**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-QSB**





**(Mark
      One)**





x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the quarterly period ended: March 31, 2007**





o
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT**




**For
      the transition period ____________ to ____________**





**Commission
      file number: 000-51248**





**OPTIGENEX
      INC.**


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





**Delaware**
            **20-1678933**(State
                or other jurisdiction of
            (IRS
                Employer I.D. Number)incorporation
                or organization)**Optigenex
                Inc.,750 Lexington Avenue 6****th****FloorNew York, NY 10022**
            **10022**(Address
                of principal executive offices)
            (Zip
                Code)




**Registrant’s
      telephone number: (212) 905-0189**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes oNo x





There
      were 11,268,316 shares of Common Stock outstanding as of May 14,
      2007.





Transitional
      Small Business Disclosure Format (check one): Yes oNo x







**OPTIGENEX
      INC.**





**Table
      of Contents**





PART
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Condensed
                Financial Statements (Unaudited)Condensed
                Balance Sheet as of March 31, 2007
            
            1Condensed
                Statements of Operations for the three months ended March 31, 2007
                and
                2006
            
            2Condensed
                Statements of Cash Flows for the three months ended March 31, 2007
                and
                2006
            
            3Notes
                to Condensed Financial Statements
            
            4Item
                2.
            Management's
                Discussion and Analysis of Financial Condition
            
            10Item
                3.
            Controls
                and Procedures
            
            16PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            
            16Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            16Item
                3.
            Defaults
                Upon Senior Securities
            
            16Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            16Item
                5.
            Other
                Information
            
            16Item
                6.
            Exhibits
            
            16SIGNATURES
            
            17










**PART
      1. FINANCIAL INFORMATION**





**Item
      1.**  **Condensed
      Financial Statements - Unaudited**





**OPTIGENEX
      INC.**





**Condensed
      Balance Sheet**





**March
                31,**
              **2007****(Unaudited)****ASSETS**Current
                assets:Cash
            
            $
            162,053Accounts
                receivable, net
            
            
            41,372Inventories,
                net
            
            
            879,636Prepaid
                expenses and other current assets
            
            
            54,165Total
                current assets
            
            
            1,137,226Property
                and equipment, net
            
            
            59,314Intangible
                assets, net
            
            
            1,441,326Other
                assets
            
            
            103,333**Total
                Assets**
            
            $
            2,741,199**LIABILITIES
                AND STOCKHOLDERS' DEFICIENCY**Current
                liabilities:Accounts
                payable
            
            $
            276,968Accrued
                expenses
            
            
            327,061Total
                current liabilities
            
            
            604,029Callable
                secured convertible notes, net of debt discount of
                $2,896,915including
                embedded derivative liability
            
            
            6,674,770Common
                stock warrants
            
            
            1,200,836Total
                liabilities
            
            
            8,479,635Stockholders'
                deficiency:Preferred
                stock - $0.001 par value; 5,000,000 shares authorized,none
                issued
            
            
            -Common
                stock - $0.001 par value; 100,000,000 shares authorized,11,268,316
                shares issued and outstanding
            
            
            11,268Additional
                paid-in capital
            
            
            18,066,068Accumulated
                deficit
            
            
            (23,815,772
            )Total
                stockholders’ deficiency
            
            
            (5,738,436
            )**Total
                Liabilities and Stockholders’ Deficiency**
            
            $
            2,741,199




See
      notes to condensed financial
      statements


1


**OPTIGENEX
      INC.**





**Condensed
      Statements of Operations - Unaudited**





Three
                Months Ended
              March
                31,2007
            
            2006Net
                sales
            
            $
            117,569
            
            $
            38,606Cost
                of sales
            
            
            43,836
            
            
            28,025Gross
                profit
            
            
            73,733
            
            
            10,581Selling,
                general and administrative
            
            
            401,662
            
            
            1,249,950Loss
                from operations
            
            
            (327,929
            )
            
            (1,239,369
            )Other
                (income) expense:Interest
                expense, net
            
            
            1,324,554
            
            
            660,072Equity
                in loss from joint ventures
            
            
            -
            
            
            14,294Net
                change in fair value of common stockwarrants
                and derivative liability
            
            
            (761,811
            )
            
            (339,144
            )Net
                loss
            
            $
            (890,672
            )
            $
            (1,574,591
            )Net
                loss per common share - basic and diluted
            
            $
            (0.08
            )
            $
            (0.15
            )Weighted
                average number of commonshares
                outstanding - basic and diluted
            
            
            11,150,086
            
            
            10,580,234





See
      notes to condensed financial
      statements


2


**OPTIGENEX
      INC.**





**Condensed
      Statements of Cash Flows - Unaudited**





**Three
                Months Ended**
              **March
                31,****2007**
            
            **2006****Cash
                flows from operating activities:**Net
                cash used in operating activities
            
            $
            (241,100
            )
            $
            (1,259,217
            )**Cash
                flows from investing activities:**Patent
                costs
            
            
            -
            
            
            (5,621
            )Net
                cash used in investing activities
            
            
            -
            
            
            (5,621
            )**Cash
                flows from financing activities:**Proceeds
                from the sale of convertible notes
            
            
            250,000
            
            
            1,350,000Principal
                payments under convertible notes
            
            
            -
            
            
            (115,555
            )Deferred
                financing costs
            
            
            -
            
            
            (10,000
            )Net
                cash provided by financing activities
            
            
            250,000
            
            
            1,224,445**Net
                increase (decrease) in cash**
            
            
            8,900
            
            
            (40,393
            )**Cash
                - beginning of period**
            
            
            153,153
            
            
            969,289**Cash
                - end of period**
            
            $
            162,053
            
            $
            928,896**Supplemental
                schedule of cash flow information:**Cash
                paid for interest
            
            $
            -
            
            $
            70,592**Supplemental
                schedule of non-cash investing and financing
                activities:**Debt
                discount in connection with recordingvalue
                of embedded derivative liabilityfeature
            
            $
            312,500
            
            $
            1,350,000Allocation
                of convertible note proceeds to warrants
            
            $
            800,000
            
            $
            21,094Common
                stock issued in connection with conversion ofconvertible
                notes
            
            $
            2,043
            
            $
            51,600




See
      notes to condensed financial
      statements


3


**Optigenex
      Inc. - Notes to Condensed Financial Statements March 31, 2007
      (Unaudited)**


**Note
      1.**  **Basis
      of Presentation**





The
      accompanying unaudited condensed interim financial statements of Optigenex
      Inc.
      (the “Company”) have been prepared in accordance with generally accepted
      accounting principles for interim financial information and the requirements
      of
      Item 310(b) of Regulation S-B. Accordingly, certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with generally accepted accounting principles have been condensed or omitted
      pursuant to the rules and regulations of the Securities and Exchange Commission.





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ from those estimates. The
      unaudited condensed interim financial statements for the three month periods
      ended March 31, 2007 and 2006 include all adjustments (consisting only of those
      of a normal recurring nature) necessary for a fair statement of the results
      of
      the interim period.





The
      results of operations for the three month period ended March 31, 2007 is not
      necessarily indicative of the results of operations expected for the year ending
      December 31, 2007. These financial statements should be read in conjunction
      with
      the audited financial statements as of December 31, 2006 and for the year then
      ended and the notes thereto, which are contained in the Company’s Form 10-KSB
      for the year ended December 31, 2006 filed with the Securities and Exchange
      Commission.





The
      Company maintains cash in bank deposit accounts which, at times, may exceed
      federally insured limits. The Company has not experienced any losses on these
      accounts.





Accounts
      receivable are reported at their outstanding unpaid principal balances reduced
      by an allowance for doubtful accounts. The Company estimates doubtful accounts
      based on historical bad debts, factors related to specific customers' ability
      to
      pay and current economic trends. The Company writes off accounts receivable
      against the allowance when a balance is determined to be
      uncollectible.





Inventories
      are stated at the lower of cost, determined by the average cost method, or
      market. Inventories consists of (i) raw materials that are purchased from a
      sole
      supplier in Brazil; (ii) the Company’s proprietary compound known as AC-11 which
      is manufactured in Brazil; and (iii) finished nutritional supplement and skin
      care products that are produced by a contract manufacturer in the United States.
      The Company periodically reviews its inventories for evidence of spoilage and/or
      obsolescence and removes these items from inventory at their carrying value.
      An
      inventory valuation allowance is established when management determines that
      quantities on hand may exceed projected demand prior to the expiration date
      of
      the inventory item.





The
      Company reviews long-lived assets for impairment whenever events or changes
      in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. An asset is considered to be impaired when the sum of the
      undiscounted future net cash flows expected to result from the use of the asset
      and its eventual disposition is less than its carrying amount. The amount of
      impairment loss, if any, is measured as the difference between the net book
      value of the asset and its estimated fair value.





Management
      does not believe that any recently issued, but not yet effective, accounting
      standards if currently adopted would have a material effect on the accompanying
      financial statements.




4


**Optigenex
      Inc. - Notes to Condensed Financial Statements March 31, 2007
      (Unaudited)**




**Note
      2.**  **Loss
      per Share**





Basic
      loss per share is computed by dividing net loss by the weighted-average number
      of shares of common stock outstanding during the period. Diluted earnings per
      share gives effect to dilutive options, warrants and other potential common
      stock outstanding during the period. Potential common stock, consisting of
      options and warrants outstanding are shown in the table below:





Potential
      common stock consists of the following:





At
                March 31,
            
            2007
            
            2006Stock
                options
            
            
            1,664,605
            
            
            4,801,605Common
                stock warrants
            
            
            120,891,918
            
            
            891,918Common
                stock issuable upon
              conversion
                of convertible notes (1)
            
            
            510,331,222
            
            
            38,328,450Total
            
            
            632,887,745
            
            
            44,021,973





(1)
      At
      March 31, 2007 and 2006 the Company had Callable Secured Convertible Notes
      outstanding of $4,592,981 and $3,832,845, respectively. The Notes are
      convertible into shares of the Company's common stock at the Note Holders'
      option, at the lower of (i) $3.20 per share or (ii) 60% of the average of the
      three lowest intra-day trading prices for the common stock as quoted on the
      Over-the-Counter Bulletin Board for the 20 trading days preceding the conversion
      date. At March 31, 2007 and 2006 the Notes would have been convertible into
      shares of the Company’s common stock at a price of $0.009 and $0.10,
      respectively. See Note 5 for a complete discussion of the Callable Secured
      Convertible Notes.





The
      potential common stock has not been included in the computation of diluted
      loss
      per share, as the effect would be anti-dilutive.





**Note
      3.**  **Inventories**





Inventories
      consisted of the following components at March 31, 2007:





Raw
                materials
            
            $
            791,241Finished
                goods
            
            
            1,161,017Inventory
                reserve
            
            
            (1,072,622
            )$
            879,636





The
      Company recorded an inventory valuation allowance of $1,072,622 at December
      31,
      2006. This allowance relates to quantities of raw materials and finished goods
      that management determined would not be sold prior to their respective
      expiration dates. The amount of the inventory allowance was equal to the book
      value of the inventory items at December 31, 2006 which was $691,355 for raw
      materials and $381,267 for finished goods.





**Note
      4.**  **Stockholders’
      (Deficiency)**





On
      February 16, 2007, the Note Holders converted a total of $723 of Convertible
      Notes into 109,850 shares of the Company's common stock at a price of $0.0066
      per share.





On
      January 29, 2007, the Note Holders converted a total of $1,320 of Convertible
      Notes into 200,000 shares of the Company's common stock at a price of $0.0066
      per share.




5


**Optigenex
      Inc. - Notes to Condensed Financial Statements March 31, 2007
      (Unaudited)**




**Note
      5.**  **Callable
      Secured Convertible Notes and Common Stock Warrants**





On
      February 14, 2007, the Company entered into a Securities Purchase Agreement
      (the
      "Securities Purchase Agreement") with New Millennium Capital Partners II, LLC,
      AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
      (collectively, the "Note Holders"). Under the terms of the Securities Purchase
      Agreement, the Note Holders purchased an aggregate of (i) $250,000 in callable
      secured convertible notes (the "notes") and (ii) issued warrants to purchase
      20,000,000 shares of the Company’s common stock (the "warrants").





The
      notes
      bear interest at 8% per annum and mature on February 14, 2010. The Company
      is
      not required to make any principal payments during the term of the notes. The
      notes are convertible into shares of the Company's common stock at the Note
      Holders' option, at the lower of (i) $0.10 per share or (ii) 60% of the average
      of the three lowest intra-day trading prices for the Company’s common stock as
      quoted on the Over-the-Counter Bulletin Board for the 20 trading days preceding
      the conversion date. The full principal amount of the notes is due upon the
      occurrence of an event of default. The warrants are exercisable for a period
      of
      seven years from the date of issuance and have an exercise price of $0.07 per
      share.





The
      Company committed to registering the shares of common stock underlying the
      Notes
      upon written demand of the Note Holders (“Demand Notice”). The Company is
      required to file a registration statement within forty-five (45) days from
      the
      date on which it receives the Demand Notice otherwise it may be subject to
      penalty provisions. There are also penalty provisions should the filing not
      be
      declared effective within 120 days from the date on which the Company receives
      the Demand Notice.





Prior
      to
      the sale of notes and issuance of warrants on February 14, 2007 described above,
      the Company sold an aggregate of $4,515,000 of notes and issued warrants to
      purchase an aggregate of 100,625,000 shares of its common stock to the same
      Note
      Holders. These sales were made in four installments as follows:





·
            On
                August 31, 2005, the Company sold $1,300,000 of notes and issued
                five-year
                warrants to purchase 203,124 shares of its common stock at an exercise
                price of $4.50 per share (the "First Installment"). The Company received
                net cash proceeds of $1,165,334 after the payment of transaction
                costs of
                $100,000 and prepaid interest of $34,666. The transaction costs were
                capitalized and are being expensed over the three year term of the
                notes.
                The prepaid interest represented four months of interest on the notes
                and
                was amortized to interest expense
                accordingly.





·
            On
                October 19, 2005, the Company sold an additional $1,350,000 of notes
                and
                issued five-year warrants to purchase 210,938 shares of its common
                stock
                at an exercise price of $4.50 per share (the "Second Installment").
                The
                Company received net cash proceeds of $1,304,000 after the payment
                of
                transaction costs of $10,000 and prepaid interest of $36,000. The
                transaction costs were capitalized and are being expensed over the
                three
                year term of the notes. The prepaid interest represented four months
                of
                interest on the notes and was amortized to interest expense accordingly.





·
            On
                February 17, 2006, the Company sold an additional $1,350,000 of notes
                and
                issued five-year warrants to purchase 210,938 shares of its common
                stock
                at an exercise price of $4.50 per share (the "Third Installment").
                The
                Company received net cash proceeds of $1,304,000 after the payment
                of
                transaction costs of $10,000 and prepaid interest of $36,000. The
                transaction costs were capitalized and are being expensed over the
                three
                year term of the notes. The prepaid interest represented four months
                of
                interest on the notes and was amortized to interest expense accordingly.





·
            On
                September 15, 2006, the Company sold an additional $515,000 of notes
                and
                issued seven-year warrants to purchase 100,000,000 shares of its
                common
                stock at an exercise price of $0.10 per share (the "Fourth Installment").
                The Company received net cash proceeds of $489,800 after the payment
                of
                transaction costs of $10,200 and key-man life insurance of $15,000.
                The
                transaction costs were capitalized and are being expensed over the
                three
                year term of the notes. The key-man life insurance is being expensed
                over
                the one-year term of the policy.





In
      each
      of the four installments described above, the notes bear interest at 8% per
      annum and have a maturity date of three years from the respective date of each
      issuance. The Company is not required to make any principal payments during
      the
      term of the notes. The Notes are convertible into shares of the Company's common
      stock at the Note Holders' option, at the lower of (i) $3.20 per share ($.10
      per
      share for the fourth installment) or (ii) 60% of the average of the three lowest
      intra-day trading prices for the Company’s common stock as quoted on the
      Over-the-Counter Bulletin Board for the 20 trading days preceding the conversion
      date. The full principal amount of the notes is due upon the occurrence of
      an
      event of default.





The
      conversion price of the notes and the exercise price of the warrants will be
      adjusted in the event that the Company issues common stock at a price below
      the
      initial fixed conversion price of $3.20 per share ($.10 per share for the fourth
      installment), with the exception of any shares of common stock issued in
      connection with the notes. The conversion price of the notes and the exercise
      price of the warrants may also be adjusted in certain circumstances such as
      if
      the Company pays a stock dividend, subdivides or combines outstanding shares
      of
      common stock into a greater or lesser number of shares, or takes such other
      actions as would otherwise result in dilution of the Note Holders'
      position.




6


**Optigenex
      Inc. - Notes to Condensed Financial Statements March 31, 2007
      (Unaudited)**




The
      Note
      Holders have contractually agreed to restrict their ability to convert their
      notes or exercise their warrants and receive shares of the Company's common
      stock such that the number of shares of common stock held by the Note Holders
      and their affiliates after such conversion or exercise does not exceed 4.99%
      of
      the then issued and outstanding shares of common stock. In addition, the Company
      has granted the Note Holders a security interest in substantially all of the
      Company's assets.





The
      Company has the right to prepay the entire outstanding balance of the notes
      under certain circumstances at a premium of 50%. The Company also has the right
      to prepay a portion of the notes (“Partial Call Option”) each month in an amount
      equal to 104% of the then outstanding principal balance divided by 36, plus
      one
      month’s interest. The Company may only prepay the notes in the event that no
      event of default exists, there are a sufficient number of shares available
      for
      conversion of the notes and the market price is at or below $3.20 per share.
      This partial call option has the effect of preventing the Note Holders from
      converting their notes into shares of the Company’s common stock in the
      succeeding month.





The
      Company committed to registering the shares of common stock underlying the
      notes
      in sold in the fourth installment upon written demand of the Note Holders
      (“Demand Notice”). The Company is required to file a registration statement
      within forty-five (45) days from the date on which it receives the Demand Notice
      otherwise it may be subject to penalty provisions. There are also penalty
      provisions should the filing not be declared effective within 120 days from
      the
      date on which the Company receives the Demand Notice





In
      accounting for the convertible notes and warrants described above, the Company
      considered the guidance contained EITF 00-19, "Accounting for Derivative
      Financial Instruments Indexed To, and Potentially Settled In, a Company's Own
      Common Stock," and SFAS 133 "Accounting for Derivative Instruments and Hedging
      Activities." In accordance with the guidance provided in EITF 00-19, the Company
      determined that the conversion feature of the notes represents an embedded
      derivative since the note is convertible into a variable number of shares upon
      conversion and a liquidated damage clause contained in the Registration Rights
      Agreement requires the Company to pay liquidated damages of 2.0% per month
      of
      the outstanding principal amount of the notes, in cash or shares of common
      stock
      to the Note Holders in the event that a registration statement covering the
      shares underlying the notes and warrants is not declared effective within 120
      days from the date that the Note Holders notify the Company that such
      registration statement is required to be filed. Accordingly, the notes are
      not
      considered to be "conventional" convertible debt under EITF 00-19 and thus
      the
      embedded conversion feature must be bifurcated from the debt host and accounted
      for as a derivative liability.





The
      Company calculated the fair value of the embedded conversion feature related
      to
      the $250,000 of notes on February 14, 2007 using the Black-Scholes valuation
      model with the following assumptions: market price of $0.04; exercise price
      of
      $0.024, which represents a 40% discount to the market price on February 14,
      2007; risk free interest rate of 4.76%; expected volatility of 111% and an
      expected life of 3 years. The fair value of $312,500 was recorded as a debt
      discount, which reduced the carrying amount of the notes. To determine the
      liability related to the warrants, the Company calculated the fair value of
      the
      warrants on February 14, 2007 using the Black-Scholes valuation model with
      the
      following assumptions: market price of $0.04; exercise price of $0.07; risk
      free
      interest rate of 4.76%; expected volatility of 162% and an expected life of
      7
      years. The fair value of $800,000 was also recorded as a debt discount. The
      total debt discount attributable to the warrants and embedded conversion feature
      of $1,112,500 exceeded the principal amount of the notes by $862,500 and
      accordingly this excess amount was charged directly to interest expense on
      February 14, 2007. The remaining $250,000 of debt discount will be amortized
      over the three year term of the notes using the interest method.





*Re-measurement
      of the fair value of common stock warrants*





The
      Company is required to measure the fair value of the warrants on the date of
      each reporting period. The effect of this re-measurement is to adjust the
      carrying value of the liability related to the warrants. Accordingly, the
      Company measured the fair value of the 120,625,000 warrants at March 31, 2007
      using the Black-Scholes valuation model with the following assumptions: market
      price of common stock on the measurement date of $0.015, exercise price of
      warrants ranging from $0.07 to $4.50, risk-free interest rate of 4.51%, expected
      volatility ranging from 125% to 162% and expected lives ranging from 3.4 to
      6.9
      years. This resulted in an aggregate fair value for the 120,625,000 warrants
      of
      $1,200,836 at March 31, 2007. As a result of this re-measurement, the Company
      recorded non-cash other income of $600,211 for the three months ended March
      31,
      2007.




*Re-measurement
      of the fair value of the embedded conversion feature*




The
      Company is required to measure the fair value of the embedded conversion feature
      related to the $4,765,000 of notes on the date of each reporting period. The
      effect of this re-measurement is to adjust the carrying value of the liability
      related to the embedded conversion feature. Accordingly, the Company measured
      the fair value of the embedded conversion feature at March 31, 2007 using the
      Black-Scholes valuation model with the following assumptions: market price
      of
      common stock on the measurement date of $0.015, exercise price of $0.009 which
      represents a 40% discount to the market price on March 31, 2007; risk-free
      interest rate of 4.51%, expected volatility of 111% and expected lives ranging
      from 1.4 to 2.9 years. This resulted in an aggregate fair value for the embedded
      conversion feature of $4,978,704. As a result of this re-measurement, the
      Company recorded non-cash other income of $161,600 for the three months ended
      March 31, 2007.




7




**Optigenex
      Inc. - Notes to Condensed Financial Statements March 31, 2007
      (Unaudited)**


In
      total,
      for the three months ended March 31, 2007, the Company recorded non-cash other
      income of $761,811 related to the net change in the fair value of the
      liabilities related to the warrants and embedded conversion
      feature.





A
      summary
      of the Callable Secured Convertible Notes at March 31, 2007 is as follows:


Callable
                  Secured Convertible Notes; 8% per annum;due
                  August 31, 2008
              
              $
              1,127,981Callable
                  Secured Convertible Notes; 8% per annum;due
                  October 19, 2008
              
              $
              1,350,000Callable
                  Secured Convertible Notes; 8% per annum;due
                  February 17, 2009
              
              $
              1,350,000Callable
                  Secured Convertible Notes; 8% per annum;due
                  September 15, 2009
              
              $
              515,000Callable
                  Secured Convertible Notes; 8% per annum;due
                  February 14, 2010
              
              $
              250,000Debt
                  Discount, net of accumulated amortization of $1,628,884
              
              
              (2,896,915
              )Embedded
                  Derivative Liability
              
              
              4,978,704Total
              
              $
              6,674,770





As
      of
      March 31, 2007, the total amount of accrued but unpaid interest due under the
      Notes was $308,196. This amount is included in accrued expenses at March 31,
      2007.




**Note
      6.**  **Stock
      Based Compensation**





In
      July
      2004, the Board of Directors and then sole stockholder of the Company adopted
      the 2004 Stock Incentive Plan, pursuant to which 5,000,000 shares of common
      stock have been reserved for issuance. The plan provides for grants of incentive
      stock options, non-qualified stock options and shares of common stock to
      employees, non-employee directors and others. In the case of an incentive stock
      option, the exercise price cannot be less than the fair market value of the
      Company's common stock on the date of grant. Vesting schedules for options
      and
      stock awards and certain other conditions are to be determined by the Board
      of
      Directors or a committee appointed by the Board of Directors.




The
      fair
      value of each option award is estimated on the date of each option grant using
      the Black-Scholes option valuation model using the assumptions noted in the
      following table. Because the Company’s common stock has only traded publicly
      since April 2005, the expected volatility for the three months ended March
      31,
      2006 was estimated based on a sampling of similar size companies. The Company
      has limited history by which to estimate the expected holding period of the
      options, and therefore, has estimated that the expected holding period for
      all
      stock options granted is equal to the contractual life of the
      option.





Three
                months ended
              March
                31,2007(1)
            
            2006Expected
                life (in years)
            
            
            NA
            
            
            5Risk-free
                interest rate
            
            
            NA
            
            
            4.66
            %Volatility
            
            
            NA
            
            
            100
            %Dividend
                yield
            
            
            NA
            
            
            None





(1)
      The
      Company did not issue any stock options during the three months ended March
      31,
      2007.





The
      following table summarizes the stock option activity for the three months ended
      March 31, 2007:





Number
                of
              Options
            
            Weighted
              Average
              Exercise
                Price
            
            Aggregate
              Intrinsic
                ValueOutstanding
                at December 31, 2006
            
            
            1,664,605
            
            $
            2.44Granted
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Forfeited/Cancelled
            
            
            —
            
            
            —Outstanding
                at March 31, 2007
            
            
            1,664,605
            
            $
            2.44
            
            $
            209Exercisable
                at March 31, 2007
            
            
            1,664,605
            
            $
            2.44
            
            $
            209Vested
                and expected to vest at March 31, 2007
            
            
            1,664,605
            
            $
            2.44
            
            $
            209




8


**Optigenex
        Inc. - Notes to Condensed Financial Statements March 31, 2007
        (Unaudited)**


A
      summary
      of the status of the Company’s non-vested stock options as of March 31, 2007,
      and changes during the three months ended March 31, 2007, is presented
      below:





Number
                of
              OptionsNon-vested
                at December 31, 2006
            
            
            —Granted
            
            
            —Vested
            
            
            —Forfeited/Cancelled
            
            
            —Outstanding
                at March 31, 2007
            
            
            —





The
      Company did not issue any stock options during the three months ended March
      31,
      2007. The weighted average grant-date fair value of options granted during
      the
      three months ended March 31, 2006 was $0.08.




The
      following table summarizes information about stock options outstanding and
      exercisable at March 31, 2007:


Options
                Outstanding
            
            Options
                ExercisableExercise
                prices
            
            Number
              outstanding
            
            Weighted
              average
              remaining
              contractual
              life
                (years)
            
            Weighted
              average
              exercise
                price
            
            Number
              exercisable
            
            Weighted
              average
              exercise
                price$0.001
            
            
            9,210
            
            
            1.66
            
            $
            0.001
            
            
            9,210
            
            $
            0.001$0.01
            
            
            16,000
            
            
            2.50
            
            $
            0.01
            
            
            16,000
            
            $
            0.01$0.30
            
            
            100,000
            
            
            2.15
            
            $
            0.30
            
            
            100,000
            
            $
            0.30$1.00
            
            
            165,000
            
            
            .75
            
            $
            1.00
            
            
            165,000
            
            $
            1.00$2.00
            
            
            259,395
            
            
            .83
            
            $
            2.00
            
            
            259,395
            
            $
            2.00$3.00
            
            
            1,115,000
            
            
            2.42
            
            $
            3.00
            
            
            1,115,000
            
            $
            3.00$0.001
                - $3.00
            
            
            1,664,605
            
            
            1.99
            
            $
            2.44
            
            
            1,664,605
            
            $
            2.44





**Note
      7.**  **Going
      Concern**





The
      Company’s financial statements are presented on a going concern basis, which
      contemplates the realization of assets and satisfaction of liabilities in the
      normal course of business.





The
      Company has experienced a significant loss from operations as a result of its
      investment necessary to achieve its operating plan, which is long-range in
      nature. For the three months ended March 31, 2007, the Company had a net loss
      of
      $890,672 and had a stockholders’ deficit of $5,738,436 at March 31, 2007.





The
      Company’s ability to continue as a going concern is contingent upon its ability
      to secure additional financing, increase ownership equity and achieve profitable
      operations. In addition, the Company’s ability to continue as a going concern
      must be considered in light of the problems, expenses and complications
      frequently encountered by entrance into established markets and the competitive
      environment in which the Company operates.





The
      Company is pursuing financing for its operations and seeking additional private
      investments. In addition, the Company is seeking to expand its revenue base.
      Failure to secure such financing or to raise additional equity capital and
      to
      expand its revenue base may result in the Company depleting its available funds
      and not being able pay its obligations.





The
      financial statements do not include any adjustments to reflect the possible
      future effects on the recoverability and classification of assets or the amounts
      and classification of liabilities that may result from the possible inability
      of
      the Company to continue as a going concern.




9


**Item
      2.**  **Management’s
      Discussion and Analysis or Plan of Operation**





The
      following discussion and analysis should be read in conjunction with our
      Condensed Financial Statements and Notes thereto included elsewhere in this
      Form
      10-QSB.





**Cautionary
      Note Regarding Forward Looking Statements**





Certain
      statements in this Quarterly Report on Form 10-QSB constitute forward-looking
      statements for purposes of the securities laws. Forward-looking statements
      include all statements that do not relate solely to the historical or current
      facts, and can be identified by the use of forward looking words such as "may",
      "believe", "will", "expect", "expected", "project", "anticipate", "anticipated",
      "estimates", "plans", "strategy", "target", "prospects" or "continue". These
      forward looking statements are based on the current plans and expectations
      of
      our management and are subject to a number of uncertainties and risks that
      could
      significantly affect our current plans and expectations, as well as future
      results of operations and financial condition and may cause our actual results,
      performances or achievements to be materially different from any future results,
      performances or achievements expressed or implied by such forward-looking
      statements. Such risks and uncertainties include those set forth in our most
      recent report on Form 10-KSB. In making these forward-looking statements, we
      claim the protection of the safe-harbor for forward-looking statements contained
      in the Private Securities Reform Act of 1995. Although we believe that the
      expectations reflected in such forward-looking statements are reasonable, there
      can be no assurance that such expectations will prove to have been correct.
      We
      do not assume any obligation to update these forward-looking statements to
      reflect actual results, changes in assumptions, or changes in other factors
      affecting such forward-looking statements.





**Overview**





We
      develop and market proprietary products that feature our patented and wholly
      natural compound AC-11® (“AC-11”) as a core ingredient. AC-11 is a bioactive
      form of the medicinal herb known as *Uncaria
      tomentosa* which is
      indigenous to the Amazon rainforest and other tropical areas of South and
      Central America. AC-11 is manufactured for us by the Centroflora Group of Sao
      Paulo, Brazil, using a patented process that we own which delivers an alkaloid
      free, water soluble extract, standardized to an 8% carboxyl alkyl ester
      concentration. This manufacturing process takes place in a facility utilizing
      manufacturing equipment that we own. This facility complies with worldwide,
      voluntary standards for quality management.





We
      sell
      Activar AC-11, an oral nutritional supplement, direct to the consumer primarily
      through our Internet website www.AC-11.com. We do not sell Activar AC-11 through
      traditional wholesale or retail outlets. Activar AC-11 is a once daily capsule
      containing 350 mg of AC-11 with a suggested retail price of $29.95 for a one
      month supply. To increase consumer awareness of the benefits of Activar AC-11,
      we advertised the product in various magazines such as Glamour, Self and Allure
      in the first quarter of 2006. Activar AC-11 is manufactured for us by Garden
      State Nutritionals in New Jersey.





We
      sell
      AC-11 as a bulk ingredient to companies in the nutraceutical, cosmeceutical,
      personal care, skin care and hair care industries. Although we have executed
      several new bulk ingredient supply agreements with mass market retailers
      including Life Extension, an international distributor of private labeled of
      wellness products and LifeSpan International, a multi-level marketing
      organization, we continue to be highly dependent on a small base of customers
      that purchase bulk AC-11 as an ingredient and as such, these customers make
      purchases from us only when required to do so in connection with their
      manufacturing cycle and market demand. We rely on independent commissioned
      sales
      people, consultants and management to introduce us to prospective marketing
      partners and customers.





In
      the
      third quarter of 2005, we commenced development of a line of proprietary topical
      skin care products which contain AC-11 as an active ingredient. These skin
      care
      products consist of a day cream, night cream and eye cream. These products
      contain AC-11 as an ingredient and are designed to repair damage to the skin
      from multiple causes including; exposure to ultraviolet rays, stress and
      pollution while enhancing skin elasticity, and reducing wrinkles and other
      visible signs of aging. These products are intended to appeal to a targeted
      demographic audience which includes women ages 30 and over. Our skin care
      products are manufactured for us by Celmark, a division of Garden State
      Nutritionals.





In
      March
      2006, we began test marketing our skin care products direct to the consumer
      through a celebrity endorsed, 30-minute television infomercial. This infomercial
      cost approximately $400,000 to produce. Based on the initial test marketing
      results, we determined that the infomercial needed to be modified and
      subsequently re-tested. We spent approximately $50,000 to reproduce certain
      portions of the infomercial and we began testing the modified program in April.
      We purchased media time on various over -the-air and cable TV channels in a
      variety of local, regional and national markets. After evaluating the results
      of
      the revised infomercial, we determined that the level of product sales which
      were achieved did not warrant the expenditure of additional funds to purchase
      media time. As a result, we discontinued the airing of the infomercial in June
      2006. In 2007, we plan to reposition our skin care products to appeal to a
      higher socio-economic customer base by seeking to introduce these products
      to
      prestige retailers and international wholesale distributors.





We
      plan
      to seek other wholesale channels of distribution for our nutritional supplement,
      bulk AC-11 and skin care products such as multi-level marketing organizations
      and distribution networks both domestically and in certain international
      markets.


10




**Joint
      Ventures**





*PMO
      Products Inc.*





In
      November 2004, we entered into a joint venture with the two principals of Pierre
      Michel Salon, a leading New York City based hair salon to develop and market
      a
      line of professional hair care products that contain AC-11 as an ingredient.
      We
      contributed $25,000 in cash for a 50% ownership interest in a newly formed
      corporation named PMO Products Inc., a New York corporation ("PMO"). In August
      2005, PMO began selling these products exclusively to the Pierre Michel Salon
      in
      New York City.





On
      August
      31, 2006, we entered into an agreement with PMO whereby PMO purchased the
      Company’s 50% ownership interest in exchange for $6,841 in cash. The purchase
      price represented the net book value of our investment in PMO as of such date.
      As a result, we no longer have an ownership interest in PMO.





In
      connection with the sale of our ownership interest, we entered into a seven-year
      Supply Licensing Agreement with PMO which allows PMO to utilize our registered
      trademark AC-11® for the sale of hair-care products in North America, South
      America and Japan. PMO granted us a seven-year trademark license to use its
      trademark “RepHair, by Pierre Michel” for hair-care products sold in Europe, all
      of Asia (except Japan) and Australia.





*Prometheon
      Labs LLC*





In
      September 2005, we contributed $40,000 in cash for a 50% ownership interest
      in
      Prometheon Labs LLC, a New York limited liability company which was formed
      for
      the purpose of developing and marketing an oral nutritional supplement
      containing our ingredient AC-11. Our joint venture partner Prometheon Holding
      LLC, contributed $40,000 in cash for its 50% ownership interest in Prometheon
      Labs. In June 2006, we advanced an additional $5,000 in cash to Prometheon
      for
      working capital purposes.





On
      November 19, 2006, we entered into an agreement with our joint venture partner
      Prometheon Holding whereby Prometheon Holding purchased our 50% ownership
      interest in Prometheon Labs in exchange for $18,000 in cash. The purchase price
      exceeded the net book value of our investment in Prometheon Labs which on
      November 30, 2006, the date of closing of the transaction, was $0. As a result,
      we no longer have an ownership interest in Prometheon Labs.





The
      parties also entered into a five-year Supply and Trademark Licensing Agreement
      which allows Prometheon Labs to continue to develop and market oral nutritional
      supplement products containing AC-11.





**Critical
      Accounting Policies and Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires us 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 periods. On an on-going basis, we evaluate our estimates, including
      those related to collection of accounts receivable, inventory obsolescence,
      sales returns and non-monetary transactions such as stock based compensation,
      impairment of intangible assets and derivative liabilities related to
      convertible notes payable. We base our estimates on historical experience and
      on
      other assumptions that are believed to be reasonable under the circumstances.
      As
      the number of variables and assumptions affecting the probable future resolution
      of the uncertainties increase, these judgments become even more subjective
      and
      complex. Actual results may differ from these estimates.





We
      have
      identified the following critical accounting policies, described below, that
      are
      the most important to the portrayal of our current financial condition and
      results of operations.





**Accounts
      Receivable and Bad Debt Expense**





Accounts
      receivable are reported at their outstanding unpaid principal balances net
      of an
      allowance for doubtful accounts. We estimate bad debt expense based upon past
      experience related to specific customers' ability to pay and current economic
      conditions. At March 31, 2007, our allowance for doubtful accounts was
      approximately $27,000.




11


**Inventory**





Our
      inventories are stated at the lower of cost, determined by the average cost
      method, or market. Our inventories consists of (i) raw materials that we
      purchase from a sole supplier in Brazil; (ii) our proprietary compound known
      as
      AC-11 which is manufactured in Brazil; and (iii) our line of nutritional
      supplement and skin care products that are produced for us by a contract
      manufacturer in the United States. We periodically review our inventories for
      evidence of spoilage and/or obsolescence and we remove these items from
      inventory at their carrying value. During 2006, we incurred inventory write-offs
      of approximately $280,000 as follows: (i) $152,000 of obsolete inventory which
      consisted of finished nutritional supplements that reached their stated
      expiration date; (ii) $51,000 of obsolete packaging components related to our
      skin creams and discontinued nutritional supplements; and (iii) $77,000 of
      raw
      material inventory in connection with the production of finished bulk AC-11
      powder that did not conform to our specifications. An inventory valuation
      allowance is established when we determine that quantities of inventory items
      on
      hand may exceed projected demand prior to the expiration date of such inventory
      items. At December 31, 2006, we recorded an inventory allowance of approximately
      $1,073,000 related to the book value certain raw material and finished goods
      inventory items that we determined may not be sold prior to their respective
      expiration dates.




**Revenue
      Recognition**





Revenue
      is recognized when persuasive evidence of an arrangement exists, the product
      has
      been delivered, the rights and risks of ownership have passed to the customer,
      the price is fixed and determinable, and collection of the resulting receivable
      is reasonably assured. For arrangements that include customer acceptance
      provisions, revenue is not recognized until the terms of acceptance are met.





For
      our
      nutritional supplements, we provide a 100% money back guarantee on all unopened
      and undamaged products that are returned to us within 60 days of purchase.
      We
      estimate an allowance for product returns at the time of shipment based on
      historical experience. In 2006, product returns were negligible. We monitor
      our
      estimates on an ongoing basis and we may revise our allowance for product
      returns to reflect recent experience. To date, we have not made any significant
      changes in our allowance for returns. Products returned as a result of damage
      incurred during shipment are replaced at our cost. We do not estimate an
      allowance for returns due to damage as historically the level of returns has
      been negligible. For our bulk sales of AC-11, our standard return policy
      provides for a reimbursement of the full purchase price for any bulk AC-11
      that
      does not conform with the stated specifications. We must receive notification
      of
      a return request within 30 days from the date that the customer accepts
      delivery





**Intangibles**





We
      account for long-lived assets and certain identified intangible assets such
      as
      patents and trademarks in accordance with Statement of Financial Accounting
      Standard No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").
      Management reviews these long-lived assets for impairment whenever events or
      changes in circumstances indicate that the carrying amount of an asset may
      not
      be recoverable. An asset is considered to be impaired when the sum of the
      undiscounted future net cash flows expected to result from the use of the asset
      and its eventual disposition is less than its carrying amount. The amount of
      impairment loss, if any, is measured as the difference between the net book
      value of the asset and its estimated fair value. We monitor our projections
      of
      expected future net cash flows on an ongoing basis. If we determine that our
      projections require revision due to specific events such as a delayed product
      launch or a change in our product mix, or changes in economic conditions, we
      may
      incur additional write-offs. We recorded an impairment charge of approximately
      $935,000 in 2006.





**Derivative
      Instrument Liabilities related to Convertible Notes and Warrants**





In
      connection with the sale of convertible notes and warrants on August 31, 2005,
      October 17, 2005, February 17, 2006, September 15, 2006 and February 14, 2007,
      we determined that in accordance with EITF No. 00-19, "Accounting for Derivative
      Financial Instruments Indexed To, and Potentially Settled in, a Company's Own
      Stock," and SFAS 133, "Accounting for Derivative Instruments and Hedging
      Activities," that the conversion feature of the convertible notes represents
      an
      embedded derivative. As such, we are required to estimate the fair value of
      the
      embedded derivative and the warrants at of the end of each reporting period
      and
      these values are recorded as liabilities. We estimate fair value using the
      Black-Scholes option pricing model. This model requires us to make estimates
      such as the expected holding period, the expected future volatility of our
      common stock and the risk-free rate of return over the holding period. These
      estimates directly affect the reported amounts of the derivative instrument
      liabilities.





**Employee
      Stock Options and Stock Based Compensation**





Effective
      January 1, 2006, we adopted the provisions of Statement of Financial
      Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, (“SFAS
      123(R)”), which requires the measurement and recognition of compensation expense
      for all share-based payment awards to employees and directors based on estimated
      fair values. We adopted SFAS 123(R) using the modified prospective transition
      method. Under this transition method, share-based compensation expense
      recognized during 2006 included: (a) compensation expense for all
      share-based awards 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 expense for all share-based
      awards granted on or after January 1, 2006, based on the grant date fair value
      estimated in accordance with the provisions of SFAS 123(R). In accordance with
      the modified prospective transition method, our consolidated financial
      statements for prior periods have not been restated to reflect the impact of
      SFAS 123(R).




12


**Recent
      Accounting Pronouncements**





In
      February 2006, the FASB issued Statement No. 155, *Accounting
      for Certain Hybrid Financial Instruments, an amendment of FASB Statements No.
      133 and 140* . 
      Among other matters, that statement provides that where a company is required
      to
      bifurcate a derivative from its host contract, the company may irrevocably
      elect
      to initially and subsequently measure that hybrid financial instrument in its
      entirety at fair value, with changes in fair value recognized in operations.
      The
      statement is effective for financial instruments issued after the beginning
      of
      an entity’s first fiscal year that begins after September 15, 2006. Earlier
      adoption is permitted as of the beginning of an entity’s fiscal year, provided
      the entity has not yet issued financial statements, including financial
      statements for any interim period for that fiscal year.





In
      June 2006, the FASB issued Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109”
(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes
      recognized in a company’s financial statements in accordance with SFAS
      No. 109, “Accounting for Income Taxes.” FIN 48 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 fiscal years beginning after December 15, 2006. We are
      currently reviewing this new standard to determine its effects, if any, on
      our
      results of operations or financial position.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements”, which establishes a framework for reporting fair value and
      expands disclosures about fair value measurements. SFAS No. 157 is
      effective for the Company January 1, 2008. We are currently evaluating the
      impact of this new standard on our consolidated financial
      statements.





Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      accompanying financial statements.





**RESULTS
      OF OPERATIONS**





**For
      the three months ended March 31, 2007 compared to the three months ended March
      31, 2006.**





**Net
      Sales**





Our
      net
      sales are derived from the sale of our nutritional supplement product Activar
      AC-11 and our line of proprietary skin care products. We also sell AC-11 as
      a
      bulk ingredient to other companies in the nutritional supplement and
      cosmeceutical industries who utilize it in their own proprietary products.
      We
      sell Activar AC-11 direct to consumers through our Internet website www.ac-11.com .
      During
      2006, we began selling our skin care products via a 30-minute TV infomercial.
      We
      discontinued the infomercial in June 2006 and as a result, we are not currently
      selling our skin care products direct to the consumer.





Net
      sales
      for the quarter ended March 31, 2007 were $117,569 compared to net sales of
      $38,606 for the quarter ended March 31, 2006, an increase of $78,963 or 204.5%.
      Our net sales by product line are summarized in the following table:





Three
                months ended
              March
                31,
            
            $
            
            %2007
            
            2006
            
            Inc/(Dec)
            
            Inc/(Dec)Activar
                AC-11
            
            $
            8,858
            
            $
            12,631
            
            $
            (3,773
            )
            
            (29.9
            %)Bulk
                AC-11
            
            
            102,096
            
            
            20,525
            
            
            81,571
            
            
            397.4
            %Skin
                Care Products
            
            
            6,000
            
            
            -
            
            
            6,000
            
            
            NAOther
            
            
            615
            
            
            5,450
            
            
            (4,835
            )
            
            (88.7
            %)Total
                Revenue
            
            $
            117,569
            
            $
            38,606
            
            $
            78,963
            
            
            204.5
            %





Sales
      of
      our nutritional supplement product Activar AC-11 decreased $3,773 or 29.9%
      in
      the quarter ended March 31, 2007 compared to the quarter ended March 31, 2006.
      This decrease was due to lower unit volume and not the result of a price
      decrease or discounting.




Sales
      of
      bulk AC-11 increased $81,571 or 397.4% in the quarter ended March 31, 2007
      compared to the quarter ended March 31, 2006. This increase was due primarily
      to
      higher order levels from existing customers in 2007.





Other
      sales consist primarily of sales that we made to our joint venture companies
      PMO
      Products and Prometheon Labs in 2006. Also included in other sales are royalties
      that we earned from products sold by third parties that utilize our trademark
      AC-11®. Other sales decreased $4,835 or 88.7% in the quarter ended March 31,
      2007 compared to the quarter ended March 31, 2006. Royalties from product sales
      decreased from $1,305 in the quarter ended March 31, 2006 to $615 in the quarter
      ended March 31, 2007.




13




**Cost
      of Sales**





Cost
      of
      sales includes direct and indirect costs associated with manufacturing AC-11
      and
      our line of nutritional supplement and skin care products that contain AC-11
      as
      an ingredient. Cost of sales was $43,836 and $28,025 for the quarters ended
      March 31, 2007 and 2006, respectively. Gross profit as a percentage of net
      sales
      for the three months ended was 62.7% compared to 27.4% for the comparable period
      in 2006. The increase in gross profit in 2007 was due to the increase in sales
      of bulk AC-11 during the period as this product carries a higher gross margin
      than our nutritional supplements.





**Selling,
      General and Administrative Expenses**





Selling,
      general and administrative (SG&A) expenses include salaries, employee
      benefits, marketing and advertising costs, professional fees related to
      scientific research, legal and accounting fees, rent and other office related
      expenses. Also included in SG&A are various non-cash expenses such as
      depreciation, amortization of intangible assets including patents and other
      intellectual property, and stock-based compensation.





The
      table
      below highlights the major components of our SG&A expenses:





Three
                months ended
              March
                31,
            
            $
            
            %2007
            
            2006
            
            Inc/(Dec)
            
            Inc/(Dec)Employee
                compensation and benefits
            
            $
            58,991
            
            $
            214,890
            
            $
            (155,899
            )
            
            (72.6
            %)Marketing,
                advertising and promotion
            
            
            62,948
            
            
            327,953
            
            
            (265,005
            )
            
            (80.8
            %)Research
                and development
            
            
            4,564
            
            
            51,005
            
            
            (46,441
            )
            
            (91.1
            %)Consulting
                and other professional services
            
            
            16,129
            
            
            107,940
            
            
            (91,811
            )
            
            (85.1
            %)Legal
                and accounting
            
            
            110,969
            
            
            168,034
            
            
            (57,065
            )
            
            (34.0
            %)General
                and administrative
            
            
            57,367
            
            
            66,017
            
            
            (8,650
            )
            
            (13.1
            %)Occupancy
            
            
            30,646
            
            
            51,578
            
            
            (20,932
            )
            
            (40.6
            %)Stock
                based compensation
            
            
            —
            
            
            188,550
            
            
            (188,550
            )
            
            (100.0
            %)Depreciation
                and amortization
            
            
            60,048
            
            
            73,983
            
            
            (13,935
            )
            
            (18.8
            %)Total
                SG&A
            
            $
            401,662
            
            $
            1,249,950
            
            $
            (848,288
            )
            
            (67.9
            %)





In
      total,
      SG&A expenses decreased $848,288 or 67.9% from $1,249,950 for the three
      months ended March 31, 2006 to $401,662 for the comparable period in 2007.
      Expenses decreased in all categories. Areas where we achieved significant cost
      savings are as follows:





·
            Employee
                compensation expense decreased $155,899 or 72.6% in 2007 compared
                to 2006.
                This decrease is due to a reduction in the number of full-time
                employees.




·
            Marketing,
                advertising and promotion expenses decreased $265,005 or 80.8% in
                2007
                compared to 2006. During 2006, we incurred costs related to the production
                of our TV infomercial and the purchase of media
                time.





·
            Research
                and development expenses decreased $46,441 or 91.1% in 2007 compared
                to
                2006. This decrease was due to higher product development costs and
                higher
                costs related to services provided by scientific advisors in 2006
                compared
                to 2007.





·
            Consulting
                and other professional services decreased $91,811 or 85.1% in 2007
                compared to 2006. A majority of this decrease is due to the fact
                that in
                2006, we engaged the services of consultants in the areas of strategic
                planning, mergers and acquisitions, investor relations and business
                development. We terminated many of these relationships during
                2006.





·
            Legal
                and accounting expenses decreased $57,065 or 34.0% in 2007 compared
                to
                2006. In 2006, we incurred one-time legal and accounting fees related
                to
                the preparation of a registration
                statement.




·
            Stock
                based compensation expense of $188,550 in 2006 related to stock options
                issued to employees pursuant to FASB 123R. We did not incur stock
                based
                compensation during the three months ended March 31,
                2007.





**Interest
      Expense**





Interest
      expense for the three months ended March 31, 2007 was $1,324,554 compared to
      $660,072 in the comparable period in 2006. Of the total in 2007, approximately
      $1,236,349 was non-cash interest expense resulting from the accounting treatment
      of our convertible notes. The remaining $88,205 was interest due under the
      convertible notes. At March 31, 2007, we had not paid $308,196 of interest
      due
      under our convertible notes and accordingly this amount is included in accrued
      expenses at March 31, 2007.




14


**Net
      Change in Value of Common Stock Warrants and Embedded Derivative
      Liability**





We
      are
      required to measure the fair value of the warrants and the embedded conversion
      feature related to our convertible notes on the date of each reporting period.
      The effect of this re-measurement is to adjust the carrying value of the
      liabilities related to the warrants and the embedded conversion feature.
      Accordingly, during the three months ended March 31, 2007, we recorded non-cash
      other income of $761,811 related to the decrease in the fair value of the
      warrants and embedded derivative liability.





**Net
      Loss**





Net
      loss
      for the three months ended March 31, 2007 was $890,672 or $0.08 per share,
      compared to a net loss of $1,574,591 or $0.15 for the three months ended March
      31, 2006.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Based
      upon our recurring losses from operations, a stockholders’ deficit of
      approximately $5,738,000 as of March 31, 2007, our current rate of cash
      consumption and the uncertainty of liquidity related initiatives described
      below, there is substantial doubt as to our ability to continue as a going
      concern. Future losses are likely to continue unless we successfully implement
      our business plan. At March 31, 2007, we had cash of approximately $162,000
      and
      net working capital of approximately $533,000. Excluding approximately $880,000
      of inventory, we have a net working capital deficit of approximately $347,000.
      As of that same date, we had approximately $604,000 in current
      liabilities.





At
      March
      31, 2007, we have an aggregate of $4,592,981 of secured convertible notes
      outstanding, which may hinder our ability to raise additional debt or equity
      capital. In addition, we have granted a security interest in substantially
      all
      of our assets to the holders of the notes. If we were required to repay all
      or a
      portion of the outstanding balance of the notes in cash due to the occurrence
      of
      an event of default, we would be required to raise additional funds in the
      event
      that we do not have sufficient cash available. There can be no assurance that
      any additional financing will be available when needed, on commercially
      reasonable terms or at all. If we were to seek asset based financing, we would
      need the approval of the existing note holders which we may not receive. Any
      additional equity financing may involve substantial dilution to our then
      existing shareholders. Consequently, if we were unable to repay the notes,
      the
      note holders could commence legal action against us and foreclose on all of
      our
      assets to recover the amounts due. Any such action would require us to curtail
      or cease operations.





We
      plan
      to seek other channels of wholesale distribution for our nutritional supplement
      product, bulk AC-11 and proprietary skin care products such as multi-level
      marketing organizations and other distribution networks both domestically and
      in
      certain international markets. Future sales generated from our products will
      depend on numerous factors including the degree to which consumers' perceive
      that these products offer superior benefits compared to other more established
      brands. If consumers do not believe that our products offer benefits
      commensurate with the purchase price, our sales may suffer.





We
      maintain high levels of inventory relative to our historical product sales.
      We intend to aggressively market our existing inventory of skin care products
      and bulk AC-11 in order to convert this inventory into cash. The shelf life
      of
      our bulk AC-11 is approximately three years from the date of processing. In
      October 2006, we began testing certain lots of our existing inventory of bulk
      AC-11 using established and accepted protocols to determine the stability of
      the
      active ingredient and its microbiology profile. We contracted with an
      independent laboratory to perform these tests. Based on the results of this
      testing, we extended the shelf life of these specific lots for an additional
      24
      month period. As a result, the earliest expiration date for our inventory of
      bulk AC-11 is December 2008. In the event that future lots are retested and
      the
      test results indicate that the active ingredient and/or microbiology profile
      do
      not meet our specifications, we will be required to write-off the value of
      this
      inventory. We are unable to predict the likelihood at this time of future
      write-offs related to our bulk inventory however at December 31, 2006, we
      incurred an allowance for inventory obsolescence of approximately $1,073,000
      to
      reflect the uncertainty of being able to sell our existing inventory prior
      to
      its expiration.




Given
      our
      limited cash on hand, we have taken steps to decrease the amount of cash
      required to fund our existing operations. We estimate that we will require
      approximately $1,200,000 over the next twelve months or $100,000 per month
      to
      fund our existing operations. These costs include (i) compensation and
      healthcare benefits for our two full-time employees, (ii) compensation for
      consultants who we deem critical to our business, (iii) general office expenses
      including rent and utilities, (iv) insurance, (v) outside legal and accounting
      services and, (vi) order fulfillment operations.





We
      currently do not have the required cash on hand and therefore, we will be
      relying on product sales to augment our existing cash. In addition, this
      estimated “burn-rate” does not include costs related to (i) marketing and
      advertising our products, (ii) cash needed to satisfy existing accounts payable,
      (iii) research and new product development and; (iv) interest payable under
      our
      notes which at December 31, 2006 was approximately $308,000.




15




**Item
      3.**  **Controls
      and Procedures**





a)  *Evaluation
      of Disclosure Controls and Procedures:* As of
      March 31, 2007, an evaluation was carried out under the supervision and with
      the
      participation of Daniel Zwiren, our Chief Executive Officer ("CEO") and Chief
      Financial Officer ("CFO"), of the effectiveness of our disclosure controls
      and
      procedures. The system of disclosure controls and procedures was designed to
      be
      effective at a reasonable assurance level. Based on that evaluation, Mr. Zwiren
      has concluded that our disclosure controls and procedures are effective at
      the
      reasonable assurance level to timely alert him of information required to be
      disclosed by us in reports that we file or submit under the Securities Act
      of
      1934. During the quarter ended March 31, 2007, there were no changes in our
      internal controls over financial reporting that have materially affected, or
      are
      reasonably likely to materially affect our internal controls over financial
      reporting.





b)  *Changes
      in internal controls:* There
      were no changes in internal controls over financial reporting that occurred
      during the period covered by this report that have materially affected, or
      are
      reasonably likely to materially effect, our internal control over financial
      reporting.





**PART
      II**  **OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have, individually
      or in the aggregate, a material adverse affect on our business, financial
      condition or operating results.





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





None.





**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





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





None.





**Item
      5.**  **Other
      Information**





None.





**Item
      6.**  **Exhibits**





Exhibit
              No.
            
            Title31.1
            
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended31.2
            
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Chief Executive
                Officer)32.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
                Financial
                Officer)




16




**SIGNATURES**





In
      accordance with the requirements of the Securities Exchange Act of 1934, the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





**Dated:** May
      21,
      2007





OPTIGENEX
      INC.


Registrant




By:/s/
              Daniel ZwirenDaniel
                Zwiren
              President,
                Chief Executive Officer and
              Chief
                Financial Officer


17