            
            0
            
            
            10,194
            
            
            0Prepaid
                expenses
            
            
            (24,555
            )
            
            (31,793
            )
            
            (43,414
            )Accounts
                payable
            
            
            195,301
            
            
            161,039
            
            
            352,454Accrued
                salaries to officers
            
            
            150,000
            
            
            90,000
            
            
            633,966Due
                to shareholders
            
            
            42,793
            
            
            0
            
            
            204,273Increase
                in accrued interest
            
            
            7,396
            
            
            0
            
            
            23,116**Net
                cash utilized by operating activities**
            
            $
            (967
            )
            $
            (328,620
            )
            $
            (1,613,514
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES**Payment
                regarding license
            
            $
            0
            
            $
            0
            
            $
            (150,000
            )Capital
                expenditures
            
            
            0
            
            
            0
            
            
            (30,000
            )**Net
                cash utilized by investing activities**
            
            $
            0
            
            $
            0
            
            $
            (180,000
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Issuance
                of common stock to founders
            
            $
            0
            
            $
            0
            
            $
            65,760Additional
                Contribution to Capital
            
            
            0
            
            
            176,500
            
            
            1,263,866Cash
                received in merger
            
            
            0
            
            
            0
            
            
            300,000Convertible
                Note Payable
            
            
            0
            
            
            99,325
            
            
            150,000Note
                Payable to Individual
            
            
            0
            
            
            0
            
            
            16,200**Net
                cash provided by financing activities**
            
            $
            0
            
            $
            275,825
            
            $
            1,795,826**NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS**
            
            $
            (967
            )
            $
            (52,795
            )
            $
            2,312Cash,
                beginning of period
            
            
            3,279
            
            
            57,495
            
            
            0**CASH,
                END OF PERIOD**
            
            $
            2,312
            
            $
            4,700
            
            $
            2,312






See
      accompanying notes


5


**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**




**NOTE
      1 -**  **DESCRIPTION
      OF COMPANY/OPERATIONS**





Organetix,
      Inc. (“the Company” or “Organetix”), a Delaware Corporation, was incorporated on
      May 28, 2003.





Organetix
      is a biotechnology company that has the exclusive worldwide license (see Note
      8)
      for the formula of a proprietary medical discovery relating to the liver
      referred to as A4+L. The Company intends to patent, research, develop, produce
      and sell this proprietary liver product initially as a nutraceutical and will
      investigate the possibility of manufacturing a synthetic drug in an alliance
      with a major pharmaceutical partner. To date, the Company has been using this
      liver product to treat patients with Hepatitis C. This proprietary liver product
      does not cure Hepatitis C but clinical research suggests it is regenerating
      liver tissue thus allowing the liver to begin functioning again despite years
      of
      damage from the virus. This product may be useful for treating many liver
      disorders, and may also be useful as an anti-ager and anti-toxin. Organetix
      intends to also specialize in researching, developing and patenting bioactive
      compounds and their unique formulas and processes from plants having a
      distinctive history of medicinal use.





On
      November 7, 2003 (the “Effective Date”), pursuant to a Share Exchange Agreement
      (“Agreement”) between Diamond International Group, Inc. (“Diamond”), a Delaware
      corporation and Organetix, Inc. (“Organetix”), a Delaware corporation and all of
      the shareholders of Organetix, Diamond acquired all of the shares of Organetix
      as consideration for the issuance of 64,000,000 restricted shares of Diamond
      to
      the Organetix shareholders. As a result of this Agreement, Diamond International
      Group, Inc. (the legal acquirer) received 100% of the issued and outstanding
      common stock of Organetix, Inc. in exchange for 64,000,000 shares of common
      stock of Diamond. Pursuant to the Agreement, Organetix became a wholly owned
      subsidiary of Diamond which entity filed a Certificate of Amendment with the
      State of Delaware changing its name to Organetix, Inc. This reverse merger
      transaction was treated retroactively as a recapitalization with Organetix,
      Inc.
      being treated as the accounting acquirer.





The
      Company has been devoting its time towards establishing its business and no
      revenues have been generated to date. As such, the Company is considered as
      being in the development stage, since its inception, in accordance with
      Statement of Financial Accounting Standards No. 7, and its year-end is December
      31.





As
      shown
      in the accompanying financial statements, the Company has incurred net losses
      of
      $3,308,645 since inception and has a negative working capital of $1,334,283
      at
      June 30, 2006. Management’s plans include raising of capital through the equity
      markets to fund operations, and the generating of revenue through its business.
      Failure to raise adequate capital and generate adequate sales revenues could
      result in the Company having to curtail or cease operations. Additionally,
      even
      if the Company does raise sufficient capital to support its operating expenses
      and generate adequate revenues, there can be no assurances that the revenue
      will
      be sufficient to enable it to develop to a level where it will generate profits
      and cash flows from operations. These matters raise substantial doubt about
      the
      Company’s ability to continue as a going concern. However, the accompanying
      financial statements have been prepared on a going concern basis, which
      contemplates the realization of assets and satisfaction of liabilities in the
      normal course of business. These financial statements do not include any
      adjustments relating to the recovery of the recorded assets or the
      classifications of the liabilities that might be necessary should the Company
      be
      unable to continue as a going concern.





6




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**




**NOTE
      2 -**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES:**





The
      Company’s accounting policies are in accordance with accounting principles
      generally accepted in the United States of America. Outlined below are those
      policies considered particularly significant.





***(a)***  ***Use
      of Estimates:***





In
      preparing financial statements in accordance with accounting principles
      generally accepted in the United States of America, management makes certain
      estimates and assumptions, where applicable, that affect the reported amounts
      of
      assets and liabilities and disclosures of contingent assets and liabilities
      at
      the date of the financial statements, as well as the reported amounts of
      revenues and expenses during the reporting period. While actual results could
      differ from those estimates, management does not expect such variances, if
      any,
      to have a material effect on the financial statements.




***(b)***  ***Statements
      of Cash Flows:***





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





***(c)***  ***Fair
      Value:***





The
      Company’s financial instruments consist primarily of cash and cash equivalents
      and accounts payable. The recorded values of cash and cash equivalents and
      accounts payable approximate their fair values based on their short-term
      nature.





***(d)***  ***Fixed
      Assets:***





Fixed
      assets are recorded at cost. Depreciation and amortization are provided on
      a
      straight-line basis over 5 years.





***(e)***  ***Amortization
      – License Agreement:***





The
      cost
      of the license (see Note 6) is being amortized on the straight-line method
      over
      its contractual life of 40 years. Intangible assets that do not have indefinite
      lives are amortized over their useful lives and reviewed for impairment in
      accordance with SFAS No. 144 *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”* .
      As of
      December 31, 2005, the Company believes that the carrying value of this license
      is fully recoverable.





***(f)***  ***Research
      and Development Expenses:***





Research
      and development costs are charged to expense when incurred and aggregated
      $132,139 and $209,747 for the six months ended June 30, 2006 and June 30, 2005
      respectively. For the period from inception to June 30, 2006, the Company has
      incurred and aggregated research and development costs of
      $1,249,157.





***(g)***  ***Income
      Taxes:***





The
      asset
      and liability method is used in accounting for income taxes. Under this method,
      deferred tax assets and liabilities are recognized for operating loss and tax
      credit carry forwards and for the future tax consequences attributable to
      differences between the financial statement carrying amounts of existing assets
      and liabilities and their respective tax bases. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to taxable
      income in the years in which those temporary differences are expected to be
      recovered or settled. The effect on deferred tax assets and liabilities of
      a
      change in tax rates is recognized in the results of operations in the period
      that includes the enactment date. A valuation allowance is recorded to reduce
      the carrying amounts of deferred tax assets unless it is more likely than not
      that such assets will be realized.





7




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**


***(h)***  ***Loss
      per Share:***





Basic
      and
      diluted earnings (loss) per common share is computed using the weighted average
      number of shares of common stock outstanding for the period.





***(i)***  ***Recent
      Accounting Pronouncements Affecting The Company:***





In
      December 2004, the FASB issued SFAS No. 123 (revised 2004), or SFAS 123R,
“Share-Based Payment.” This statement replaces SFAS 123, “Accounting for
      Stock-Based Compensation” and supersedes Accounting Principles Board’s Opinion
      No. 25 (ABP 25), “Accounting for Stock Issued to Employees.” SFAS 123R will
      require us to measure the cost our employee stock-based compensation awards
      granted after the effective date based on the grant date fair value of those
      awards and to record that cost as compensation expense over the period during
      which the employee is required to perform services in exchange for the award
      (generally over the vesting period of the award). SFAS 123R addresses all forms
      of share-based payments awards, including shares issued under employee stock
      purchase plans, stock option, restricted stock and stock appreciation rights.
      In
      addition, we will be required to record compensation expense (as previous awards
      continue to vest) for the unvested portion of previously granted awards that
      remain outstanding at the date of adoption. SFAS 123R is effective for fiscal
      periods beginning after June 15, 2005. Therefore, we are required to implement
      the standard no later than our third fiscal quarter, which begins on July 1,
      2005. SFAS 123R permits public companies to adopt its requirements using the
      following methods: (1) a “modified prospective” method in which compensation
      cost is recognized beginning with the effective date (a) based on the
      requirements of SFAS 123R for all share-based payments granted after the
      effective date and (b) based on the requirements of SFAS 123 for all awards
      granted to employees prior to the effective date of SFAS 123R that remain
      unvested on the effective date; or (2) a “modified retrospective” method which
      includes the requirements of the modified prospective method described above,
      but also permits entities to restate their financial statements based on the
      amounts previously recognized under SFAS 123 for purposes of pro forma
      disclosures for either (a) all prior periods presented or (b) prior interim
      periods of the year of adoption.





In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      No.
      153 (SFAS 153), “Exchanges of Non-monetary Assets.” SFAS 153 amends the guidance
      in APB No. 29, “Accounting for Non-monetary Assets.” APB No. 29 was based on the
      principle that exchanges of non-monetary assets should be measured on the fair
      value of the assets exchanged. SFAS 153 amends APB No. 29 to eliminate the
      exception for non-monetary exchanges of similar productive assets and replaces
      it with a general exception for exchanges of non-monetary assets that do not
      have commercial substance if the future cash flows of the entity are expected
      to
      change significantly as a result of the exchange. SFAS 151 is effective for
      financial statements issued for fiscal years beginning after June 15, 2005.
      The
      adoption of SFAS 153 is not expected to have a material effect on the Company’s
      financial position or results of operations.





In
      May
      2005, the FASB issued SFAS no. 154, “Accounting Changes and Error Corrections
      (“SFAS No 154”) which replaces APB Opinion No. 20, “Accounting changes” and SFAS
      No. 3, “Reporting Accounting Changes in Interim Financial Statements-An
      Amendment of ABP Opinion No. 28. SFAS No. 154 provides guidance on the
      accounting for and reporting of accounting changes and error corrections.
      Specifically, this statement requires “retrospective application” of the direct
      effect for a voluntary change in accounting principle to prior periods’
financial statements, if it is practical to do so. SFAS No. 154 also strictly
      defines the term “restatement” to mean the correction of an error revising
      previously issued financial statements. SFAS No. 154 is effective for accounting
      changes and corrections of errors made in fiscal years beginning after December
      15, 2005 and are required to be adopted by the Company in the first quarter
      of
      fiscal year 2007. Although we will continue to evaluate the application of
      SFAS
      No. 154, management does not currently believe adoption will have a material
      impact on our results of operations, financial position or cash
      flows.





8




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**




**NOTE
      3 -**  **RESEARCH
      AND DEVELOPMENT SUPPLIES:**





As
      of
      December 31, 2004, the Company had $72,108 in raw materials purchased and other
      costs incurred for production of its nutraceutical supplement, which is
      currently being utilized in research. The Company only produced the
      nutraceutical supplement in Peru during the period of January 2004 through
      March
      2004. The product manufactured is being used to continue the testing on the
      existing Hepatitis C patients along with other required testing. During 2005,
      the existing inventory had been utilized for the continued product
      testing.





**NOTE
      4 -**  **CONVERTIBLE
      NOTE PAYABLE:**





On
      July
      6, 2005 the Company entered into three convertible promissory notes with three
      individuals who are also shareholders of the Company for an aggregate of
      $150,000. The note was to bridge the Company for 90 days while it closed a
      proposed private placement memorandum with an investment banker in New Jersey,
      which did not materialize due to a significant drop in the Company’s share price
      in the second quarter of 2005. The note bears interest at the rate of 20% per
      annum and was due within 90 days of the note date. The note is currently in
      default. Additionally, these individuals received 150,000 shares of the
      Company’s restricted common stock as additional consideration for making an
      unsecured loan to the Company.





The
      terms
      of the conversion were based upon the proposed private placement memorandum
      which did not materialize and thus the Company does not have definitive
      conversion terms. The Company plans to reach amicable terms with the note
      holders relating to the terms of conversion or the Company will re-pay the
      $150,000 plus interest accrued.





**NOTE
      5 -**  **NOTE
      PAYABLE TO INDIVIDUAL:**





The
      Company in April 2005 borrowed $16,200 from an individual who is also a
      shareholder of the Company. This amount represents advances for working capital
      in order to continue operations. The loan is non-interest bearing to December
      31, 2005, is unsecured and has no specific repayment date.





**NOTE
      6 -**  **RELATED
      PARTY TRANSACTIONS:**





At
      June
      30, 2006 the Company is indebted to the President, Chief Executive Officer
      and
      Director through his related companies for $204,273. This amount represents
      advances for working capital in order to continue operations. These advances
      as
      of June 30, 2006 are non-interest bearing, have no specific maturity date and
      are unsecured.





9




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**




**NOTE
      7 - INCOME TAXES:**





2005
            
            2004Deferred
                tax assets and liabilities consist of the following:Deferred
                tax assets:Net
                operating loss carry forwards
            
            $
            675,000
            
            $
            555,000Less
                valuation allowance
            
            
            (675,000
            )
            
            (555,000
            )$
            -
            
            $
            -





At
      December 31, 2005, the Company had approximately $2,700,000 of net operating
      loss carry forwards (“NOL’s”) available, which expires in years beginning in
      2021. The Company has provided a 100% valuation allowance on the deferred tax
      assets at December 31, 2005 and 2004 to reduce such asset to zero, since there
      is no assurance that the Company will generate future taxable income to utilize
      such asset. Management will review this valuation allowance requirement
      periodically and make adjustments as warranted.








**NOTE
      8 - ASSIGNMENT OF LICENSE AND CONSULTING AGREEMENTS:**





***(a)***  ***License
      Agreement:***





On
      July
      15, 2003, Amma Corporation (“Amma”), a privately held entity domiciled in
      Alberta, Canada, assigned all of its rights, title and interest in and to the
      A4+L compound as defined in a License Agreement, dated June 5, 2003, between
      Amma and Dr. Jose Cabanillas Coral, a Canadian resident and citizen of Peru,
      to
      the Company in exchange for 8,160,000 shares of Company common
      stock.





The
      A4+L
      compound (the “technology”), is a multiple plant formulation used for the relief
      of certain medical symptoms associated with Hepatitis C. This license grants
      the
      Company the exclusive right to use and sublicense the technology, and any
      improvements, and to research, manufacture, distribute and sell products
      throughout the world excluding Peru.





This
      40-year license also requires that the Company pay a royalty equal to 3% of
      gross sales and sublicensing revenues to Dr. Cabanillas.





***(b)***  ***Consulting
      Agreement:***





Concurrently
      with the assignment of the license agreement described above, Amma also assigned
      its consulting agreement, dated June 1, 2001, with Dr. Cabanillas to the
      Company.





This
      agreement, which expired on June 1, 2006, requires that Dr. Cabanillas provide
      general and research duties as requested, in exchange for a monthly fee of
      $12,000.





10




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**




**NOTE
      9 -**  **SHAREHOLDERS’
      EQUITY:**





The
      Company has authorized 150 million shares of common stock, par value $.0001
      per
      share.





The
      following shares, aggregating 64,000,000, were issued in connection with the
      share exchange agreement described in Note 1: (i) in May 2003, the Company
      issued 7,200,000 shares of common stock to its founders, at a per share price
      of
      $.01, for aggregate proceeds of $72,000 of which $6,240 had not been received
      as
      of December 31, 2003, but was received by June 2004, (ii) in June 2003, the
      Company began offering its common stock in a private offering of such securities
      and, generated proceeds of $160,000, for the sale of 640,000 shares of its
      common stock at a per share price of $.25; (iii) in July 2003, the Company
      issued 8,160,000 shares of its common stock in connection with the assignment
      of
      a license agreement (see Note 8). These shares were deemed to have a fair value
      of $.25 per share at the time of issuance, and in November 2003, the Company
      issued an additional 48 million shares pursuant to the share exchange
      agreement.





During
      the year ended December 31, 2004, the Company declared and paid a 10% stock
      dividend to all shareholders, excluding the majority shareholder, AMMA
      Corporation, issuing 3,017,584 shares of its common stock in connection
      therewith. The Company also received $479,866 in proceeds from the sales of
      5,439,990 shares of its common stock. In partial payment for legal services
      received, the Company issued 142,857 shares of common stock valued at $10,000.
      In connection with the reverse merger with Diamond International, Inc., Sylvio
      Martini, the majority shareholder at the time, agreed to pay certain expenses
      of
      the Company from the shares retained by him. Such shares were placed in escrow
      and during the year, 2,500,000 shares were sold and transferred to 20 persons
      generating $500,000 of proceeds, which were then contributed to the Company
      as
      additional paid-in capital. Mr. Martini also transferred certain escrowed shares
      to consultants as payment for services provided to the Company. The value of
      these shares, $131,970, was recorded as additional paid-in capital.





On
      January 2, 2004, the majority shareholder approved the adoption of the 2004
      Omnibus Stock Option Plan under which 5,000,000 shares of Company common stock
      have been reserved for issuance. To date, no options have been granted under
      this plan.





During
      the year ended December 31, 2005, in connection with the reverse merger with
      Diamond International, Inc. in 2003, Sylvio Martini, the majority shareholder
      at
      the time, agreed to pay certain expenses of the Company from the shares retained
      by him. Such shares were placed in escrow and during the twelve months ending
      December 31, 2005, 620,000 shares were issued to 7 persons for services rendered
      for a total of $124,000 of proceeds, which were then contributed to the Company
      as additional paid-in capital.





In
      July
      2005, 150,000 shares of common stock valued at $22,485 were issued in connection
      with a bridge note (see Note 5). In August 2005, 470,000 shares of common stock
      value at $65,853 were issued for services rendered to the Company. In November
      2005, 800,000 shares of common stock value at $39,920 were issued for services
      rendered to the Company.





11




**ORGANETIX,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **June
        30, 2006**


**NOTE
      10 - COMMITTMENTS:**





***Leases:***





The
      Company leases space on a month-to-month basis in Calgary, Alberta, for its
      main
      offices, and in Peru, for manufacturing, research, bulk packaging and storage.
      Additional office space is also provided in New York, New York, by the Company’s
      attorneys, at no cost. The Company is also renting on an annual basis a small
      business office located in Lima, Peru.





***Employment
      Agreements:***





On
      January 2, 2004, the Company entered into an Employment Agreement with Mr.
      L. B.
      (Brad) Clarke as a “senior executive” (the “Employment Agreement”). The
      Employment Agreement is for a 3-year term and provides for annual salaries
      of
      $120,000 for 2004, $180,000 for 2005 and $240,000 for 2006. Other remuneration
      under the Employment Agreement is a $700 per month automobile allowance and
      30
      days paid vacation. The Employment Agreement may be terminated for “cause”. All
      salaries and automobile allowance have been accrued as payable but not paid.
      Please note Mr. Clarke has agreed not to accrue his annual salary for 2006
      but
      to instead accrue the same amount as he accrued in 2005.





12




**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF
      OPERATIONS**





**CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING STATEMENTS**


It
      should
      be noted that this Management's Discussion and Analysis of Financial Condition
      and Results of Operations may contain "forward-looking statements." The terms
      "believe," "anticipate," "intend," "goal," "expect," and similar expressions
      may
      identify forward-looking statements. These forward-looking statements represent
      the Company's current expectations or beliefs concerning future events. The
      matters covered by these statements are subject to certain risks and
      uncertainties that could cause actual results to differ materially from those
      set forth in the forward-looking statements, including the Company's dependence
      on weather-related factors, introduction and customer acceptance of new
      products, the impact of competition and price erosion, as well as supply and
      manufacturing restraints and other risks and uncertainties. The foregoing list
      should not be construed as exhaustive, and the Company disclaims any obligation
      subsequently to revise any forward-looking statements to reflect events or
      circumstances after the date of such statements, or to reflect the occurrence
      of
      anticipated or unanticipated events. In light of the significant uncertainties
      inherent in the forward-looking information included herein, the inclusion
      of
      such information should not be regarded as a representation that the strategy,
      objectives or other plans of the Company will be achieved. The Company wishes
      to
      caution readers not to place undue reliance on any such forward-looking
      statements, which speak only as of the date made.




**RESULTS
      OF OPERATIONS**


Due
      to
      the inability of the Company to close funding, the Company is in default of
      its
      License Agreement dated July 15, 2003 **** with **** AMMA
      Corporation, and with ****** the
      assignment of a consulting agreement, dated June 1, 2001 with AMMA Corporation
      relating to Dr. Jose Cabanillas. The Company is also in default of its
      employment agreement with its President & CEO, L.B.(Brad) Clarke. The
      Company has also not been able to pay its consulting obligations for Robert
      Howell, Dennis Chan, John Garcia, as well as professional fees owed to the
      Company’s ex-auditors, Lazar Levine & Felix LLP and its present attorneys,
      Rubin, Bailin, Ortoli LLP as well as its other accounts, loans and notes
      payable. To date all parties have deferred payments owed to them in the hope
      that the Company will successfully secure funding to pay back such debts and
      continue operations.





**FUND
      RAISING ACTIVITIES**


The
      Company hopes to finalize its fund raising activities or if necessary the
      Company may have to sell the OGTX shell in the third quarter of 2006. The basic
      terms of such fund raising activities would be a minimum of $500,000 and a
      maximum of $7,000,000 through a variable price convertible note, merger and
      or
      the sale of common shares which may combine common stock and warrants. If
      funding cannot be concluded the Company may have to file for bankruptcy and
      or
      re-organize accordingly.





Otherwise,
      we are currently in the development stage and have generated no revenues to
      date. Our activities from inception to date were related to our formation,
      preparation of our business model, arranging and planning financing and the
      acquiring all rights, title and interest in the A4+L compound. During 2003
      the
      Company completed a reverse acquisition of Diamond International Group Inc.,
      changed its name to Organetix, Inc., changed its OTC-BB symbol to OGTX and
      began
      a new harvest of materials necessary to begin formulating new bulk inventories
      of the A4+L liver product in 2004. We have financed our operations to date
      through the sale of our securities and affiliates of our shareholders have
      provided administrative services for which we have been billed.




Operating
      costs for the period from inception to June 30, 2006 aggregated $3,308,645.
      This
      includes costs incurred in research and development of $1,249,157, operating
      expenses for our research facility in Peru of $247,659 and fees paid to various
      professionals for research as well as to our attorneys and accountants in the
      collective amount of $340,796. As a result of the above we realized a cumulative
      loss of $3,308,645.





Operating
      costs for the six-month period ended June 30, 2006 aggregated $404,277. This
      includes costs incurred in research and development of $132,139, operating
      expenses for our research facility in Peru of $36,600 and fees paid to various
      professionals for research as well as to our attorneys and accountants in the
      collective amount of $30,296. As a result of the above we realized a loss of
      $404,277 for the six-month period ended June 30, 2006.





13




From
      inception through June 30, 2006, net cash used to fund operating activities
      totaled $1,613,514, net cash utilized by investing activities totaled $180,000
      and net cash provided by financing activities totaled $1,795,826. Cash on hand
      was $2,312 as of June 30, 2006.




**HISTORY**


Prior
      to
      November 7, 2003, Organetix, Inc. (the “Company”) was in the direct mail
      business and was named Diamond International Group, Inc. However, on such date,
      pursuant to a Share Exchange Agreement between Diamond and Organetix, Inc.
      and
      all of the shareholders of Organetix (“Exchange Agreement"), Diamond acquired
      all of the shares of Organetix, Inc. from its shareholders in consideration
      for
      the issuance of 64,000,000 restricted shares of Diamond to the Organetix, Inc.
      shareholders (this transaction is referred to herein as the “Exchange”).
      Pursuant to the Exchange Agreement: (i) Organetix, Inc. became a wholly-owned
      subsidiary of Diamond; (ii) and Diamond divested itself of all of its
      pre-Exchange assets to the pre-Exchange shareholders; (iii) Diamond changed
      its
      name to Organetix, Inc.; (iv) Diamond changed its symbol to “OGTX”; and (v)
      Sylvio Martini resigned as the sole director and officer of the Company and
      L.B.
      (Brad) Clarke was appointed to the Board of Directors and named as President,
      Chief Executive Officer and Chief Financial Officer of Diamond. The present
      company shall sometimes be referred to as Organetix or the Company.





The
      Exchange was approved by the unanimous consent of the Board of Directors of
      Diamond and by unanimous consent of the Board of Directors of Organetix on
      October 31, 2003.




**OVERVIEW**


Organetix,
      Inc. http://www.organetixinc.com; (OTCBB: OGTX) is a biotechnology
      company that has the exclusive worldwide license for the formula of a
      proprietary medical discovery relating to the liver referred to as A4+L.
      Organetix will patent, research, develop, produce and sell this proprietary
      liver product initially as a nutraceutical and will investigate the possibility
      of manufacturing a synthetic drug in an alliance with a major pharmaceutical
      partner.





To
      date,
      Organetix, Inc. has been using this liver product to treat patients with
      Hepatitis C and for patients taking chemotherapy. This proprietary liver product
      does not cure Hepatitis C but clinical research suggests it is regenerating
      liver tissue thus allowing the liver to begin functioning again despite years
      of
      damage from the virus.





This
      product may be useful for treating many liver disorders, and may be useful
      as an
      anti-ager and anti-toxin.





Management,
      together with research and medical advisors are reporting that the formula,
      in
      the limited tests conducted to date eliminates most of the symptoms of Hepatitis
      C quickly and effectively without any known side effects. The liver product
      may
      directly compete in a billion dollar market that currently exists around the
      world. Additional testing will be ongoing. Analog products will also be
      evaluated.





The
      objective of a 10 patient study completed in 2004 was to determine the
      effectiveness of A4+L on the quality of life of Hepatitis C patients. It was
      designed by independent doctors in the USA and Peru and was conducted in Peru
      on
      North American patients. These patients were directly under care and supervision
      of doctors and nurses for approximately four weeks.





Based
      on
      the results reported by the USA doctors, who tested and examined the patients
      at
      the beginning and at the end of the study, it was concluded that there was
      success in the areas of depression, health-related quality of life burden,
      clinical symptoms, and within blood results relating to the prothrombin activity
      and the serum cholinesterase.





14




As
      quoted
      by Dr. Joseph Nystrom, Chief of Staff Elect at the East Pasco Medical Center,
      located in the Tampa Bay Metropolitan area: “In summary, the nutraceutical
      product A4+L has enormous potential as therapy for emotional and physical
      suffering of the burgeoning number of Hepatitis C sufferers. A larger placebo
      controlled long-term study is warranted. Further study of A4+L may reveal it
      to
      be useful in other disease processes as well.”





The
      Company has since commenced the phytochemistry, pharmacology and the technology
      processes relating to the A4+L liver product.





In
      addition to treating Hepatitis C patients, the Company’s A4+L liver product may
      be useful in treating cirrhosis, liver cancer and toxic liver patients.
      Researchers are also requesting the Company to test our liver treatment as
      an
      adjunct product to help patients who are being treated with chemotherapy and
      or
      interferon drugs.





In
      summary, to date Organetix Inc., has results supporting this product in the
      following areas:





**Laboratory
      Testing** has
      reported:





-
            A4+L
                does not damage human DNA.


-
            A4+L
                is a powerful Anti-Toxin


-
            A4+L
                is a powerful Anti-Oxidant


-
            A4+L
                is proliferating cell growth





**Blood
      Testing** has
      shown there was a significant increase in prothrombin activity and serum
      cholinesterase, which supports increased protein synthesis by liver and a
      decrease in the degradation of the liver.





**Depression:** The
      severity of depression at the start of the study ranged from borderline in
      10%
      of the subjects, mild to moderate depression in 80%, and severe depression
      in
      10%. By the end of the study period significant improvement in depression was
      noted and 90% of the subjects had become free of depression. Noteworthy is
      the
      reported change in the Beck Depression Inventory score. The scoring reported
      is
      unusual in population norms.





**Health-Related
      Quality of Life Burden:** **** In
      general, use of A4+L was accompanied by significantly improved health-related
      quality of life in study subjects by Day 14. By Day 28, the functional status
      and well-being of study subjects were restored completely to normal levels.
      The
      score improvements observed in this study by Day 28 were on average larger
      than
      two standard deviations for nearly all health-related quality of life scales,
      which has rarely been observed in the thousands of treatment studies of other
      chronic diseases involving the SF-36 Health Survey.





**Clinical
      symptoms:**  Study
      subjects showed a significant improvement in most of their symptoms. This
      included improvement in fatigue, right upper quadrant pain and tenderness,
      dyspepsia, nausea-vomiting, indigestion, headache, muscle and joint/bone
      pain.





A
      one
      hundred cell study, which was designed to investigate the possible genotoxicity
      of A4+L liver product focused on the primary culture of human lymphocytes using
      the Comet Assay to evaluate the damage to the genetic material.




The
      study concluded that our A4+L liver product doesn't induce damage to the DNA
      in
      human lymphocytes. The results are a positive step in evidencing that the A4+L
      liver product is safe for human consumption.




Organetix
      Inc. has also recently received positive independent medical and laboratory
      results from a test conducted in Peru on a chemotherapy patient diagnosed with
      lung cancer and metastasis on the liver. This patient received the A4+L liver
      product while taking her 5 th through
      her 32 nd treatment of chemotherapy.




After
      15
      days of taking A4+L along with her chemotherapy treatments, her nausea and
      fatigue disappeared completely and her appetite was restored. She recorded
      a
      weight gain of 7 kilograms.




15




Similar
      results were reported on an inoperable breast cancer patient in Calgary,
      Alberta, Canada while she was being treated with FEC Chemotherapy to reduce
      large tumors so that she could undergo a mastectomy.





**DESCRIPTION
      OF PROPERTY**


The
      Company's main facility is located at Suite 200, Manulife House, 603 –
7 th Avenue
      S.W., Calgary, Alberta T2P 2T5. This facility is rented on a month to month
      basis by the Company. The Company is also sharing space at no cost to the
      Company on a month to month basis with Rubin, Bailin, Ortoli LLP, located at
      the
      15 th floor of
      405 Park Avenue, New York, New York 10022. This facility is approximately 200
      square feet. The Company is also renting on a month to month basis a facility
      located at Alfonso Cobian Manzana “H” Lot #1, in the District of Chaclalayo,
      near Lima, Peru. This facility is approximately 700 square meters and is used
      for manufacturing, research, bulk packaging and storage. The Company is also
      renting on an annual basis a small business office located at #302, 1080 Malecon
      de la Marina, Mita Flores, Lima, Peru. This facility is approximately 70 square
      meters.





**LEGAL
      PROCEEDINGS**


The
      Company is not a party to any material pending legal proceedings or government
      actions, including any bankruptcy, receivership, or similar proceedings.
      Management of the Company does not believe that there are any proceedings to
      which any director, officer, or affiliate of the Company, any owner of record
      of
      the beneficially or more than five percent of the common stock of the Company,
      or any associate of any such director, officer, affiliate of the Company, or
      security holder is a party adverse to the Company or has a material interest
      adverse to the Company.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**


The
      Company’s discussion and analysis of its financial condition and results of
      operations are based upon its financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these financial statements requires the Company to make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an on-going basis, the Company evaluates its estimates,
      including those related to bad debts, income taxes and contingencies and
      litigation. The Company bases its estimates on historical experience and on
      various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      carrying values of assets and liabilities that are not readily apparent from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions.




***RECENT
      ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY***


In
      December 2004, the FASB issued SFAS No. 123 (revised 2004), or SFAS 123R,
“Share-Based Payment.” This statement replaces SFAS 123, “Accounting for
      Stock-Based Compensation” and supersedes Accounting Principles Board’s Opinion
      No. 25 (ABP 25), “Accounting for Stock Issued to Employees.” SFAS 123R will
      require us to measure the cost our employee stock-based compensation awards
      granted after the effective date based on the grant date fair value of those
      awards and to record that cost as compensation expense over the period during
      which the employee is required to perform services in exchange for the award
      (generally over the vesting period of the award). SFAS 123R addresses all forms
      of share-based payments awards, including shares issued under employee stock
      purchase plans, stock option, restricted stock and stock appreciation rights.
      In
      addition, we will be required to record compensation expense (as previous awards
      continue to vest) for the unvested portion of previously granted awards that
      remain outstanding at the date of adoption. SFAS 123R is effective for fiscal
      periods beginning after June 15, 2005. Therefore, we are required to implement
      the standard no later than our third fiscal quarter, which begins on July 1,
      2005. SFAS 123R permits public companies to adopt its requirements using the
      following methods: (1) a “modified prospective” method in which compensation
      cost is recognized beginning with the effective date (a) based on the
      requirements of SFAS 123R for all share-based payments granted after the
      effective date and (b) based on the requirements of SFAS 123 for all awards
      granted to employees prior to the effective date of SFAS 123R that remain
      unvested on the effective date; or (2) a “modified retrospective” method which
      includes the requirements of the modified prospective method described above,
      but also permits entities to restate their financial statements based on the
      amounts previously recognized under SFAS 123 for purposes of pro forma
      disclosures for either (a) all prior periods presented or (b) prior interim
      periods of the year of adoption.





16





**ITEM
      3 – CONTROLS AND PROCEDURES**




**Evaluation
      of Disclosure Controls and Procedures** .


As
      of June 30, 2006, the Company’s management carried out an evaluation, under the
      supervision of the Company’s Chief Executive Officer and the Chief Financial
      Officer of the effectiveness of the design and operation of the Company’s system
      of disclosure controls and procedures pursuant to the Securities and Exchange
      Act , Rule 13a-15(e) and 15d-15(e) under the Exchange Act.  Based upon that
      evaluation, the Chief Executive Officer and Chief Financial Officer concluded
      that the Company’s disclosure controls and procedures were effective, as of the
      date of their evaluation, for the purposes of recording, processing, summarizing
      and timely reporting material information required to be disclosed in reports
      filed by the Company under the Securities Exchange Act of 1934.





**Changes
      in internal controls** .


There
      were no changes in internal controls over financial reporting, known to the
      Chief Executive Officer or Chief Financial Officer that occurred during the
      period covered by this report that has materially affected, or is likely to
      materially effect, the Company’s internal control over financial
      reporting.





17




**PART
      II**




**Item
      1. Legal Proceedings**


None





**Item
      2. Changes in Securities**


None





**Item
      3. Defaults Upon Senior Securities**


None





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


None





**Item
      5. Other Information**


None





**Item
      6. Exhibits**





31.1
      Certification of Chief Executive Officer


31.2
      Certification of Principal Financial Officer


32.1
      Certification of Chief Executive Officer


32.2
      Certification of Principal Financial Officer






**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.







**ORGANETIX,
      INC.**




/s/
      L. B.
      (Brad) Clarke


_____________________________


Name:
      L.
      B. (Brad) Clarke


Title:
      Chief Executive Officer


Date:
      August 14, 2006








/s/
      Robert C. Howell


_____________________________


Name:
      Robert C. Howell


Title:
      Chief Financial Officer


Date:
      August 14, 2006





18