FORM 10-KSB  X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    EXCHANGE ACT OF 1934  For the fiscal year ended December 31, 2006.  OR  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from  ____________________    to   _____________________  Commission File Number 000-30156  PHYTOMEDICAL TECHNOLOGIES, INC. 
AND SUBSIDIARIES (Exact name of registrant as specified in its charter)  NEVADA (State or other jurisdiction of incorporation)  87-0429962 (I.R.S Employer Identification No.)  100 Overlook Drive, Princeton, New Jersey  08540 (Address of principal executive offices)  (800) 611-3388 (Registrants telephone number, including area code)  Securities registered under Section 12(b) of the Exchange Act:  Title of Each Class Common Stock, $.00001 par value per share  Name of Each Exchange on Which Registered OTC Bulletin Board  Securities registered under Section 12(g) of the Exchange Act: None   Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [  ] No [X]  Check whether the registrant: (1) has filed all reports required 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 registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days. Yes [X] No [_]  Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [   ] No [X]  Revenues for its most current fiscal year:  None  Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of March 21, 2007: $28,843,268  Number of shares of Common Stock, $0.00001 par value, outstanding as of March 21, 2007: 189,669,641.  Documents incorporated by reference:None.  Transitional Small Business Disclosure Format:  Yes [   ] No [X]     TABLE OF CONTENTS  PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006    PART I PAGE  Item 1.   Description of Business 4  Item 2.   Description of Property 12  Item 3.   Legal Proceedings 12  Item 4.   Submissions of Matters to a Vote of Security Holders 12  PART II  Item 5.    Market for Common Equity and Related Stockholder Matters 13  Item 6.    Management's Discussion and Analysis or Plan of Operations 13  Item 7.    Financial Statements 17  Item 8.    Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 34  Item 8a. Controls and Procedures 34  Item 8b. Other information 34  PART III  Item 9.    Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act 35  Item 10. Executive Compensation 36  Item 11. Security Ownership of Certain Beneficial Owners and Management 38 and Related Stockholder Matters  Item 12.  Certain Relationships and Related Transactions 39  Item 13.  Exhibits 39  Item 14.  Principal Accountant Fees and Services 40  Signatures 41


PART I   ITEM 1.  DESCRIPTION OF BUSINESS  Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995:  Except for the historical information presented in this document, the matters discussed in this Form 10-KSB for the fiscal year ending December 31, 2006, and specifically in the items entitled "Managements Discussion and Analysis or Plan of Operation", or otherwise incorporated by reference into this document, contain "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are identified by the use of forward-looking terminology such as "believes", "plans", "intend", "scheduled", "potential", "continue", "estimates", "hopes", "goal", "objective", expects", "may", "will", "should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.  The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. The reader is cautioned that no statements contained in this Form 10-KSB should be construed as a guarantee or assurance of future performance or results. These forward-looking statements involve risks and uncertainties, including those identified within this Form 10-KSB. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this Form 10-KSB and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.  The Company  PhytoMedical Technologies, Inc. (PhytoMedical or the Company), together with its subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products.  Cachexia  Presently, through contract research organizations, the Company is working to isolate potentially active pharmacological elements in PhytoMedical's first plant derived compound, BDC-03, which has been successful in reducing body fat percentage, increasing lean muscle mass and lowering cholesterol in a study of growing animals.  For obese or overweight individuals, BDC-03s potential capacity to decrease the deposition of fat and lower cholesterol would be a vitally important therapeutic outcome. However, its prospective ability to induce overall weight gain in the form of lean muscle mass may well be the difference between life and death for individuals suffering from cachexia.  Cachexia, which is characterized by dramatic weight loss, not only of fatty tissue, but also muscle tissue and bone, is among the most devastating and life-threatening aspects of AIDS and cancer. Once the body loses 30% of its lean muscle mass, major organs are affected, resulting in death.  Sadly, cachexia afflicts 25% of all AIDS patients and upwards of 90% of all advanced cancer patients. In fact, half of all cancer related deaths are a result of cachexia, not the cancer itself.  Diabetes  Additionally, through a Cooperative Research and Development Agreement (CRADA), PhytoMedical was working with the United States Department of Agriculture (USDA) and Iowa State University (ISU) towards synthesizing the active components of several polyphenolic compounds found in cinnamon bark and identifying a Type 2 Diabetes candidate for an IND (Investigational New Drug) application with the FDA.  However, in November 2006, it was announced that PhytoMedical would terminate the CRADA as of February 1, 2007, in favor of moving all development to a true pharmaceutical contract research organization to expedite and prepare for a future IND filing.   4   These compounds, which increase insulin sensitivity by activating key enzymes that stimulate insulin receptors, while inhibiting the enzymes that deactivate them, have increased sugar metabolism by a factor of 20 in test tube assays using fat cells. Impaired sugar and fat metabolism, present in millions around the world, may lead to Type-2 diabetes and cardiovascular diseases.  Insulin is a hormone made by the pancreas to help the body use glucose (sugar) for energy. In people with Type-2 diabetes, either the pancreas doesn't make enough insulin or the body is unable to use it correctly. Without sufficient insulin, glucose accumulates in the blood and urine, and the cells of the body are starved, a condition known as diabetes - the leading cause of end-stage renal disease, blindness and lower limb amputations.  Diabetes, which results from the bodys inability to produce enough insulin or use it efficiently, affects 20.8 million people in the United States, or 7% of the population (American Diabetes Association). The Centers for Disease Control and Prevention expects this number to rise to over 30 million by 2030. As the leading cause of end-stage renal disease, blindness and lower limb amputations, diabetes now costs the health care system over $132 billion each year.  While the causes of diabetes are not entirely clear, it is known that diet plays a key role in the prevention and cure of diabetes.  In fact, research studies have shown that aqueous extracts of cinnamon improves the action of insulin and helps to control risk factors associated with diabetes including, glucose, insulin, cholesterol, triglycerides and related variables.  One study published in Diabetes Care, a journal of the American Diabetes Association, showed that as little as one gram a day of cinnamon  one-fourth of a teaspoon twice a day  can lower blood sugar by an average of 18 to 29 percent, triglycerides (fatty acids in the blood) by 23 to 30 percent, LDL (or bad) cholesterol by 7 to 27 percent and total cholesterol by 12 to 26 percent. Changes in HDL (good) cholesterol were not significant. Amazingly, the study found that the beneficial effects of cinnamon lasted for at least 20 days after people stopped taking it.  At present, the Company does not currently have commercial products intended to diagnose, treat, cure or prevent any disease. The statements contained in this Form 10-KSB regarding our on going research and development and the results attained by us to-date have not been evaluated by the Food and Drug Administration. There can be no assurance that further research and development, and /or whether clinical trial results, if any, will validate and support the results of our preliminary research and studies.  Cooperative and License Agreements  New York University (NYU)  On July 29, 2004, PhytoMedical Technologies Corporation, a wholly owned subsidiary of PhytoMedical Technologies, Inc., entered into an exclusive worldwide licensing agreement with New York University (NYU) for certain patented inventions (NYU Patents) related to pharmacologically active elements of a muira puama plant extract and ion channel modulators from natural sources.  In consideration for the grant of the license, PhytoMedical Technologies Corporation agreed to:  -  reimburse NYU for its patent costs incurred to date; - pay to NYU a royalty of four percent (4%) of the net sales of all licensed products related to medical, pharmacological, therapeutic, prophylactic, nutritional and research applications of the muira puama extract; - pay NYU twenty percent (20%) of the net sales for all other licensed products; - pay NYU ten percent (10%) of all sublicense fees.  In connection with the licensing agreement, PhytoMedical Technologies Corporation granted to each of NYU and Dr. Bruce Cherksey, a NYU scientist and inventor of the NYU Patents, an option to acquire, for a period of two years from July 29, 2004, a number of shares equal to 12.5% of the outstanding common stock of PhytoMedical on a fully diluted basis.  On May 30, 2006, Dr. Bruce Cherksey exercised the option and acquired 12.5% of PhytoMedical Technologies Corporation.  On June 30, 2006, NYU and PhytoMedical Technologies Corporation agreed to extend the option to July 20, 2008.  All other terms and conditions of the option agreement will remain in full force and effect.  This combined 25% equity position may not be diluted until a total of $1,825,000, after deduction of all related financing costs, has been invested to further develop the technology.  Thereafter, NYU and Dr. Cherksey will be diluted pari passu with other equity holders of PhytoMedical Technologies Corporation.  5   USDA's Agricultural Research Service (ARS) and Iowa State University (ISU)  On December 1, 2004, PolyPhenol Technologies Corporation, a wholly owned subsidiary of PhytoMedical Technologies, Inc., entered into a three year, three-way Cooperative Research and Development Agreement (CRADA) with the USDA's Agricultural Research Service (ARS) and Iowa State University (ISU). PolyPhenol Technologies Corporation committed to providing $666,336 in research funding to the ARS and $186,865 to ISU.  On March 6, 2006, PolyPhenol Technologies Corporation, a wholly-owned subsidiary of PhytoMedical Technologies, Inc. agreed to extend its Cooperative Research and Development Agreement (CRADA) with the USDAs Agricultural Research Service (ARS) and Iowa State University (ISU) for an additional two years through October 31, 2009.  Effective February 1, 2007, the Company terminated its CRADA agreement with the USDAs Agricultural Research Service (ARS) and Iowa State University (ISU) in favor of moving all development to a true pharmaceutical contract research organization to expedite and prepare for a future IND filing.  Iowa State University Research Foundation Inc. (ISURF)  On June 12, 2006, the Company, through its wholly owned subsidiary, PolyPhenol Technologies Corporation, entered into an exclusive license agreement with Iowa State University Research Foundation Inc. (ISURF) to develop, market and distribute novel synthesized compounds derived from type A-1 polyphenols, which have been linked to insulin sensitivity by lead researcher, Dr. Richard Anderson of the USDA's Agricultural Research Service.  Under terms of the agreement, the Company has to pay to ISURF license fees of $320,000, of which $20,000 is payable (paid) within 30 days of execution of the agreement, $50,000 is payable upon completion of the first successful Phase 2 clinical trial and the remaining $250,000 is payable upon first approval by the regulatory authority on new drug application. In addition, ISURF will receive royalty payments equal to 5% on the net sales of products, except that 3% will apply on the net sales of pharmaceutical products. The Company will pay a minimum annual royalty of $20,000, $50,000 and $100,000 in calendar year 2010, 2011, 2012 and onwards, respectively. The Company also has to reimburse ISURF the cost incurred for filing, prosecuting and maintaining the licensed patents together with 15% of the said costs, not exceeding $10,000, as the administration fee. The Company will administrate the development, regulatory approval and commercialization of the compounds and pursue future collaborative arrangements.  As of December 31, 2006, the Company paid in total of $20,000 for the License Fee and $25,381 for reimbursement of the patent costs and research expenses as per agreement with ISURF.  Effective February 1, 2007, the Company, through its wholly owned subsidiary, PolyPhenol Technologies Corporation, entered into an expanded sponsored research agreement with Iowa State University (ISU). Under terms of the agreement, PhytoMedical will continue to undertake its research at ISURF for development of the Companys novel, synthesized type A-1 polyphenolic compounds  an entirely new, innovative class of compounds derived from cinnamon, shown in published human and pre-clinical animal studies to favorably effect type-2 diabetes without side effects.  ISU:  Year 1: $62,251 to ISU in 4 quarterly installments, the first of which is due within 30 days of signing of the sponsored research agreement, the second of which is due to ISU 3 months from the previous payment;  Year 2: $70,295 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment; and  Year 3: $72,140 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment.  All rights, title, and interest in any subject invention made solely by the Company are owned by the Company, solely by ISU are owned by ISU, owned jointly by the two parties if made by any of the parties.  The Agreement or parts thereof, is subject to termination at any time by mutual consent.  Any party may unilaterally terminate the entire agreement at any time by giving the other parties written notice not less than sixty calendar days prior to the desired termination date.   6   Employees  At December 31, 2006, the Company employed 5 full-time person and 2 part-time persons. All of our research and development activities are provided on our behalf by scientists and others employed governmental agencies and academic institutions with which we have agreements or by third party providers.  To the best of the Companys knowledge, none of the Companys officers or directors is bound by restrictive covenants from prior employers. None of the Companys employees are represented by labor unions or other collective bargaining groups. We consider relations with our employees to be good. We plan to retain and utilize the services of outside consultants as the need arises.  Risk Factors  We have sought to identify what we believe to be the most significant risks to our business.  However, we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our Common Stock. We provide the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could adversely affect us.  Inability to Obtain Funding  The process of developing our products requires significant research and development efforts, including basic research, preclinical and clinical development, as well as FDA regulatory approval. Our ability to achieve profitability depends on our ability, alone or with future potential collaborators, to develop our drug candidates, conduct clinical trials, obtain necessary regulatory approvals, and manufacture, distribute, market and sell our drug products. We cannot assure you that we will be successful at any of these activities or predict when we will ever become profitable.  We may not be able to obtain additional funding when needed, which could limit future expansion and marketing opportunities, as well as result in lower than anticipated revenues. We may require additional financing to pursue relationships with joint venture partners. If the market price of the common stock declines, some potential financiers may either refuse to offer us any financing or will offer financing at unacceptable rates or unfavorable terms. If we are unable to obtain financing on favorable terms, or at all, this unavailability could prevent us from expanding our business, which could materially impact our future potential revenues.  Lack of Operating History  Our business is subject to the risks inherent in the establishment of a new business. In formulating our business plan, we have relied on the judgment of our officers, directors and consultants but have not conducted any formal independent market studies concerning the demand for our products. Because of our limited operating history and lack of past profitability, you may lose your investment if we are unable to successfully market our products and implement our business plan.  We have had limited revenues since inception.  In both 2006 and 2005, we had zero revenues. We have not been profitable, experiencing an accumulated loss of $22,904,995 through December 31, 2006. Even if we become profitable in the future, we cannot accurately predict the level of, or our ability to sustain profitability. Because we have not yet been profitable and cannot predict any level of future profitability, you bear the risk of a complete loss of your investment in the event our business plan is unsuccessful.  Continued Control by Existing Management  You may lack an effective vote on corporate matters and management may be able to act contrary to your objectives. As of March 21, 2007, our officers and board members own 62% of the 189,669,641 of our outstanding common stock, excluding stock options. If management votes together, it could influence the outcome of corporate actions requiring shareholder approval, including the election of directors, mergers and asset sales. As a result, new stockholders may lack an effective vote with respect to the election of directors and other corporate matters. Therefore, it is possible that management may take actions with respect to its ownership interest, which may not be consistent with your objectives or desires.  7   Liquidity of Shares in Market Place  As of March 21, 2007, one of our directors beneficially owns approximately 62% of the Companys outstanding common stock, which could affect the liquidity of the companys shares in the market.  Dividends  We have not paid and do not currently intend to pay dividends, which may limit the current return you may receive on your investment in our common stock.  Since inception, we have paid no dividends to our stockholders. Future dividends on our common stock, if any, will depend on our future earnings, capital requirements, financial condition and other factors. We currently intend to retain earnings, if any, to increase our net worth and reserves. Therefore, we do not anticipate that any holder of common stock will receive any cash, stock or other dividends on his shares of common stock at any time in the near future. You should not expect or rely on the potential payment of dividends as a source of current income.  Dependence on Executive Officers and Technical Personnel  The success of our business plan depends on attracting qualified personnel, and failure to retain the necessary personnel could adversely affect our business. Competition for qualified personnel is intense, and we may need to pay premium wages to attract and retain personnel. Attracting and retaining qualified personnel is critical to our business. Inability to attract and retain the qualified personnel necessary would limit our ability to implement our business plan successfully.  Adverse Effect of Shares Eligible for Future Sale  Future sales of large amounts of common stock could adversely affect the market price of our common stock and our ability to raise capital.  Future sales of our common stock by existing stockholders pursuant to Rule 144 under the Securities Act, or following the exercise of outstanding options and warrants, could adversely affect the market price of our common stock. Substantially all of the outstanding shares of our common stock are freely tradable, without restriction or registration under the Securities Act, other than the sales volume restrictions of Rule 144 applicable to shares held beneficially by persons who may be deemed to be affiliates. Our directors and executive officers and their family members are not under lockup letters or other forms of restriction on the sale of their common stock. The issuance of any or all of these additional shares upon exercise of options or warrants or conversion of preferred stock will dilute the voting power of our current stockholders on corporate matters and, as a result, may cause the market price of our common stock to decrease. Further, sales of a large number of shares of common stock in the public market could adversely affect the market price of the common stock and could materially impair our future ability to generate funds through sales of common stock or other equity securities.  Government Regulation  Regulation by government authorities in the United States and foreign countries is a significant factor in the development, manufacture and marketing of our proposed products and in our ongoing research and product development activities. All of our products will require regulatory approval by government agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical studies and clinical trials and other approval procedures of the FDA and similar regulatory authorities in foreign countries. Various federal and state statutes and regulations also govern or influence testing, manufacturing, safety, labeling, storage and record-keeping related to such products and their marketing. The process of obtaining these approvals and the subsequent compliance with appropriate federal and state statutes and regulations require the expenditure of substantial time and financial resources.  Preclinical studies generally are conducted in laboratory animals to evaluate the potential safety and the efficacy of a product. Drug developers submit the results of preclinical studies to the FDA as a part of an IND application that must be approved before clinical trials can begin in humans. Typically, clinical evaluation involves a time consuming and costly three-phase process.  Phase I Clinical trials are conducted with a small number of patients to determine the early safety profile, maximum tolerated dose and pharmacological properties of the product in human volunteers.  Phase II Clinical trials are conducted with groups of patients afflicted with a specific disease in order to determine preliminary efficacy, optimal dosages and expanded evidence of safety.  8    Phase III Large-scale, multi-center, comparative clinical trials are conducted with patients afflicted with a specific disease in order to determine safety and efficacy as primary support for regulatory approval by the FDA to market a product candidate for a specific disease.  The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted in the United States and may, at its discretion, reevaluate, alter, suspend or terminate the testing based upon the data accumulated to that point and the FDAs assessment of the risk/benefit ratio to the patient. To date, we have not conducted any clinical trials.  Once Phase III trials are completed, drug developers submit the results of preclinical studies and clinical trials to the FDA in the form of an NDA or a biologics licensing application for approval to commence commercial sales. In response, the FDA may grant marketing approval, request additional information or deny the application if the FDA determines that the application does not meet regulatory approval criteria. FDA approvals may not be granted on a timely basis, or at all. Furthermore, the FDA may prevent a drug developer from marketing a product under a label for its desired indications, which may impair commercialization of the product.  If the FDA approves the NDA, the drug becomes available for physicians to prescribe in the United States. After approval, the drug developer must submit periodic reports to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional studies, known as Phase IV, to evaluate long-term effects.  In addition to studies requested by the FDA after approval, a drug developer may conduct other trials and studies to explore use of the approved compound for treatment of new indications. The purpose of these trials and studies and related publications is to broaden the application and use of the drug and its acceptance in the medical community.  We will also have to complete an approval process similar to that in the United States in virtually every foreign target market for our products in order to commercialize our product candidates in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. Foreign approvals may not be granted on a timely basis, or at all. In addition, regulatory approval of prices is required in most countries other than the United States. We face the risk that the resulting prices would be insufficient to generate an acceptable return to us or our corporate collaborators.  Competition  The biotechnology and pharmaceutical industries are subject to rapid and intense technological change. We face competition from numerous pharmaceutical companies, pharmaceutical divisions of chemical companies, and biotechnology companies of various sizes. Many of these companies have commercial arrangements with other companies in the biotechnology industry to supplement their own research capabilities. Developments by others may render our product candidates or technologies obsolete or noncompetitive.  Compared to us, many of our competitors and potential competitors have substantially greater:  - capital resources; - research and development resources, including personnel and technology; - regulatory experience; - preclinical study and clinical testing experience; - manufacturing and marketing experience; and - production facilities.  Any of these competitive factors could harm our business, prospects, financial condition and results of operations, which could negatively affect our stock price.  Limited Experience  Even if we are able to develop our products and obtain necessary regulatory approvals, we have limited experience or capabilities in marketing or commercializing our products. We currently have no sales, marketing or distribution infrastructure. Accordingly, we are dependent on our ability to find collaborative marketing partners or contract sales companies for commercial sale of any future products. Even if we find a potential marketing partner, we may not be able to negotiate a licensing contract on favorable terms to justify our investment or achieve adequate revenues.   9   Intellectual Property  The Company relies on a combination of copyright law, trade secret protection, confidentiality agreements and other contractual arrangements with employees, vendors and others to protect its rights to intellectual property. These measures, however, may be inadequate to deter misappropriation of proprietary information. Failure to adequately protect its intellectual property could harm the Company, devalue its proprietary content and affect the Company's ability to compete effectively.  Our success depends in significant part on our ability to obtain important research and invention licenses, obtain patents, protect trade secrets, operate without infringing upon the proprietary rights of others and prevent others from infringing on our proprietary rights.  If we do obtain patents, the claims allowed may not be sufficiently broad to protect our technology. In addition, issued patents that we own or license may be challenged, invalidated or circumvented. Our patents also may not afford us protection against competitors with similar technology. Because patent applications in the United States are maintained in secrecy until patents issue, third parties may have filed or maintained patent applications for technology used by us or covered by our pending patent applications without our being aware of these applications.  We may not hold proprietary rights to all of the patents related to our proposed products. These patents may be owned or controlled by third parties. As a result, we or any future collaborative partners may be required to obtain licenses under third-party patents to market our proposed products. If licenses are not available on acceptable terms, we or any future collaborative partners will not be able to market these products or services.  Research Agreements  We expect to enter into research agreements and licenses in the future that relate to important technologies that may be necessary for the development and commercialization of related and unrelated products. These agreements and licenses may impose various commercialization, indemnification, royalty, insurance and other obligations on us, which, if we fail to comply may result in the termination of these agreements and licenses or make the agreements and licenses non-exclusive, which could affect our ability to exploit important technologies that are required for successful development of our products.  Insurance Coverage  Our products may prove to be unsuccessful if various parties, including government health administration authorities, private healthcare insurers and other healthcare payers, such as health maintenance organizations and self-insured employee plans that determine reimbursement to the consumer, do not accept our products for reimbursement. Sales of therapeutic and other pharmaceutical products depend in significant part on the availability of reimbursement to the consumer from these third party payers. Third party payers are increasingly challenging the prices charged for medical products and services. We cannot assure you that reimbursement will be available, if at all. If we fail to achieve adequate reimbursement levels, patients may not purchase our products and sales of these products will be absent or reduced.  We are considered a penny stock.  The Company's stock differs from many stocks, in that it is a "penny stock." The Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks."  These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as amended.  Because our securities probably constitute "penny stock" within the meaning of the rules, the rules would apply to us and our securities. The rules may further affect the ability of owners of our stock to sell their securities in any market that may develop for them.  There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers.  The market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock.  The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value.  Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.  Stockholders should be aware that, according to the Securities and Exchange Commission Release No. 34- 29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include:   10   - Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;  - Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;  - "Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;  - Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and  - The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.  Furthermore, the "penny stock" designation may adversely affect the development of any public market for the Company's shares of common stock or, if such a market develops, its continuation.  Broker-dealers are required to personally determine whether an investment in "penny stock" is suitable for customers.  Penny stocks are  securities (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ automated  quotation  system  (NASDAQ-listed stocks must still meet  requirement  (i)  above);  or (iv) of an issuer with net tangible  assets  less than  $2,000,000  (if the issuer  has been in  continuous operation  for at least three years) or $5,000,000  (if in continuous  operation for less  than  three  years),  or with  average  annual  revenues  of less than $6,000,000 for the last three years.  Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account.  Potential investors in the Company's common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock."  Rule 15g-9 of the  Commission  requires  broker-dealers  in penny stocks to approve the  account of any  investor  for  transactions  in such stocks  before selling  any  penny  stock  to  that  investor.   This  procedure  requires  the broker-dealer to (i) obtain from the investor information  concerning his or her financial  situation,  investment  experience  and investment  objectives;  (ii) reasonably  determine,  based on that  information,  that  transactions in penny stocks are  suitable  for the  investor  and that the  investor  has  sufficient knowledge and experience as to be reasonably  capable of evaluating the risks of penny stock  transactions;  (iii) provide the investor with a written  statement setting forth the basis on which the  broker-dealer  made the  determination  in (ii) above;  and (iv) receive a signed and dated copy of such statement from the investor,  confirming  that it  accurately  reflects  the  investor's  financial situation,  investment  experience and investment  objectives.  Compliance with these requirements may make it more difficult for the Company's stockholders to resell their shares to third parties or to otherwise dispose of them.  Stock Price Fluctuations  The market price of our common stock could be subject to significant fluctuations. Among the factors that could affect our stock price are:  - negative results from our research efforts, future clinical or pre-clinical studies or adverse FDA decisions related to our product candidates; - speculation in the press or investment community; - strategic actions by us or our competitors, such as acquisitions or restructurings; - low average daily trading volumes; - general market conditions, and - numerous other factors unrelated to our performance.  The stock markets in general and the markets for biotechnology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.   11   Independent Directors.  We cannot guarantee our Board of Directors will have a majority of independent directors in the future. In the absence of a majority of independent directors, our executive officers, who are also principal stockholders and directors, could establish policies and enter into transactions without independent review and approval thereof. This could present the potential for a conflict of interest between the Company and its stockholders generally and the controlling officers, stockholders or directors.  Environmental Matters  The Company believes it conducts its business in compliance with all environmental laws presently applicable to its facilities. To date, there have been no expenses incurred by the Company related to environmental issues.  ITEM 2.  DESCRIPTION OF PROPERTY  The Company's corporate office is located at 100 Overlook Drive, 2nd Floor, Princeton, New Jersey, 08540.  The Companys administrative office is located at 1628 West First Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises in Vancouver, British Columbia are owned by a private corporation controlled by a director and majority shareholder.  ITEM 3.  LEGAL PROCEEDINGS  The Company is not party to any current legal proceedings.  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  There were no matters submitted to a vote of the security holders in the fourth quarter of 2006. It is our intention to schedule a shareholders meeting to elect directors and transact any additional business in the second or third quarter of 2007.  12    PART II  ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS  Market Information  The Company's Common Stock is listed on the OTC Bulletin Board under the symbol "PYTO". The following table sets forth the high and low sale prices for the periods indicated:   High Low First Quarter 2005 $1.24 $0.85 Second Quarter 2005 $1.46 $0.89 Third Quarter 2005 $1.12 $0.65 Fourth Quarter 2005 $1.09 $0.56  First Quarter 2006 $1.54 $0.96 Second Quarter 2006 $1.34 $0.63 Third Quarter 2006 $0.63 $0.38 Fourth Quarter 2006 $0.88 $0.39 January 1, 2007  March 21, 2007 $0.53 $0.38  As of March 22, 2007, there were approximately 290 stockholders of record of the Company's Common Stock.  Dividend Policy  We do not have a history of paying dividends on our Common Stock, and there can be no assurance that we will pay any dividends in the foreseeable future. We intend to use any earnings, which may be generated, to finance the growth of our businesses. Our Board of Directors has the right to authorize the issuance of preferred stock, without further shareholder approval, the holders of which may have preferences over the holders of the Common Stock as to payment of dividends.  Securities Authorized for Issuance Under Equity Compensation Plans   Number of securities remaining available for Number of Securities to be Weighted-average exercise future issuance under issued upon exercise of price of outstanding equity compensation plans outstanding options, options, warrants and (excluding securities warrants and rights rights reflected in column (a)) Plan Category (a) (b) (c) ____________________________________________________________________________________________________________  Equity compensation plans approved by security holders 2,000,000 $0.52 20,275,000  Equity compensation plans not approved by security holders ____________________________________________________________________________________________________________ Total 2,000,000 $0.52 20,275,000   ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  The following discussion should be read in conjunction with the financial statements and notes thereto included in Item 7 of this Form 10-KSB. Except for the historical information contained herein, the discussion in this Annual Report on Form 10-KSB contains certain forward-looking statements that involve risk and uncertainties, such as statements of the Company's plans, objectives, expectations and intentions as of the date of this filing. The cautionary statements made in this document should be read as being applicable to all related forward-looking statements wherever they appear in this document. The Company's actual results could differ  13   materially from those discussed here. Factors that could cause differences include those discussed in "Risk Factors", as well as discussed elsewhere herein.  Overview  PhytoMedical Technologies, Inc. (PhytoMedical or the Company), together with its subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products.  Currently, the Company is working to isolate potentially active pharmacological elements in PhytoMedical's first plant derived compound, BDC-03, which has been successful in reducing body fat percentage, increasing lean muscle mass and lowering cholesterol in a study of growing animals.  PhytoMedical is also continuing to undertake its research at ISURF for development of the Companys novel, synthesized type A-1 polyphenolic compounds  an entirely new, innovative class of compounds derived from cinnamon, shown in published human and pre-clinical animal studies to favorably effect type-2 diabetes without side effects.  Results of Operations  Revenues:  The Company generated revenues of $0 for the years ended December 31, 2006 and December 31, 2005.  General and Administrative Expenses:  During 2006, the Company incurred $3,337,079 in general and administrative expenses, a decrease of 1% over 2005 expenses of $3,322,323.  The decrease is primarily attributable to decreases in investor relations costs and the stock offering expense that incurred in the Fusion Capital transaction with the issuance of commitment shares.  Interest Income:  Interest income was $16,930 and $3,697 for the years ended December 31, 2006, and 2005, respectively. Interest earned in the future will be dependent on Company funding cycles and prevailing interest rates.  Provision for Income Taxes:  As of December 31, 2006, the Company's accumulated deficit was $22,904,995, and as a result, there has been no provision for income taxes to date.  Net Loss:  For the year ended December 31, 2006, the Company recorded a net loss of $3,852,569, a decrease of 10%, compared to a net loss of $4,257,382 for the same period in 2005. The decrease is primarily attributable to decreases in investor relations costs and the stock offering expense that incurred in the Fusion Capital transaction with the issuance of commitment shares.  Liquidity and Capital Resources  At December 31, 2006, the Company had a cash balance of $386,547 compared to a cash balance of $63,770 at December 31, 2005.  During 2006, the Company used $2,331,943 of net cash from operating activities, an increase of 10%, as compared to net cash flows used by operating activities of $2,117,231 in 2005, primarily due to increases in accounts payable and stock based compensation.  Net cash flows used in investing activities was $21,367 for 2006, compared to $20,540 for 2005, due to a license fee in 2006 and equipment purchases during 2005.  Net cash provided by financing activities was $2,675,997 for 2006 compared to $1,864,003 for 2005. The Company has financed its operations primarily from cash on hand, through loans from shareholders, proceeds from stock option and warrant exercises and through the common stock purchase agreement with Fusion Capital.  During the year ended December 31, 2006, Fusion Capital has purchased 4,044,454  (2005: 733,136) shares of the Company for total proceeds of $3,165,997 (2005: $465,002).  Plan of Operation  Presently, through contract research organizations, the Company is working to isolate potentially active pharmacological elements in PhytoMedical's first plant derived compound, BDC-03, which has been successful in reducing body fat percentage, increasing lean muscle mass and lowering cholesterol in a study of growing animals.  14    Additionally, through an expanded sponsored research agreement with ISU, PhytoMedical is working towards synthesizing the active components of several polyphenolic compounds found in cinnamon bark and characterizing their beneficial health effects in cell cultures systems, animals and ultimately humans.  The Company anticipates that through its common stock purchase agreement with Fusion Capital, the Company will receive sufficient funds to satisfy the cash needs of the Company through calendar year ending December 31, 2007, however, if necessary additional funds maybe provided by debt or equity financings.  Due to the "start up" nature of the Company's business, the Company expects to incur losses as the Company conducts its ongoing research and product development programs. We will require additional funding to continue our research and product development programs, to conduct preclinical studies and clinical trials, for operating expenses, to pursue regulatory approvals for our product candidates, for the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims, if any, for any possible acquisitions or new technologies, and we may require additional funding to establish manufacturing and marketing capabilities in the future. We may seek to access the public or private equity markets whenever conditions are favorable. We may also seek additional funding through strategic alliances and other financing mechanisms. We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail significantly one or more of our research or development programs or obtain funds through arrangements with collaborators or others. This may require us to relinquish rights to certain of our technologies or product candidates. To the extent that we are unable to obtain third-party funding for such expenses, we expect that increased expenses will result in increased losses from operations. We cannot assure you that we will successfully develop our products under development or that our products, if successfully developed, will generate revenues sufficient to enable us to earn a profit.  Related Party Transactions  Management Fees:  During the year ended December 31, 2006, the Company charged $18,300 (2005: $6,000) to operations for director fees incurred for services rendered by directors. As of December 31, 2006, the Company owed $nil (2005: $63,000) for outstanding management fees owed to a director and major shareholder, which is included in accounts payable  related parties.  Notes Payable and Accrued Interest:  Notes Payable totaled $1,213,776 as at December 31, 2006 (2005: $1,703,776), representing unsecured loans of $140,000 (8.25%), $323,776 (8.50%) and $750,000 (8.50%) due to Mr. Harmel S. Rayat, a director and majority shareholder of the Company. During the year ended December 31, 2006, the Company repaid $490,000 to the director and majority shareholder with the accrued interest of $51,785. The entire principal and accrued interest is due and payable on demand. Accrued and unpaid interest on these notes as of December 31, 2006, amounted to $193,847 (December 31, 2005 - $133,228) and is included in accounts payable - related parties.  Rent: The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by a director and majority shareholder. The Company pays a monthly rent of C$3,200 effective from April 1, 2006. The Company paid rent of $25,555 (2005: $nil) for the year ended December 31, 2006.  Mr. Harmel S. Rayat is an officer, director and majority stockholder of the Company.  He is also an officer, director and majority shareholder of each of HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp. and International Energy, Inc.  All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.  Going Concern  The Company has incurred net operating losses since inception. The Company faces all the risks common to companies in their early stages of development, including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. The Companys recurring losses raise substantial doubt about its ability to continue as a going concern.  The Companys financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. The Company expects to incur losses from its business operations and may require additional funding during 2007. The satisfaction of our cash hereafter will depend in large part on the Companys ability to successfully raise capital from external sources to pay for planned expenditures and to fund operations.  15    To meet these objectives, the Company has arranged a Common Stock Purchase Agreement with Fusion Capital Fund II, LLC to purchase from the Company up to $10,000,000 of the Companys common stock over a twenty-five month period. Management believes that its current and future plans enable it to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.  16    ITEM 7.  FINANCIAL STATEMENTS   INDEX TO FINANCIAL STATEMENTS      Report of Independent Registered Public Accounting Firm 18  Consolidated Balance Sheets as of December 31, 2006 and 2005 19  Consolidated Statements of Operations for years ended December 31, 2006 and 2005 20    Consolidated Statements of Changes in Stockholders Deficiency for the years ended 
December 31, 2006 and 2005  21  Consolidated Statements of Cash Flows for the years ended December 31, 2006 and 2005 22  Notes to the Financial Statements 23-33  17   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   To the Board of Directors PhytoMedical Technologies, Inc. Princeton, New Jersey   We have audited the accompanying consolidated balance sheets of PhytoMedical Technologies, Inc. and Subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' deficiency, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of PhytoMedical Technologies, Inc. and Subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.  The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has experienced recurring losses from operations since inception, and has a substantial accumulated deficit.  These conditions 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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.   /S/ PETERSON SULLIVAN PLLC   March 28, 2007 Seattle, Washington    18    PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES(Formerly Enterprises Technologies, Inc.)CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2006 AND 2005(Expressed in U.S. Dollars)20062005ASSETSCurrent assetsCash$386,457$63,770Prepaid expenses4,788-Total current assets391,24563,770Property and Equipment, Net9,62118,881Intangible asset - License fee (Note 6)20,000-Total assets$420,866$82,651LIABILITIESCurrentAccounts payable and accrued liabilities$194,027$113,333Accounts payable - related parties (Note 4)193,847203,062Promissory notes - related party (Note 4)1,213,7761,703,776Total liabilities1,601,6502,020,171STOCKHOLDERS' DEFICIENCYStockholders' DeficiencyPreferred stock: $0.25 par value; Authorized: 1,000,000Issued and outstanding: nil--Common stock: $0.00001 par value; Authorized: 300,000,000Issued and outstanding: 189,181,866 (2005: 185,137,412)1,8921,851Additional paid-in capital21,722,31917,113,055Accumulated deficit(22,904,995)(19,052,426)Total stockholders' deficiency(1,180,784)(1,937,520)Total liabilities and stockholders' deficiency$420,866$82,651(The accompanying notes are an integral part of these consolidated financial statements)  19    PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES(Formerly Enterprise Technologies, Inc.)CONSOLIDATED STATEMENTS OF OPERATIONSfor the years ended December 31, 2006 and 2005(Expressed in U.S. Dollars)20062005Revenue$-$-ExpensesManagement fees - related party (Note 4)18,3006,000Investor relations999,8941,589,440Other operating expenses, including interest of$112,403 in 2006 and $128,967 in 2005860,801479,685Research and development costs (Note 5 and 6)547,196267,745Stock based compensation1,443,308924,000Stock offering costs-994,2093,869,4994,261,079Operating loss(3,869,499)(4,261,079)Other incomeInterest income16,9303,697Net loss available to common shareholders$(3,852,569)$(4,257,382)Loss per common share -basic and diluted$(0.02)$(0.02)Weighted average number of common sharesoutstanding- basic and diluted187,496,408173,456,330(The accompanying notes are an integral part of these consolidated financial statements)  20


PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES(Formerly Enterprise Technologies, Inc.)CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCYfor the years ended December 31, 2006 and 2005Accumulated otherTotalCommon StockAdditionalAccumulatedComprehensivecomprehensiveStockholders'(Expressed in U.S. Dollars)SharesAmountpaid-in capitaldeficitlossincomeDeficiencyBalance, December 31, 2004168,541,165$1,685$14,210,010$(14,795,044)$ -$ -$ (583,349)Common stock issued uponexercise of stock options550,0006419,994---420,000Stock based compensation expenses--924,000---924,000Common stock issued uponexercise of warrants, at$0.007 per share14,285,71414399,857---100,000Restricted common stock issuedpursuant to share purchase agreement1,027,39710994,199---994,209Common stock issued for cash733,1367464,995---465,002Loss, year ended December 31, 2005---(4,257,382)(4,257,382)-(4,257,382)$ (4,257,382)Balance, December 31, 2005185,137,412$1,851$17,113,055$(19,052,426)--$(1,937,520)Common stock issued for cash4,044,454413,165,956---3,165,997Stock based compensation expenses--1,443,308---1,443,308Loss, year ended December 31, 2006---(3,852,569)(3,852,569)-(3,852,569)$(3,852,569)Balance, December 31, 2006189,181,866$1,892$21,722,319$(22,904,995)-$(1,180,784)(The accompanying notes are an integral part of these consolidated financial statements)


21


PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES(Formerly Enterprise Technologies, Inc.)CONSOLIDATED STATEMENTS OF CASH FLOWSfor the years ended December 31, 2006 and 2005(Expressed in U.S. Dollars)20062005Cash flows from operating activitiesReconciliation of net loss to net cash used in operating activitiesNet loss$(3,852,569)$(4,257,382)Adjustments for items not involving cash:Accrued interest expense to stockholder60,619128,542Amortization and depreciation10,6271,659Stock based compensation1,443,308924,000Stock offering costs-994,209Change in non-cash working capital items:Increase in prepaid expenses(4,788)-Decrease in related party accounts payable(69,834)Increase in accounts payable80,69491,741Net cash used in operating activities(2,331,943)(2,117,231)Cash flows from investing activitiesAdditions to property and equipment(1,367)(20,540)Additions to intangible asset(20,000)-Net cash used in investing activities(21,367)(20,540)Cash flows from financing activitiesProceeds from issuance of common stock3,165,997985,003Repayment of loan to stockholder(490,000)(21,000)Promissory note proceeds from a major stockholder-900,000Net cash used provided by financing activities2,675,9971,864,003Increase (decrease) in cash322,687(273,768)Cash, beginning of year63,770337,538Cash, end of year$386,457$63,770Supplemental disclosure of cash flow information:Interest paid in cash$52,728$425Income tax paid in cash$-$-Noncash financing activities:Issuance of common stock as stock offering costs$-$994,209(The accompanying notes are an integral part of these consolidated financial statements)  22   PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES (Formerly Enterprise Technologies, Inc.)  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2006 (Expressed in US Dollars)  Note 1 - Organization and Nature of Operations  PhytoMedical Technologies, Inc. (formerly Enterprise Technologies, Inc.) (the Company), a Nevada Corporation, has an authorized capital of 301,000,000 shares of which 300,000,000 shares are $0.00001 par value common stock and 1,000,000 shares are $0.25 par value preferred stock.  On September 7, 2004, the Company changed its name to PhytoMedical Technologies, Inc.  The Company, together with its subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products.  The Company has incurred net operating losses since inception. The Company faces all the risks common to companies that are relatively new, including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. The Companys recurring losses raise substantial doubt about its ability to continue as a going concern.  The Companys financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. The Company expects to incur losses from its business operations and will require additional funding during 2007. The future of the Company hereafter will depend in large part on the Companys ability to successfully raise capital from external sources to pay for planned expenditures and to fund operations.  To meet these objectives, the Company has arranged a Common Stock Purchase Agreement with Fusion Capital Fund II, LLC to purchase from the Company up to $10,000,000 of the Companys common stock over a twenty-five month period (Note 8). Management believes that its current and future plans enable it to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.  Note 2  Significant Accounting Policies  (a) Principles of Accounting  These financial statements are stated in U.S. Dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America.  (b) Principles of Consolidation  The accompanying consolidated financial statements have been prepared on the accrual basis in accordance with accounting principles generally accepted in the United States, and include the accounts of PhytoMedical Technologies, Inc. and its subsidiaries, PhytoMedical Technologies Corp. and PolyPhenol Technologies Corp., which both were incorporated under the laws of the State of Nevada.  All significant inter-company transactions and accounts have been eliminated in consolidation.  (c) Use of Estimates  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.    23   (d) Cash and Cash Equivalents  The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents for the years ended December 31, 2006 and 2005. The Company occasionally has cash deposits in excess of insured limits. The Company places its cash and cash equivalents with high credit quality financial institutions.  (e) Equipment and Depreciation  Equipment is initially recorded at cost and is depreciated under the straight-line method over its estimated useful life as follows:  Computer equipment 2 years Office equipment 2 years  Repairs and maintenance costs are charged to operations as incurred.  (f) Research and Development Costs  Research and development costs are expensed as incurred.  (g) Fair Value of Financial Instruments  Fair value of financial instruments is made at a specific point in time, based on relevant information about financial markets and specific financial instruments.  As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision.  Changes in assumptions can significantly affect estimated fair values.  The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, accounts payable - related parties, and notes/advances payable to related parties approximates their fair value because of the short-term nature of these instruments.  (h) Advertising Expenses  The Company expenses advertising costs as incurred. The Company did not incur any advertising costs during the years ended December 31, 2006 and 2005.  (i) Impairment and Disposal of Long-Lived Assets  Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable in accordance with the  guidance established in Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  For assets that are to be held and used, an impairment loss is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.  (j) Income Taxes  The Company accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes.Under SFAS No. 109, deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary, to reduce deferred income tax assets to the amount expected to be realized.  (k) Earnings (Loss) Per Share  Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic earnings (loss) per share is computed by dividing income (loss)  (numerator) applicable to common stockholders by the weighted average  24   number of common stocks outstanding (denominator) for the period. All earnings (loss) per share amounts in the financial statements are basic earnings (loss) per share, as defined by SFAS No. 128,Earnings Per Share. Diluted earnings (loss) per share does not differ materially from basic earnings per share for all periods presented. Convertible securities that could potentially dilute basic earnings (loss) per share in the future, such as options and warrants, are not included in the computation of diluted earnings (loss) per share because to do so would be anti-dilutive.  (l) Stock-Based Compensation  On January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment, (SFAS 123R).  Prior to January 1, 2006, the Company accounted for stock-based payments under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related Interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123).  In accordance with APB 25, no compensation cost was required to be recognized for options granted that had an exercise price equal to the market value of the underlying common stock on the date of grant.  The Company adopted SFAS 123R using the modified-prospective transition method.  Under that transition method, compensation cost recognized for the year ended December 31, 2006, and thereafter will include:  (a) compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R.  The financial results for the prior periods have not been restated.  The Company will amortize stock compensation cost ratably over the requisite service period.  Had compensation expense for the Company's stock-based compensation plans been determined under SFAS No. 123, based on the fair market value at the grant dates, the Company's pro forma net loss and pro forma net loss per share would have been reflected as follows:  2005Net income (loss)$(4,257,382)Stock-based employee compensationexpenses as determined under thefair value based method(4,158,131)Stock-based compensation using intrinsic value924,000Pro-forma$(7,491,513)Net income (loss) per stock -basic and dilutedAs reported$(0.02)Pro-forma$(0.04)  The weighted average fair values of the options vested in 2005 was estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions:  dividend yield of 0%, expected volatility of 91.5%, risk free interest rates of 3.6%, and expected lives of 3.4 years.  The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable.  In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility.  Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing model may not necessarily provide a reliable measure of the fair value of its stock options.  (m) Comprehensive Income (Loss)  The Company has adopted SFAS No. 130, Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances.  The Company is disclosing this information on its Statements  25   of Changes in Stockholders' Equity (Deficiency). Comprehensive income (loss) comprises all equity changes except those resulting from investments by owners and distributions to owners.  (n) Foreign Currency Translations  The Company maintains both U.S. Dollar and Canadian Dollar bank accounts at a financial institution in Canada. Foreign currency transactions are translated into their functional currency, which is U.S. Dollar, in the following manner:  At the translation date, each asset, liability, revenue and expense is translated into the functional currency by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are translated into U.S. Dollars by using the exchange rate in effect at that date. There are no subsidiaries using a functional currency other than the U.S. Dollar at December 31, 2006 and 2005. Transaction gains and losses that arise from exchange rate fluctuations are included in the results of operations.  (o) Accounting for Derivative Instruments and Hedging Activities  The Company adopted SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, which requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value.  If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.  The Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes.  The adoption of this pronouncement does not have an impact on the Companys financial statements.  (p) Intangible Assets  The Company adopted the SFAS No. 142, Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with indefinite life to not be amortized but rather tested at least annually for impairment.  Intangible assets with a definite life are required to be amortized over its useful life.  The intangible asset is not amortized but we perform the annual review for possible impairment in the fourth calendar quarter of each year.  No Intangible asset impairment was recognized based on the evaluations performed.  (q) Related Party Transactions  A related party is generally defined as (i) any person that holds 10% or more of the Companys securities and their immediate families, (ii) the Companys management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties (See Note 4).  (r) Stock Offering Costs  As discussed in Note 8, the fair value of stock issued to Fusion Capital under the stock purchase agreement was expensed in the year the stock was issued because the agreement can be terminated without the stock being returned.  (s) New Accounting Pronouncements  In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes, (FIN 48).  FIN 48 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 is effective for financial statements as of December 15, 2006.  The adoption of FIN 48 is expected to have no impact on the Company's financial statements.    26   In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157,Fair Value Measurements(SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements but does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has not yet determined the impact of applying SFAS 157.  In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, (SFAS 158). SFAS 158 requires an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 is effective for financial statements as of December 31, 2006. The adoption of FAS No. 158 is expected to have no impact on the Company's financial statements.  Note 3  Equipment  20062005Computer equipment$2,293$19,266Office equipment19,6131,27421,90620,540Less: accumulated depreciation(12,285)(1,659)$9,621$18,881  Depreciation expenses charged to operations for the year ended December 31, 2006 were $10,627 (2005: $1,659).  Note 4 - Related Party Transactions  Management Fees:  During the year ended December 31, 2006, the Company charged $18,300 (2005: $6,000) to operations for director fees incurred for services rendered by directors. As of December 31, 2006, the Company owed $nil (2005: $63,000) for outstanding management fees owed to a director and major shareholder, which is included in accounts payable  related parties.  Notes Payable and Accrued Interest:  Notes Payable totaled $1,213,776 as at December 31, 2006 (2005: $1,703,776), representing unsecured loans of $140,000 (8.25%), $323,776 (8.50%) and $750,000 (8.50%) due to Mr. Harmel S. Rayat, a director and majority shareholder of the Company. During the year ended December 31, 2006, the Company repaid $490,000 to the director and majority shareholder with the accrued interest of $51,785. The entire principal and accrued interest is due and payable on demand. Accrued and unpaid interest on these notes as of December 31, 2006, amounted to $193,847 (December 31, 2005 - $133,228) and is included in accounts payable - related parties.  Rent: The Companys principal office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by a director and majority shareholder. The Company pays a monthly rent of C$3,200 effective from April 1, 2006. The Company paid rent of $25,555 (2005: $nil) for the year ended December 31, 2006.  Mr. Harmel S. Rayat is an officer, director and majority stockholder of the Company.  He is also an officer, director and majority shareholder of each of HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp. and International Energy, Inc.  All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.  Note 5  Cooperative Agreements  On July 29, 2004, PhytoMedical Technologies Corporation (PTC), a wholly owned subsidiary of the Company, Inc., entered into an exclusive worldwide licensing agreement with New York University (NYU) for certain patented inventions (NYU Patents) related to pharmacologically active elements of a muira puama plant extract and ion channel modulators from natural sources.   27   In consideration for the grant of the License, PTC agreed to:  (a) reimburse NYU for its patent costs incurred to date; (b) pay to NYU a royalty of 4% of the net sales of all licensed products related to medical, pharmacological, therapeutic, prophylactic, nutritional and research applications of the muira puama extract; (c) pay NYU 20% of the net sales for all other licensed products; (d) pay NYU 10% of all sublicense fees.  In connection with the licensing agreement, PTC granted to each of NYU and Dr. Bruce Cherksey, a NYU scientist and inventor of the NYU Patents, an option to acquire, for a period of two years from July 29, 2004, a number of shares equal to 12.5% of the outstanding common stock of PTC on a fully diluted basis. The option was exercised by Dr. Cherksey on May 30, 2006. On June 30, 2006, NYU and PhytoMedical Technologies Corporation agreed to extend the option to July 20, 2008.  All other terms and conditions of the option agreement will remain in full force and effect.  This combined 25% equity position may not be diluted until a total of $1,825,000, after deduction of all related financing costs, has been invested to further develop the technology. Thereafter, NYU and Dr. Cherksey will be diluted pari passu with other equity holders of PTC.  On December 1, 2004, PolyPhenol Technologies Corporation (PolyPhenol), a wholly owned subsidiary of the Company, entered into a three year, three-way Cooperative Research and Development Agreement (CRADA) with the USDA's Agricultural Research Service (ARS) and Iowa State University (ISU). PolyPhenol committed to providing $666,366 in research funding to the ARS and $186,865 to ISU under the following schedule below.  On March 6, 2006, PolyPhenol agreed to extend its CRADA with the USDAs ARS and ISU for an additional two years through October 31, 2009.  The USDAs Agricultural Research Service will receive $1,760,845, or $1,094,479 in additional funds, to support the research work and related administrative costs.  This represents a 164% increase over the prior funding commitment of $666,366.  ARS:  Year 1: $238,300 in 4 installments, the first of which is due to ARS within 30 days of signing of the CRADA, with the following three payments commencing at the hiring of appropriate research personnel  and at three month intervals thereafter;  Year 2: $482,964 in 4 quarterly installments, the first of which is due to ARS 3 months from the previous payment; and  Year 3: $507,114 in 4 quarterly installments, the first of which is due to ARS 3 months from the previous payment.  Year 4: $532,467 in 4 quarterly installments, the first of which is due to ARS 3 months from the previous payment.  The agreement was terminated by mutual agreement in December 2006. As of December 31, 2006, the Company totally incurred $640,819 under the agreement with USDAs ARS.  ISU:  Year 1: $60,000 to ISU in 4 quarterly installments, the first of which is due within 30 days of signing of the CRADA, with the following three payments commencing at the hiring of appropriate research personnel  and at three month intervals thereafter;  Year 2: $62,251 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment; and  Year 3: $70,295 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment.  Year 4: $72,140 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment.   As at December 31, 2006, the Company paid in total of $137,252 as per agreement with ISU.   28   All rights, title, and interest in any subject invention made solely by employee(s) of ARS shall be owned by ARS, solely by the Company are owned by the Company, solely by ISU are owned by ISU, owned jointly by any of three parties if made by any of those parties.  The Agreement or parts thereof, is subject to termination at any time by mutual consent.  Any party may unilaterally terminate the entire agreement at any time by giving the other parties written notice not less than sixty calendar days prior to the desired termination date.  Note 6  License Agreement  On June 12, 2006, the Company, through its wholly owned subsidiary, PolyPhenol Technologies Corporation, entered into an exclusive license agreement with Iowa State University Research Foundation Inc. (ISURF) to develop, market and distribute novel synthesized compounds derived from type A-1 polyphenols, which have been linked to insulin sensitivity by lead researcher, Dr. Richard Anderson of the USDA's Agricultural Research Service.  Under terms of the agreement, the Company has to pay to ISURF license fees of $320,000, of which $20,000 is payable (paid) within 30 days of execution of the agreement, $50,000 is payable upon completion of the first successful Phase 2 clinical trial and the remaining $250,000 is payable upon first approval by the regulatory authority on new drug application. In addition, ISURF will receive royalty payments equal to 5% on the net sales of products, except that 3% will apply on the net sales of pharmaceutical products. The Company will pay a minimum annual royalty of $20,000, $50,000 and $100,000 in calendar year 2010, 2011, 2012 and onwards, respectively. The Company also has to reimburse ISURF the cost incurred for filing, prosecuting and maintaining the licensed patents together with 15% of the said costs, not exceeding $10,000, as the administration fee. The Company will administrate the development, regulatory approval and commercialization of the compounds and pursue future collaborative arrangements.  As of December 31, 2006, the Company paid in total of $20,000 for the license fee and $25,381 for reimbursement of the patent costs and research expenses as per agreement with ISURF.  Note 7  Development Agreements  During the quarter ended September 30, 2006, the Company entered into two development agreements with Ricerca BioSciences (Ricerca), a world class pharmaceutical development laboratory, to begin developmental work on the Companys BDC-03 compound for cachexia, a devastating muscle wasting condition that afflicts 25% of all AIDS patients and upwards of 90% of all advanced cancer patients. BDC-03 has pharmacologically active elements that have been successful in reducing body fat percentage, increasing lean muscle mass and lowering cholesterol in a study of growing animals. Ricercas responsibilities will eventually expand to include the Companys other compounds.  As at December 31, 2006, the Company paid in total of $51,558 as per the two agreements with Ricerca.  Note 8  Common Stock  On July 8, 2005, the Company entered into a Common Stock Purchase Agreement (Purchase Agreement) and a Registration Rights Agreement (Registration Agreement) with Fusion Capital Fund II, LLC (Fusion Capital). Pursuant to the terms of the Purchase Agreement, the Company had to issue to Fusion Capital 863,724 shares (issued) of its common stock, which Fusion has agreed to hold for twenty-five months. Fusion Capital has agreed to purchase from the Company up to $10,000,000 of the Companys common stock over a twenty-five month period. Pursuant to the terms of the Registration Agreement, the Company has filed a registration statement (the Registration Statement) with the Securities and Exchange Commission covering shares which may be purchased by Fusion Capital under the Purchase Agreement.  The Registration Statement was declared effective on October 14, 2005. On each trading day during the term of the Purchase Agreement, the Company has the right to sell to Fusion Capital $20,000 of the Companys common stock at a purchase price equal to the lower of the (a) the lowest sale price of the common stock on such trading day and (b) the arithmetic average of the three (3) lowest closing sale prices for the common stock during the twelve (12) consecutive trading days immediately preceding the date of purchase. At the Companys option, Fusion Capital can be required to purchase fewer or greater amounts of common stock each month. The Company has the right to control the timing and the number of shares sold to Fusion Capital.  The Company shall always have the right at any time to decrease the amount of the daily purchase amount by delivering written notice to the buyer which notice shall specify the new daily purchase amount.  The decrease in the daily purchase amount shall become  29   effective one trading day after receipt by the buyer of the daily purchase amount decrease notice. The Company shall have the right (but not the obligation) to increase the amount of the daily purchase amount in accordance with the terms and conditions set forth in this Section 1(c)(iii) by delivering written notice to the buyer stating the new amount of the daily purchase amount. With respect to increases in the daily purchase amount above the original daily purchase amount, as the market price for the Common Stock increases the Company shall have the right from time to time to increase the daily purchase amount as follows.  For every $0.20 increase in threshold price above $1.00 (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), the Company shall have the right to increase the daily purchase amount by up to an additional $2,000 in excess of the original daily purchase amount.  Threshold price for purposes hereof means the lowest sale price of the Common Stock during the five (5) consecutive trading days immediately prior to the submission to the buyer of a daily purchase amount increase notice (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction).  For example, if the threshold price is $1.20, the Company shall have the right to increase the daily purchase amount to up to $22,000 in the aggregate.  If the threshold price is $2.00, the Company shall have the right to increase the daily purchase amount to up to $30,000 in the aggregate.  During the year ended December 31, 2006, Fusion Capital has purchased 4,044,454 (2005: 733,136) shares of the Company for total proceeds of $3,165,997 (2005: $465,002).    As of March 23, 2007, Fusion Capital has purchased 5,310,681 shares of common stock of the Company for total proceeds of $3,860,999.  Note 9  Warrants  The movement of share purchase warrants can be summarized as follows:  Weighted averageNumber of warrantsexercise priceBalance, December 31, 200414,285,714$0.007Exercised(14,285,714)0.007Balance, December 31, 2006 and 2005-  As of December 31, 2006, there are no outstanding share purchase warrants.  Note 10 - Stock Options  As of December 31, 2006, the Company had an active stock option plan that provides shares available for options granted to employees, directors and others. Options granted to employees under the Companys option plans generally vest over two to five years or as otherwise determined by the plan administrator. Options to purchase shares expire no later than ten years after the date of grant.  The movement of stock options can be summarized as follows:  30    RemainingAggregateWeighted averagecontractualintrinsicNumber of optionsexercise pricetermvalueOutstanding, December 31, 20044,575,000$0.24Granted6,700,0000.90Exercised(550,000)0.76Cancelled(1,450,000)0.24Outstanding, December 31, 20059,275,0000.68Granted4,250,0000.89Cancelled(2,250,000)1.22Outstanding, December 31, 200611,275,0000.658.12 years$882,750Exercisable at December 31, 20069,275,0000.687.81 years$862,750Available for grant at December 31, 200611,000,000   The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all in-the-money options (i.e. the difference between the Companys closing stock price on the last trading day of 2006 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2006. This amount changes based on the fair market value of the Companys stock. Total intrinsic value of options exercised was $nil (2005: $176,500) for the year ended December 31, 2006. Weighted average fair value of options granted during the year ended December 31, 2006 was $0.83 (2005: $0.62) per share.  A summary of the Companys unvested stock options and changes during the years ended December 31 is as follows:  Fair valueSharesper shareOutstanding at December 31, 2004-$-Granted during 2005--Vested during 2005(6,700,000)0.62Outstanding at December 31, 2005--Granted during 20064,250,0000.83Cancelled during 2006(2,250,000)(1.15)Outstanding at December 31, 20062,000,0000.48  On April 4, 2006, the Company granted 2,250,000 stock options at an exercise price of $1.22 to an employee, expiring on April 4, 2016. The vesting periods for the options are as follows: 250,000 stock options shall vest if and when an IND is filed for any current or future compound; another 250,000 stock options shall vest if and when a phase 1 clinical trial is commenced for any current or future compound; 1,750,000 stock options shall vest if and when the Company acquires any current or future compound or enters into a strategic collaborative agreement for any current or future compound.  As the 2,250,000 stock options will vest based on certain performance conditions, the Company expects that the first 250,000 stock options will vest at around 16 months from the date of grant, the second 250,000 stock options will vest at around 22 months from the date of grant and the remaining 1,750,000 stock options will vest at around 16 months from the date of grant. The fair value of each batch of stock options will be amortized over their expected service periods. The Company will periodically reassess the probability of the performance conditions being met and the estimated service period of each batch of stock options.   31   The fair value of the 2,250,000 stock options granted was estimated at $1.15 each, for a total amount of $2,587,500, by using the Black-Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, expected volatility of 91.8%, risk-free interest rates of 4.15%, and expected life of three years.  On August 1, 2006, the Company cancelled 2,250,000 stock options granted to an employee on April 6, 2006, while simultaneously granting 2,000,000 stock options. The 2,000,000 stock options have an exercise price of $0.52 per share, the closing price of the Companys shares on July 31, 2006.  The options vest as follows: (a) 250,000 options shall vest if and when an Investigational New Drug (IND) application is filed for any current or future compounds;  (b) 250,000 options shall vest if and when a phase I clinical trial is commenced for any current or future compounds; and  (c) 1,500,000 options shall vest if and when the Company or a wholly owned subsidiary or any one current or future compound is acquired, in whole or in part, or when either through the Company or a subsidiary, enters into a strategic collaborative agreement for any one current or future compound, provided that the Companys Board of Directors has approved, by written resolution, any such acquisition, sale or agreement.  As the 2,000,000 stock options will vest based on certain performance conditions, the Company expects that the first 250,000 stock options will vest at around 12 months from the date of grant, the second 250,000 stock options will vest at around 18 months from the date of grant and the remaining 1,500,000 stock options will vest at around 12 months from the date of grant. The fair value of each batch of stock options will be amortized over their expected service periods. The Company will periodically reassess the probability of the performance conditions being met and the estimated service period of each batch of stock options.  The fair value of the 2,000,000 options granted was estimated at $0.48 each, for a total of amount of $960,000, by using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 89.7%, risk-free interest rates of 4.91%, and expected lives of three years.  Additional stock-based compensation expense of $80,000 was recognized as a result of the cancellation and re-issuance of stock options.  During the year ended December 31, 2006, compensation expenses of $1,443,308 (2005: $924,000) was recognized for options previously granted and vesting over time. As of December 31, 2006, the Company had $1,224,192 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of one year.  The options outstanding and exercisable as of December 31, 2006 can be summarized as follows:  OutstandingExercisableWeightedNumberAverageWeightedNumberWeightedRange ofOutstanding atRemainingAverageExercisable atAverageExerciseDecember 31,ContractualExerciseDecember 31,ExercisePrices2006Life (Years)Price2006Price$0.242,975,0006.73$0.242,975,000$0.240.522,000,0009.590.52--0.601,200,0008.930.601,200,0000.600.965,100,0008.170.965,100,0000.96$0.24 - $0.9611,275,0008.12$0.659,275,000$0.68  The Company does not repurchase shares to fulfill the requirements of options that are exercised. Further, the Company issues new shares when options are exercised.  All options other than those issued in 2006 were cancelled effective March 5, 2007.   32   Note 11 - Income Taxes  There is no current or deferred tax expense for the years ended December 31, 2006 and 2005, due to the Company's loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company's ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes and has recorded a 100% valuation allowance against the deferred tax asset.  The income tax effect, utilizing a 34% income tax rate, of temporary differences giving rise to the deferred tax assets and deferred tax liabilities is a result of the following:  20062005Deferred tax assets:Net operating loss carryforwards$6,192,000$5,710,000Research and development expenses305,000-Stock based compensation490,000-Valuation allowance(6,987,000)(5,710,000)Net deferred tax assets$-$-  The 2006 increase in the valuation allowance was $1,277,000 (2005:  $795,000).  The Company has available net operating loss carry-forwards of approximately $18,213,000 for tax purposes to offset future taxable income, which expires commencing 2008 through to the year 2026. Pursuant to the Tax Reform Act of 1986, annual utilization of the Companys net operating loss carry-forwards may be limited if a cumulative change in ownership of more than 50% is deemed to occur within any three-year period.  A reconciliation between the statutory federal income tax rate (34%) and the effective rate of income tax expense for each of the years during the years ended December 31 follows:  20062005Statutory federal income tax rate-34.0%-34.0%Valuation allowance34.0%26.1%Stock offering costs0.0%7.9%Effective income tax rate0.0%0.0%  33   ITEM 8: CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  We have had no disagreements with our certified public accountants with respect to accounting practices, procedures or financial disclosure. ITEM 8a: CONTROLS AND PROCEDURES  Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.  An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Securities Exchange Act of 1934 (the Exchange Act) Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.  Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons associated with us to disclose material information otherwise required to be set forth in our periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.  There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date that management, including the Chief Executive Officer and the Chief Financial Officer, completed their evaluation  ITEM 8b: OTHER INFORMATION  None.    34   ITEM 9: DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT  Set forth below is certain information regarding each of the directors and officers of the Company:  Greg Wujek  President, Chief Executive Officer, Director  Mr. Greg Wujek earned his Bachelors degree in Science from Illinois State University in 1986.  From November 2000 to May 2005, Mr. Wujek was employed by Andrx Laboratories.  During his tenure at Andrx Laboratories, Mr. Wujek managed a team of over 450 individuals, and held several positions, including Vice President of Business Development, Vice President of Sales, as well as Vice President of Managed Care. During June 2005 to September 2005, Mr. Wujek performed independent consulting services for branded pharmaceutical companies.  Consulting services ranged from sales management training, optimizing sales, managed care, and sales operations.  From September 2005 to March 2006, Mr. Wujek was employed by Savient Pharmaceuticals,  where he held the position of Vice President, Sales, and was responsible for sales, operations, training, and managed care.  Mr. Wujek joined the Company as President, Chief Executive Officer and Director on April 3, 2006.  Gary Branning  Director  Mr. Branning received his Bachelor of Science degree in Business Administration from Wagner College, on Staten Island, NY, and an MBA in finance from Fairleigh Dickinson University. In 2001, Mr. Branning joined Pharmacia Corporation.  Mr. Branning was the Executive Director of Managed Markets Marketing for Pharmacia Corporation.  The Marketing Unit of the Managed Markets Marketing of Pharmacia was a service organization focused on the development of brand programs, value added services and health management programs in managed markets.  In 2003, Mr. Branning joined Managed Market Resources, a health care consulting and medical communications company as Managing Partner and Senior Vice President of Managed Market Resources.  Mr. Brannings responsibilities included strategic consulting, new product development, business development, and executing Managed Market Resources sales and marketing plans. Mr. Branning joined the Company as a Director on September 13, 2006.  Rick Henson  Director  Mr. Henson earned his Bachelors degree in Education from Wichita State University.  In 2001, Mr. Henson joined Andrx Corporation, where he held the position of Senior Vice President of Sales, and was responsible for sales, operations, and training. During his tenure at Andrx Corporation, Mr. Henson built a 500-plus person branded sales division from inception and increased division sales to $120 million.  Andrx Laboratories was recently acquired by Watson Pharmaceuticals for $1.9 billion.  In 2005, Mr. Henson joined Vernalis Pharmaceuticals, Inc. as a consultant to start up a US commercial operation and was responsible for strategic planning, training, sales management and product acquisition.  In 2006, Mr. Henson accepted the position of Vice President of Sales with complete oversight of sales function for Vernalis US.  Mr. Henson joined the Company as a Director on September 13, 2006.  Harmel S. Rayat - Secretary, Treasurer, Chief Financial Officer, Director  Mr. Rayat has been in the brokerage and venture capital industry since 1981. Between January 1993 and April 2001, Mr. Rayat served as the president of Hartford Capital Corporation, a company that provided financial consulting services to a wide range of emerging growth corporations. From April 2001 through January 2002, Mr. Rayat acted as an independent consultant advising small corporations and since January 2002, he has been president of Montgomery Asset Management Corporation, a privately held firm providing financial consulting services to emerging growth corporations. Mr. Rayat has served, and continues to serve, as a director, officer and majority shareholder of a number of publicly traded and privately held corporations, including, HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp., and International  Energy, Inc. Mr. Rayat has served as one of our directors since December 4, 2000. In 2002, Mr. Rayat was appointed secretary and treasurer. On August 12, 2005, Mr., Rayat was appointed our president and chief executive and financial officer, as well as our principal accounting officer.  On April 3, 2006, Mr. Rayat resigned as president and chief executive officer. On September 13, 2006, Mr. Rayat was appointed secretary and treasurer.  There are no family relationships among or between any of our officers and directors.  During the past five years, except as set forth below, none of our directors, executive officers, promoters or control persons has been:  (a) the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;   35   (b) convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);  (c) subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or  (d) found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.  Mr. Harmel S. Rayat, EquityAlert.com, Inc., Innotech Corporation and Mr. Bhupinder S. Mann, a former part-time employee of ours (collectively the respondents), consented to a cease-and-desist order pursuant to Section 8A of the Securities Act of 1933. The matter related to the public resale by EquityAlert of securities received as compensation from or on behalf of issuers for whom EquityAlert and Innotech provided  public relation and stock advertising services; Mr. Rayat was the president of Innotech and Equity Alert was the wholly-owned subsidiary of Innotech at the time.  The U.S. Securities & Exchange Commission contended and alleged that Equity Alert had received the securities from persons controlling or controlled by the issuer of the securities, or under direct or indirect common control with such issuer with a view toward further distribution to the public; as a result, the U.S. Securities & Exchange Commission further alleged that the securities that Equity Alert had received  were restricted securities, not exempt from registration, and hence could not be resold to the public within a year of their receipt absent registration; and, accordingly,  the U.S. Securities & Exchange Commission further alleged, since Equity Alert effected the resale within a year of its acquisition of the securities, without registration, such resale violated Sections 5(a) and 5(c) of the Securities Act.  Without admitting or denying any of the findings and/or allegations of the U.S. Securities & Exchange Commission the respondents agreed, on October 23, 2003 to cease and desist, among other things, from committing or causing any violations and any future violations of Section 5(a) and 5(c) of the Securities Act of 1933.  EquityAlert.com, Inc. and Innotech Corporation agreed to pay disgorgement and prejudgment interest of $31,555.14.  Compliance With Section 16(a) of the Exchange Act  Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's directors, officers and persons who own more than 10 percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("the Commission"). Directors, officers and greater than 10 percent beneficial owners are required by applicable regulations to furnish the Company with copies of all forms they file with the Commission pursuant to Section 16(a). Based solely upon a review of the copies of the forms furnished to the Company, the Company believes that during fiscal 2006, the Section 16(a) filing requirements applicable to its directors and executive officers were satisfied.  ITEM 10:  EXECUTIVE COMPENSATION  Remuneration and Executive Compensation  The following table shows, for the three-year period ended December 31, 2006, the cash compensation paid by the Company, as well as certain other compensation paid for such year, to the Company's Chief Executive Officer and the Company's other most highly compensated executive officers. Except as set forth on the following table, no executive officer of the Company had a total annual salary and bonus for 2006 that exceeded $100,000.  Summary Compensation Table  Securities  Underlying Name and Options All Other Principal Position               Year Salary Bonus Other Granted Compensation  Greg Wujek 2006 $161,250 $0 $0 2,000,000 $0 President, CEO 2005 $0 $0 $0  0 $0 and Director 2004 $0  $0 $0 0 $0   36   Harmel S. Rayat 2006 $0 $0 $3,900 0 $0 Secretary, Treasurer 2005 $0 $0 $1,800 0 $0 and Director 2004 $0  $0 $3,500 0 $0  Gary Branning  2006 $0 $0 $1,200 0 $0 Director  2005 $0 $0 $0  0 $0  2004 $0  $0 $0  0 $0  Rick Henson  2006 $0 $0 $1,200 0 $0 Director  2005 $0 $0 $0  0 $0  2004 $0  $0 $0  0 $0  Indy Panchi (1)  2006 $0 $0 $2,850 0 $0 Director  2005 $0 $0 $2,400 0 $0  2004 $0  $0 $4,700 0 $0  Derek Cooper, (2) 2006 $0 $0 $2,850 0 $0 Secretary, Treasurer 2005 $0 $0 $1,800 0 $0 and Director 2004 $0  $0 $3,500 0 $0  (1)  Mr. Indy Panchi resigned as a Director on September 13, 2006  (2)  Mr. Derek Cooper resigned as a Secretary, Treasurer and Director on September 13, 2006  Stock Option Grants in Last Fiscal Year  Shown below is further information regarding employee stock options awarded during 2006 to the named officers and directors:  Number of % of Total Securities Options Granted Underlying to Employees Exercise Expiration Name Options in 2006 Price ($/sh) Date  Greg Wujek 2,000,000 100 $0.52 August 1, 2016 Harmel Rayat 0 0 n/a n/a Gary Branning 0 0 n/a n/a Rick Henson 0 0 n/a n/a Indy Panchi (1) 0 0 n/a n/a Derek Cooper (2) 0 0 n/a n/a  (1)  Mr. Indy Panchi resigned as a Director on September 13, 2006  (2)  Mr. Derek Cooper resigned as a Secretary, Treasurer and Director on September 13, 2006   37   Aggregated Option Exercises During Last Fiscal Year and Year End Option Values  The following table shows certain information about unexercised options at year-end with respect to the named officers and directors:  Common Shares Underlying Unexercised      Value of Unexercised In-the-money  Options on December 31, 2006 Options on December 31, 2006 Name Exercisable Unexercisable Exercisable Unexercisable  Greg Wujek 0 2,000,000 0 $1,060,000 Harmel Rayat 0 0 0 0 Gary Branning 0 0 0  0 Rick Henson 0 0 0  0 Indy Panchi (1) 0 0 0 0 Derek Cooper (2) 0 0 0 0  (1)  Mr. Indy Panchi resigned as a Director on September 13, 2006  (2)  Mr. Derek Cooper resigned as a Secretary, Treasurer and Director on September 13, 2006  Changes in Control  There are no understandings or agreements, aside from the transaction completed and described under Certain Relationships and Related Transactions, known by management at this time which would result in a change in control of the Company.  If such transactions are consummated, of which there can be no assurance, the Company may issue a significant number of shares of capital stock which could result in a change in control and/or a change in the Companys current management.  ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  The following table sets forth, as of March 21, 2007, the beneficial ownership of the Company's Common Stock by each director and executive officer of the Company and each person known by the Company to beneficially own more than 5% of the Company's Common Stock outstanding as of such date and the executive officers and directors of the Company as a group.  Number of Shares Person or Group of Common Stock Percent  Harmel S. Rayat (1) 117,561,471 62% 216-1628 West First Avenue Vancouver, B.C. V6J 1G1 Canada  Greg Wujek (2) 2,000,000 0% 100 Overlook Drive, 2nd Floor Princeton, NJ  08540  Gary Branning  0 0% 100 Overlook Drive, 2nd Floor Princeton, NJ  08540  Rick Henson 0 0% 100 Overlook Drive, 2nd Floor Princeton, NJ  08540  Indy Panchi (3) 0 0% 216-1628 West First Avenue Vancouver, B.C.  V6J 1G1 Canada   38   Derek Cooper (4)  0 0% 216-1628 West First Avenue Vancouver, B.C.  V6J 1G1 Canada  Directors and Executive Officers 119,561,471 62% as a group (6 persons)  (1) Includes 31,300 shares held by Tajinder Chohan, Mr. Rayat's wife. Additionally, other members of Mr. Rayat's family hold shares and share purchase warrants. Mr. Rayat disclaims beneficial ownership of the shares and share purchase warrants beneficially owned by his wife and other family members.  (2) 2,000,000 stock options were granted on August 1, 2006, which may be acquired pursuant to options granted and exercisable under the Company's stock option plans.  (3)  Mr. Indy Panchi resigned as a Director on September 13, 2006  (4)  Mr. Derek Cooper resigned as a Secretary, Treasurer and Director on September 13, 2006  ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  Management Fees:  During the year ended December 31, 2006, the Company charged $18,300 (2005: $6,000) to operations for director fees incurred for services rendered by directors. As of December 31, 2006, the Company owed $nil (2005: $63,000) for outstanding management fees owed to a director and major shareholder, which is included in accounts payable  related parties.  Notes Payable and Accrued Interest:  Notes Payable totaled $1,213,776 as at December 31, 2006 (2005: $1,703,776), representing unsecured loans of $140,000 (8.25%), $323,776 (8.50%) and $750,000 (8.50%) due to Mr. Harmel S. Rayat, a director and majority shareholder of the Company. During the year ended December 31, 2006, the Company repaid $490,000 to the director and majority shareholder with the accrued interest of $51,785. The entire principal and accrued interest is due and payable on demand. Accrued and unpaid interest on these notes as of December 31, 2006, amounted to $193,847 (December 31, 2005 - $133,228) and is included in accounts payable - related parties.  Rent: The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by a director and majority shareholder. The Company pays a monthly rent of C$3,200 effective from April 1, 2006. The Company paid rent of $25,555 (2005: $nil) for the year ended December 31, 2006.  Mr. Harmel S. Rayat is an officer, director and majority stockholder of the Company.  He is also an officer, director and majority shareholder of each of HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp. and International Energy, Inc.  All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.  ITEM 13:  EXHIBITS  (a)  The following exhibits are filed as part of this Annual Report:  31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)  31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)  32.1 Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  32.2 Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   39   (b)  During the Companys fourth fiscal quarter, there were no reports filed on Form 8-K  October 16, 2006:  PhytoMedical Technologies, Inc. issued a news release to announce the addition of pharmacology researcher and drug discovery and development expert, Dr. Jay R. Wiggins, to the Companys Scientific Advisory Board.  December 7, 2006:  PhytoMedical Technologies, Inc. issued a news release to announce plans to expedite the development of its new class of cinnamon-derived 'polyphenolic' compounds, which possess unique antioxidant and insulin enhancing qualities, distinct from existing classes of drugs for diabetes.  ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES  The firm of Ernst & Young, LLP served as the Company's independent accountants from May 5, 2005 until their dismissal in March 2006. The firm of Peterson Sullivan, PLLC currently serves as the Companys independent accountants.  The Board of Directors of the Company, in its discretion, may direct the appointment of different public accountants at any time during the year, if the Board believes that a change would be in the best interests of the stockholders.  The Board of Directors has considered the audit fees, audit-related fees, tax fees and other fees paid to the Company's accountants, as disclosed below, and had determined that the payment of such fees is compatible with maintaining the independence of the accountants.  Audit Fees:  The aggregate  fees,  including  expenses,  billed by the Company's principal accountant in connection with the audit of our consolidated  financial statements  for the most recent  fiscal year and for the review of our financial information  included in our Annual  Report on Form  10-KSB and our  quarterly reports on Form  10-QSB  during the fiscal  years  ending  December  31, 2006 and December 31, 2005 were $9,851 and $17,221 respectively.  Tax  fees:  The aggregate fees billed to the Company for tax compliance, tax advice and tax  planning by the Companys principal accountant for fiscal 2006 and 2005 were $0.  All Other Fees: The aggregate fees, including expenses, billed for all other services rendered to the Company by its principal accountant during year 2006 and 2005 were $0.  The Company does not currently have an audit committee.  40   SIGNATURES  Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,  thereunto duly  authorized on this 30th day of March, 2007.   PhytoMedical Technologies, Inc.    /s/ Greg Wujek  Greg Wujek  President and CEO    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons  on  behalf of the registrant and in capacities and on the dates indicated.    Signature Title Date  /s/ Greg Wujek President, Chief Executive March 30, 2007 Greg Wujek Officer and Director   /s/ Harmel S. Rayat Secretary, Treasurer, March 30, 2007 Harmel S. Rayat Chief Financial Officer, Principal Accounting Officer and Director   /s/ Gary Branning Director March 30, 2007 Gary Branning   /s/ Rick Henson Director March 30, 2007 Rick Henson  41