**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





**(Mark
      One)**





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





**For
      the quarterly period ended: March 31, 2008**





**o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**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)





**1170
      Valley Brook Avenue, 2** **nd** **Floor Suite B, Lyndhurst, NJ 07071**


(Address
      of principal executive offices)





**(212)
      905-0189**


(Issuer’s
      telephone number)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, and
      accelerated file, a non-accelerated filer, or a smaller reporting
      company.





Large
                accelerated filer o
            
            Accelerated
                filer oNon-accelerated
                filer o (Do not check if
                a smaller reporting company)
            
            Smaller
                reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x





APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS:





Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Sections 12, 13 of 15(d) of the Securities Exchange
      Act
      of 1934 subsequent to the distribution of securities under a plan confirmed
      by a
      court. Yes o No
o





APPLICABLE
      ONLY TO CORPORATE ISSUERS:





There
      were 66,533,776 shares of Common Stock outstanding as of May 12, 2008.







**OPTIGENEX
      INC.**





**Table
      of Contents**





PART
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements
            2Balance
                Sheets as of March 31, 2008 (unaudited) and December 31,
                2007
            2Statements
                of Operations for the three months endedMarch
                31, 2008 and 2007 (unaudited)
            3Statements
                of Cash Flows for the three months endedMarch
                31, 2008 and 2007 (unaudited)
            4Notes
                to Financial Statements
            5-11Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            12Item
                3.
            Controls
                and Procedures
            19PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            19Item
                6.
            Exhibits
            19SIGNATURES
            
            
            20







**PART
      1. FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**




**OPTIGENEX
      INC.**





**Balance
      Sheets**




March
                31,
            
            December
                31,2008
            
            2007(Unaudited)ASSETSCurrent
                Assets:Cash
            
            $
            4,335
            
            $
            6,758Accounts
                receivable, net
            
            
            619
            
            
            10,882Inventories,
                net
            
            
            413,369
            
            
            468,774Prepaid
                expenses and other current assets
            
            
            16,507
            
            
            16,541Total
                current assets
            
            
            434,830
            
            
            502,955Property
                and equipment, net
            
            
            17,769
            
            
            19,868Intangible
                assets, net
            
            
            1,287,370
            
            
            1,325,859Other
                assets
            
            
            28,758
            
            
            39,608Total
                Assets
            
            $
            1,768,727
            
            $
            1,888,290LIABILITIES
                AND STOCKHOLDERS' DEFICIENCYCurrent
                Liabilities:Accounts
                payable
            
            $
            447,597
            
            $
            340,949Accrued
                expenses
            
            
            113,718
            
            
            45,000Current
                portion of callable secured convetible notes
            
            
            9,271,151
            
            
            4,513,669Deferred
                income
            
            
            99,900
            
            
            119,880Total
                current liabilities
            
            
            9,932,366
            
            
            5,019,498Callable
                  secured convertible notes, net of debt discountincluding
                  embedded derivative liability
            
            
            3,023,492
            
            
            4,427,067Common
                stock warrants
            
            
            128,802
            
            
            124,054Total
                liabilities
            
            
            13,084,660
            
            
            9,570,619CommitmentsStockholders'
                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, 66,533,776
                and
                52,212,067 issued and outstanding respectively
            
            
            66,534
            
            
            52,212Additional
                paid-in capital
            
            
            18,100,628
            
            
            18,088,319Accumulated
                deficit
            
            
            (29,483,095
            )
            
            (25,822,860
            )Total
                stockholders' deficiency
            
            
            (11,315,933
            )
            
            (7,682,329
            )Total
                Liabilities and Stockholders' Deficiency
            
            $
            1,768,727
            
            $
            1,888,290





See
      notes
      to financial statements




2




**OPTIGENEX
      INC.**





**Statements
      of Operations - Unaudited**





Three
                Months EndedMarch
                31,2008
            
            2007Net
                sales
            
            $
            195,424
            
            $
            117,569Cost
                of sales
            
            
            88,718
            
            
            43,836Gross
                profit
            
            
            106,706
            
            
            73,733Selling,
                general and administrative
            
            
            289,603
            
            
            401,662Loss
                from operations
            
            
            (182,897
            )
            
            (327,929
            )Other
                (income) expense:Interest
                expense, net
            
            
            509,177
            
            
            1,324,554Net
                (income) expense due to change in fair value common stock warrants
                and
                derivative liability
            
            
            2,968,161
            
            
            (761,811
            )Net
                loss
            
            $
            (3,660,235
            )
            $
            (890,672
            )Net
                loss per common share - basic and diluted
            
            $
            (0.06
            )
            $
            (0.08
            )Weighted-average
                number of common shares outstanding - basic and diluted
            
            
            64,645,199
            
            
            11,150,086





See
      notes
      to financial statements




3




**OPTIGENEX
      INC.**





**Statements
      of Cash Flows – Unaudited**





Three
                Months EndedMarch
                31,2008
            
            2007Cash
                flows from operating activities:Net
                cash used in operating activities
            
            $
            (2,423
            )
            $
            (241,100
            )Cash
                flows from investing activities:Net
                cash used in investing activities
            
            
            -
            
            
            -Cash
                flows from financing activities:Proceeds
                from the sale of convertible notes
            
            
            -
            
            
            250,000Net
                cash provided by financing activities
            
            
            -
            
            
            250,000Net
                increase (decrease) in cash
            
            
            (2,423
            )
            
            8,900Cash
                - beginning of year
            
            
            6,758
            
            
            153,153Cash
                - end of year
            
            $
            4,335
            
            $
            162,053Supplemental
                schedule of cash flow information:Cash
                paid for interest
            
            $
            -
            
            $
            -Supplemental
                schedule of non-cash investing and financing activities:Debt
                discount in connection with recording value of embedded derivative
                liability
            
            $
            584,062
            
            $
            312,500Allocation
                of convertible note proceeds to warrants
            
            $
            -
            
            $
            800,000Common
                stock issued in connection with conversion of convertible
                notes
            
            $
            26,631
            
            $
            2,043





See
      notes
      to financial statements




4




**Optigenix
      Inc. - Notes to Financial Statements (Unaudited)**




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





The
      accompanying unaudited 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 Rule 8.03
      of Regulation S-X. 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 interim financial statements for the three month periods ended March
      31, 2008 and 2007 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, 2008 are not
      necessarily indicative of the results of operations expected for the year ending
      December 31, 2008. These financial statements should be read in conjunction
      with
      the audited financial statements as of December 31, 2007, 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, 2007, 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 consist of (i) raw materials that are purchased from a
      sole
      supplier in Brazil and (ii) the Company’s proprietary compound known as AC-11
      which is manufactured in Brazil. 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.


5


**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,
            
            2008Stock
                options
            
            
            1,664,605Common
                stock warrants
            
            
            120,891,918Common
                stock issuable uponconversion
                of convertible notes (1)
            
            
            8,792,286,207Total
            
            
            8,914,842,730





(1)
      At
      March 31, 2008 the Company had Callable Secured Convertible Notes outstanding
      of
      $5,099,526. 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, 2008, the Notes would have been convertible
      into shares of the Company’s common stock at a price of $0.00058. See Note 6 for
      a complete discussion of the Callable Secured Convertible Notes. The Company
      does not currently have sufficient authorized common shares to affect the
      exercise of the stock options or warrants or conversion of the
      notes.








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





Inventories
      net of reserves consisted of the following components at March 31, 2008 and
      December 31, 2007:





March 31,
              2008
            
            December 31,
              2007Raw
                materials
            
            $
            789,274
            
            $
            789,274Finished
                goods
            
            
            857,095
            
            
            912,500Inventory
                reserve
            
            
            (1,233,000
            )
            
            (1,233,000
            )$
            413,369
            
            $
            468,774





The
      Company recorded an additional inventory valuation allowance of $160,378 at
      December 31, 2007. 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 inventory reserve at March 31, 2008 is equal
      to
      the book value of the inventory items which was $691,355 for raw materials
      and
      $541,645 for finished goods.




**Note
      4.**   **Deferred
      Income**





In
      July
      2007, the Company sold a two-year exclusive license to a new customer in
      exchange for an upfront fee of $159,840. The entire amount of the license fee
      was collected as of September 30, 2007. The Company recorded the upfront license
      fee as deferred income and will amortize it to revenue in equal monthly amounts
      of $6,660 over the two-year period of the license. During the three months
      ended
      March 31, 2008, the Company recorded license fee revenue of $19,980. The balance
      of deferred income at March 31, 2008 was $99,900.




**Note
      5.**   **Stockholders’
      Deficiency**





During
      the three months ended March 31, 2008, the Note Holders converted a total of
      $14,322 of Convertible Notes into 14,321,709 shares of the Company's common
      stock at a conversion price of $0.001 per share.


6


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





Between
      August 31, 2005 and April 15, 2008, the Company entered into a series of seven
      Securities Purchase Agreements with a group of five accredited investors (New
      Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
      Ltd., AJW Partners, LLC and AJW Master Fund Ltd., collectively the "Note
      Holders") for the sale of an aggregate of $5,504,062 of Callable Secured
      Convertible Notes (the "Convertible Notes") and warrants to purchase up to
      130,625,000 shares of its common stock (the “Warrants”).





The
      first
      five tranches of the Convertible Notes, which were issued between August 31,
      2005 and February 14, 2007, bear interest at 8% per annum. Tranche six, which
      was issued on January 31, 2008 to settle all accrued interest of $584,062
      outstanding as of December 31, 2007, bears interest at 2% per annum. Tranche
      seven, which was issued on April 15, 2008 for $155,000, bears interest at 8%
      per
      annum. All notes mature three years from the date of issuance. The Company
      is
      not required to make any principal payments during the term of the Convertible
      Notes. At March 31, 2008, tranche one has been partially converted by the Note
      Holders.





The
      Convertible Notes are convertible into shares of the Company's common stock
      at
      the Note Holders' option, at the lower of (i) a fixed price which, depending
      on
      the note, is between $0.10 and $3.20 per share or (ii) the “Applicable
      Percentage” (60% for tranches one to six and 45% for tranche seven) 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. In connection with the issuance of tranche seven on April
      15, 2008, the Applicable Percentage for tranches one to six was reduced to
      45%.




As
      of
      March 31, 2008, 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
      preceding trading days was $0.00097, resulting in an effective conversion price
      at that date for the tranches outstanding at that date of $0.00058 per share.
      During the three months ended March 31, 2008, the Note Holders converted a
      total
      of $14,322 of the Convertible Notes due August 31, 2008 into 14,321,709 shares
      of the Company's common stock at a conversion price of $0.001 per
      share.





The
      Convertible Notes provide for certain Events of Default, which include
      non-payment of principal and interest when due and failure to effect
      registration of the common shares underlying conversion of the Convertible
      Notes
      and exercise of the Warrants, if and when required. If an Event of Default
      occurs, the Holders may demand repayment at the greater of (a) 140% of the
      “Default Sum”, being principal outstanding, together with accrued interest,
      default interest due (if any) and registration penalties due (if any) or the
      “parity value” of the Default Sum, where parity value means (a) the number of
      shares of Common Stock issuable upon conversion of the Default Sum, treating
      the
      trading day immediately preceding the repayment date as the “conversion date”
for purposes of determining the applicable conversion price, multiplied by
      (b)
      the highest closing price for the Common Stock during the period beginning
      on
      the date of first occurrence of the Event of Default and ending one day prior
      to
      the repayment date.





If
      the
      Convertible Notes are not in default, the Company has the right to prepay the
      Convertible Notes under certain circumstances at a premium ranging from 35%
      to
      50% of the principal amount, depending on the timing of such prepayment. The
      Company has granted the Note Holders a security interest in substantially all
      of
      the Company's assets.





The
      130,625,000 warrants issued (of which 120,625,000 were issued in connection
      with
      tranches one to five and 10,000,000 were issued on April 15, 2008 in connection
      with tranche seven) are exercisable for a period of seven years from the date
      of
      issuance and have exercise prices that range from $0.001 per share to $4.50
      per
      share.





The
      conversion price of the Convertible 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 or exercise price, with the exception of
      any
      shares of common stock issued in connection with the Convertible Notes. The
      conversion price of the Convertible 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.




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.


7


The
      Company has the right to prepay the entire outstanding balance of the notes
      under certain circumstances at a premium of up to 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.





As
      of
      December 31, 2007, the total amount of accrued but unpaid interest due under
      the
      Convertible Notes was $584,062. This amount was settled by the issuance of
      additional Convertible Notes (tranche six) on January 31, 2008.





Pursuant
      to Registration Rights Agreements entered into with the Note Holders, the
      Company may be required to register for resale, within defined time periods,
      the
      shares underlying the Warrants and the shares issuable on conversion of the
      Convertible Notes. The terms of the Registration Rights Agreements provide
      that,
      in the event that the required registration statements are not filed or do
      not
      become effective within the required time periods, the Company is required
      to
      pay to the Note Holders, as liquidated damages, an amount equal to 2% per month
      of the principal amount of the Convertible Notes. This amount may be paid in
      cash or, at the Company’s option, in shares of common stock priced at the
      conversion price then in effect on the date of the payment. The estimated cost
      of any such liquidated damages is accrued when the Company believes it is
      probable they will be incurred. The required registration statement for tranches
      one to three became effective on February 15, 2006. For tranches four to seven,
      the Company is required to file a registration statement only if requested
      by
      the Note Holders. As of May 15, 2008, no request for registration has been
      received from the Note Holders and, at March 31, 2008, no accrual for liquidated
      damages has been made.





Because
      the number of shares that may be required to be issued on conversion of the
      Convertible Notes is dependent on the price of the Company’s common stock and is
      therefore indeterminate, the embedded conversion option of the Convertible
      Notes
      and the Warrants are accounted for as derivative instrument liabilities (see
      below) i n
      accordance with EITF Issue 00-19, "Accounting for Derivative Financial
      Instruments Indexed To, and Potentially Settled In, a Company's Own Common
      Stock" (EITF 00-19). Accordingly, the initial fair values of the embedded
      conversion options and the Warrants were recorded as derivative instrument
      liabilities. For option-based derivative instruments, the Company estimates
      fair
      value using the Black-Scholes valuation model, based on the market price of
      the
      common stock on the valuation date, an expected dividend yield of 0%, a
      risk-free interest rate based on constant
      maturity rates published by the U.S. Federal Reserve applicable to the remaining
      term of the instruments ,
      and an
      expected life equal to the remaining term of the instruments. Because
      of the limited historical trading period of our common stock, the expected
      volatility of our common stock over the remaining life of the conversion options
      and Warrants has been estimated based on a review of the volatility of companies
      considered by management to be comparable to the Company. The
      Company is required to re-measure the fair value of these derivative instrument
      liabilities at each reporting period.





The
      Company calculated the fair value of the embedded conversion feature related
      to
      the $584,062 Convertible Notes issued on January 31, 2008 to be $1,317,265,
      using the Black-Scholes valuation model with the following assumptions: market
      price of $0.0018; exercise price of $0.00066, risk free interest rate of 2.27%;
      expected volatility of 115% and an expected life of 3 years. Because the fair
      value of the embedded conversion feature exceeded the principal amount of the
      notes by $733,203, this excess amount was charged directly to expense on January
      31, 2008, and the Convertible Notes were initially recorded with no carrying
      value. The resulting discount from the face amount of the Convertible Notes
      is
      being amortized over their three year term using the effective interest rate
      method.


8


A
      summary
      of the Callable Secured Convertible Notes at March 31, 2008, is as follows:





Issue Date
            
            Due Date
            
            Face Amount
            
            Principal Outstanding08-31-2005
            
            
            08-31-2008
            
            $
            1,300,000
            
            $
            1,050,46410-19-2005
            
            
            10-19-2008
            
            
            1,350,000
            
            
            1,350,00002-17-2006
            
            
            02-17-2009
            
            
            1,350,000
            
            
            1,350,00009-15-2006
            
            
            09-15-2009
            
            
            515,000
            
            
            515,00002-14-2007
            
            
            02-14-2010
            
            
            250,000
            
            
            250,00001-31-2008
            
            
            01-31-2011
            
            
            584,062
            
            
            584,062$
            5,349,062
            
            $
            5,099,526Less:
                unamortized discount
            
            
            
            
            (1,865,336
            )3,234,190Add:
                embedded derivative liability
            
            9,060,45312,294,643Less:
                current portion
            
            (9,271,151
            )$
            3,023,492





The
      current portion represents the net carrying value of tranches one to three,
      including the embedded derivative liability.





Re-measurement
      of the fair value of common stock warrants





The
      Company is required to re-measure the fair value of the Warrants at the end
      of
      each reporting period and adjust the carrying value of the liability related
      to
      the Warrants. Accordingly, the Company re-measured the fair value of the
      120,625,000 Warrants outstanding at March 31, 2008, using the Black-Scholes
      valuation model with the following assumptions: market price of common stock
      on
      the measurement date of $0.0015, exercise prices ranging from $0.07 to $4.50,
      risk-free interest rates ranging from 1.71% to 2.56%, expected volatility
      ranging from 125% to 162% and expected lives equal to the remaining term of
      the
      warrants, ranging from 2.4 to 5.9 years. This resulted in an aggregate fair
      value for the 120,625,000 warrants of $128,802 at March 31, 2008. As a result
      of
      this re-measurement, for the three months ended March 31, 2008, the Company
      recorded a non-cash expense of $4,748 related to the re-measurement of the
      fair
      value of the Warrants.




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




The
      Company is required to re-measure the fair value of the embedded conversion
      feature related to the outstanding Convertible 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, 2008, using the Black-Scholes valuation model with the following
      assumptions: market price of common stock on the measurement date of $0.0015,
      exercise price of $0.00058; risk-free interest rates ranging from 1.51% to
      1.79%, expected volatility of 115% and expected lives ranging from 0.4 to 2.8
      years. This resulted in an aggregate fair value for the embedded conversion
      feature of $9,060,453 at March 31, 2008. As a result of this re-measurement,
      the
      Company recorded a non-cash expense of $2,230,210 for the three months ended
      March 31, 2008.





In
      total,
      for the three months ended March 31, 2008, the Company recorded non-cash expense
      of $2,968,161 related to the net change in the fair value of the liabilities
      related to the Warrants and embedded conversion feature.


9


**Note
      7.**   **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
      Company did not issue any stock options during the three months ended March
      31,
      2008 and 2007.





The
      following table summarizes the stock option activity for the three months ended
      March 31, 2008:





Number of
              Options
            
            Weighted
              Average
              Exercise Price
            
            Aggregate
              Intrinsic
              ValueOutstanding
                at December 31, 2007
            
            
            1,664,605
            
            $
            2.44Granted
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Forfeited/Cancelled
            
            
            449,395
            
            $
            1.69Outstanding
                at March 31, 2008
            
            
            1,215,210
            
            $
            2.72
            
            $
            5.00Exercisable
                at March 31, 2008
            
            
            1,215,210
            
            $
            2.72
            
            $
            5.00Vested
                and expected to vest at March 31, 2008
            
            
            1,215,210
            
            $
            2.72
            
            $
            5.00





A
      summary
      of the status of the Company’s non-vested stock options as of March 31, 2008,
      and changes during the three months ended March 31, 2008, is presented
      below:





Number of
              Options
            
            Weighted
              Average
              Option PriceNon-vested
                at December 31, 2007
            
            
            —
            
            
            NAGranted
            
            
            —
            
            
            NAVested
            
            
            —
            
            
            NAForfeited/Cancelled
            
            
            —
            
            
            NAOutstanding
                at March 31, 2008
            
            
            —
            
            
            NA







The
      following table summarizes information about stock options outstanding and
      exercisable at March 31, 2008:


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
            
            
            .66
            
            $
            0.001
            
            
            9,210
            
            $
            0.001$0.01
            
            
            16,000
            
            
            1.50
            
            $
            0.01
            
            
            16,000
            
            $
            0.01$0.30
            
            
            100,000
            
            
            1.15
            
            $
            0.30
            
            
            100,000
            
            $
            0.30$3.00
            
            
            1,090,000
            
            
            1.42
            
            $
            3.00
            
            
            1,090,000
            
            $
            3.00$0.001
                - $3.00
            
            
            1,215,210
            
            
            1.39
            
            $
            2.72
            
            
            1,215,210
            
            $
            2.72




10


**Note
      8.**   **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, 2008, the Company had a net loss
      of
      $3,660,235 and had working capital and stockholders’ deficits of $9,497,536 and
      $11,315,933, respectively at March 31, 2008.





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.





**Note
      9.**   **Subsequent
      Event**





On
      April
      15, 2008, the Company entered into four (4) Callable Secured Convertible Notes
      (the “Notes”) with its existing note holders for working capital purposes. The
      aggregate principal amount of these notes was $155,000. The Notes carry an
      interest rate of 8% per annum and mature on April 15, 2011. At the election
      of
      the note holder, the Notes are convertible into shares of the Company’s common
      stock at the lesser of (i) $3.20 or (ii) 45% 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 Company also granted the note holders warrants to purchase 10,000,000
      shares of the Company’s common stock at an exercise price of $0.001. The
      warrants expire seven years from the date of issuance.





Simultaneously
      on April 15, 2008, the Company amended all previously executed Notes with its
      note holders to reduce the Applicable Percentage under such Notes from 60%
      to
      45%. The aforementioned notes were entered into on August 31, 2005, October
      19,
      2005, February 14, 2006, September 15, 2006, February 12, 2007 and January
      31,
      2008.


11


**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.**





The
      following discussion should be read in conjunction with our consolidated
      financial statements including the notes thereto contained in this report.
      In
      addition to historical information, the following discussion and other parts
      of
      this annual report contain forward-looking information that involves risks
      and
      uncertainties.





**Cautionary
      Note Regarding Forward Looking Statements**





Certain
      statements in this Quarterly Report on Form 10-Q 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 in this report on Form
      10-Q. 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
      supply
      bulk material and
      finished products  featuring our
      patented and wholly natural compound AC-11® (“AC-11”) as a core ingredient to
      wholesale distributors, skin care and nutrace u tical marketing companies. These companies create their own private labeled products
      utilizing our compound and technology for the retail market .
      In
      addition, we license our technology and trademark to third party marketers
      and
      manufacturers of skin care and nutraceutical
      products .





The
      decision to purchase our patented ingredient and license our technology is
      driven in large part by the scientific and clinical evidence validating the
      safety and efficacy of AC-11. In third party studies AC-11 has been shown to
      repair damage to DNA due to multiple factors including; over exposure to the
      sun, environmental pollution, stress and other toxins. In addition, AC-11 has
      demonstrated effectiveness as an inhibitor of pro-inflammatory agents and as
      an
      immune system enhancer.





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 using
      our
      specialized equipment and patented process by the
      Centroflora Group of Sao Paulo, Brazil, to deliver a
      unique alkaloid
      free, water soluble extract, standardized to an 8% carboxyl alkyl ester
      concentration. This facility complies with worldwide, voluntary standards for
      quality management and Good
      Manufacturing Practices .





In
      October of 2007 we discontinued our direct to consumer sales of Activar AC-11
      oral nutritional supplements through our Internet website www.AC-11.com .
      The
      decision to cease sales through this channel was influenced by the exclusive
      rights we granted to Solgar Herb and Vitamin to market AC-11 supplements to
      the
      retail market. We have no plans to re-introduce the Activar AC-11 oral
      supplement through our Internet site in the near future.





We
      sell
      AC-11 as a bulk ingredient to companies in the nutraceutical , cosmeceutical ,
      skin
      care and hair care industries. Although we have executed  bulk
      ingredient supply and
      trademark license agreements with customers such as Itochu Corporation (Tokyo, Japan), Solgar Herb and Vitamin
      Company and Life
      Extension, 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.


12


We
      have
      developed a
      line of
      proprietary topical skin care products which contain AC-11 as an active
      ingredient. C onsist ing of a day
      cream, night cream and eye cream the
      products are
      designed to repair damage to the skin due
      to multiple
      causes including; exposure to ultraviolet rays, stress and pollution while
      enhancing skin elasticity, and reducing wrinkles and other visible signs of
      aging. Our products
      are marketed to
      appeal to a targeted demographic audience which includes women ages 30 and
      over. These skin
      care
      products are manufactured for us by Celmark, a division of Garden State Nutritional .





We are
      currently in discussions with wholesale marketing companies who may distribute
      our manufactured skin care products to the retail consumer. Also, through our
      partner Itochu Corporation Tokyo and on a direct basis, we are exploring
      strategies to license our technology and trademark (AC-11®) for use in a variety
      of skin care products containing our patented ingredient. We plan
      to
      seek other wholesale channels of distribution for bulk AC-11 ,
      manufactured skin care skin
      care products and our
      technology  to distribution
      networks both domestically and in international markets.





**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, 2008, our allowance for doubtful accounts was
      approximately $27,000.





**Inventory**





Our
      inventories are stated at the lower of cost, determined by the average cost
      method, or market. Our inventories consist of raw materials that we purchase
      from a sole supplier in Brazil and our proprietary compound known as AC-11
      which
      is manufactured in Brazil. We periodically review our inventories for evidence
      of spoilage and/or obsolescence and we remove these items from inventory at
      their carrying value. During 2007, we incurred inventory write-offs of
      approximately $174,000 as follows: (i) $162,000 of obsolete inventory which
      consisted of finished skin care products; (ii) $12,000 of bulk AC-11 which
      was
      damaged. 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, 2007, we recorded
      an
      inventory allowance of approximately $161,000 related to the book value of
      finished goods that we determined may not be sold prior to their respective
      expiration dates. At March 31, 2008, our inventory valuation allowance is
      $1,233,000.




**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.


13


We
      estimate an allowance for product returns at the time of shipment based on
      historical experience. In 2007, 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 did not incur an impairment charge in 2007
      or
      during the three months ended March 31, 2008.





**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, February 14, 2007
      and
      January 31, 2008, 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**





We
      account for stock-based compensation in accordance with 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.





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.


14


RESULTS
      OF OPERATIONS





**For
      the three months ended March 31, 2008 compared to the three months ended March
      31, 2007.**





**Net
      Sales**





Our
      net
      sales are derived primarily from the sale of AC-11 as a bulk ingredient to
      other
      companies in the nutritional supplement and cosmeceutical industries who utilize
      it in their own proprietary products. During 2007, we also sold our line of
      proprietary skin care products which contain AC-11 as a core ingredient to
      domestic and international distributors. Currently we do not sell our skin
      care
      products direct to consumers. In October 2007, we discontinued our direct to
      consumer sales of our Activar AC-11 oral nutritional supplements through our
      Internet website. The decision to cease sales through this channel was
      influenced by the exclusive rights we granted to Solgar Herb and Vitamin to
      market their own proprietary AC-11 supplements to the retail market. We have
      no
      plans to re-introduce the Activar AC-11 oral supplement through our Internet
      site in the near future.





Net
      sales
      for the three months ended March 31, 2008 were $195,424 compared to
      net sales of approximately $117,569 for the three months ended March 31, 2008,
      an increase of $77,855 or 66.2%. Our net sales by product category are
      summarized in the following table:





Three Months Ended
              March 31,
            
            $
            
            %2008
            
            2007
            
            Inc/(Dec)
            
            Inc/(Dec)Activar
                AC-11
            
            $
            16,200
            
            $
            8,858
            
            $
            7,342
            
            
            82.9
            %Bulk
                AC-11
            
            
            158,625
            
            
            102,096
            
            
            56,529
            
            
            55.4
            %Skin
                Care Products
            
            
            —
            
            
            6,000
            
            
            (6,000
            )
            
            (100.0
            )%License
                Fee
            
            
            19,980
            
            
            —
            
            
            19,980
            
            
            NAOther
            
            
            619
            
            
            615
            
            
            4
            
            
            0.00
            %Net
                Sales
            
            $
            195,424
            
            $
            117,569
            
            $
            77,855
            
            
            66.2
            %





Sales
      of
      bulk AC-11 increased $56,529 for the three months ended March 31, 2008 compared
      to the three months ended March 31, 2007. This increase was primarily due to
      a
      sale made to a new customer in 2008.





In
      July
      2007, we sold a two-year exclusive trademark license in exchange for an upfront
      fee of $159,840. We recorded the upfront license fee as deferred income and
      we
      will amortize it to revenue in equal monthly amounts of $6,660 over the two-year
      period of the license. During year three months ended March 31, 2008, we
      recorded license fee revenue of $19,980. The balance of deferred income at
      March
      31, 2008 was $99,900.




**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 $88,718 and $43,836 for the three months ended
      March 31, 2008 and 2007, respectively. Gross profit as a percentage of net
      sales
      was 54.6% for the three months ended March 31, 2008 compared to 62.7% for the
      comparable period in 2007. The decrease in gross profit percentage was due
      primarily to a sale made to a new customer which carried a lower price than
      sales made to existing customers.


15


**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,
            
            $
            
            %2008
            
            2007
            
            Inc/(Dec)
            
            Inc/(Dec)Employee
                compensation and benefits
            
            $
            44,789
            
            $
            58,991
            
            $
            (14,202
            )
            
            (24.1
            )%Marketing,
                advertising and promotion
            
            
            62,708
            
            
            62,948
            
            
            (240
            )
            
            (0.4
            )%Research
                and development
            
            
            —
            
            
            4,564
            
            
            (4,564
            )
            
            (100.0
            )%Consulting
                and other professional services
            
            
            21,800
            
            
            16,129
            
            
            5,671
            
            
            35.2
            %Legal
                and accounting
            
            
            62,145
            
            
            110,969
            
            
            (48,824
            )
            
            (44.0
            )%General
                and administrative
            
            
            30,748
            
            
            57,367
            
            
            (26,619
            )
            
            (46.4
            )%Occupancy
            
            
            15,975
            
            
            30,646
            
            
            (14,671
            )
            
            (47.9
            )%Depreciation
                and amortization
            
            
            51,438
            
            
            60,048
            
            
            (8,610
            )
            
            (14.3
            )%Total
                SG&A
            
            $
            289,603
            
            $
            401,662
            
            $
            (112,059
            )
            
            (27.9
            )%





In
      total,
      SG&A expenses decreased $112,059 or 27.9% from $401,662 for the year ended
      March 31, 2008 to $289,603 for the three months ended March 31, 2008. Areas
      where we achieved significant cost savings are as follows:





·
            Employee
                compensation expense decreased $14,202 or 24.1% in 2008 compared
                to 2007.
                This decrease is due to a reduction in the number of full-time employees
                from two in 2007 to one in 2008.





·
            Legal
                and accounting expenses decreased $48,824 or 44.0% in 2008 compared
                to
                2007. This decrease is due primarily to a reduction in legal fees
                related
                to the maintenance of our patent
                portfolio.





·
            General
                and administrative expenses decreased $26,619 or 46.4% in 2008 compared
                to
                2007. This decrease was due to a reduction in insurance costs and
                travel
                and entertainment expenses.





·
            Occupancy
                costs decreased $14,671 or 47.9% in 2008 compared to 2007 due to
                the
                relocation of our office from New York City to Lyndhurst, New
                Jersey.





**Interest
      Expense**





Interest
      expense for the three months ended March 31, 2008 was $509,177
      compared to $1,324,554 in the comparable period in 2007. Of the total in 2008,
      $417,125 was non-cash interest expense resulting from the accounting treatment
      of our convertible notes. The remaining $92,052 was interest due under the
      convertible notes and was included in accrued expenses at March 31, 2008. This
      amount was due and payable on April 1, 2008. As of May 20, 2008, we have not
      paid such amount to the holders of our convertible notes. The failure to pay
      interest constitutes an event of default under the convertible note agreements
      by and between us and our note holders however, as of May 20, 2008, we have
      not
      received and notice of default from the note holders. In the event we receive
      a
      notice a notice of default and we are unable to timely cure the default, we
      would be required to pay additional interest to the note holders on the unpaid
      principal balance at the default rate of 15% until the default is
      cured.


16


**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, 2008, we recorded non-cash
      other expense of $2,968,161 related to the increase in the fair value of the
      warrants and embedded derivative liabilities.





**Net
      Loss**





Net
      loss
      for the three months ended March 31, 2008 was $3,660,235 or $0.06 per share,
      compared to a net loss of $890,672 or $0.08 per share for the three months
      ended
      March 31, 2007. The increase in net loss was due primarily to the non-cash
      expense we incurred related to the change in the fair value of the derivate
      liability related to the embedded conversion feature of our convertible
      notes.




**LIQUIDITY
      AND CAPITAL RESOURCES**





Based
      upon our recurring losses from operations, an accumulated deficit of
      $29,483,095 as of March 31, 2008, 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, 2008, we had cash of $4,335 and a net working capital deficit
      of $9,497,536. We have callable secured convertible notes in the principal
      amounts of $1,050,464, $1,350,000 and $1,350,000 that are due and payable on
      August 31, 2008, October 19, 2008, and February 17, 2009, respectively. We
      do
      not anticipate having the necessary cash available to repay these amounts when
      due.





On
      April
      1, 2008, we were required to pay $92,052 of interest which was due under our
      convertible notes. This interest was for the period from January 1, 2008 through
      March 31, 2008. As of May 20, 2008, we have not paid such amount to the holders
      of our convertible notes. The failure to pay interest constitutes an event
      of
      default under the convertible note agreements by and between us and our note
      holders however, as of May 20, 2008, we have not received and notice of default
      from the note holders. In the event we receive a notice a notice of default
      and
      we are unable to timely cure the default, we would be required to pay additional
      interest to the note holders at the default rate of 15% on the unpaid principal
      balance and until the default is cured.





On
      January 31, 2008, we entered into three (3) callable secured convertible notes
      with our existing note holders for the purpose of capitalizing interest owed
      under all previously executed notes dated August 31, 2005, October 19, 2005,
      February 14, 2006, September 15, 2006 and February 12, 2007. The aggregate
      principal amount of the three notes is $584,062 which was equal to the aggregate
      amount of interest owed to the note holders as of December 31, 2007. We did
      not
      receive any funds in connection with entering into these notes. The notes carry
      an interest rate of 2% and a maturity date of January 31, 2011 and are
      convertible into shares of our common stock at 60% (the “Applicable Percentage”)
      multiplied by the average of the three lowest intra-day trading prices for
      our
      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. Interest on the notes is paid
      quarterly in arrears.





On
      April
      15, 2008, we entered into a Securities Purchase Agreement with our four existing
      note holders for the sale of $155,000 in callable secured convertible notes
      and
      warrants to purchase 10,000,000 shares of our common stock. The notes bear
      interest at 8% and mature on April 15, 2011. We are not required to make any
      principal payments during the term of the notes. The notes are convertible
      into
      shares of our common stock at the note holders' option, at the lower of (i)
      $0.10 per share or (ii) 45% (the “Applicable Percentage”) multiplied by the
      average of the three lowest intra-day trading prices for our 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. Interest on the notes is paid quarterly
      in
      arrears.


17


The
      warrants are exercisable for a period of seven years from the date of issuance
      and have an exercise price of $0.001 per share. In addition, the conversion
      price of the notes and the exercise price of the warrants will be adjusted
      in
      the event that we issue common stock at a price below the fixed conversion
      price
      of $0.001, with the exception of any shares of common stock issued in connection
      with the notes. We have the right to prepay the entire outstanding balance
      of
      the notes under certain circumstances at premiums ranging from 35% to 50%.
      We
      also have the right to prepay a portion of the notes each month in an amount
      equal to 104% of the then outstanding principal balance divided by 36, plus
      one
      month’s interest.





In
      connection with entering into the notes on April 15, 2008, we also amended
      all
      previously executed notes with our existing note holders to increase the
      discount to market that the note holders reduce the Applicable Percentage under
      such notes from 60% to 45%. The aforementioned notes were entered into on August
      31, 2005, October 19, 2005, February 14, 2006, September 15, 2006, February
      12,
      2007 and January 31, 2008.





As
      a
      result of this sale of additional notes, at April 30, 2008, we have an aggregate
      of $5,254,526 of callable 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 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, 2007, we incurred an allowance for inventory
      obsolescence of approximately $174,000 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 $900,000 over the next twelve months or $75,000 per month to
      fund
      our existing operations. These costs include (i) compensation and healthcare
      benefits for our full-time employee, (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.


18


**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**




Not
      applicable




**Item
      4T. Controls and Procedures.**





a)  *Evaluation
      of Disclosure Controls and Procedures:* As of
      March 31, 2008, 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, 2008, 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
      6.**  **Exhibits.**





Exhibit No.
            
            Title31.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Rule
                13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange
                Act of 1934, as amended.32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.


19


**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
      20,
      2008





OPTIGENEX
                INC.Registrant




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




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