UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                     For The Fiscal Year Ended June 30, 2005

                                       Or

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934


                        Commission File Number: 001-16703
                                                ---------

                             NOVA BIOGENETICS, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)


            Delaware                                    04-3656563
 -------------------------------           ------------------------------------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
 Incorporation or Organization)


             8601 Dunwoody Place, Atlanta, Georgia            30350
            ----------------------------------------        ----------
            (Address of Principal Executive Offices)        (Zip Code)


                                 (770) 650-6508
                 -----------------------------------------------
                 Issuer's telephone number (including area code)


Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
                                                             par value $.0001

Check whether the Issuer 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 has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No.

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State Registrant's revenues for its most recent fiscal year. $482,679.

<PAGE>

The number of shares outstanding of each of the Registrant's classes of common
stock, as of October 12, 2005 is 11,817,772 shares, all of one class, $.0001 par
value per share. Of this number, 2,835,311 shares having an aggregate market
value of $3,260,607 based on the closing price of Registrant's common stock of
$1.15 on June, 30, 2005 as quoted on the Over-the-Counter Bulletin Board
("OTCBB") were held by non-affiliates of the Registrant.

*Affiliates for the purpose of this item refers to the Registrant's officers and
directors and/or any persons or firms (excluding those brokerage firms and/or
clearing houses and/or depository companies holding Registrant's securities as
record holders only for their respective clienteles' beneficial interest) owing
5% or more of the Registrant's common stock, both of record and beneficially.

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes [ ] No [ ] NOT APPLICABLE

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are herewith incorporated by reference: None

Transitional Small Business Disclosure Format

[ ] Yes [X] No

<PAGE>

                                TABLE OF CONTENTS


PART I.........................................................................2

   Item 1.  Description Of Business............................................2

   Item 2.  Description Of Property...........................................13

   Item 3.  Legal Proceedings.................................................13

   Item 4.  Submission Of Matters To A Vote Of Security Holders...............13

PART II.......................................................................13

   Item 5.  Market For Common Equity, Related Stockholder Matters And
            Small Business Issuer Purchases Of Equity Securities..............13

   Item 6.  Management's Discussion And Analysis Or Plan Of Operation.........14

   Item 7.  Financial Statements..............................................15

   Item 8.  Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure..........................................15

   Item 8A. Controls and Procedures...........................................15

   Item 8B. Other Information.................................................15

PART III......................................................................16

   Item 9.  Directors And Executive Officers Of The Registrant................16

   Item 10. Executive Compensation............................................17

   Item 11. Security Ownership Of Certain Beneficial Owners And Management
            And Related Stockholder Matters ..................................18

   Item 12. Certain Relationships And Related Transactions....................19

   Item 13. Exhibits, List And Reports On Form 8-K............................19

   Item 14. Principal Accountant Fees And Services............................19

Signatures....................................................................20

CERTIFICATIONS


                                        1
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

The Company
-----------

Nova BioGenetics, Inc. (Nova) is a Georgia (USA) based, publicly listed company
embodying two principal divisions. As its primary focus, Nova is committed to
the discovery, development, marketing, and sales of surface-modifying
antimicrobial products. Antimicrobials challenge conventional anti-infective
agents and combat worldwide emergent antimicrobial resistance. Nova has received
EPA and marketing clearance for its active water-based antimicrobial to be used
in a vast range of materials and products against the harmful effects of
viruses, bacteria and fungi. Nova manufactures revolutionary alternatives to
conventional antimicrobial agents such as sanitizers, disinfectants, bleaches,
biocides and preservatives. Nova's specialty chemical division is fully
operational and has an active customer base that is growing appreciably. Nova
has recently signed its first major contract and is now embarking on a worldwide
expansion program to enable it to support global customers on a local regional
basis.

Nova's biopharmaceutical division is a longer-term undertaking. Significant work
has already been completed and further work will continue to be conducted, as
appropriate. This division will apply the Company's state-of-the-art proprietary
technology to develop and commercialize new antibiotics, antivirals and/or
derivatives directed at the well recognized, essential resistance of
microorganisms to anti-infective agents worldwide. The Company's antibiotic and
antiviral products suite will expand its portfolio and enhance its role within
different markets. The antibiotic and antiviral products highly specialized
suite will be referred to as "Antibiotic Resistance Technology" otherwise known
as "ART".

Background / History
--------------------

Nova is the result of years of extensive and costly technology formulation and
development, including trials, supporting data and documentation. The process
has been a lengthy and gradual one, which has resulted in an established
corporate headquarters in Atlanta and an array of leading-edge products, many of
which have already been proven in various markets. This period has included the
creation of global alliances, product awareness and simultaneous testing of
other chemistries for compatibility with our own core technology. Ongoing R & D
has also been supported by multiple patents and EPA approvals and registrations.

The over-riding objective has always been to take the technology and products
worldwide by the most effective means. On May 23, 2005, the first five year
contract was finalized with a world leader in additives for the Construction
Industry. This contract is the catalyst for launching the global expansion
strategy. Nova is committed to meeting its contractual obligations worldwide;
the establishment of a global Nova infrastructure will now allow it to support
additional anticipated global contracts with other multinationals and
wholesalers operating internationally.

Since early 2005 Nova has had a presence in Europe through its European Master
Licensee, Eco Group International Ltd, which has recently been acquired by Nova.
This acquisition provides a strong platform for Nova's planned expansion into
that region. Dubai has also been selected as the Regional Headquarters Middle
East. The best location and range of facilities for our operations in Dubai have
been identified and a strategy is being developed for the Middle East region.

Global Umbrella
---------------

As part of the implementation of the global strategy, strategic marketing and
sales packages have been compiled and specific domains of responsibilities have
been clearly defined. Considerable preparatory work, regarding global industries
and markets, has been completed. We have identified 50 world leading companies
requiring the application of our technology, many of which have already been
approached. The response to our technology has been very positive and the
remaining targeted companies will be approached in due course. In North America,
there are considerable benefits derived from our association with many marketing
partners, particularly Palmer Holland, www.palmerholland.com, a premier
specialty chemicals and raw materials distributor in North America committed to
meeting customer, principal, regulatory, and ISO 9001:2000 requirements, as well
as continuous improvement through the use of measurable quality objectives. In
Europe, several Master Wholesalers have already been established; those in
Europe have networks in all parts of the world.

                                        2
<PAGE>

The Nova technology is the foundation on which this global alliance of companies
is now being formed. By working alongside each other, Nova, together with its
clients, marketing partners and wholesalers are able to share their collective
intellectual knowledge and to pool resources to best effect. This creates the
ability to integrate technologies, to create new chemistries and products and to
open up global markets quickly and cost-effectively. By sharing existing global
customer-bases, large sales teams and other pooled resources, penetration of
global markets becomes automatic for all companies working under the umbrella of
the alliance. As new chemistries and products are developed, they too can be
brought to market rapidly and at minimal cost and effort through the
ever-growing network. This is a win-win-win situation of immense value to all.

Products
--------

APPLICATIONS AND BENEFITS

Nova's antimicrobial products incorporate molecularly-bonded antimicrobial
agents in a wide range of applications, e.g., industrial, medical, commercial
and healthcare use, synthetic, woven and non-woven textile products, fibers,
fabrics, liquids, cleaning products for general households, sealants, adhesives,
stains, caulking compounds, coating systems and numerous other surface
materials. This technology is not only effective against a broad spectrum of
micro-organisms, including certain viruses, mold, mildew, fungi, yeasts and gram
(+) and gram (-) bacteria, but also permanently bonds molecularly to all
surfaces to form a new antimicrobial surface which is durable. It will not wash
off or dissipate into the air and does not exhibit loss of activity over the
normal life of the surface which has been treated. The Nova line of products
contains no heavy metals, tin, lead, mercury or formaldehyde and is virtually
non-toxic.

Nova offers a systems process that allows for an endless variety of commercial
and industrial applications. Nova's technology provides a long-term effective
control of micro-organisms that are commonly associated with human and building
health problems. The antimicrobial agent is non-migratory; it does not leach,
gas or volatize. It stops and controls mold and mildew odors, soiling, staining
and deterioration. It controls the growth of micro-organisms in order to prolong
the life of the product. The antimicrobial agent permanently bonds to surfaces
to form a new antimicrobial surface which is durable and which does not exhibit
loss of activity over the normal life of the treated surface. Unlike other
antimicrobials, Nova's does not allow or cause microbial adaptation or
resistance, is effective for use in solving microbial contamination problems and
possesses unique features and advantages over conventional antibacterial agents.

Unlike other antimicrobial materials, the Nova product line has never been shown
to allow or cause microbial adaptation, resistance, diffusion or migration. It
is significantly different from conventional sanitizers, disinfectants, bleaches
or biocides which, themselves, contaminate the environment with undesirable
chemicals. Some of the differences are in its chemical nature and in its
effectiveness, durability and safety. This technology has a unique advantage
over all previously known methods and applications in that the antimicrobial
component material is bonded to the surface. Micro-organisms are then destroyed
by simple contact with the surface. Nova's antimicrobial technology can be
bonded to almost any solid surface such as metal, wood, siliceous material,
plastic or organic materials.

In comparison to most other biocides, it is effective against single-celled
organisms. Since it does not dissipate, it minimizes or eliminates the potential
for micro-organisms to adapt or build up tolerance, or to become resistant. It
acts by rupturing the cell membrane, not by poisoning the cell. By contrast, all
other antimicrobials, sanitizers and disinfectants are designed to diffuse and
be absorbed. Once absorbed, they act by poisoning the micro-organisms or causing
fatal mutations. However, as they diffuse, they lose strength and adaptation can
and usually does occur.

Conventional biocides are designed to volatize and be absorbed by organisms.
Nova's antimicrobial, however, is a durable, broad spectrum antimicrobial that
chemically bonds to and, literally, becomes part of the application surface.
Most surfaces remain antimicrobial for at least three years. It acts only when
micro-organisms come into direct contact with it. Since the antimicrobial is not
absorbed by organisms but remains a part of each application surface, in effect
it transforms conventional surfaces and materials into active antimicrobial
surfaces which will remain effective for extended periods and which will result
in a significant reduction of air-borne microbial contaminants.

                                        3
<PAGE>

Competitive Position
--------------------

Nova's technology and products exhibit revolutionary, highly potent activity
with virtually no toxicity, unlike any other products and/or methods currently
in use. Nova's antimicrobial products demonstrate chemical action drastically
different from the conventional mechanism of action exhibited by contemporary
antimicrobials and disinfectants. Nova's unique technology provides an
unparalleled opportunity for market penetration in almost all industries.

Product Development
-------------------

At the heart of Nova's success is its ongoing commitment to an extensive R&D
program. This guarantees the successful development and introduction of new
products, enhancement of existing products and the adaptation of products to yet
new applications and wider markets. Nova will continue to evolve and expand its
technology platform and is developing the next generation of chemistries and
products.

Manufacturing, Blending and Distribution
----------------------------------------

At this stage the manufacturing of the core chemistries has been outsourced in
North America. Super-concentrate base chemistry is then shipped to designated
blenders. This safeguards the integrity of the manufacturing and blending
process.

Blending has been outsourced as well for Europe. Additional UK blending
facilities and a pan-European distribution capability are available through a
specific UK leading independent chemical distributor and operates solely in the
UK and Ireland, but is part of a global chemicals distribution alliance. The
alliance includes key facilities in the USA, Asia and Germany.

One of our blending designees has 15 UK depots, including port facilities, and
specializes in large-scale manufacturing, blending and filling. It has over 100
tankers on the road in the UK daily. This facility has confirmed that it would
be available and ready to provide bulk blending and distribution support when
Nova moves to large-scale European production.

If required, a further UK manufacturing capability has been negotiated. In
Sweden we also have blending and distribution facilities available, as required.
This provides a local platform into Scandinavia, the Baltic States and Russia in
addition to other European countries.

By these means we have contingency coverage and volume capacity across Europe.
North America and Europe both have their own in-house chemists and laboratory
facilities, which enable us to augment our in-house testing and technical
support for our customers worldwide.

Intellectual Property
---------------------

From the outset it has been Nova's policy to pursue and secure patents and to
protect the unique technology, inventions and novel chemistries that are
commercially important to its business. Nova's patented portfolio currently
consists of five (5) U.S. granted patents and three (3) pending U.S. patent
applications, as well as two (2) foreign patents issued and twenty-five (25)
foreign patents pending. These patents will expire from 2018 to 2021. Our
currently existing patents cover 473 different compounds. New patent
applications, if and when awarded, typically have a twenty (20) year effective
term.

1. United States Patent Number 6,120,587

Abstract: The composition formed by mixing an organosilane, optionally having a
nonhydrolizable organic group, one or more Hydroxyl able groups, a polyol,
containing at least two hydroxyl groups, wherein at least any two of the
Hydroxyl groups are separated by no more than two intervening atoms.
Water-stabilized organosilane compounds. A water stable composition made from
the polyol and organosilane or compound and water. A method of making a siloxane
in the presence of a stabilizer.

2. United States Patent Number 6,113,815

Abstract: The composition formed by mixing an organosilane with an ether.
Water-stabilized organosilane compounds. A water stable composition made from
the ether and organosilane composition and water. A treated substrate having
adhered thereto the product, compound, or composition of this invention. A
method of antimicrobial treating a food article. A method of antimicrobial
coating a fluid container. A method of antimicrobial coating a latex medical
article.

                                        4
<PAGE>

3. United States Patent Number 5,954,869

Abstract: The composition formed by mixing an organosilane, optionally having a
nonhydrolizable organic group, but having one or more Hydroxylable groups, with
a polyol containing at least two Hydroxyl groups, wherein at least any two of
the Hydroxyl groups are separated by no more than two intervening atoms.
Water-stabilized organosilane compounds. A water stable composition made from
the polyol and organosilane or compound and water. A method of antimicrobial
treating a food article. A method of antimicrobial coating a fluid container. A
method of antimicrobial coating a latex medical article. A method of making a
siloxane in the presence of a stabilizer.

4. United States Patent Number 6,469,120

Abstract: The composition formed by mixing an organosilane, optionally having a
nonhydrolizable organic group, one or more Hydroxylable groups, with a organic
carbonate containing at least two Hydroxyl groups, wherein at least any two of
the Hydroxyl groups are separated by no more than two intervening atoms.
Water-stabilized organosilane compounds. A water stable composition made from
the polyol and organosilane or compound and water. A method of antimicrobial
treating a food article. A method of antimicrobial coating a fluid container. A
method of antimicrobial coating a latex medical article. A method of making a
siloxane in the presence of a stabilizer.

5. United States Patent Number

6,762,172 Abstract: The composition formed by mixing an organosilane with an
organic carbonate. Water-stabilized organosilane compounds. A water stable
composition made from the organic carbonate and organosilane composition and
water. A method of treating a substrate by mixing or contacting the substrate
with the product, compound, or composition of this invention for a period of
time sufficient for treatment of the substrate. A treated substrate having
adhered thereto the product, compound, or composition of this invention. A
method of dyeing and treating a substrate. A method of antimicrobially treating
a food article. A method of antimicrobially coating a fluid container. A method
of antimicrobially coating a latex medical article.

Markets
-------

Introduction

Specific markets have been identified as the priority focus for Nova's marketing
and sales operations. Within selected industries we have listed those leading
companies that either already are, or will become, our primary targets. Key
industries at this stage are as follows:

Building Materials Industry Profile
-----------------------------------

One of the largest target markets for Nova is the worldwide construction
industry. Used as an additive, Nova dramatically enhances many traditional
building materials, including cement, grout, wood, plaster, caulk, adhesives and
joint compounds. When integrated into concrete, for example, it inhibits
microbial growth, thereby dramatically enhancing the durability, strength and
longevity of the finished product. It also prevents deterioration of the
concrete by inhibiting the growth of bacteria, fungi and molds. Nova's
technology is also cleared throughout the United States for usage in both
residential and commercial structures, and especially in confined or enclosed
spaces which would make the usage of other toxic chemicals impractical and
ultimately prohibitive. Our level of expertise and number of specialists and
contacts throughout the remediation, protection and restoration markets are
numerous. In addition to our Nova range of products, we also provide a growing
number of other unique products that complete the portfolio we offer to the
evolving construction industry.

Paints and Coatings Industry Profile
------------------------------------

The specialized chemical industry is under intense, worldwide pressure to
produce safer and more effective alternatives to the traditional biocides being
sold today. The proliferation of microbial growth, combined with
paint-and-coating specific problems, including clear coat finishes and `pin
holing,' is fueling the growing interest in antimicrobial solutions. Nova has
already developed joint-research partnerships with two global market leaders in
order to capitalize on this expanding market. This framework of cooperation and
unrestricted access to joint findings, in addition to our strict adherence to
new legislation, including the Biocidal Products Directive (BPD) in Europe,
ensures that we can integrate cutting-edge technology into existing systems,
throughout the world.

Textile Industry Profile
------------------------

The textile industry has long recognized the overwhelming potential of
successfully integrating antimicrobial technology into the production and
manufacturing of textiles including wool, cotton, blended and synthetic fibers.
By being cross-platform compatible, the Nova antimicrobial technology can be
imparted seamlessly into these materials to provide protection against wear,
bacterial growth and odor. By offering the ability to brand garments with a
recognized Nova tag, the added value and perceived worth of these garments in
the eyes of the consumer is greatly enhanced.

                                        5
<PAGE>

Carpet / Flooring Industry Profile
----------------------------------

Carpeting constitutes a major environmental surface for both residential and
commercial establishments. By its construction and use, carpeting provides an
ideal habitat for a large variety of micro-organisms, some of which not only
produce putrid and mildew odors, but also contribute to unsightly defacement and
deterioration of carpet components themselves. In addition, the micro-organisms
often produce infections or allergic conditions in human beings. In institutions
all floor coverings, textile as well as hard surfaces, need to undergo periodic
housekeeping to maintain a hygienic and aesthetic appearance. For this reason,
antimicrobial additives should be used as a part of the cleaning procedures.
Nova has a long history of effectiveness on flooring material; benefits include
exceptional antistatic properties. We are currently working with a major
European carpet manufacturer, who is looking to use our technology during the
manufacturing process.

Marine Industry Profile
-----------------------

Nova products protect ships, ferries, yachts, boats, containers, marinas,
offices and other marine areas. Benefits include health and hygiene protection
in close-living conditions and prevention of external fouling, an ongoing
problem and significant cost to the owner. External fixtures, ranging from
hulls, ropes, masts, sails, handrails, life-jackets, lifeboats and deck areas,
are protected and the effects of salt-corrosion and other damage from weathering
are minimized. Nova antimicrobial treatment of all fabrics, furniture and
fittings, together with walls and floors, prevents damage from micro-organisms
and thereby increases the life of all the items appreciably. In Europe,
extensive marine work has been conducted along the Adriatic, Mediterranean and
Atlantic coasts (in particular Spain, Portugal, Italy, Slovenia and the UK). We
have premium products under development for the marine industry.

JanSan Industry Profile
-----------------------

The combined revenue generated annually by industrial contract and domestic
cleaning companies in North America is staggering; the figure for the UK alone
exceeds (pound)12bn. Many additives once deemed safe and/or acceptable by
various worldwide sanctioning agencies, including the Environmental Protection
Agency (EPA), are in the process of being banned. Published `white papers' in
the United States and EU legislation are the catalysts driving the sweeping
change throughout these massive markets. The need for registered and approved
antimicrobial technology to replace the blacklisted chemicals is now imperative.
We have written programs and are creating product ranges for hotels, gymnasia,
spas and other areas of the leisure industry.

Commercial Laundry Industry Profile
-----------------------------------

We have expertise in the commercial laundry industry and are working on various
products, suitable for either initial or ongoing washes. Benefits include:
prevention of cross-contamination risk; reduced electricity and other major
cost-savings, including reduced equipment maintenance and downtime; softener;
ant-corrosive and anti-static properties, UV protection, together with extended
life of sheets, uniforms, drapes and other items. We are working closely with
several hospital suppliers in UK and have recently completed specific trials on
their behalf, the results of which have been outstanding.

Air Filtration Systems & HVAC Industry Profile
----------------------------------------------

An estimated 90% of antimicrobial contamination is generated by environmental
sources. Increased scrutiny is being leveled at manufacturers of integral
components needed for a preemptive solution, such as air filtration and HVAC
systems, filters, duct work, cooling tower containers and drains. Consumer
demand is outpacing supply in a majority of the world, and the common consensus
is that antimicrobial, permanently-bonded agents are the preferred solution. The
ability to pre-treat almost all of these components is what makes the Nova
solution viable, cost-effective and easily implemented. There is a wealth of
existing data which directly pinpoints antimicrobial technology as being the
only system to deal with these potential health hazards primarily at the source
of their introduction into both commercial and residential environments.

Health Industry Profile
-----------------------

In recent years, the emergence of chemical and antimicrobiotic resistant strains
of bacteria (MRSA, VRSA, VRE and others) within high-risk environments has
caused major problems for Health Services worldwide due to hospital acquired
infections. Nova has developed a unique, fully integrated system of cleaning and
surface preparation, protected by an environmentally balanced antimicrobial
surface coating, which provides active protection against airborne and surface
microbial contamination. In addition, Nova can provide unique air filtration
protection and greatly enhanced air quality. Programs have been written and
successful MRSA and hospital trials have been completed. We are working with two
global suppliers and manufacturers to the health industry on a wide range of
products and services that will protect staff, patients and visitors to
hospitals and other health-related locations, including doctors' and dentists'
surgeries.

                                        6
<PAGE>

Marketing and Sales
-------------------

Nova's route to market is simple and cost-effective. Our unique products offer
selected, leading companies with many new business opportunities. In turn, this
allows us to sell into large global markets on the back of these companies'
extensive customer-bases. The process will accelerate as each global contract
comes into play and the level of awareness of Nova and its proprietary products
increases.

Stepped Process
---------------

Our marketing strategy is to demonstrate to clients how we can improve their
products, give them the market edge and improve their profits and market share.
We also offer global sharing of expertise, knowledge, contacts and customer
bases.

Our marketing and sales strategy is based upon a process that is a series of
steps that create awareness and interest in our technology and products so that
the potential client is fully receptive by the sales stage of the program. The
steps are:

   o  Research an industry and categorize potential clients within that
      industry;
   o  Research the compatibility of chemistries;
   o  Identify how our technology can be integrated into existing products and
      create new, leading-edge products for clients;
   o  Create a bespoke presentation showing the marketing, sales and business
      strategy, together with the full product range and marketing material for
      individual clients;
   o  Having raised the interest level, highlight the benefits and business
      opportunity;
   o  Finalize the sale.

This is a process that can be taught to all those involved in Nova marketing and
sales and becomes a system that can be replicated in each Nova region. The
process is continually refined as feedback is received and lessons are learnt
from our customers and our own sales force.

In addition, the process includes the provision of a package that clients
themselves can adopt to increase their market share and profitability.

Customers
---------

Nova's customers fall into 3 categories:

   o  Multi-nationals / global companies;
   o  Wholesalers - both national and international;
   o  Smaller national companies.

Multi-nationals / Global Companies
----------------------------------

We have been working with multinational manufacturing companies both in North
America and Europe for the past 18 months or more. Global contracts will be
co-ordinated through Head Office and will subsequently be subdivided into
regional sales and manufacturing contracts. This will ensure continuity of
supply and guaranteed quality of products for customers around the world. A
significantly large number of internationally recognized companies are now
evaluating our technology and its potential applications across a diverse range
of industries.

Wholesalers
-----------

It is estimated there are as many as 200,000 wholesalers in Europe. Due to the
number of chemicals and products being taken off the market as a result of new
EU legislation (Biocidal Products Directive and other directives), wholesalers
are actively seeking alternatives. The diverse applications of Nova(TM) are
leading wholesalers to increasingly look in our direction. Wholesalers provide a
ready-made network of customers and a comparatively fast route to market.
Therefore, it is in our interests to access certain markets through selected
Master Wholesalers.

Master Wholesalers
------------------

We have aligned ourselves with an international sales and marketing partner,
Palmer Holland. Additionally, we have established three Master Wholesalers in
Europe, who are on the point of generating their first sales. Several other
potential Master Wholesalers are also in final negotiations with us. It is
anticipated that a number of Turkish companies will be among the first to commit
fully to our technology and to provide us with regular substantial monthly
sales.

                                        7
<PAGE>

Nova BioGenetics Global strategy
--------------------------------

The Nova global strategy is focused on harnessing our collective intelligence
and avoiding any unnecessary duplication of cost or effort. Each region will
contribute what it does best and will automatically benefit from all global
contracts. Other benefits will include being part of a global infrastructure,
lower production costs, shared ownership of all intellectual property and
immediate access to new technologies and products. This shall enhance Nova's
overall earning power and share value.

Regions

Nova's global strategy is based upon four regions:

   o  THE AMERICAS     o  EUROPE     o  THE MIDDLE EAST     o  ASIA-PACIFIC

The objective is to build quickly upon the existing platforms in North America
and Europe before moving into the Middle East. The current round of investment
is geared predominantly to the expansion into Europe and the Middle East over
the next 12 months. Once the infrastructure is in place in Dubai, it will act as
the essential fall-back position for the Corporate Headquarters, should anything
untoward happen in Atlanta. Until Dubai has been established and is able to
blend products, Europe will provide the manufacturing and distribution
capability for both the Middle East and Asia-Pacific.

North America
-------------

The Head Office in Atlanta will provide all regions with:

   o  central administration and policy;
   o  R&D leading to new product and technology development;
   o  corporate training;
   o  patent, legal and essential approvals cover;
   o  global sales and marketing material;
   o  media and other public relations services;
   o  website facilities.

Europe
------

In the UK, a senior management team with strong contacts within a vast network
of companies both in Europe and the Middle-East is in place. The European team
adds considerable talent, skill and experience in building and running large
organizations. More importantly, it is well versed and comfortable with current
uses and applications of antimicrobial products in various markets.

Laboratory facilities as well as banking, legal and other professional services
are also available. Inventory has been shipped to the UK where in-house blending
and product trials have been successful. Samples have been distributed and
tested throughout Europe and elsewhere (for example, Morocco, Pakistan, India
and Singapore).

Product ranges affiliated to the Nova technology have been identified and are
being prepared for leading European companies in specific markets such as
leisure, health, building materials, air filtration, remediation, paint,
coatings and hygiene.

Two offices, together with a range of shared meeting, conferencing and other
facilities, are established. We anticipate remaining in the current premises
until our requirement extends to a laboratory and training facility on site;
this is anticipated to be within the next twelve months.

Staffing levels are being expanded to 6 full-time personnel: Managing Director,
Business Director, 1 Chemist (PhD), 2 Marketing & Sales and 1 Office Support
personnel, all of whom should be in situ by September 2005.

Dubai
-----

The case for establishing a presence in Dubai is overwhelming. Not only is Dubai
at the historical crossroads of East - West trade, but it is also positioned to
become the centre of global business over the next decade.

We have visited the three Free Zones established at Sharjah Airport, Dubai
International Airport and Jebel Ali Port. At each location we viewed office
units, warehouses / light industrial units, shared business facilities and land
sites. All the Zones offer outstanding facilities; in the light of our
particular requirements, Jebel Ali Port is the best option and it is currently
planned to lease an office / warehouse / blending facility there in early 2006.
There are many advantages to setting up business in a Free Zone.

                                        8
<PAGE>

Asia-Pacific
------------

Asia-Pacific is a distinct geographical territory; Europe will provide cover for
this region until Dubai is up-and-running.

Biopharmeuticals Division
-------------------------

Nova's biopharmaceuticals' division is engaged in the discovery, development,
and commercialization of new therapeutic agents that treat life threatening
infectious diseases. Nova's biopharmaceuticals division's pipeline is based on
patented technology, used as a broad base for applications with existing
antibiotic compounds. Attaching the patented technology with antibiotic
compounds is intended to facilitate potential disruption of bacterial agents.

In particular, Nova's biopharmaceutical mission is to provide solutions to the
major therapeutic dilemma of growing bacterial resistance to antibiotics in the
present worldwide marketplace. It will use its proprietary technology to develop
a suite of new antibiotics and antibiotic derivative products. Nova Biogenetics'
antibiotic product suite will fall under "Antibiotic Resistance Technology,"
otherwise referred to as "ART"

Product Differentiation/Competitive Advantage
---------------------------------------------

Nova's broad line of specialized antibiotic products has the potential of
disrupting the cell membrane of targeted microorganisms, thus killing them.
Presently, generic antibiotic formulations act by diffusing the targeted
organism cells and providing the optimal environment for cellular activity to
take over and combat the infection. Nova's compounds have the potential to
actually kill the targeted organism, significantly enhancing existing generic
antibiotic agents.

In addition, Nova possesses the competitive advantage of providing a product
platform that can create longevity in the drugs that it produces, by delivering
antibiotics that are less susceptible to adaptation or mutation. Finally, the
"ART" platform is based upon existing technology for which Nova has already
received patents and EPA approvals regarding industrial applications. Much has
been learned about the "ART" platform, adding to the volume of microbiologic
information available, thus shortening the timeline for development and
minimizing the research associated with creating a viable core platform from
which to work.

Product Research & Development Pipeline
---------------------------------------

Nova views bacterial resistance as a major hurdle in effective therapeutic
interventions for a significant number of infectious disease processes. This is
ever apparent in the clinical practice, where physicians and other healthcare
providers are constantly exposed to a number of new antibiotics being offered by
pharmaceutical manufacturers, while familiar antibiotic therapy continues to be
limited. In both cases, bacterial resistance and the broad spectrum of use are
identified as the reasons for the introduction of the new and improved products.

Currently, Nova is taking steps to file patents to secure the intellectual
property of the compounds and effective molecules Nova will utilize in its
pipeline. To date, current research and existing regulatory approvals have been
secured by Nova. This data will be used as part of the foundation for existing
and future development of its unique line of antibiotic products.

                                       9
<PAGE>

The Market for Antibacterial Products
-------------------------------------

The worldwide sales of prescription antibiotics exceed $23 billion
(Biotechnology Industry Association). Antibiotics represent the second largest
therapeutic category in terms of pharmaceutical sales. While there are more than
100 different antibiotics from more than 30 different classes, approved for use
in humans, a select few antibiotics and classes garner the majority of use. Most
of the leading products are broad spectrum, with only a few reserved for
targeted or restricted use. While the overall market continues to grow at a rate
of 6.5% annually, as antibiotics are increasingly used in combination to combat
resistant bacteria, a few new classes of antibiotics have been introduced during
the past twenty years.

Explanation of Antibiotic Resistance
------------------------------------

(Source: United States Food and Drug Administration)

Disease-causing microbes that have become resistant to drug therapy are an
increasing public health concern. Tuberculosis, gonorrhea, malaria, and
childhood ear infections are just a few of the diseases that have become hard to
treat with conventional antibiotic drugs. Part of the problem is bacteria and
other microorganisms that cause infections are remarkably resilient and can
develop ways to survive drugs meant to kill or weaken them. This antibiotic
resistance, also known as antimicrobial resistance or drug resistance is due
largely to the increasing use of antibiotics. Other facts:

   o  Though food-producing animals are given antibiotic drugs for important
      therapeutic, disease prevention or production reasons, these drugs have
      the downside of potentially causing microbes to become resistant to drugs
      used to treat human illnesses, ultimately making some human ailments
      harder to treat.

   o  About 70 percent of bacteria that cause infections in hospitals are
      resistant to at least one of the drugs most commonly used to treat
      infections.

   o  Some organisms are resistant to all approved antibiotics and must be
      treated with experimental and potentially toxic drugs.

   o  Research has shown antibiotics are given to patients more often than the
      recommended guidelines set by federal and other healthcare organizations.
      For example, patients sometimes ask their doctors for antibiotics for a
      cold, cough, or the flu, all of which are viral and do not respond to
      antibiotics. In addition, patients who are prescribed antibiotics do not
      take the full dosing regimen, thus contributing to resistance.

   o  Unless antibiotic resistance problems are detected as they emerge, and
      actions are taken to contain them, the world could be faced with
      previously treatable diseases that have become once again untreatable, as
      in the pre antibiotics era.

Commercial Strategy
-------------------

Nova is committed to becoming a biopharmaceutical company at the forefront of
the therapeutic developments, focused on overcoming bacterial resistance to
antibiotics.

Nova's commercial strategy is to partner with established pharmaceutical
companies in the major antibacterial markets; while retaining rights to
antibiotics based upon their core technology the Company will seek to develop
and commercialize independently.

Antibiotic Resistance Technology (ART)
--------------------------------------

The widespread and uncontrolled use of antibiotics, both for human consumption
and animal feed, has encouraged the development of drug resistance in a variety
of pathogenic microorganisms. These microorganisms employ resistance mechanisms,
which include the modification of the antibiotic structure, mutagenesis of key
amino acids in the macromolecular targets of specific chemotherapeutics, or drug
efflux from the cell, among others. These three main mechanisms have been
identified in resistance profiles for systems involved in protein biosynthesis,
nucleic acid replication, and bacterial cell wall generation.

Most antibiotics, presently used in humans, are natural products manufactured by
different species of bacteria or fungi to be employed in their own survival --
for example, to kill other microbes in times of overpopulation. In a natural
environment, such as soil, bacteria exchange genetic information (such as
resistance genes) with great facility and lack of species specificity, thus
allowing molecular determinants of resistance to be passed on to other microbes
with great ease.

                                       10
<PAGE>

Such resistance-development methodologies fall into three main categories: (i)
inactivation of the antibiotic by modification of its active chemical moiety;
(ii) specific modification of the macromolecular target, i.e., by mutagenesis of
key residues, and (iii) promotion of antibiotic efflux from the cell. Today, the
emergence of bacterial strains, which display resistance to a variety of drugs
(multiple drug resistant; MDR), is the major cause of failure of treatment of
infections worldwide. Methicillin-resistant Staphylococcus aureus (MRSA) strains
already require vancomycin as the last resort for treatment, and Streptococcus
pneumoniae strains, which no longer respond to vancomycin, have already been
identified. Multi-drug resistant Mycobaterium tuberculosis is another example of
an emerging infectious disease with world-wide significance.

Nova's biopharmaceutical solution to emerging antibiotic resistance in
microorganisms will use the application of its proprietary technology to develop
a suite of new antibiotics and / or antibiotic derivatives. Nova Biogenetics'
antibiotic product suite will fall under "Antibiotic Resistance Technology,"
otherwise referred to as "ART".

RISK FACTORS

Any investment in our common stock involves a significant degree of risk. You
should not invest in our common stock unless you can afford to lose your entire
investment. You should consider carefully the following risk factors and other
information in this Form 10-KSB before deciding whether to invest in our common
stock. We have only a limited operating history and have not operated profitably
since commencement of operations. Our operations have never been profitable. We
have incurred net losses since inception through June 30, 2005 of $2,987,963 and
it is expected that we will continue to incur operating losses in the future. In
fiscal 2005, we generated revenues of $482,679 and had a net loss of $1,939,933.

There is no assurance that we will operate profitably in the future. Our
independent auditors have added an explanatory paragraph to their audit opinion,
issued in connection with our financial statements, which states that our
ability to continue as a going concern is uncertain due to our continued
operating losses, the excess of our liabilities over our assets and uncertain
conditions we face in our day-to-day operations.

Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty. Our future revenues are unpredictable. As a
result of our limited operating history and the highly competitive market in
which we compete, we are unable to accurately forecast our revenues.

Revenues and operating results generally depend on the volume of, timing of and
ability to fulfill services, and competitive conditions, which are difficult to
forecast. We may be unable to adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. Accordingly, any significant shortfall in
revenues in relation to our planned expenditures would have an immediate adverse
effect on our business, prospects, financial condition and results of
operations. We will need to raise additional funds to provide sufficient working
capital to continue our operations. If we are unable to raise additional
capital, our results of operations will be materially adversely affected. As
described above, the report of our independent auditors for fiscal 2005 contains
a qualification as to our ability to continue as a going concern. We will need
to raise additional capital or our ability to continue our operations, implement
our business strategy and to generate any significant revenues will be adversely
affected. The amount of additional capital we require is based upon a number of
factors, including the level of our continuing revenues and costs associated
with the marketing of our services. Even if we raise additional capital, we
cannot guarantee that we will ever generate any significant revenues or report
profitable operations. In addition, our business plan may change or unforeseen
events may occur which require us to raise additional funds. We do not presently
have any agreements or understanding with third parties which will enable us to
raise additional capital. Given our relatively small size, history of losses and
overall weakness in the capital markets, we are unsure as to our ability to
raise additional working capital. Even if we locate a source willing to invest
in our company, additional funds may not be available on terms acceptable to us
or when we need such funds. The unavailability of additional funds when needed
is likely to have a material adverse effect on us. If adequate funds are not
available to satisfy short-term or long-term requirements, our management will
be required to consider a variety of other options including curtailing the
development and growth of the services we propose to offer, as well as other
cost cutting actions, including suspending all or a portion of our activities.

                                       11
<PAGE>

If we raise additional capital through the issuance of debt, this will result in
increased interest expense. If we raise additional funds through the issuance of
equity or convertible debt securities, the percentage ownership of Nova
BioGenetics Inc held by existing shareholders will be reduced and those
shareholders may experience significant dilution. In addition, new securities
may contain certain rights, preferences or privileges that are senior to those
of our common stock. There can be no assurance that acceptable financing can be
obtained on suitable terms, if at all. Our inability to raise the additional
funds need will have a material adverse affect on our results of operations in
future periods.

Fluctuations in our operating results may adversely affect our stock price and
purchasers of our shares of common stock may lose all or a portion of their
investment. Historically, there has been volatility in the market price for our
common stock, although no active or established trading market exists. Our
quarterly operating results, changes in general conditions in the economy, the
financial markets or the marketing industry, or other developments affecting us
or our competitors, could cause the market price of our common stock to
fluctuate substantially. We expect to experience significant fluctuations in our
future quarterly operating results due to a variety of factors.

FACTORS THAT MAY ADVERSELY AFFECT OUR QUARTERLY OPERATING RESULTS INCLUDE

The announcement or introduction of new services and products by us and our
competitors; - our ability to retain existing clients and attract new clients at
a steady rate, and maintain client satisfaction - the amount and timing of
operating costs and capital expenditures relating to expansion of our business
and operations; - increased government regulation; and - general economic
conditions and economic conditions specific to the biotech industry. As a result
of these factors, in one or more future quarters, our operating results may fall
below the expectations of securities analysts and investors. In this event, the
market price of our common stock would likely be materially adversely affected.
In addition, the stock market in general and the market prices for biotech
related companies in particular, have experienced extreme volatility that often
has been unrelated to the operating performance of those companies. These broad
market and industry fluctuations may adversely affect the price of our common
stock, regardless of our operating performance. If we lose our key personnel or
are unable to attract and retain additional personnel, our ability to compete
would be harmed. We are highly dependent on our management, in particular Dr.
Kevin Smith, our CEO. We are parties to employment agreements with these
individuals, if for any reason we should be deprived of their services our
business would be adversely affected until we could find a suitable replacement.
In addition, in order to pursue our product development, marketing and
commercialization plans, we will need to hire additional qualified personnel
with expertise in sales and marketing, and finance. Attracting and retaining
qualified personnel will be critical to our success, and competition for
qualified personnel is intense. We may not be able to attract and retain
personnel on acceptable terms given the competition for such personnel among
technology and biotech companies, and universities. Our inability to attract and
retain qualified personnel could harm our business and our ability to compete.

We do not intend to pay dividends. We have never paid any dividends on our
common stock and it is unlikely that we will pay any dividends in the
foreseeable future due to our anticipated substantial cash requirements for
future operations. We anticipate using any proceeds of investments in us and any
earnings received from operations for the marketing, development and expansion
of our proposed business, for operating capital and for corporate development
and expansion activities.

Our common stock is regulated as a "penny stock" by the Securities and Exchange
Commission. We are subject to additional regulation by the Securities and
Exchange Commission under its rules regulating broker-dealer practices in
connection with transactions in "penny stocks." This type of regulation may
reduce the level of trading activity or your ability to sell the common stock.
Penny stocks generally are equity securities with a price of less than $4.00
that are not registered on certain national securities exchanges or quoted on
the Nasdaq Stock Market.

                                       12
<PAGE>

The penny stock rules require a broker-dealer, prior to a transaction in a
regulated penny stock, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide information concerning
his compensation for the penny stock purchase, current prices of the penny
stock, and a special written determination that the penny stock is a suitable
investment for the purchaser.

The market for our common stock is poorly developed. Purchasers of our
securities should anticipate a thin and volatile market. Investors that purchase
our common stock may not be able to sell their securities. Our common stock is
currently quoted on the OTCBB. There are many days when our common stock does
not trade at all. The spread between the quoted bid and ask prices is usually
great. As a result of the thinly traded nature of our common stock and lack of
market support by brokers or dealers, purchasers of our shares may have great
difficulty in liquidating their investments.

ITEM 2.  DESCRIPTION OF PROPERTY

We are located in the Northridge 400 Business Park at 8601 Dunwoody Place, Suite
338 Atlanta, Georgia 30350. The office contains approximately 3200 square feet
and is currently under a five year lease through May 2008. In accordance with
the terms of the Company's lease agreement commencing on June 30, 2005 and
expiring on May 31, 2008, the Company's monthly payment obligation is
approximately $2,600. The lease agreement is subject to an annual rent
escalation of approximately three percent. See also footnote to audited
financial statements.

ITEM 3.  LEGAL PROCEEDINGS

We are a party to one pending legal proceeding. Nova Biogenetics has a pending
judgment in the amount of $42,000 from CFO On Call, the former accountant for
Nova's predecessor Healthcare Network Solutions, Inc. The Company intends to
contest this action vigorously. In addition, Timothy C. Moses, the Company's
Senior Vice-President and Chief Operating Officer was indicted on September 29,
2004 in The United States District Court, Northern District of Georgia, Atlanta
Division (United States of America v. Timothy C. Moses) Case: 1:04-CR-58 wherein
Mr. Moses was charged with one count of securities fraud and one count of
perjury with respect to matters involving International Biochemical Industries,
Inc. and Mr. Moses. Mr. Moses intends to vigorously defend himself against these
charges.

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

None

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
         BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTCBB. It was approved for quotation on the
OTCBB on January 4, 2002 originally under the symbol HNWS and after the
completion of the reverse acquisition in March 2003 has traded since August,
2003 as NVBG.

The following table sets forth, for the periods indicated, the range of high and
low bid prices on the dates indicted for the Registrant's securities indicated
below for each full quarterly period within the two most recent fiscal years (if
applicable) and any subsequent interim period for which financial statements are
included and/or required to be included.

 Fiscal Year ended June 30, 2004        (1) Quarterly Common Stock Price Ranges
 -------------------------------        ---------------------------------------
 Quarter     Quarter Ended                     High                Low
 -------     -------------                     ----                ---
 1st         September  30, 2003               $0.35               $0.25
 2nd         December 31, 2003                 $0.12               $0.07
 3rd         March 31, 2004                    $0.12               $0.12
 4th         June 30, 2004                     $0.17               $0.12

                                       13
<PAGE>

 Fiscal Year ended June 30, 2005        (1) Quarterly Common Stock Price Ranges
 -------------------------------        ---------------------------------------
 Quarter     Quarter Ended                     High                Low
 -------     -------------                     ----                ---
 1st         September  30, 2004               $0.22               $0.22
 2nd         December 31, 2004                 $0.22               $0.20
 3rd         March 31, 2005                    $1.90               $0.85
 4th         June 30, 2005                     $1.25               $1.15
__________
(1) The existence of limited or sporadic quotations should not of itself be
deemed to constitute an "established public trading market." All prices
indicated are as reported to the Registrant by broker-dealer(s) making a market
in its common stock in the Over-The-Counter Bulletin Board. During the indicated
periods of time, the Registrant's common stock was not traded or quoted on any
automated quotation system other than as indicated herein. The market quotes
indicated reflect inter-dealer prices without retail mark-up, mark-down or
commission and do not necessarily represent actual transactions.

HOLDERS

As of the close of business on October 12, 2005, there were 162 stockholders of
record of the Registrant's Common Stock and 11,817,772 shares issued and
outstanding.

DIVIDEND POLICY

We have never paid cash dividends on our common stock. We intend to keep future
earnings, if any, to finance the expansion of our business. We do not anticipate
that any cash dividends will be paid in the foreseeable future.

During fiscal year ended June 30, 2005, the Company did not purchase any of its
equity securities.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE
RELATED NOTES INCLUDED IN THIS FORM 10-KSB. THIS REPORT OF FORM 10-KSB CONTAINS
FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS
AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS.
THESE FORWARD-LOOKING STATEMENTS INCLUDE ALL STATEMENTS THAT ARE NOT STATEMENTS
OF HISTORICAL FACT. YOU CAN IDENTIFY THESE STATEMENTS BY OUR USE OF WORDS SUCH
AS "MAY", "EXPECT", "BELIEVE", "ANTICIPATE", "INTEND", "COULD", "ESTIMATE",
"CONTINUE", "PLANS", OR THEIR NEGATIVES OR COGNATES. SOME OF THESE STATEMENTS
INCLUDE DISCUSSIONS REGARDING OUR FUTURE BUSINESS STRATEGY AND OUR ABILITY TO
GENERATE REVENUE, INCOME AND CASH FLOW. WE WISH TO CAUTION THE READER THAT ALL
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-KSB ARE ONLY ESTIMATES AND
PREDICTIONS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
AS A RESULT OF RISKS FACING US OR ACTUAL EVENTS DIFFERING FROM ASSUMPTIONS
UNDERLYING SUCH FORWARD-LOOKING STATEMENTS. SOME FACTORS THAT COULD AFFECT OUR
RESULTS INCLUDE THOSE THAT WE DISCUSS IN THIS SECTION AS WELL AS ELSEWHERE IN
THIS FORM 10-KSB. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON ANY
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. WE WILL NOT UPDATE THESE
FORWARD-LOOKING STATEMENTS UNLESS THE SECURITIES LAWS AND REGULATIONS REQUIRE US
TO DO SO.

FISCAL YEAR ENDED JUNE 30, 2005

GENERAL

The following discussion and analysis should be read in conjunction with the
financial statements and notes appearing elsewhere in this report. We were
incorporated under the laws of the State of Delaware on April 23, 2001. Through
March 2003, we completed a reverse acquisition with Nova Biogenetics. In August
the name of the Company was changed to Nova Biogenetics and the stock symbol was
changed in August, 2003 to NVBG. On June 30, 2005, the company acquired a
U.K.-based company with a broad range of experience in sales and marketing of
antimicrobials and specialty chemicals in Europe and the Middle-East. This
acquisition represents the harbinger necessary for the introduction to a large
global market for the company to have the ability to service its existing global
contracts in the coming year.

                                       14
<PAGE>

FISCAL YEAR ENDED JUNE 30, 2005

Revenues are generated from one of our two business units. The Company is broken
down into two divisions: Bio-pharmaceuticals and Specialty Chemicals. Revenues
for the fiscal year ended June 30, 2005 were solely from the Specialty chemicals
division and were $482,679. We are continuing with our marketing efforts and
believe that our revenues for fiscal 2006 will exceed those of fiscal 2005. Cost
of sales, which includes contract manufacturing, were $27,304 and other expenses
were $1,446,503 including R&D, Salaries, Professional Fees and General and
Administration for the fiscal year ended June 30, 2005. Salaries (including
consultants) were $204,760 for the fiscal year ended June 30, 2005. Salaries,
which consist of salaried and hourly employees, include staff used for, our
technical development staff, marketing staff and office personnel and bonuses.
As a result of these factors, we reported a net loss of $1,939,933 or $(0.22)
per share for the fiscal year ended June 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005, we had a stockholders' deficit of $852,587. Since our
inception, we have accumulated deficit of $2,987,963. Net cash used in
operations during the fiscal year ended June 30, 2005 was $661,098 and was
attributable to our loss from operations of $1,195,888. Net cash provided by
financing activities for the fiscal year ended June 30, 2005 was $852,131.
Additionally. We may not have sufficient cash flow from operations to
sufficiently meet all of our cash requirements for the next 12 months absent
additional capital raising activities or growth of revenue sources. At this
time, however, we have no agreements or understandings with any third parities
regarding additional capital, and we cannot guarantee that we will be successful
in obtaining capital upon terms acceptable to us, if at all. Our failure to
secure necessary financing would have a material adverse effect on our financial
condition and results of operations.

ITEM 7.  FINANCIAL STATEMENTS

The financial statements required by this report are included, commencing on
page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our chief
executive officer and chief accounting officer, conducted an evaluation of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 (the "Exchange Act") Rules 13a-14(c)). Based on their evaluation, our
chief executive officer and chief accounting officer have concluded that as of
the Evaluation Date, our disclosure controls and procedures are effective to
ensure that all material information required to be filed in this Annual Report
on Form 10-KSB has been made known to them in a timely fashion.

There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the Evaluation Date set forth above.

ITEM 8B. OTHER INFORMATION

See Footnote to audited financial statements.

                                       15
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our current directors and executive officers are as follows. Our directors serve
until the next annual meeting of our stockholders and our officers hold their
positions at the pleasure of the board of directors, subject to the terms of
their employment agreements which are described elsewhere herein There is no
arrangement or understanding between our directors and officers and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.

    NAME                 AGE      POSITION

Dr. Kevin Smith          48       CEO, Director
Mr. Timothy Moses        48       EVP, Director
Mr. Bradley Smith        42       Secretary/Treasurer, Director
Mr. William Crook        54       Managing Director/Europe
Mr. Colin Debenham       51       Assoc. Managing Director/Europe

Dr. Smith has served as CEO and President as well as a member of the Board of
Directors since the Company's inception. He enriches the company with his 20+
years of experience in both the private and academic sectors of the fields of
Preventive and Occupational Medicine. He has trained at Yale University, the
University of Iowa, and is pursuing his PhD at the Karlinski Institute in
Stockholm, Sweden. Dr. Smith has served as Medical Director for HealthSouth in
Georgia and has held multiple board seats for many publicly traded companies.
Currently, he is affiliated with Emory University as an associate professor in
the School of Public Health and as a professor in the School of Nursing at
Kennesaw State University. Dr. Smith presently owns an expanding number of
clinics in the Atlanta area; and recently, he proudly served our country abroad
as a Medical Officer (Major) in the United States Army Reserves in the effort as
part of the Operation Iraqi Freedom. His role at Nova BioGenetics continues to
encompass his interests in assisting in expanding the implementation of the
company's global strategy and defining the vision of the company's
biopharmaceutical division

Mr. Moses brings a wealth of experience to the Company that dates back over
twenty years and originates from his time at Dow Corning, Inc. After leaving Dow
he secured the data citation that constitutes the core of Nova's technology.
Further research in conjunction with an accredited university supported
advancements and modifications that became the foundation of our proprietary
intellectual property. Having founded Nova Technologies, Inc., in 1995 Mr. Moses
set out to secure EPA approvals and registrations for the technology; in 1998 he
was awarded several patents from the United States Trademark Office, together
with foreign patents from many countries. These cover the discovery of ways of
producing water-stable organosilane compounds, products, compositions and
methods of use, which result in a broad range of product applications. Since
joining Nova BioGenetics, Mr. Moses has played an instrumental role in
assembling an outstandingly professional team of individuals, who manage the
Company's affairs. He continues to provide corporate vision, guidance on the
implementation of global strategy, technical expertise and ongoing product and
technology development. A graduate with a Master's in Architectural Engineering,
Mr. Moses enjoys spending time with his family, playing golf, reading and
fishing. See Part I, Item 3 regarding indictment of Timothy C. Moses.

Bill Crook brings a life-time of commercial knowledge and expertise to Nova
BioGenetics. His career includes over 20 years' Group Managing Director
experience, during which he has built up a series of successful Groups in the
United Kingdom with business interests worldwide. During the past 12 years he
has been at the forefront of European best practices in eco-hygiene, protection
and restoration. His experience includes five years' market research and trials,
often involving innovative antimicrobial applications and programmes devised
personally by him. A colleague of Tim Moses since 2001, he has played a part,
either directly or indirectly, in the development of the Nova business strategy
over a prolonged period. More recently, he has created a network of UK-based
companies that is now ready to take the Nova technology to a range of markets
globally. A lifelong student of business and current affairs, his other
interests include martial arts, sport, travel and reading.

Following 25 years' military service, in 1996 Colin Debenham retired from the
Royal Air Force after a series of key executive appointments at both junior and
senior management levels. His final appointment in the rank of Wing Commander
was as Project Manager for the Vice-Chief of the Defence Staff at the
Headquarters Ministry of Defence, London. In this role, he advised on an annual
budget in excess of (pound)400m and initiated a global networked database of
28,000 personnel as a key management tool.

                                       16
<PAGE>

Over the past 9 years he has co-founded several small businesses, on each
occasion acting as Managing Director. His earlier business interests were
focused on hygiene, environmental and asset protection issues. These lead him
progressively into the field of antimicrobial technology. Since 2002, together
with Bill Crook, he has been involved in the development of products, programmes
and business opportunities associated with the Nova technology. Colin holds a
degree in French (with subsidiary Spanish) from Sheffield University. A keen
all-round sportsman, he formerly played first-class rugby and cricket for the
Royal Air Force and Combined Services; his interests include travel, sport,
theatre, foreign languages, garden design and history of art.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table The table below sets forth information relating to
the compensation paid by us during the past two fiscal years to: (i) the
President and Chief Executive Officer; and (ii) each other executive officer who
earned more than $100,000 during Fiscal 2004 and 2005 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
                                       Annual Compensation                       Long Term
                                -------------------------------   -----------------------------------
                                Fiscal                              Other Annual      Restricted
Name and Principal Position      Year    Salary ($)   Bonus ($)   Compensation ($)   Stock Awards ($)
---------------------------      ----    ----------   ---------   ----------------   ----------------
<S>                              <C>      <C>          <C>              <C>           <C>
*Dr. Kevin Smith (CEO)           2005     $ -0-        $ -0-            $ -0-         $ -0-

Mr. Bradley Smith (Director)     2005     $ -0-        $ -0-            $ -0-         $ -0-

**Mr. Timothy C. Moses (COO)     2005     $250,000     $ -0-            $ -0-         $ -0-
__________
*  Dr. Kevin Smith has fore barred his salary for all of 2005
</TABLE>

Employment Agreement made and entered into effective as of March 19, 2003 by and
between Nova BioGenetics, Inc. (the "Company") and Mr. Timothy C. Moses. During
the Employment Term, the Company shall pay the Executive an annual base salary
of Two Hundred and Fifty Thousand [$250,000] (the "Base Salary"), beginning from
the effective date of this contract, at the annual rate of no less than the rate
of base salary in effect as of the Effective Date. Base Salary shall be payable
in regular installments in accordance with the Company's usual payroll
practices.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

None. Stock Option Plan pursuant to August 18, 2001 Board of Directors approval
and subsequent stockholder approval, we adopted our 2001 Non-Statutory Stock
Option Plan ("Plan") whereby we reserved for issuance up to 9,000,000 shares of
our common stock. In November 2001 we filed a registration statement on Form S-8
registering the shares of common stock issuable upon the exercise of options
granted under the Plan. The principal terms of the Plan are summarized below but
it is not intended to be a complete description thereof and such summary is
qualified in its entirety by the actual text of the Plan.

The purpose of the Plan is to provide our directors, officers and employees of,
consultants, attorneys and advisors with additional incentives by increasing
their ownership interest in our company. Directors, officers and other employees
of our company are eligible to participate in the Plan. The Plan provides for
the issuance of non-incentive options (NSOs) only, which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code, as amended. Our Board of Directors or a Compensation
Committee (once established) administers the Plan with the discretion generally
to determine the terms of any option grant, including the number of option
shares, exercise price, term, vesting schedule and the post-termination exercise

                                       17
<PAGE>

period. Notwithstanding this discretion (i) the term of any option may not
exceed 10 years and (ii) an option will terminate as follows: (a) if such
termination is on account of termination of employment for any reason other than
death, without cause, such options shall terminate one year thereafter; (b) if
such termination is on account of death, such options shall terminate 15 months
thereafter; and (c) if such termination is for cause (as determined by the Board
of Directors and/or Compensation Committee), such options shall terminate
immediately. Unless otherwise determined by the Board of Directors or
Compensation Committee, the exercise price per share of common stock subject to
an option shall be equal to no less than 10% of the fair market value of the
common stock on the date such option is granted. No NSO shall be assignable or
otherwise transferable except by will or the laws of descent and distribution or
except as permitted in accordance with SEC Release No.33-7646 as effective April
7, 1999. The Plan may be amended, altered, suspended, discontinued or terminated
by the Board of Directors without further stockholder approval, unless such
approval is required by law or regulation or under the rules of the stock
exchange or automated quotation system on which the common stock is then listed
or quoted. Thus, stockholder approval will not necessarily be required for
amendments which might increase the cost of the Plan or broaden eligibility
except that no amendment or alteration to the Plan shall be made without the
approval of stockholders which would (a) increase the total number of shares
reserved for the purposes of the Plan or decrease the NSO price (except as
provided in paragraph 9 of the Plan) or change the classes of persons eligible
to participate in the Plan or (b) extend the NSO period or (c) materially
increase the benefits accruing to Plan participants or (d) materially modify
Plan participation eligibility requirements or (e) extend the expiration date of
the Plan. Unless otherwise indicated the Plan will remain in effect until
terminated by the Board of Directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial
ownership of the common stock as of October 11, 2005 (except where otherwise
noted) with respect to: (i) each person known by the Registrant to be the
beneficial owner of more than five (5%) percent of the outstanding shares of
common stock; (ii) each director of the Registrant; (iii) the Registrant's
executive officers; and (iv) all officers and directors of the Registrant as a
group. Except as indicated in the footnotes to the table, all of such shares of
common stock are owned with sole voting and investment power. The title of class
of all securities indicated below is common stock with $.0001 par value per
share.

Name and Address of             (2) Number of Shares   (3) Percentage of Shares
Beneficial Owner                 Beneficially Owned      Beneficially Owned
-------------------             --------------------   ------------------------
International Biochemical
 Industries Inc.
8725 Rosewell Road
Atlanta, Georgia 30327              (3)   997,561                8.44%

Domus Trust Fund
5525 New Wellington Close
Atlanta, Georgia 30327              (4)   202,248                1.71%

M5 Trust Funds I and II
405 North Errol Court
Atlanta, Georgia 30327              (5) 2,431,451               20.57%

Timothy C. Moses
405 North Errol Court
Atlanta, Georgia 30350              (6)   756,347                6.40%

Kevin Smith
5525 New Wellington Close
Atlanta, Georgia 30327              (8)   511,275                4.33%

                                       18
<PAGE>

Bradley Smith
800 SW 19th Street
Ft. Lauderdale, 33315                           0                    0

All Officers and Directors as
 a Group (4 persons)                (9) 4,898,882               41.45%

Represents less than 42% of the 11,817,772 shares outstanding as of October 12,
2005.
__________
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of the
Common Stock beneficially owned by them. A person is deemed to be the beneficial
owner of securities which may be acquired by such person within 60 days from the
date indicated above upon the exercise of options, warrants or convertible
securities. Each beneficial owner's percentage of ownership is determined by
assuming that options, warrants or convertible securities that are held by such
person (not those held by any other person) and which are exercisable within 60
days of the date indicated above, have been exercised.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

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

(a) Exhibits

31.1     Certification of Chief Executive Officer

31.2     Certification of Principle Financial Officer

32.1     Certification of Chief Executive Officer

32.2     Certification of Principle Financial Officer
__________
(10) Incorporated herein by reference to the comparable exhibits filed with
Registrant's Form 10-SB as filed on September 27, 2001.

(11) Incorporated herein by reference to the comparable exhibits filed with
Registrant's Form S-8 as filed on November 30, 2001.

(12) To be filed by amendment.

(b) Reports on 8-K

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

1. AUDIT FEES

         The aggregate fees billed for the fiscal year ended June 30, 2005, for
professional services rendered by Bouwhuis, Morrill & Company, for the audit of
the Registrant's annual financial statements or services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for the fiscal year ended 2005 were approximately $50,500.

                                       19
<PAGE>

2. AUDIT RELATED FEES

         The aggregate fees billed for the fiscal year ended June 30, 2005, for
assurance and related services by Bouwhuis, Morrill & Company, that are
reasonably related to the performance of the audit of the Registrant's financial
statements for the fiscal year ended 2005 were approximately $-0-.

3. TAX FEES

         The aggregate fees billed for the fiscal year ended June 30, 2005, for
professional services rendered by Bouwhuis, Morrill & Company for tax
compliance, tax advice and tax planning for the fiscal year ended 2005 were
$-0-.

4. ALL OTHER FEES

         The aggregate fees billed for the fiscal year ended June 30, 2005, for
products and services provided by Bouwhuis, Morrill & Company other than those
services reported above, for the fiscal year ended 2005 were $-0-.




                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        NOVA BIOGENETICS, INC.
                                        (Registrant)

                                        /s/ Dr. Kevin Smith
                                        -------------------
                                        Dr. Kevin Smith

                                        Date: October 13, 2005

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

      Signatures                      Titles                         Dates
      ----------                      ------                         -----

/s/ Dr. Kevin Smith
-------------------         Chairman, Chief Executive
Dr. Kevin Smith             Officer and President               October 13, 2005


/s/ Bradley Smith
-----------------
Bradley Smith               Secretary and Treasurer             October 13, 2005


/s/ Timothy C. Moses
--------------------        Senior Vice-President, Chief
Timothy C. Moses            Operating Officer                   October 13, 2005


                                       20
<PAGE>



                     NOVA BIOGENETICS, INC AND SUBSIDIARIES

                 Consolidated Financial Statements for the Years
                          Ended June 30, 2005 and 2004

                      and Report of Independent Registered
                             Public Accounting Firm



                                       F-1
<PAGE>

                                    CONTENTS

Report of Independent Registered Public Accounting Firm......................F-3

Consolidated Balance Sheet...................................................F-4

Consolidated Statements of Operations........................................F-5

Consolidated Statements of Stockholders' Deficit.............................F-6

Consolidated Statements of Cash Flows........................................F-7

Notes to the Consolidated Financial Statements...............................F-9



                                       F-2
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Nova BioGenetics, Inc. and Subsidiaries
Atlanta, Georgia

We have audited the accompanying consolidated balance sheet of Nova BioGenetics,
Inc. and Subsidiaries as of June 30, 2005 and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
ended June 30, 2005 and 2004. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Nova
BioGenetics, Inc. and Subsidiaries as of June 30, 2005 and 2004 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 13 to
the consolidated financial statements, the Company has negative working capital,
negative cash flows from operations and recurring operating losses which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 13. These
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Bouwhuis, Morrill & Company, LLC
Layton, Utah

October 11, 2005

                                       F-3
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                                  June 30, 2005

                                     ASSETS
                                     ------

CURRENT ASSETS

  Cash and cash equivalents (Note 2) ...........................    $   386,596
  Accounts receivable, net (Note 2) ............................         49,949
  Inventory (Note 2) ...........................................         43,712
                                                                    -----------

    Total Current Assets .......................................        480,257
                                                                    -----------

PROPERTY AND EQUIPMENT - NET (Note 2) ..........................         26,659
                                                                    -----------

OTHER ASSETS

  Deposits .....................................................          4,508
                                                                    -----------

    Total Other Assets .........................................          4,508
                                                                    -----------

    TOTAL ASSETS ...............................................    $   511,424
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------

CURRENT LIABILITIES

  Accounts payable and accrued expenses ........................    $   528,715
  Due to related parties (Note 4) ..............................        145,392
  Escrow payable (Note 5) ......................................        199,500
  Notes payable - related party (Note 8) .......................        490,404
                                                                    -----------

   Total Current Liabilities ...................................      1,364,011
                                                                    -----------

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' DEFICIT

  Common stock, $0.0001 par value; 50,000,000 shares
   authorized, 11,107,772 shares issued and outstanding ........          1,111
  Additional paid-in capital ...................................      2,134,265
  Accumulated deficit ..........................................     (2,987,963)
                                                                    -----------

   Total Stockholders' Deficit .................................       (852,587)
                                                                    -----------

   TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT .................    $   511,424
                                                                    ===========

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-4
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                                           For the Years
                                                           Ended June 30,
                                                    ---------------------------
                                                        2005            2004
                                                    -----------     -----------

NET SALES ......................................    $   482,679     $   261,881

COST OF SALES ..................................         27,304          51,827
                                                    -----------     -----------

GROSS MARGIN ...................................        455,375         210,054
                                                    -----------     -----------

OPERATING EXPENSES

  Salaries and consulting ......................        204,760         558,524
  Professional fees ............................        172,484          57,918
  Research and development .....................          1,536          22,108
  Rent expense .................................         28,579          28,152
  Selling, general and administrative ..........      1,243,904         215,479
                                                    -----------     -----------

    Total Operating Expenses ...................      1,651,263         882,181
                                                    -----------     -----------

LOSS FROM OPERATIONS ...........................     (1,195,888)       (672,127)
                                                    -----------     -----------

OTHER INCOME (EXPENSES)

  Interest expense .............................        (52,678)        (32,409)
  Gain on sale of assets .......................         28,844             850
  Loss on impairment of goodwill (Note 3) ......       (720,211)              -
                                                    -----------     -----------

    Total Other Income (Expenses) ..............       (744,045)        (31,559)
                                                    -----------     -----------

LOSS BEFORE INCOME TAXES .......................     (1,939,933)       (703,686)

INCOME TAX EXPENSE .............................              -               -
                                                    -----------     -----------

NET LOSS .......................................    $(1,939,933)    $  (703,686)
                                                    ===========     ===========

BASIC AND DILUTED:
  Net loss per common share ....................    $     (0.22)    $     (0.11)
                                                    ===========     ===========

  Weighted average shares outstanding ..........      8,763,955       6,353,924
                                                    ===========     ===========

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       F-5
<PAGE>
<TABLE>
                           NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                       Consolidated Statements of Stockholders' Deficit
                          For the Years Ended June 30, 2005 and 2004
<CAPTION>

                                          Common Stock           Additional
                                   --------------------------      Paid-in       Accumulated
                                      Shares         Amount        Capital         Deficit
                                   -----------    -----------    -----------     -----------
<S>                                <C>            <C>            <C>             <C>
Balance, June 30, 2003 ........      5,542,934    $       554    $  (861,525)    $  (344,344)

Common stock issued for
 services rendered ............        885,338             88        137,712               -

Exercise of common stock
 options for services rendered         465,000             46        132,204               -

Common stock issued to
 convert note payable .........        275,000             29        316,127               -

Common stock issued for
 stock deposit ................        183,000             18         31,232               -

Accrued salaries contributed to
 the Company as a capital
 contribution by an Officer ...              -              -        275,246               -

Common stock options issued
 below market value ...........              -              -         11,645               -

Net loss for the year
 ended June 30, 2004 ..........              -              -              -        (703,686)
                                   -----------    -----------    -----------     -----------

Balance, June 30, 2004 ........      7,351,272            735         42,641      (1,048,030)

Common stock issued for cash ..      1,660,000            166        829,834               -

Common stock issued for
 services rendered ............      1,130,000            113        295,387               -

Common stock issued for the
 acquisition of subsidiary ....        966,500             97        966,403               -

Net loss for the year
 ended June 30, 2005 ..........              -              -              -      (1,939,933)
                                   -----------    -----------    -----------     -----------

Balance, June 30, 2005 ........     11,107,772    $     1,111    $ 2,134,265     $(2,987,963)
                                   ===========    ===========    ===========     ===========

                     The accompanying notes are an integral part of these
                              consolidated financial statements.

                                             F-6
</TABLE>
<PAGE>
<TABLE>
                           NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                            Consolidated Statements of Cash Flows

<CAPTION>
                                                                        For the Years
                                                                        Ended June 30,
                                                                 ---------------------------
                                                                     2005           2004
                                                                 -----------     -----------
<S>                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................................    $(1,939,933)    $  (703,686)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Bad debt expense ..........................................              -           1,106
  Depreciation ..............................................          2,018             760
  Common stock issued for services rendered .................        295,500         137,800
  Exercise of common stock options for services rendered ....              -         132,250
  Stock options issued below market value ...................              -          11,645
  Gain on sale of fixed assets ..............................              -            (850)
  Gain on settlement of debt ................................        (28,844)              -
  Loss on impairment of goodwill ............................        720,211               -
Changes in assets and liabilities:
  Increase in accounts receivable ...........................           (694)         (3,786)
  Increase in inventories ...................................        (22,207)         (3,622)
  Increase in deposits and other current assets .............            (33)         (1,000)
  Increase in accounts payable and accrued expenses .........        312,884         106,501
                                                                 -----------     -----------

    Net Cash Used in Operating Activities ...................       (661,098)       (322,882)
                                                                 -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Cash received from sale of fixed assets ...................              -             850
  Purchases of fixed assets .................................        (22,156)           (584)
  Cash received from acquisition of subsidiary ..............        216,028               -
                                                                 -----------     -----------

    Net Cash Provided by Investing Activities ...............        193,872             266
                                                                 -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Increase in due to related party ..........................         22,131         123,261
  Repayments on notes payable - related party ...............              -            (500)
  Increase in escrow payable ................................              -         199,500
  Proceeds from sale of common stock ........................        830,000               -
                                                                 -----------     -----------

    Net Cash Provided by Financing Activities ...............    $   852,131     $   322,261
                                                                 -----------     -----------

                     The accompanying notes are an integral part of these
                              consolidated financial statements.

                                             F-7
</TABLE>
<PAGE>
<TABLE>
                           NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                            Consolidated Statements of Cash Flows
                                         (Continued)
<CAPTION>
                                                                        For the Years
                                                                        Ended June 30,
                                                                 ---------------------------
                                                                     2005           2004
                                                                 -----------     -----------
<S>                                                              <C>             <C>
NET INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS ..................................    $   384,905     $      (355)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ................          1,691           2,046
                                                                 -----------     -----------

CASH AND CASH EQUIVALENTS, END OF YEAR ......................    $   386,596     $     1,691
                                                                 ===========     ===========

SUPPLEMENTAL CASH FLOW INFORMATION

  Cash Payments For:

    Interest ................................................    $     3,293     $     1,685
    Income taxes ............................................    $         -     $         -

  Non-Cash Investing and Financing Activities:

    Common stock issued for services ........................    $   295,500     $   270,050
    Accrued salaries contributed to the Company as a
     capital contribution by an Officer .....................            $ -     $   275,246
    Common stock issued for debt ............................            $ -     $   347,406
    Common stock issued for the acquisition of subsidiary ...    $   966,500     $         -

                     The accompanying notes are an integral part of these
                              consolidated financial statements.

                                             F-8
</TABLE>
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

         Nova BioGenetics, Inc. (the "Company") was originally incorporated
         under the laws of the State of Delaware on April 23, 2001, under the
         name of Healthcare Network Solutions, Inc. ("HNS"). Through November
         2001, the Company was a 52% owned subsidiary of BioShield Technologies,
         Inc. ("BTSI"); BTSI having acted as incorporator and having initially
         been the sole shareholder of the Company. During December 2001,
         3,646,579 of the Company's shares owned by BTSI (approximately 24% of
         all then issued and outstanding shares) were spun-off to BTSI's
         shareholders on a one for ten basis with BTSI retaining 4,453,421
         shares (approximately 28% of all then issued and outstanding shares).

         Nova BioGenetics, Inc. ("Nova") was originally incorporated on July 22,
         2002, under the laws of the State of Delaware. On March 19, 2003, Nova
         BioGenetics, Inc. ("Nova") was acquired by HNS, for 31,253,904
         pre-split shares of HNS stock (the "Exchange"). The Exchange was
         completed pursuant to the Agreement and Plan of Reorganization between
         Nova and HNS. The Exchange has been accounted for as a reverse
         acquisition under the purchase method for business combinations. The
         reorganization was accounted for as a recapitalization of Nova because
         the shareholders of Nova controlled the Company immediately after the
         acquisition. Therefore, Nova is treated as the acquiring entity.
         Accordingly there was no adjustment to the carrying value of the assets
         or liabilities of Nova. The Company is the acquiring entity for legal
         purposes and Nova is the surviving entity for accounting purposes. On
         July 11, 2003, The Company merged its two entities into a single
         corporation under the name Nova BioGenetics, Inc.

         Nova reincorporated in the State of Delaware on January 16, 2002. Nova
         is a biochemical company headquartered in Atlanta, Georgia that is
         engaged in the discovery, development, and commercialization of
         antibiotic and antimicrobial agents for use in the industrial and
         pharmaceutical sectors.

         Subsidiaries
         ------------

         During the year ended June 30, 2004, the Company incorporated two new
         subsidiaries, Nova Specialty Chemicals, Inc. and Nova
         BioPharmaceuticals, Inc. Both subsidiaries are owned 100% by the
         Company.

         Nova Specialty Chemicals, Inc. ("NSCI") was incorporated under the laws
         of the State of Delaware on January 30, 2004, for the purpose of
         researching and developing chemicals and compounds to be used in
         industrial applications.

         Nova BioPharmaceuticals, Inc. ("NBPI") was incorporated under the laws
         of the State of Delaware on January 30, 2004, for the purpose of
         researching and developing chemicals and compounds to be used in the
         pharmaceuticals industry. NBPI has not had any significant operations
         to date.

         Eco Group International Limited ("ECO") was incorporated under the laws
         of England and Wales on November 21, 2003. ECO was acquired on June 30,
         2005 in a stock transaction whereby 966,500 shares of Nova BioGenetics'
         common stock was exchanged for all of the issued and outstanding shares
         of ECO. ECO was acquired for the purpose of marketing Nova BioGenetics'
         products in Europe and the surrounding regions.

                                       F-9
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

         This summary of significant accounting policies of the Company is
         presented to assist in understanding the Company's consolidated
         financial statements. The consolidated financial statements and notes
         are representations of the Company's management who are responsible for
         their integrity and objectivity. These accounting policies conform to
         accounting principles generally accepted in the United States of
         America and have been consistently applied in the preparation of the
         consolidated financial statements. The following policies are
         considered to be significant:

         a. Accounting Method

         The Company recognizes income and expenses based on the accrual method
         of accounting. Accordingly, revenues are recognized when earned and
         expenses are recognized when incurred. The Company has elected a June
         30 year-end.

         b. Cash and Cash Equivalents

         Cash equivalents are generally comprised of certain highly liquid
         investments with original maturities of less than three months.

         c. Use of Estimates in the Preparation of Consolidated Financial
         Statements

         The preparation of consolidated financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.

         d. Revenue Recognition Policy

         Revenue is recognized upon delivery of goods where the sales price is
         fixed or determinable and collectibility is reasonably assured. Revenue
         is not recognized until persuasive evidence of an arrangement exists.
         Advance customer payments are recorded as deferred revenue until such
         time as they are recognized.

         e. Allowance for Doubtful Accounts

         Accounts receivable are recorded net of the allowance for doubtful
         accounts. The Company generally offers 30-day credit terms on sales to
         its customers and requires no collateral. The Company maintains an
         allowance for doubtful accounts which is determined based on a number
         of factors, including each customer's financial condition, general
         economic trends and management judgment. As of June 30, 2005, the
         allowance for doubtful accounts was $55,540. Bad debt expense was
         $55,540 and $1,106 for the years ended June 30, 2005 and 2004,
         respectively.

         f. Inventories

         Inventories are stated at the lower of average cost or market value.
         When there is evidence that the inventory's value is less than original
         cost, the inventory is reduced to market value. Inventories consist
         entirely of raw materials of $43,712 at June 30, 2005.

                                      F-10
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         g. Property and Equipment

         Property and equipment are stated at cost less accumulated
         depreciation. Depreciation is calculated using the straight-line method
         over the estimated useful lives of the assets. When assets are disposed
         of, the cost and accumulated depreciation (net book value of the
         assets) are eliminated and any resultant gain or loss reflected
         accordingly. Betterments and improvements are capitalized over their
         estimated useful lives whereas repairs and maintenance expenditures on
         the assets are charged to expense as incurred.

                                                     Life                2005
                                                     ----                ----

         Furniture and Fixtures                    3-5 Years           $ 29,512
         Less - Accumulated Depreciation                                 (2,853)
                                                                       --------

              Net Property and Equipment                               $ 26,659
                                                                       ========

         Depreciation expense for the years ended June 30, 2005 and 2004 was
         $2,208 and $760, respectively.

         h. Basic Net Loss per Share of Common Stock

         In accordance with Financial Accounting Standards No. 128, "Earnings
         per Share," basic net loss per common share is based on the weighted
         average number of shares outstanding during the periods presented.
         Diluted earnings per share is computed using weighted average number of
         common shares plus dilutive common share equivalents outstanding during
         the period. Dilutive instruments have not been included and calculated
         for the year end computations as their effect is antidilutive.

                                            June 30,          June 30,
                                              2005              2004
                                         -------------      ------------

         Net loss (numerator)            $ (1,939,933)      $  (703,686)
         Weighted average shares
           outstanding (denominator)        8,763,955         6,353,924
         Loss per share amount           $      (0.22)      $     (0.11)

         i. Recent Accounting Pronouncements

         In December 2002, the Financial Accounting Standards Board issued SFAS
         No. 148, "Accounting for Stock Based Compensation-Transition and
         Disclosure-an amendment of FASB Statement No. 123" which is effective
         for financial statements issued for fiscal years ending after December
         15, 2002. This Statement amends SFAS 123, Accounting for Stock-Based
         Compensation, to provide alternative methods of transition for a
         voluntary change to the fair value based method of accounting for
         stock-based employee compensation. In addition, this Statement amends
         the disclosure requirements of SFAS 123 to require prominent
         disclosures in both annual and interim financial statements about the
         method of accounting for stock-based compensation and the effect of the
         method used on reported results. The adoption of SFAS No. 148 did not
         have a material effect on the financial statements of the Company.

                                      F-11
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         i. Recent Accounting Pronouncements (Continued)

         In April 2003, the Financial Accounting Standards Board issued SFAS No.
         149, Amendment of Statement 133 on Derivative Instruments and Hedging
         Activities" which is effective for contracts entered into or modified
         after June 30, 2003 and for hedging relationships designated after June
         30, 2003. This statement amends and clarifies financial accounting for
         derivative instruments embedded in other contracts (collectively
         referred to as derivatives) and hedging activities under SFAS 133. The
         adoption of SFAS No. 149 did not have a material effect on the
         financial statements of the Company.

         In May 2003, the Financial Accounting Standards Board issued SFAS No.
         150, "Accounting for Certain Financial Instruments with Characteristics
         of both Liabilities and Equity" which is effective for financial
         instruments entered into or modified after May 31, 2003, and is
         otherwise effective at the beginning of the first interim period
         beginning after June 15, 2003. This Statement establishes standards for
         how an issuer classifies and measures in its statement of financial
         position certain financial instruments with characteristics of both
         liabilities and equity. It requires that an issuer classify a financial
         instrument that is within its scope as a liability (or an asset in some
         circumstances) because that financial instrument embodies an obligation
         of the issuer. The adoption of SFAS No. 150 did not have a material
         effect on the financial statements of the Company.

         In January 2003, the Financial Accounting Standards Board issued FASB
         Interpretation No. 46 "Consolidation of Variable Interest Entities."
         FIN 46 provides guidance on the identification of entities for which
         control is achieved through means other than through voting rights,
         variable interest entities, and how to determine when and which
         business enterprises should consolidate variable interest entities.
         This interpretation applies immediately to variable interest entities
         created after January 31, 2003. It applies in the first fiscal year or
         interim period beginning after June 15, 2003, to variable interest
         entities in which an enterprise holds a variable interest that it
         acquired before February 1, 2003. The adoption of FIN 46 did not have a
         material impact on the financial statements of the Company.

         j. Income Taxes

         The Company accounts for income taxes in accordance with Statement of
         Financial Accounting Standards Board (SFAS) No. 109, "Accounting for
         Income Taxes." Under this method, deferred income taxes are determined
         based on the difference between the financial statement and tax bases
         of assets and liabilities using enacted tax rates in effect for the
         year in which differences are expected to reverse. In accordance with
         the provisions of SFAS No. 109, a valuation allowance would be
         established to reduce deferred tax assets if it were more likely than
         not that all or some portion of such deferred tax assets would not be
         realized. A full allowance against deferred tax assets was provided as
         of June 30, 2005.

         At June 30, 2005, the Company had net operating loss carryforwards of
         approximately $3,000,000 that may be offset against future taxable
         income through 2025. No tax benefits have been reported in the
         consolidated financial statements because the potential tax benefits of
         the net operating loss carry forwards are offset by a valuation
         allowance of the same amount.

                                      F-12
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         j. Income Taxes (Continued)

         Due to the change in ownership provisions of the Tax Reform Act of
         1986, net operating loss carryforwards for Federal income tax reporting
         purposes are subject to annual limitations. Should a change in
         ownership occur, net operating loss carryforwards may be limited as to
         its future use by the Company.

         k. Reclassifications

         Certain amounts in the accompanying consolidated financial statements
         have been reclassified to conform to the current year presentation.

         l. Principles of Consolidation

         The consolidated financial statements include the accounts of Nova
         BioGenetics, Inc. and its wholly-owned subsidiaries Nova
         BioPharmaceuticals, Inc., Nova Specialty Chemicals, Inc., and Eco Group
         International Limited. All significant intercompany accounts and
         transactions have been eliminated in the consolidation.

NOTE 3 - GOODWILL

         Goodwill represents the excess of cost over the fair value of net
         assets acquired through acquisitions. In the acquisition of Eco Group
         International Limited, this excess of cost over net assets acquired
         amounted to $720,211. In accordance with the provisions of Statement of
         Financial Accounting Standards No. 141, management of the Company has
         evaluated the resulting goodwill and has determined that the amount is
         impaired. It is unlikely that there is significant future value beyond
         the value of the net assets acquired of $246,289 and, therefore, the
         Company has recorded a loss on the impairment of goodwill in the amount
         of $720,211. The amount of goodwill being carried as an asset at June
         30, 2005 is $-0-.

NOTE 4 - RELATED PARTY TRANSACTIONS

         At June 30, 2005, the Company had a related party payable of $145,392.
         This amount includes $16,904 payable to an officer of the Company,
         $67,459 in accrued interest (see Note 8), and $61,029 also payable to
         the company indicated in Note 8 for prior services rendered.

NOTE 5 - ESCROW PAYABLE

         The Company owes Pyramid Financial Group ("Pyramid") for monies that
         were either expended on the Company's behalf or that were loaned to the
         Company on a short-term basis. These monies were held in escrow by
         Pyramid. The Company believes that pursuant to the terms of the escrow
         agreement the funds would be available to the Company for cash-flow
         purposes at times prior to closing of the escrow. At the time of the
         transactions Pyramid was owned by a former officer of the Company,
         however, no such relationship still exists. The amount still owing at
         June 30, 2005 is $199,500 plus accrued interest of $15,960 which is
         included on the balance sheet in accounts payable and accrued expenses.
         See Note 10 - Contingencies.

                                      F-13
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 6 - EQUITY TRANSACTIONS

         During the year ended June 30, 2004, the Company issued 275,000 shares
         of common stock in satisfaction of a note payable of $275,000 and
         accrued interest of $41,156, or $1.15 per share.

         During the year ended June 30, 2004, the Company issued 183,000 shares
         of common stock for a stock deposit received in 2003 of $31,250, or
         $0.17 per share.

         During the year ended June 30, 2004, the Company issued 885,338 shares
         of common stock to officers, directors and an attorney for services
         rendered. The shares were valued at the market price on the date the
         shares were authorized for issuance and range from $0.15 to $0.20 per
         share. In connection with these issuances, the Company recorded
         stock-based compensation of $137,800 during the year ended June 30,
         2004.

         During the year ended June 30, 2004, in connection with the exercise of
         stock options the Company issued 465,000 shares of common stock to
         consultants, officers, employees, and an attorney for services
         rendered. The Company recorded stock-based compensation expense of
         $125,750 and reduced accounts payable by $6,500 based on the exercise
         price of the stock options.

         During the year ended June 30, 2004, an officer of the Company
         converted $275,246 of his accrued salary into additional paid-in
         capital by contributing the amount to the Company.

         During the year ended June 30, 2005, the Company issued 1,660,000
         shares of common stock in a private placement for $0.50 per share. Each
         share issued in this private placement had an attached warrant to
         purchase an additional share of common stock for $0.50 per share and
         expire on March 31, 2010.

         During the year ended June 30, 2005, the Company issued 1,130,000
         shares of common stock to officers, directors and an attorney for
         services rendered. The shares were valued at the market price on the
         date the shares were authorized for issuance and range from $0.10 to
         $1.35 per share. In connection with these issuances, the Company
         recorded stock-based compensation of $295,500 during the year ended
         June 30, 2005.

         On June 30, 2005, the Company issued 966,500 shares of common stock for
         all of the issued and outstanding shares of a United Kingdom based
         company. The shares were valued at the market price on the date of
         acquisition of $1.00 per share, or $966,500. The net assets of the
         acquired company on the date of acquisition was $246,289. See Note 3 -
         Goodwill.

NOTE 7 - FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107 (SFAS 107),
         "Disclosures about Fair Value of Financial Instruments" requires
         disclosure of the fair value of financial instruments held by the
         Company. SFAS 107 defines the fair value of a financial instrument as
         the amount at which the instrument could be exchanged in a current
         transaction between willing parties. The following methods and
         assumptions were used to estimate fair value:

         The carrying amount of cash equivalents, accounts receivable and
         accounts payable approximate fair value due to their short-term nature.

                                      F-14
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 8 - NOTES PAYABLE - RELATED PARTY

         Notes payable - related party consists of a note issued in connection
         with a joint venture agreement with International Biochemical
         Industries, Inc. (formerly BioShield Technologies, Inc.) ("IBCI") in
         the original amount of $500,000. At the time the joint venture
         agreement was entered into, an Officer of the Company was also the
         president of IBCI. IBCI is currently undergoing Chapter 7 bankruptcy
         proceedings. The final outcome has yet to be determined. The balance at
         June 30, 2005 was $490,404 with an additional amount of $67,459 in
         accrued interest relating to this note that is shown on the balance
         sheet in due to related parties (see Note 4).

NOTE 9 - STOCK WARRANTS OUTSTANDING

         As discussed in Note 6, the Company has granted warrants to purchase
         common stock in conjunction with certain stock issuances for cash. All
         warrants expire March 31, 2010. A summary of the status of the
         Company's stock warrants as of June 30, 2005, and changes during the
         years then ending, are presented below:

                                                        Weighted       Weighted
                                                         Average       Average
                                                        Exercise      Grant Date
                                          Options        Price        Fair Value
                                         ---------      --------      ----------

         Outstanding, June 30, 2004 ....         -      $      -      $        -

             Granted ................... 1,660,000          0.50               -
             Canceled ..................         -             -               -
             Exercised .................         -             -               -
                                         ---------      --------      ----------

         Outstanding, June 30, 2005 .... 1,660,000      $   0.50      $        -
                                         =========      ========      ==========

NOTE 10 - COMMITMENTS AND CONTINGENCIES

         Operating Lease
         ---------------

         The Company is obligated under an agreement for the lease of its office
         space for a monthly payment of approximately $2,619 at June 30, 2005.
         The lease terminates on May 31, 2008 and is subject to an annual rent
         escalation of approximately 3 percent.

         Rent expense for the years ended June 30, 2005 and 2004 was $30,073 and
         $27,974, respectively.

         The future minimum lease payments are as follows:

             June 30, 2006................. $ 29,156
                      2007.................   30,031
                      2008.................   28,354
                      2009+................        -
                                            --------

                      Total................ $ 87,541
                                            ========

                                      F-15
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)

         Employment Agreements
         ---------------------

         The Company is subject to one employment agreement with an executive of
         the Company whereby it will pay an annual base salary in the amount of
         $300,000 per year for the term of the agreement which expires in March
         of 2008. The agreement also provides for the issuance of stock options.
         The agreement provides for the executive's ownership in the Company to
         be subject to anti-dilution privileges. The agreement is subject to
         automatic one-year extensions indefinitely. At June 30, 2005, the
         Company has deferred payment of a total of $395,505 of this
         compensation in accrued expenses on the balance sheet. Furthermore, the
         executive is eligible to participate in an incentive compensation/bonus
         program that guarantees the payment of an additional $250,000 per year
         which is included in the deferral noted above.

         Contingencies
         -------------

         In accordance with a formal Order entered by the United States
         Securities and Exchange Commission ("SEC"), Nova has been subpoenaed
         requiring production of various documents relating to any offering of
         stock, warrants, or units by Nova or its subsidiaries from August 2004
         to October 8, 2004 as well as documents sufficient to identify any
         person or entity who invested in a private offering from September 1,
         2003 to October 8, 2004. Nova intends to cooperate with the Commission
         regarding this matter.

         During the year ended June 30, 2004, Nova BioPharmaceuticals, Inc.
         ("NBPI"), a wholly-owned subsidiary of Nova BioGenetics, Inc., was
         seeking investment capital in the form of a private placement of the
         NBPI's common stock. A former officer of the Company was in charge of
         fundraising activities. This fundraising was done in conjunction with a
         company, Pyramid Financial Group, which is owned by the former officer.
         There are allegations of misappropriation of investment funds by both
         the NBPI and the former officer against the other party, respectively.
         The following is a summary of the two situations:

         In one situation a prospective investor was contacted about purchasing
         NBPI's common stock pursuant to a private placement. This individual
         paid $400,000 to the former officer to be escrowed with Pyramid (see
         Note 5) for the purchase of 400,000 common shares. The NBPI claims to
         have had access to these funds prior to the closing of escrow for
         short-term borrowings. Pyramid disbursed amounts to NBPI, or one of its
         consolidated companies, on several occasions or made disbursements on
         their behalf. Amounts owing to the escrow were $199,500 at June 30,
         2005 (see Note 5 - Escrow Payable). There is a possibility that the
         NBPI may ultimately be responsible for either the repayment of the
         entire $400,000 (which includes the $199,500 in Note 5), the issuance
         of 400,000 shares of its common stock, or just the repayment of the
         $199,500 indicated in Note 5. As these allegations were made only
         recently and have not yet been resolved, the outcome is undeterminable
         at the present time.

         In another situation involving this former officer and Pyramid several
         investors were contacted about purchasing common shares through a
         private placement of NBPI. These individuals paid $70,500 to Pyramid
         through the former officer for the purchase of 70,500 shares of the
         NBPI's common stock. NBPI never received these funds and was unaware
         that money was committed until later when one of the investors of
         $10,000 contacted NBPI trying to locate their 10,000 shares of stock.
         This particular investor was

                                      F-16
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)

         Contingencies (Continued)
         -------------------------

         repaid for his investment and all claims have been forfeited. There is
         a possibility that the NBPI may ultimately be responsible for either
         the repayment of the entire $60,500 ($70,500 less $10,000 repayment) or
         the issuance of 60,500 shares of its common stock. It is unknown at the
         present time whether there were additional shares sold through this
         private placement by the former officer. However, no additional
         investors beyond those indicated above have come forth requesting
         shares or repayment relating to this private placement up through the
         date of the audit report. As these allegations were made only recently
         and have not yet been resolved, the outcome is undeterminable at the
         present time.

         Legal Proceedings
         -----------------

         The Company is party to one legal proceeding. A former accountant of
         Nova's predecessor, Healthcare Network Solutions, Inc., has a pending
         judgment in the amount of $42,000 against the Company for collection of
         past due fees. Nova asserts that it only owes them $15,000, which
         amount is accrued as a liability in accounts payable at June 30, 2005.
         The Company intends to contest this action vigorously. Management and
         the Company's attorneys have not yet determined an estimated range of
         loss, if any. Therefore, as the outcome is undeterminable at the
         present time, no additional amounts will be accrued in the consolidated
         financial statements as a result of this contingency.

NOTE 11 - CONCENTRATIONS OF RISK

         Major Customers
         ---------------

         For the year ended June 30, 2005, four customers' generated revenues in
         excess of 10% of the Company's total consolidated revenues. Revenues
         from these customers totaled $127,500, $125,743, $71,123, and $60,797
         or 26.1%, 25.7%, 14.6%, and 12.4%, respectively.

         For the year ended June 30, 2004, three customers' generated revenues
         in excess of 10% of the Company's total consolidated revenues. Revenues
         from these customers totaled $89,250, $37,343, and $29,750 or 34%, 14%,
         and 11%, respectively.

NOTE 12 - GOING CONCERN CONSIDERATIONS

         The accompanying consolidated financial statements have been prepared
         using generally accepted accounting principles applicable to a going
         concern which contemplates the realization of assets and liquidation of
         liabilities in the normal course of business. As reported in the
         consolidated financial statements, the Company has incurred losses of
         approximately $3,000,000 from inception of the Company through June 30,
         2005. The Company's stockholders' deficit at June 30, 2005 was $852,587
         and its current liabilities exceeded its current assets by $883,754.
         These factors combined, raise substantial doubt about the Company's
         ability to continue as a going concern. Management's plans to address
         and alleviate these concerns are as follows:

                                      F-17
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 12 - GOING CONCERN CONSIDERATIONS (Continued)

         The Company's management continues to develop a strategy of exploring
         all options available to it so that it can develop successful
         operations and have sufficient funds, therefore, as to be able to
         operate over the next twelve months. As a part of this plan, management
         is currently in negotiations with their target industries' key players.
         In addition, management is exploring options in order to raise
         additional operating capital through debt and/or equity financing. No
         assurance can be given that funds will be available, or, if available,
         that it will be on terms deemed satisfactory to management.

         The ability of the Company to continue as a going concern is dependent
         upon its ability to successfully accomplish the plans described in the
         preceding paragraph and eventually attain profitable operations. The
         accompanying financial statements do not include any adjustments
         relating to the recoverability and classification of asset carrying
         amounts or the amount and classification of liabilities that might
         result from the outcome of these uncertainties.

                                      F-18