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

                                  FORM 10-KSB-A
                                 AMENDMENT NO. 1

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

                     For The Fiscal Year Ended June 30, 2004
                                               -------------

                                       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. $261,881.

<PAGE>

The number of shares outstanding of each of the Registrant's classes of common
stock, as of October 11, 2004 is 8,787,148 shares, all of one class, $.0001 par
value per share. Of this number, 3,258,266 shares have an aggregate market value
of $651,653 based on the closing price of Registrant's common stock of $.20 on
October 11, 2004 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...........................................22

   Item 3.  Legal Proceedings.................................................22

   Item 4.  Submission Of Matters To A Vote Of Security Holders...............22

PART II.......................................................................22

   Item 5.  Market For Common Equity, Related Stockholder Matters And
            Small Business Issuer Purchases Of Equity Securities..............22

   Item 6.  Management's Discussion And Analysis Or Plan Of Operation.........24

   Item 7.  Financial Statements..............................................25

   Item 8.  Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure..........................................25

   Item 8A. Controls and Procedures...........................................25

   Item 8B. Other Information.................................................26

PART III......................................................................26

   Item 9.  Directors And Executive Officers Of The Registrant................26

   Item 10. Executive Compensation............................................27

   Item 11. Security Ownership Of Certain Beneficial Owners And Management
            And Related Stockholder Matters ..................................29

   Item 12. Certain Relationships And Related Transactions....................30

   Item 13. Exhibits, List And Reports On Form 8-K............................31

   Item 14. Principal Accountant Fees And Services............................31

Signatures....................................................................32

CERTIFICATIONS......................................................EX 31, EX 32

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

Nova Biogenetics, Inc. is a biotech holding company headquartered in Atlanta,
Georgia with two wholly owned subsidiaries: Nova Specialty Chemical, Inc. and
Nova Biopharmaceuticals, Inc., both incorporated in Delaware on January 30, 2004
Both subsidiaries are engaged in the discovery, development, and
commercialization of new therapeutic( Human ) and industrial agents that treat
infectious diseases and microbial contamination. Nova Biogenetics' pipeline is
based on proprietary patented technology used as a broad base for applications
with existing antimicrobial compounds. Attaching the proprietary patented
technology to antibiotic compounds is intended to extend the antimicrobial
spectrum of antibiotics.

NOVA BIOPHARMACEUTICALS, INC.

Nova Biopharmaceuticals, Inc.'s ("Nova Biopharmaceuticals"), (incorporated in
Delaware on January 30, 2004) mission is to provide solutions to the major
therapeutic dilemma of antimicrobial (i.e., bacteria, fungi or viruses)
resistance to antibiotics that are currently available in the worldwide
marketplace.

Nova Biopharmaceuticals is using its proprietary technology for the development
of a suite of new antibiotics and antibiotic derivatives products. Nova
Biopharmaceuticals' antibiotic product suite is an "Antibiotic Resistance
Technology," otherwise referred to as "ART".

Nova Biopharmaceuticals products have demonstrated synergistic potential when
conjugated to existing patented antimicrobials. These new chemical compounds may
be used against targeted organisms creating a unique brand of antibiotic product
formulations.

PRODUCT DIFFERENTIATION/COMPETITIVE ADVANTAGE

Nova Biopharmaceuticals' broad line of specialized antibiotic products acts by
disrupting the cell wall of bacteria and / or fungi. This action is intended to
kill the targeted organisms. Presently, many generic antibiotic formulations act
by diffusing into the targeted organism/cells and providing an environment for
slowing cellular activity providing a state of stasis (cells are not actually
killed). Nova's compounds have significant potential to actually kill the
targeted organism, significantly enhancing existing generic antibiotic
medications.

In addition, Nova Biopharmaceuticals possess a competitive advantage of
providing a product platform that may 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 that
Nova, has already received patents and EPA approvals for 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 to work from.

NOVA PHARMACEUTICAL DEVELOPMENT STRATEGY

Nova Biopharmaceuticals 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
Biopharmaceuticals' antibiotic product suite will fall under "Antibiotic
Resistance Technology," otherwise referred to as "ART". The Nova
Biopharmaceuticals" research and development strategy is targeted at providing

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short-term (i.e., 24 months), intermediate-term (i.e., 36-48 months) and
long-term (i.e., >60 months) solutions. Nova Biopharmaceuticals' proprietary
technology has demonstrated that it is not susceptible to microbial adaptation
(i.e., antibiotic resistance) in laboratory tests designed specifically for
determining antibiotic resistance. This outcome is directly linked to the
mechanism with which this technology affects microbial growth. The mechanism is
best described as "electrocution" of actively growing microorganisms. Based on
this knowledge and the availability of a vast number of proven "generic"
antimicrobials, Nova will identify a series of "novel" target molecules with
antiviral, antibacterial or antifungal functionality. In essence, the target
molecules will function in a manner similar to targeted chemotherapy. The
generic drug component of the molecule will be used to target the microorganism
and act as a delivery device for the proprietary Nova technology, which will
"kill" the microorganism.

NOVA BIOPHARMACEUTICALS RESEARCH & DEVELOPMENT PIPELINE

Nova Biopharmaceuticals views bacterial resistance as a major hurdle in
effective therapeutic interventions for a significant number of infectious
diseases. This is ever apparent in the clinical practice, where physicians and
other healthcare providers are constantly challenged by the number of new
antibiotics being offered by pharmaceutical manufacturers, while at the same
time, traditional antibiotic therapies have been 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 Biopharmaceuticals is taking steps to file patents to secure the
intellectual property of the compounds and effective molecules that Nova will
utilize in its pipeline. In that regard, it is currently conducting (MIC)
microbial inhibition studies to prepare for the filing of patents on two new
antiobiotic compound. These studies and protocols will be used to file our
intended patent surrounding the "ART" program.

THE MARKET FOR ANTIBACTERIAL PRODUCTS

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 problem. Tuberculosis, gonorrhea, malaria, and
childhood ear infections are just a few of the diseases that have become hard to
treat with antibiotic drugs. Part of the problem is that 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

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 illness, ultimately making some human sicknesses harder to treat.

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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.

Some organisms are resistant to all approved antibiotics and must be treated
with experimental and potentially toxic drugs. Some research has shown that
antibiotics are given to patients more often than guidelines set by federal and
other healthcare organizations recommend. For example, patients sometimes ask
their doctors for antibiotics for a cold, cough, or the flu, all of which are
viral and don't respond to antibiotics. Also, patients who are prescribed
antibiotics but don't take the full dosing regimen can contribute to resistance.

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 again become untreatable, as in the days before antibiotics
were developed.

Nova Biopharmaceuticals 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
Biopharmaceuticals antibiotic product suite will fall under "Antibiotic
Resistance Technology," otherwise referred to as "ART". The Nova
Biopharmaceuticals' research and development strategy is targeted at providing
short-term (i.e., 24 months), intermediate-term (i.e., 36-48 months) and
long-term (i.e., >60 months) solutions.

Nova Biopharmaceuticals' proprietary technology has so far demonstrated that it
is not susceptible to microbial adaptation (i.e., antibiotic resistance) in

laboratory tests designed specifically for determining antibiotic resistance.
This outcome is directly linked to the mechanism with which this technology
affects microbial growth. The mechanism is best described as "electrocution" of
actively growing microorganisms. Based on this knowledge and the availability of
a vast number of proven "generic" antimicrobials, Nova Biopharmaceuticals
intends to identify a series of "novel" target molecules with antiviral,
antibacterial or antifungal functionality. In essence, the target molecules will
function in a manner similar to targeted chemotherapy. The generic drug
component of the molecule will be used to target the microorganism and act as a
delivery device for the proprietary Nova technology, which will "kill" the
microorganism.

Investment funding will be needed to complete the following research activities:
Computational analysis will be utilized to determine the most economic synthesis
strategy for the target molecules and to determine potential toxicity of the
target molecules. These steps are intended to significantly reduce drug
development costs by eliminating target compounds with high toxicity and complex
synthesis requirements. Target molecules will be synthesized and subjected to
laboratory testing to validate toxicity and antimicrobial efficacy (pre-clinical
investigations). Target molecules generated in this fashion should be "novel".
As such, Nova will seek to obtain patents on the novel target molecules that
demonstrate appropriate toxicity and antimicrobial efficacy. Phase 1 through
Phase 3 Clinical Trials will be conducted. Nova may seek joint venture
partnerships to develop drug through clinical trials.

NOVA BIOPHARMACEUTICALS ANTIBIOTIC RESISTANCE TECHNOLOGY (ART)

The widespread and uncontrolled use of antibiotics, both for human consumption,
agriculture 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 in human use 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 the soil, bacteria exchange genetic information (such as

                                       4
<PAGE>

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. 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 Biopharmaceuticals' intended 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". The Nova Biopharmaceuticals' research and
development strategy is targeted at providing short-term (i.e., 24 months),
intermediate-term (i.e., 36-48 months) and long-term (i.e., >60 months)
solutions. The following is a summary of potential drug targets and the
rationale for choosing them.

Target Research Drugs

A.       Topical Treatments

Topical drug candidates represent a good option for short-term product
development. Topical drug candidates fall into three major categories:

1.       Antiviral (Acyclovir)

         Antiviral ZOVIRAX is the brand name for acyclovir, a synthetic
nucleoside analogue active against herpes viruses. ZOVIRAX Ointment 5% is a
formulation for topical administration. Each gram of ZOVIRAX Ointment 5%
contains 50 mg of acyclovir in a polyethylene glycol (PEG) base. Acyclovir is a
synthetic purine nucleoside analogue with in vitro and in vivo inhibitory
activity against herpes simplex virus types 1 (HSV-1), 2 (HSV-2), and
varicella-zoster virus (VZV). The inhibitory activity of acyclovir is highly
selective due to its affinity for the enzyme thymidine kinase (TK) encoded by
HSV and VZV. This viral enzyme converts acyclovir into acyclovir monophosphate,
a nucleotide analogue. The monophosphate is further converted into diphosphate
by cellular guanylate kinase and into triphosphate by a number of
cellularenzymes. In vitro, acyclovir triphosphate stops replication of herpes
viral DNA. This is accomplished in 3 ways: 1) competitive inhibition of viral
DNA polymerase, 2) incorporation into and termination of the growing viral DNA
chain, and 3) inactivation of the viral DNA polymerase. The greater antiviral
activity of acyclovir against HSV compared to VZV is due to its more efficient
phosphorylation by the viral TK.

2.       Antifungal (clotrimazole, econazole, miconazole, nystatin, tolnaftate).
         Topical drugs are the most attractive because they currently require
         the least amount of Food and Drug Administration (FDA) scrutiny.

         Antifungal topical medications do not fall into any single class of
drugs. Instead each has a different type of antifungal mechanism. The different
drugs in each category are used to treat different fungi. Topical drugs are
divided into over-the-counter (OTC) and prescription medications. This is also a
good target group due to antibacterial activity of Nova Biopharmaceuticals ART.
Secondary bacterial infections may also be problematic in the treatment of
primary fungal dermatomycoses. Additionally, we can narrow the list of
candidates by choosing drugs that interact with the fungal cell wall. The ART
works in a similar manner, which should increase the probability of synergistic
drug actions.

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TOPICAL OTC ANTIFUNGAL MEDICATIONS

The following list of antifungal agents represent potential target molecules for
conjugation to Nova's proprietary technology. These target molecules will be
evaluated using high throughput computational molecular modeling to identify
high consequence molecules.

Clioquinol (Vioform(R)). Clioquinol is used to treat inflammatory conditions of
the skin, such as eczema (dry skin) and athlete's foot. This medication may
stain fabric, skin, or hair.

Clotrimazole (Lotrimin(R) AF, Mycelex(R) OTC, prescription-strength Desenex(R)).
Clotrimazole is used to treat vaginal and oral candidiasis, athlete's foot, jock
itch, and ringworm of the face, arms and shoulders (not ringworm of the scalp).
It is available as either a solution or cream, lozenge, topical solution and
vaginal suppository.

Miconazole (Micatin(R)). Miconazole is available as an ointment, cream, powder,
vaginal suppository, spray, liquid, or solution. It is used to treat athlete's
foot; jock itch; and ringworm of the face, arms and shoulders. Miconazole should
provide symptomatic relief within 2-3 days. However, when treating athlete's
foot, treatment is continued for at least 2 to 4 weeks to ensure a complete
cure.

Tolnaftate (Aftate(R), Tinactin(R)). Tolnaftate is available as an aerosol
powder or solution, cream, powder, gel, or topical solution. It is used to treat
athlete's foot and other superficial fungal infections of the skin.

PRESCRIPTION TOPICAL ANTIFUNGAL MEDICATIONS

Ciclopirox (Loprox(R)). Ciclopriox is available as a cream or lotion. It is used
to treat a variety of fungal infections including athlete's foot, jock itch, and
cutaneous candidiasis. Ciclopriox is also available as a nail lacquer for
treating fungal infections of the nails and nail beds. It may take 4-6 months to
see improvement in the nails.

Ketoconazole (Nizoral(R)). Ketoconazole is available as a prescription tablet,
cream or shampoo. A 1% shampoo is also available over-the-counter. The cream is
used for the treatment of ringworm, jock itch, and athlete's foot. The shampoo
is used to reduce scaling due to dandruff. Treatment for ringworm, jock itch and
athlete's foot is usually 2-6 weeks. Treatment for dandruff is 4 weeks, and then
on an as-needed basis.

Miconazole (Mycostatin(R), Nystop(R)). Miconazole is available as an ointment,
cream, powder, spray, liquid, or solution. It is used to treat athlete's foot;
jock itch; and ringworm of the face, arms and shoulders.

Naftifine (Naftin(R)). Naftifine is available as a cream or as a gel. It is used
to treat athlete's foot, jock itch, and generalized fungal skin infections.
Complete the full course of therapy to prevent recurrent infections. Naftfine is
available by prescription only.

Nystatin (Nystop(R), Mycostatin(R)). Nystatin is available as a cream, ointment
or powder. It is used to treat a variety of fungal infections. In particular, it

is used to treat candidal infections, such as thrush, esophageal candidiasis,
and cutaneous candidiasis. It is virtually nontoxic and nonsensatizing.
Symptomatic relief should occur within 1-3 days. However, a user should finish
the full course of therapy to ensure that the infection is completely cleared
up. Nystatin is available by prescription only.

Oxiconazole (Oxistat(R)). Oxiconazole is available as a cream or a lotion. Both
are used to treat athlete's foot, jock itch, and ringworm in adults and
children. The cream can also be used to treat tinea versicolor, which is a
chronic, generalized fungal skin infection. Wash hands after applying the
medication to help prevent accidental application to other areas. Oxiconazole is
available by prescription only.

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Selenium Sulfide (Selsun(R), Exsel(R)). Selenium sulfide is available as a
lotion or shampoo. It is used to treat dandruff, seborrheic dermatitis, ringworm
of the scalp, and tinea versicolor (a generalized chronic fungal skin
infection). This medication is available by prescription only.

Terbinafine (Lamisil(R)). Terbinafine is available as a cream or pump-spray
solution. It is used to treat a variety of ringworm infections, as well as
athlete's foot, jock itch, and candidal skin infections. Terbinfine is available
by prescription only.

OTC VAGINAL ANTIFUNGAL MEDICATIONS

Miconazole (Monistat(R) 3, Monistat-Derm(R)). Miconazole is available as an OTC
suppository or cream. It is used to treat vaginal fungal infections, including
vaginal candidiasis. Terconazole (Terazol(R)). Terconazole is an antifungal
cream or suppository intended for intravaginal use only. It is used to treat
vaginal fungal infections, including vaginal candidasis. It is generally
prescribed as a 3-day or 7-day course of treatment.

3.       Antibacterial (bacitracin, clindamycin, erythromycin, metranidazole,
         mupirsoin, neomycin, and polymyxin B)

         The ideal antibacterial or antimicrobial compound displays a selective
toxicity. This means that it is harmful to the microbe (the bacteria, fungi or
virus) without being harmful to the host (a user). In reality, many
antimicrobials have a relative toxicity. Antimicrobial is a broader category
that includes antifungal, antiviral, antiprotozoal or antibacterial compounds.
Antibacterials specifically act against bacterial cells. The actual mechanism of
antibacterial compounds is not always known. In general terms, most of these
drugs act by altering or inhibiting one of the following cellular
structures/processes: a) cell wall synthesis, b) permeability of the cell
membrane, c) protein synthesis, and d) nucleic acid synthesis. Our focus is not
restricted. This phase of testing will help identify, which antibacterial
mechanisms are the most synergistic with ART. The primary market is OTC topical
antibacterial treatments.

         Target drug candidates may include: bacitracin, clindamycin,
erythromycin, metranidazole, mupirosin, neomycin and polymyxin B.

B.       Oral Treatments

Oral treatments will require significant research and development. Consequently,
oral treatments are better candidates for intermediate to long-term development.
The FDA requirements for oral treatments are also much more stringent. These
products will require considerable toxicity and bioavailablity testing. There
are three principal targets for antibacterial drugs1) cell wall synthesis, 2)
DNA / RNA sysnthesis, and 3) protein synthesis.

The ART works is primarily directed toward cell wall synthesis. Consequently,
the initial research and development will focus on drugs that interact with cell
walls, which should increase the probability of synergistic drug actions. The
following is a brief description of interaction between select antibiotics and
the cell wall. The bacterial cytoplasm is separated from the external
environment by a cytoplasmic membrane; in addition, bacteria possess a crucial
structure surrounding the entire cell: the peptidoglycan. This three-dimensional
cross-linked mesh protects the cell from modifications in osmotic pressure and
plays key roles in cellular shape determination and daughter cell formation
during the division process. Disruption of the peptidoglycan structure engenders
osmotic fragility and possibly cell lysis, underlining the essential nature of
its function. Therefore, it is not surprising that a vast number of naturally
occurring antibiotics are in fact targeted towards enzymes or substrates
involved in peptidoglycan biosynthesis and cell wall stabilization. The
widespread use of such molecules and their novel analogs, including vast
application as additives in animal feed, has promoted the development of
resistance patterns with dire effects observed for vancomycin and Beta-lactams.

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Target drug candidates may include: Penicillins (G, V, Amoxicillin, Ampicillin,
Nafcillin, Ticarcillin), Cephalosporins (Cephalexin, Cefazolin, Cefaclor,
Loracarbef, Ceftriaxone, Cefotaxime), Vancomycin, and Isoniazid.

INDUSTRY - ANTIBIOTICS

According to the Center for Disease Control (CDC), more than two million
patients in the U.S. each year contract an infection as a result of exposure
while receiving healthcare in a hospital. S. AUREUS is among the most common
causes of these hospital-acquired infections and is reportedly associated with a
death rate of 10% to 25% because of its capacity to cause serious complications.
S. AUREUS can spread from the blood (bacteremia), to the bones (osteomyelitis),
or the inner lining of the heart and its valves (endocarditis), or cause
abscesses in internal organs such as the lungs and kidneys. Most at risk for
these infections are surgical patients, trauma or burn victims, newborns whose
immune systems are not yet developed and people with such chronic illnesses as
diabetes, cancer, lung diseases or kidney diseases. People whose immune systems
are suppressed due to disease, drugs or radiation therapy also are more
susceptible to these bacterial infections. Based on a 1995 study, the Lewin
Group, an independent consulting group, published data on the incidence, deaths
and direct medical costs of S. AUREUS infections in hospitalized patients in the
New York City metropolitan area. The report found that in 1995 the total direct
medical costs incurred as a result of S. AUREUS infections was estimated at
$32,100 per patient. S. AUREUS-associated hospitalizations resulted in more than
twice the length of hospitalization stay, twice the deaths and twice the medical
costs compared to an average hospital stay. Methicillin-resistant and
methicillin-sensitive infections had similar direct medical costs, but resistant
infections caused more deaths (21% versus 8%). These infections are difficult to
treat because the bacteria that cause them are highly virulent and are resistant
to many currently available antimicrobial drugs. Overall, 70% of the bacteria
causing Gram-positive infections are resistant to at least one of the drugs most
commonly used to treat these infections. Although the contribution of antibiotic
resistance to the outcome of such infections is unclear, hospital-acquired
infections of the bloodstream may represent the eighth leading cause of death in
the U.S. The rise of antibiotic resistance has markedly curtailed options for
treating these infections. The first penicillin-resistant strains of S. AUREUS
were identified in 1944, and by the late 1950's, approximately half of S. AUREUS
infections were of this type. Methicillin-resistant strains were identified in
1961, just one year after the introduction of this antibiotic. The CDC currently
estimates that in large, urban U.S. hospitals, up to 55% of S. AUREUS infections
are resistant to methicillin. In 1997, the first S. AUREUS strains with notably
reduced sensitivity to vancomycin (so called, vancomycin intermediate
sensitivity S. AUREUS - VISA strains) and teicoplanin were discovered. VISA
strains have been isolated in 23 states within the U.S. and have contributed to
the death of patients in the U.S., Europe and Japan.

THE BIOTECHNOLOGY INDUSTRY (SOURCE: ERNST & YOUNG LLP, ANNUAL BIOTECHNOLOGY
INDUSTRY REPORTS 1993 - 2001.)

More than 250 million people worldwide have been helped by the more than 117
biotechnology drug products and vaccines approved by the U.S. Food and Drug
Administration (FDA). Of the biotech medicines on the market, 75 percent were
approved in the last six years. There are more than 350 biotech drug products
and vaccines currently in clinical trials targeting more than 200 diseases,
including various cancers, Alzheimer's disease, heart disease, diabetes,
multiple sclerosis, AIDS and arthritis.

Biotechnology is responsible for hundreds of medical diagnostic tests that keep
the blood supply safe from the AIDS virus and detect other conditions early
enough to be successfully treated. Home pregnancy tests are also biotechnology
diagnostic products. Consumers are already enjoying biotechnology foods such as
papaya, soybeans and corn. Hundreds of biopesticides and other agricultural
products are also being used to improve our food supply and to reduce our
dependence on conventional chemical pesticides. Environmental biotechnology
products make it possible to clean up hazardous waste more efficiently by
harnessing pollution-eating microbes without the use of caustic chemicals.
Industrial biotechnology applications have led to cleaner processes that produce

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less waste and use less energy and water in such industrial sectors as
chemicals, pulp and paper, textiles, food, energy, and metals and minerals. For
example, most laundry detergents produced in the United States contain
biotechnology-engineered enzymes. DNA fingerprinting, a biotech process, has
dramatically improved criminal investigation and forensic medicine, as well as
afforded significant advances in anthropology and wildlife management. There are
approximately 1,273 biotechnology companies in the United States, of which
approximately 300 are publicly held. Market capitalization, the amount of money
invested in the U.S. biotechnology industry, increased 156 percent in one year,
soaring from $137.9 billion in 1999 to $353.5 billion in 2000. The biotechnology
industry more than doubled in size since 1993, with revenues increasing from $8
billion in 1993 to $22.3 billion in 2000. The U.S. biotechnology industry
currently employs 150,800 people; that's more than all the people employed by
the toy and sporting goods industries. Biotechnology is one of the most
research-intensive industries in the world. The U.S. biotech industry spent
$10.7 billion on research and development in 2000. The top five biotech
companies spent an average of $89,400 per employee on R&D in 2000. This compares
with an average of $37,200 per employee spent by the top pharmaceutical
companies.

The biotech industry is regulated by the Food and Drug Administration (FDA), the
Environmental Protection Agency (EPA) and the Department of Agriculture (USDA).
Development of Biopharmaceutical Products (Source: Biotechnology Industry
Organization) Biopharmaceutical products, vaccines, etc are classified as
"biological products" under FDA regulations. The steps required before a
biological product may be marketed in the U.S. generally include pre-clinical
studies and the filing of an initial new drug ("IND") application with the FDA,
which must be accepted by the FDA before human clinical studies may commence.
The initial human clinical evaluation, called a Phase I trial, generally
involves administration of a product to a small number of normal healthy
volunteers to test for safety. Phase II trials involve administration of a
product to a limited number of patients with a particular disease to determine
dosage and safety, as well as provide indications of efficacy. Phase III trials
examine the efficacy and safety of a product in an expanded patient population
at geographically dispersed clinical sites. Phase IV trials monitor for adverse
effects and are undertaken post-licensure as additional large-scale, long-term
studies of morbidity and mortality. The FDA reviews the clinical plans and the
results of trials and can discontinue the trials at any time if there are
significant safety issues. Biological products, once approved, have no provision
allowing competitors to market generic versions. Each biological product must
undergo the entire development process in order to be approved. The results of
all trials are submitted in the form of a BLA/New Drug Application ("NDA") for
approval to commence commercial sales. For BLA/NDA approval, the FDA requires,
among other things, that the prospective manufacturer's methods conform to the
agency's GMP regulations, which must be followed at all times and that the
prospective manufacturer submit three conformance lots in support of the
application. In complying with standards set forth in these regulations,
manufacturers must continue to expend time, money and effort in the area of
production and quality control to ensure full regulatory compliance. The
approval process is affected by several factors, including the severity of the
disease, the availability of alternative treatments, and the risks and benefits
demonstrated in clinical trials. The FDA also may require post-marketing
surveillance to monitor potential adverse effects of the product. The regulatory
process can be modified by Congress or the FDA in specific situations.

TARGET SELECTION, SCREENING AND TESTING TARGET SELECTION

We focus on infectious diseases representing large and growing market
opportunities with significant unmet medical needs. The selection of a
particular therapeutic target relative to those infectious diseases takes into
consideration the likelihood that our proprietary compound library will yield
biologically active drug molecules. The final selection is based on the
probability of being able to generate a robust medicinal chemistry SAR analysis
to assist lead optimization and secure relevant intellectual property rights.

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SCREENING AND LEAD OPTIMIZATION

We believe that our efficiency in selecting a lead chemical structure from many
of our focused library distinguishes us from our competitors. Our ability to
discover multiple compounds with antibiotic activity, as exemplified by our drug
candidates, enhances early progress toward lead optimization.

The initial testing and proof of concept is accomplished through the use of
directed but diverse cell-based and biochemical assays. Cell-based assays are
used to analyze a drug candidate's activity in an environment similar to the
environment within which the drug will interact in the infected host. These
cell-based assays also help us to assess the cytotoxicity of drug candidates and
the ability to penetrate host cell walls or membranes. This information,
together with information our scientists (Dr. Kevin Smith and Mr. David Kien)
gather on the metabolic profile of a compound, is highly valuable both when
selection among lead candidates is necessary and also in later stages of
development.

Secondary assays of normal host cell functions are also used early in the
discovery process to identify unwanted toxicities. The conventional
high-throughput screening employed at most major pharmaceutical companies
typically relies upon the ability to screen millions of diverse synthetic
compounds against purified enzymes in in-vitro biochemical assays. These
screening efforts require tremendous technology and manpower resources, yet have
led to the development of relatively few antibiotic products that are currently
approved. Problems encountered with this approach include very low overall hit
rates and considerable effort to eliminate the false hits caused by impurities,
chemically active compounds or irrelevant mechanisms of inhibition. The hits
that emerge from in vitro screens are often not "drug-like" molecules for a
variety of reasons, including an inability to permeate cells and instability.
Converting these hits into molecules that are more drug-like in character is
often difficult. We believe our screening and lead optimization processes are
more streamlined than those of many of our competitors.

PHARMACOLOGY AND PRE-CLINICAL DEVELOPMENT

Once we have identified lead compounds, they are tested using in vitro and in
vivo pharmacological studies and in vivo animal models of antibiotic efficacy.
Using in vitro studies, our scientists are able to ascertain the relevance of
intracellular activation, metabolism and protein binding. The in vivo
pharmacokinetic studies identify the percentage of oral bioavailability and
whole body metabolism of the compound. The animal model provides data on the
efficacy of the compound and firmly establishes a proof of concept in a
biologically relevant system.

OPERATIONS TO DATE

Since our inception we have recruited key staff in the areas of management,
clinical research and development, and a staff environmental lawyer. Management
has completed restructuring of the Board of Directors and has restructured the
focus of the business model to include development of our Antimicrobials and
Biopharmaceutical affiliates. We completed the reverse merger of Nova
Biogenetics, Inc. incorporated from Healthcare Network Solutions, in March 2003,
and are moving forward with both private placement and secondary offering
strategies in an attempt to achieve the required funding for future development
of our two divisions. There can be no assurance that funds will be available,
or, if available, that it will be on terms deemed reasonable to management.

NOVA SPECIALTY CHEMICALS, INC.

Nova Specialty Chemicals, Inc. ("Nova Specialty Chemical") (incorporated in
Delaware on January 30, 2004) is committed to the development, marketing and
sale of leading antimicrobial and biostatic products. The Company's
antimicrobial technology is formulated as an alternative to conventional
sanitizers, disinfectants, bleaches, biocides and preservatives. Nova Specialty
Chemicals proprietary antimicrobial products are more durable, effective, and
safe, and can make claims that other products may not be able to make.

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Nova Specialty Chemicals is attempting to capture market opportunities through a
business strategy that encompasses superior research and development supporting
six distinct market segments. These segments include: Building Materials, Ink,
Dyes and Coatings, pulp and paper industry, Latex and other Emulsions, After
market Clear Coatings and Resins and a multitude of OEM manufacturing. These
divisions offer the Company lucrative business opportunities as well as
significant revenue diversification. Management believes that the Company's
technology will be a significant force in the future antimicrobial market. To
date, Nova Specialty Chemicals has Five U.S. patents and Seven EPA
registrations.

The primary core technology contains no heavy metals, formaldehyde treatment or
phenol groups, and is the only non-toxic antimicrobial. Unlike other
antimicrobial materials, the Company's product has not been shown to allow or
cause microbial adaptation, resistance, mutation, diffusion, or migration. It is
different from conventional sanitizers, disinfectants, or biocides that are
extremely toxic and contaminate the environment with undesirable chemicals. Some
of the differences are in its chemical nature, effectiveness, durability and
safety. This technology has a advantage over previously known methods and
applications: the antimicrobial component material is bonded to the cell or
surface. Microorganisms are then destroyed by simple contact with the surface.
Nova Specialty Chemicals antimicrobial products bond to almost any surface,
creating unlimited applications for the Company's technology.

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

Unlike conventional biocides and anti-viral drugs that are designed to
volatilize and be absorbed by organisms, the Nova Specialty Chemicals
antimicrobial is a durable, broad spectrum antimicrobial that chemically bonds
to, and literally becomes part of, the application surface. Most surfaces remain
antimicrobial for an extended period of time. Nova Specialty Chemicals
antimicrobial acts as microorganisms come into direct contact with it. Since the
antimicrobial is not absorbed by organisms, but remains a part of each
application surface, it, in effect, transforms conventional surfaces and
materials into active antimicrobial surfaces. These surfaces remain effective
for extended periods, which can result in a significant reduction of some
viruses and infections caused by air-borne microbial contaminants.

Unlike other antimicrobial products on the market, Nova Specialty Chemicals
antimicrobial products molecularly bond to numerous surfaces and are presently
being used 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). The Company controls a technology that not only effectively
kills a broad spectrum of microorganisms, including viruses, mold, mildew,
fungi, yeasts and gram (+) and gram (-) bacteria, but also permanently bonds
molecularly to most surfaces to form an active antimicrobial surface which
continues to kill microorganisms for extended periods of time.

Nova Specialty Chemicals antimicrobial products contain no heavy metals, tin,
lead, mercury or formaldehyde. Nova Specialty Chemicals products are water-based
and dilutable in water, and they do not require solvents for dilution like many
other antimicrobials. Nova Specialty Chemicals core technology products are
non-toxic and are biodegradable.

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Nova Specialty Chemicals antimicrobial products maintain permanent antimicrobial
action, killing germs, viruses and bacteria on contact. They also kill germs
that cause odors in areas such as bathrooms (basins, toilets, etc.), floors,
basements, hospital rooms, attics, closets, laundry and storage rooms, and pet
areas. Unlike many other antimicrobials, Nova Specialty Chemicals antimicrobial
products provide long-lasting residual activity on a surface thus eliminating
the worry of re-infestation by harmful microorganisms, bacteria and most
viruses.

To capitalize on the emergence of this need, Nova Specialty Chemicals will
continue to invest in its Research & Development activities to the extent that
our limited funds permit. To support this plan, the Company's operations
strategy will continue to outsource all production, warehousing, and
distribution functions in order to conserve capital for utilization within
Research & Development. This strategy, while conserving capital, also allows for
relatively low personnel requirements, more manageable inventory levels, and a
more predictable cost-of-goods for low volume new products.

Nova Specialty Chemicals intends to compete on the basis of technological
advantage, leverage of worldwide distribution and strategic alliances, the
resources of its marketing partners, specialty niche marketing, the knowledge of
its performance characteristics, its antimicrobial base products, and the
quality of its technical assistance and the service furnished to its customers.

The Company's Management, Research, Operational and Marketing teams have
developed a strategy to offer its antimicrobial products to the marketplace. To
that end, Nova Specialty Chemicals has a three distribution agreements, and
maintains partnering relationships to successfully sell its antimicrobial

products in the marketplace. The Company is negotiating with additional leading
distributors and manufacturers to use and sell Nova Specialty Chemicals
antimicrobial, preservative products and specialty chemicals.

MISSION STATEMENT

At Nova Specialty Chemicals, the pursuit of new ideas to improve and solidify
our business has always been paramount. We constantly strive to set new
standards for quality, integrity and efficiency in all of our affairs. Our
innovations are intended to propel us into the forefront of antimicrobial
research, (however, due to limited resources, such intentions may be difficult,
if not impossible to fulfill).

Through a dynamic network of synergistic partnerships, we help the world's
leading companies debut exciting, cutting-edge products that are built upon a
framework of quality, safety and reliability. We also manage and oversee
strategically located Master Licensees, which ensures conformity and adherence
to our environmental commitments pertaining to our specialty chemical products.

All of this is accomplished with an unwavering resolve to conduct our business
with the highest standards of excellence.

INDUSTRY - ANTIMICROBIALS

Nova Specialty Chemicals' primary focus is to exploit its proprietary technology
to become a leader in antimicrobials and biocides for consumers, Original
Equipment Manufacturing, industrial, institutional, environmental services, and
various biochemical related industries. Nova's products are an easily applied
reactive technology that modifies surfaces of all types, by creating an
invisible covalent bond between surfaces and a variety of chemical agents.

Through the cross linking technology, these antimicrobial properties and other
chemical agents can impart many performance-enhancing characteristics, such as
residual antimicrobial activity, removal of surface-borne and air-borne
allergens which may cause respiratory discomfort or asthma, infection
resistance, anti-inflammation, lubricity and drug delivery onto many surfaces
without changing the dimensions or physical properties of the modified surfaces.

Nova Specialty believes that its antimicrobial technologies and other related
biochemicals have properties that make its products more durable, effective and
safer than those currently available conventional antimicrobials,
non-antibiotics, preservatives or biocides. Nova Specialty also believes that

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certain manufacturers who utilize its technologies will significantly improve
the performance of their products and in some situations differentiate their
products in a highly competitive marketplace.

SPECIALTY CHEMICAL INDUSTRY

Nova Specialty Chemical is currently engaged in testing multiple applications of
its core technology and products with leading manufacturers, many of whom are
Fortune 500 companies. The Company is committed to a value-added strategy to

have our antimicrobial technology incorporated into the products of these
leading manufacturers. It is Nova Specialty Chemicals intention to produce
co-branded products in the future.

In addition, Nova Specialty intends to follow a path taken by many other
proprietary specialty chemical Research and Development Companies and has
targeted leading specialty chemical distributors representing many vertical
markets such as the Industrial and Institutional Industry, paints, coatings and
adhesives, plastics, textiles, and pulp and paper. The Company aligns with
distributors that sell Nova products on either an exclusive or non-exclusive
basis to specific customers, for specific customer applications, or into
specific vertical industry markets.

Nova Specialty manages this program so that, where possible, the distributor can
take product and stock in their locations. The stocking program, potential sales
opportunities and outlook for future sales are key requirements prior to
entering into an agreement with a distributor. The Company knows our products
have long sales cycles, however, we are interested in making long term
agreements with distributors that can expend appropriate time marketing and
selling our product and moving quantities into the marketplace.

In addition, the marketing of Nova Specialty products within the institutional
and industrial segments and other key vertical industries will be consistent, as
products that contain the Nova technology will be clearly labeled. Advertising
for the Company, its technology, and its products will consist of traditional
media, printed material in high distribution trade journals, direct mail, and
active, visible participation in appropriate industry conventions. And as a
result of the distribution agreements, Nova Specialty works very closely with
distributors providing leads and opportunities and we are committed to
supporting our distributors with strong technical personnel, sales and marketing
support, and training. Nova Specialty works with distributors regularly (monthly
sales calls, quarterly/annual meetings, etc.) to understand product pipeline and
forecasting, key opportunities, and problem accounts, with a focus on ensuring
goals are being met, appropriate levels of inventory are on hand to support
sales effort, and growth opportunities are targeted and executed.

SUB-REGISTRATIONS

THE COMPANY CURRENTLY ALLOWS COMPANIES TO SUB REGISTER OUR TECHNOLOGY AND
REGISTRATIONS AND we coordinate with distributors where applicable. As new
products are developed some will be made available for private label
distribution, particularly those that make non-pesticidal claims. The expansion
of sub registered label sales will only be executed in situations where both the
anticipated volume and pricing are such that positive profitability is
available.

LICENSING VALUE ADDED TECHNOLOGY

Utilization of Nova Specialty Chemicals patented technology in leading consumer
goods offered by other organizations represents potentially lucrative licensing
revenues for the Company. The unique attributes of Nova Specialty Chemicals
technology permit incorporation into existing products as a value-added
ingredient that imparts anti-microbial properties to the base product. Marketing
programs for value-added products are designed to support the global licensing
strategy of Nova Specialty. The Company intends to pursue additional licensing
agreements with manufacturers that the Company anticipates will contain a
marketing portion that outlines the requirements that each joint product will
bear a notification of "Protected By Nova " or other similar awareness building
program. This extension of the Company's trademarks into categories, products,
and geographies will enhance the long term branding campaign.

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MARKET COMPETITION - ANTIBIOTICS

Our industry is highly competitive and subject to rapid technological change.
Significant competitive factors in our industry include: product effectiveness;
safety; timing and scope of regulatory approvals; price of products;
availability of supply; patent protection; and sales and marketing capabilities
Many of the companies competing against us have total cash resources
substantially greater than our own. In addition, many of our competitors have
significantly greater experience in testing pharmaceutical and other therapeutic
products, obtaining FDA and other regulatory approvals of products for use in
health care and marketing and selling those products. Accordingly, our
competitors can succeed more rapidly than we will in obtaining FDA approval for
products and achieving widespread market acceptance. If we obtain necessary
regulatory approvals and commence significant commercial sales of our products,
we will also be competing with respect to manufacturing efficiency and marketing
capabilities, areas in which we have limited or no experience. We believe that
the quality and breadth of our technology and our goal to recruit and retain
skilled employees, to be aggressive in seeking patent protection for our
discoveries and our research and development capabilities may be or may lead to
competitive strengths. However, many pharmaceutical and biopharmaceutical
companies have significantly larger intellectual property portfolios than we do,
more substantial capital resources than we have, and greater capabilities and
experience than we do in pre-clinical and clinical development, sales,
marketing, manufacturing and regulatory affairs. Any drug candidates that we
successfully develop will compete with existing therapies and therapies that are
likely to become available in the future. Many organizations, including large
pharmaceutical and biopharmaceutical companies as well as academic and research
organizations and government agencies, are pursuing novel drug therapies that
target the same viral diseases. Some of the principal pharmaceutical companies
with which we expect to compete directly include Boehringer Ingelheim,
Bristol-Myers Squibb Co., F. Hoffman La Roche Holdings Ltd., GlaxoSmithKline
plc, Johnson & Johnson, Merck and Co., Pfizer Inc and Schering-Keyes Corp. Some
of the principal biopharmaceutical companies with which we expect to compete
directly include Achillion Pharmaceuticals, Inc., Chiron Corp., Human Genome
Sciences, Inc., InterMune, Inc., Gilead Sciences, Inc., Ribapharm Inc., Triangle
Pharmaceuticals, Inc., Trimeris, Inc. and Vertex Pharmaceuticals Incorporated.
Most, if not all, of these companies and organizations, either alone or with
their collaborative partners, have substantially greater financial, technical
and human resources than we currently have or will have in the foreseeable
future. We believe that a significant number of drugs are currently under
development and will become available in the future. We anticipate that we will
face intense and increasing competition as new products enter the market and
advanced technologies become available. Our competitors' products may be more
effective, or more effectively marketed and sold, than any product we may
commercialize. Competitive products may render our product obsolete or
non-competitive before we can recover the expenses of developing and
commercializing any of our drug candidates. We are also aware that the
development of a cure or new treatment methods for the diseases we are targeting
could render our products non-competitive or obsolete.

REGULATION FDA REQUIREMENTS FOR DRUG COMPOUNDS

The research, testing, manufacture and marketing of drug products are
extensively regulated by numerous governmental authorities in the United States
and other countries. In the United States, drugs are subject to rigorous
regulation by the FDA. The Federal Food, Drug and Cosmetic Act, and other
federal and state statutes and regulations govern, among other things, the
research, development, testing, manufacture, storage, record keeping, labeling,
promotion and marketing and distribution of pharmaceutical products. If we fail
to comply with applicable regulatory requirements, we may be subject to a
variety of administrative or judicially imposed sanctions. The steps ordinarily
required before a new pharmaceutical product may be marketed in the United
States include pre-clinical laboratory tests, animal tests and formulation

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studies, the submission to the FDA of an investigational new drug application,
or IND, which must become effective before clinical testing may commence in the
United States, and adequate and well-controlled clinical trials to establish the
safety and effectiveness of the drug for each indication for which it is being
tested. Pre-clinical tests include laboratory evaluation of product chemistry
and formulation, as well as in vitro and animal trials to assess the potential
safety and efficacy of the drug candidate. The conduct of the pre-clinical tests
and formulation of compounds for testing must comply with federal regulations
and requirements. The results of pre-clinical testing are submitted to the FDA
as part of the IND to justify the administration of the drug candidate to human
subjects in the proposed clinical trial. A 30-day waiting period after the
filing of each IND is required prior to the commencement of clinical testing in
humans. If the FDA has not commented on or questioned the IND within this 30-day
period, the proposed clinical trial may begin. If the FDA has comments or
questions, the questions must be answered to the satisfaction of the FDA before
initial clinical testing can begin. In addition, the FDA may, at any time,
impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical
hold, clinical trials cannot commence or recommence without FDA authorization
and then only under terms authorized by the FDA. In some instances, the IND
process can result in substantial delay and expense. Clinical trials involve the
administration of the drug candidate to healthy volunteers or patients under the
supervision of a qualified principal investigator. Clinical trials must be
conducted in compliance with federal regulations and requirements, under
protocols detailing the objectives of the trial, the parameters to be used in
monitoring safety and the effectiveness criteria to be evaluated. Each protocol
must be submitted to the FDA as part of the IND. Both, the study protocol and
informed consent information for patients in clinical trials must be approved by
the institutional review board at each institution where the trials will be
conducted. Clinical trials to support new drug applications for marketing
approval are typically conducted in three sequential phases, but the phases may
overlap.

In Phase I, the initial introduction of the drug candidate into healthy human
subjects or patients, the drug candidate is tested to assess metabolism,
pharmacokinetics and pharmacological actions and safety, including side effects
associated with increasing doses. Phase II usually involves trials in a limited
patient population, to determine dosage tolerance and optimum dosage, identify
possible adverse effects and safety risks, and provide preliminary support for
the efficacy of the drug candidate in the indication being studied. If a drug
candidate is found to be effective and to have an acceptable safety profile in
Phase II evaluations, Phase III trials are undertaken to further evaluate
clinical efficacy and to further test for safety within an expanded patient
population at geographically dispersed clinical trial sites. There can be no
assurance that Phase I, Phase II or Phase III testing of our drug candidates
will be completed successfully within any specified time period, if at all.
After completion of the required clinical testing, generally a new drug
application, or NDA, is prepared and submitted to the FDA. FDA approval of the
NDA is required before marketing of the product may begin in the United States.

The NDA must include the results of extensive clinical and pre-clinical testing
and the compilation of data relating to the product's chemistry, pharmacology,
manufacture, safety and effectiveness. The cost of the NDA is substantial, both
in terms of studies required to generate and compile the requisite data, as well
as the mandatory user fees submitted with the application. The FDA has 60 days
from its receipt of the NDA to determine whether the application will be
accepted for filing based on the agency's threshold determination that the NDA
is sufficiently complete to permit substantive review. Once the submission is
accepted for filing, the FDA begins an in-depth review of the NDA. Under federal
law, the FDA has 180 days in which to review the application and respond to the
applicant. The review process is often significantly extended by FDA requests
for additional information or clarification regarding information already
provided in the submission. The FDA typically will refer the application to the
appropriate advisory committee, typically a panel of clinicians and
statisticians, for review, evaluation and a recommendation as to whether the
application should be approved. The FDA is not bound by the recommendation of an
advisory committee. If FDA evaluations of the NDA and the manufacturing
facilities are favorable, the FDA may issue an approval letter, or, in some
cases, an approvable letter followed by an approval letter. Approvable letters

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usually contain a number of conditions that must be met in order to secure final
approval of the NDA. When and if those conditions have been met to the FDA's
satisfaction, the FDA will issue an approval letter. The approval letter
authorizes commercial marketing of the drug for specific indications. As a
condition of NDA approval, the FDA may require post-marketing testing and
surveillance to monitor the drug's safety or efficacy, or impose other
conditions. Once granted, product approvals may be withdrawn if compliance with
regulatory standards is not maintained or problems occur following initial
marketing. If the FDA's evaluation of the NDA submission or manufacturing
facilities is not favorable, the FDA may refuse to approve the NDA or may issue
a not approvable letter. The not approvable letter outlines the deficiencies in
the submission and often requires additional testing or information. The FDA
ultimately may decide that the application does not satisfy the regulatory
criteria for approval.

FOREIGN REGULATION OF DRUG COMPOUNDS APPROVAL

A drug candidate must meet the comparable regulatory authorities standards
necessary in foreign countries prior to the commencement of marketing of the
drug candidate in those countries, whether or not FDA approval has been
obtained. The approval procedure varies among countries and can involve
additional testing. The time required may differ from that required for FDA
approval. In the European Union, or EU, investigational products are subject to
extensive regulatory requirements. As in the United States, the marketing of
medicinal products has for many years been subject to the granting of marketing
authorizations by relevant regulatory agencies. In the EU, approval of new
chemical compounds can at present be obtained only through one of two processes:

1. Mutual Recognition Procedure: An applicant submits an application in one EU
member state, known as the reference member state. Once the reference member
state has granted the marketing authorization, the applicant may choose to
submit applications in other concerned member states, requesting them to
mutually recognize the marketing authorization already granted. Under this
mutual recognition process, authorities in other concerned member states have 55
days to raise objections, which must then be resolved by discussions among the
concerned member states, the reference member state and the applicant within 90
days of the commencement of the mutual recognition procedure. If any
disagreement remains, all considerations by authorities in the concerned member
states are suspended and the disagreement is resolved through an arbitration
process. The mutual recognition process results in separate national marketing
authorizations in the reference member state and each concerned member state.

2. Centralized Procedure: This procedure is currently mandatory for products
developed by means of a biotechnological process and optional for new active
substances and other "innovative medicinal products with novel characteristics."
Under this procedure, an application is submitted to the European Agency for the
Evaluation of Medical Products. Two EU member states are appointed to conduct an
initial evaluation of each application, the so-called Rapporteur and
Co-Rapporteur countries. These countries each prepare an assessment report,
which are then used as the basis of a scientific opinion of the Committee on
Proprietary Medical Products, or CPMP. If this opinion is favorable, it is sent
to the European Commission, which drafts a decision. After consulting with the
member states, the European Commission adopts a decision and grants a marketing
authorization, which is valid throughout the EU and confers the same rights and
obligations in each of the member states as a marketing authorization granted by
that member state. Nova envisages that marketing applications for its drug
candidates will be submitted via the "centralized procedure".

Several other European countries outside of the EU, for example in the Eastern
European region, accept EU review and approval as a basis for their own national
approval. Until recently, submissions to regulatory authorities in Asia for
marketing authorization have been primarily based on using prior approvals in
either the United States or the EU in addition to small, locally conducted
studies. More and more companies are now performing key Phase III clinical
trials in several of the major Asian countries such as Japan, China, Taiwan and
South Korea. Local clinical trial applications, equivalent to INDs, are expected

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to be filed in several Asian countries including those listed above to permit
the conduct of such key clinical trials in those regions. Marketing applications
similar to the United States NDA will be submitted to the appropriate regulatory
authorities upon completion of all clinical trials. Marketing Applications
Format As part of the ten-plus years of International Conference on
Harmonization, or ICH, standardization initiatives spearheaded by the United
States, EU and Japan, future marketing applications in these regions will be
submitted as a core global dossier known as the Common Technical Document, or
CTD. The CTD will be the required submission format starting in summer 2003 and
beyond. Electronic CTDs, or e-CTD, are currently being piloted and are
anticipated to be required from that time point. Non-ICH regions such as Eastern
and Central Europe, Latin America and China have indicated that the CTD will be
an acceptable submission format. Hazardous Materials Our research and
development processes involve the controlled use of hazardous materials,
chemicals and radioactive materials and produce waste products. We are subject
to federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposing of hazardous materials and waste products. We do
not expect the cost of complying with these laws and regulations to be material.

MARKET COMPETITION - ANTIMICROBIALS

INTELLECTUAL PROPERTY

To protect our proprietary rights, we rely generally on confidentiality
agreements with employees and third parties, and agreements with Consultants and
vendors, although we have not signed such agreements in every case. These steps
may be inadequate to deter misappropriation of our proprietary information. We
may be unable to detect the unauthorized use of, or take appropriate steps to
enforce, our intellectual property rights.

EMPLOYEES

We have eight full-time employees, two of whom are engaged in administrative,
billing, one is the Company's environmental lawyer, two perform research and
client service activities, and three of whom, are in the antimicrobial sales.
Additionally, from time to time we engage consultants and part-time contract
employees on an as and when needed basis.

PATENTS

Patents, Patent Applications & EPA Registrations Granted United States Patents:

United States Patent Number 6,120,587 Abstract: The composition formed by mixing
an organosilane, optionally having a nonhydrolizable organic group, but having
one or more hydrolyzable groups, with a polyol containing at least two hydroxyl
groups, wherein at least any two of the hydroxy 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 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. A method of making a siloxane
in the presence of a stabilizer.

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
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.

                                       17
<PAGE>

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 hydrolyzable groups, with a polyol containing at least two hydroxyl
groups, wherein at least any two of the hydroxy 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 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. A method of making a siloxane
in the presence of a stabilizer.
<TABLE>
US PATENTS PENDING:
<CAPTION>
                                                 Applications
                                                 ------------

Docket Number   Region       Serial Number  Description
-------------   ------       -------------  -----------
<S>             <C>          <C>            <C>
BST-105         US           08/965,441     Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100D4       US           09/590,493     Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101D1       US           09/654,232     Ether-Stabilized Organosilane Compounds and Methods for Using Same
BSI-102D1       US           09/967,486     Water-Stabilized Organosilane Compounds and Methods for Using Same


FOREIGN PATENTS ISSUED:

Docket Number   Region       Serial Number  Description
-------------   ------       -------------  -----------

BST-99NZ        New Zealand  329397         Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100NZ       New Zealand  330379         Water-Stabilized Organosilane Compounds and Methods for Using Same


FOREIGN PATENTS PENDING:
                                                 Applications
                                                 ------------

Docket Number   Region       Serial Number  Description
-------------   ------       -------------  -----------

BST-99 BZ       Brazil       PI 9702243-8   Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-99 IL       Israel       122,555        Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-99 MX       Mexico       980185         Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 AR      Argentina    P 980102138    Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 BR      Brazil       PI 9806344-8   Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 CA      Canada       2236893        Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 CA      Canada       2236893        Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 EPO     EC           98303600.5     Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 IL      Israel       124316         Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 JP      Japan        10-125119      Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 MX      Mexico       983600         Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-100 Div1IL  Israel       136872         Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101 BR      Brazil       PI9811509-0    Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101 CA      Canada       2296397        Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101 EPO     EC           98935768.6     Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101 JP      Japan        2000-503088    Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-101 MX      Mexico       627            Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-102 BR      Brazil       PI9812102-4    Water-Stabilized Organosilane Compounds and Their Use
BST-102 CA      Canada       2296395        Water-Stabilized Organosilane Compounds and Their Use
BST-102 EPO     EC           98935832       Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-102 JP      Japan        2000-503089    Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-102 MX      Mexico       625            Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-102 PCT                  PCT/US98/14985 Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-105C1X CA   Canada       2292005        Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-105C1X JP   Japan        11-355128      Water-Stabilized Organosilane Compounds and Methods for Using Same
BST-105C1X MX   Mexico       9911802        Water-Stabilized Organosilane Compounds and Methods for Using Same
</TABLE>

                                       18
<PAGE>

CURRENT EPA REGISTRATIONS

US EPA Registration Number 70871-1 Water stabilized organosilane antimicrobial
compound/end use application.

US EPA Registration Number 70871-2 Water stabilized organosilane antimicrobial
compound/manufacturers' use.

US EPA Registration Number 70871-3 Water stabilized organosilane antimicrobial
compound/end use application.

US EPA Registration Number 70871-4 Water stabilized organosilane antimicrobial
compound/end use application.

US EPA Registration Number 70871-54 Water stabilized organosilane antimicrobial
compound/end use application.

US EPA Registration Number 70871-6 Solvent based organosilane antimicrobial
compound.

US EPA Registration Number 70871-7 Disinfectant and Antimicrobial agent.
Manufacturing use product.

US EPA Registration Number 70871-8 Disinfectant and Antimicrobial agent.


                                       19
<PAGE>

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, 2004 of $1,031,235 and
it is expected that we will continue to incur operating losses in the future. In
fiscal 2004, we generated revenues of $261,881 and had a net loss of $703,686.
As of June 30, 2004, we had a working capital deficit of $997,859. 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 2004 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.
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.

                                       20
<PAGE>

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.

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.

                                       21
<PAGE>

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 Office Park at 8601 Dunwoody Place, Suite
338 in Atlanta, Georgia. 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, 2004 and expiring
on May 31, 2008, the Company's monthly payment obligation is approximately
$2,300. The lease agreement is subject to an annual rent escalation of
approximately three percent. See also footnote 9 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. In accordance with a formal Order entered by the United States
Securities and Exchange Commission ("SEC"), In The Matter Of Nova Biogenetics,
Inc., A-02873, Nova Biogenetics, Inc. ("Nova") received (on or about September
23, 2004), from the Atlantic District Office of the SEC, a Subpoena Duces Tecum,
requiring production of various documents relating to any offering of stock,
warrants or units by Nova or its subsidiaries from August 2004 to the present as
well as documents sufficient to identify any person or entity who invested in a
private offering from September 1, 2003 to the present and any employment
agreements between the Company and S. Todd Smith (a former officer). The
Subpoena Duces Tecum also requires production of shareholder list, bank
statements and documents reflecting any communication with any investment
banking firm as may relate to a public offering of Nova common stock during the
time frame indicated above. Nova intends to cooperate with the Commission
regarding this matter. See also Footnote 9 to audited financial statements.

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.

                                       22
<PAGE>

Fiscal Year ended June 30, 2003
          By Quarter                   (1) Quarterly Common Stock Price Ranges
-------------------------------        ---------------------------------------
Quarter     Quarter Ended                     High                Low
-------     -------------                     ----                ---
1st         September  30, 2002               $0.16               $0.09
2nd         December 31, 2002                 $0.09               $0.04
3rd         March 31, 2003                    $0.16               $0.02
4th         June 30, 2003                     $0.92               $0.09

Fiscal Year ended June 30, 2004
          By Quarter                   (1) Quarterly Common Stock Price Ranges
-------------------------------        ---------------------------------------
Quarter     Quarter Ended                     High                Low
-------     -------------                     ----                ---
1st         September  30, 2003               $1.05               $0.04
2nd         December 31, 2003                 $0.45               $0.12
3rd         March 31, 2004                    $0.20               $0.07
4th         June 30, 2004                     $0.27               $0.09
_________
(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 11, 2004, there were 53 stockholders of
record of the Registrant's Common Stock and 8,787,148 shares issued and
outstanding.

ISSUANCE OF RESTRICTIVE SHARES

In accordance with Board Minutes of October 30, 2003, 1,566,276 restrictive
shares of Issuer's common stock were issued as follows.

1. Employment Agreements                                Number of Shares
   ---------------------                                ----------------
   Jerry Smith                                          250,000
   Cecil Smith                                          560,000
   Todd Smith                                           200,000
   Timothy Moses                                        444,400 per
                                                        contract/antidilution

   Board of Directors                                   Number of Shares
   ------------------                                   ----------------
   Jerry Smith                                          10,000
   Cecil Smith                                          10,000
   Kevin Smith                                          10,000
   Timothy Moses                                        10,000

   Restricted Shares - Private Placement Memorandum     Number of Shares
   ------------------------------------------------     ----------------
   Daniel Pettee                                        10,938
   James Spitler                                        50,000
   John Cornetta                                        10,938

2. In December 2003, 100,000 restrictive shares were issued to Gary B. Wolff as
partial consideration for past due legal fees.

There were no underwriters involved in the transactions referred to nor were
there any underwriting discounts or commissions.

                                       23
<PAGE>

The foregoing transactions were exempt transactions in accordance with Section
4(2) as transactions by an Issuer not involving any public offering. During the
forth quarter of fiscal year ended June 30, 2004, there was no sale or issuance
by the Issuer of any of its unregistered securities. See however Footnote 9 to
audited financial statements.

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, 2004, 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, 2004

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.

FISCAL YEAR ENDED JUNE 30, 2004

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, 2004 were solely from the Specialty chemicals
division and were $261,881. We are continuing with our marketing efforts and
believe that our revenues for fiscal 2005 will exceed those of fiscal 2004. Cost
of sales, which includes contract manufacturing, were $51,827 and other expenses
were $882,181 including R&D, Salaries, Professional Fees and General and
Administration for the fiscal year ended June 30, 2004. Salaries (including
consultants) were $558,524 for the fiscal year ended June 30, 2004. 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 $(703,686) or $(0.11)
per share for the fiscal year ended June 30, 2004.

                                       24
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2004, we had a stockholders' deficit of $1,004,654. Since our
inception, we have accumulated deficit of $1,048,030. Net cash used in
operations during the fiscal year ended June 30, 2004 was $322,882 and was
attributable to our loss from operations of $703,686 and increases in assets of
$6,771 offset by non-cash compensation and depreciation of $270,810 and
increases in accounts payable and accrued expenses of $106,501. Net cash
provided by financing activities for the fiscal year ended June 30, 2004 was
$322,261. Additionally, we made repayments on notes payable of $500 and
increases of advances from a related party of $123,261. 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. See however the following Forms 8-K relating to both former and current
auditors as follows.

Form    Date of Report     Date of Filing      Description
----    --------------     --------------      -----------
8-K     December 16, 2003  February 17, 2004   Sherb & Co., LLP resignation
                                               regarding non-review of Form
                                               10-QSB for September 30, 2003

8-K     March 5, 2004      March 10, 2004      Re-engagement of Sherb & Co.,
                                               LLP

8-K     August 13, 2004    September 2, 2004   Sherb & Co., LLP resignation.
                                               New Accountants Bouwhuis,
                                               Morrill & Company

8-K/A1  August 13, 2004    September 17, 2004  Sherb & Co., LLP resignation.
                                               New Accountants Bouwhuis,
                                               Morrill & Company

8-K/A2  August 13, 2004    September 29, 2004  Sherb & Co., LLP resignation.
                                               New Accountants Bouwhuis,
                                               Morrill & Company

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.

                                       25
<PAGE>

ITEM 8B. OTHER INFORMATION

See Footnote 9 to audited financial statements.

                                    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 HELD
----                  ---      -------------
Dr. Kevin Smith        47      Chief Executive Officer/President

Edwin Schwartz Esq.    46      Chief Financial Officer, Secretary, Treasurer
                               and Director

Timothy C. Moses       46      Senior Vice-President, Chief Operations Officer

Bradley Smith          40      Director

Dr. Kevin Smith: Chief Executive Officer/Interim Chairman Of The Board Kevin F.
Smith, M.D., M.P. H. is a member of the Board of Directors. He has over 16 years
of healthcare experience. Dr. Smith has held a number of positions in the field
of occupational health and safety. He grew his practice to become one of the
largest providers of occupational health in the state of Iowa and eventually
merged that practice with Concentra. In addition, Dr. Smith served as medical
director for Georgia HealthSouth Medical Clinics. He is Board Certified in the
field of occupational health and has served on the faculty of Yale, Drake and
Emory University. Currently, Dr. Smith also holds a board seat with Healthcare
Network Solutions, Inc., an Atlanta based publicly traded company that provides
outsourced healthcare management services, medical billing, consulting and
dispensing services.

Bradley Smith: Mr. Smith is a successful Real Estate investor and realtor with
numerous income producing properties in the South Florida area. Over the past
fifteen (15) years he has founded and been instrumental in the development of
several very successful businesses: Diplomat Photo Labs, focusing mainly on
commercial photography; Founder and President of Accurate Photo Lab, servicing
the needs of commercial photographers, real estate companies, the marine
industry and all segments of industry not related to retail sales; Investor and
Founder of Print Village, Inc., a printing company designed to handle all the
printing needs of customer base developed from photo labs. Mr. Smith is
currently President of Bio-Solutions, Inc. and Stop Black Mold, Inc., a
certified Mold and Mildew Remediation company in Florida. Mr. Smith is a product
of the Community College system in the state of Florida. He currently resides in
South Florida with his wife and two children and is aggressively involved with
sports youth activities on a volunteer basis.

Edwin Schwartz, Esq.: Chief Financial Officer, Secretary and Treasurer Mr.
Schwartz is an attorney with 18 years experience principally in the area of
environmental, health and safety law. For the past several years, Mr. Schwartz
has participated in managing several private companies involved with bringing
environmental products and services to the market. In that capacity, he has
handled all legal matters for these companies including reviewing leases,
drafting and filing patents and trademarks, drafting agreements with contractors
and consultants and developing and drafting business plans and related internal
policy documents. Mr. Schwartz was a senior associate with the prominent law
firm of Kilpatrick Stockton for over eight years, where he represented
municipal, commercial and industrial clients in air, water, pesticides and toxic

                                       26
<PAGE>

substances, solid waste and hazardous waste permitting, regulatory consultation
and litigation. Prior to that time, Mr. Schwartz was Assistant Regional Counsel
with the U.S. Environmental Protection Agency ("EPA") and provided litigation
and policy assistance and counseling on complex environmental law matters. While
at EPA, Mr. Schwartz was responsible for air, water, and toxics and pesticides
enforcement and was selected as a regional expert in water and toxics regulation
and a national expert in the conduct of litigation. lectured and authored
several papers on these matters.

Mr. Timothy Moses: Senior V.P. and Chief Operating Officer Mr. Moses has served
as and has over twenty years of executive management experience originating at
DOW Chemical where he originally secured the formulations and technology that
make up the core technology behind Nova BioGenetics. Mr. Moses also serves as
the President of BioShield Technologies, Inc (OTCBB: BSTI), manages
substantially all of the affairs of the company including sales, strategic
planning, technology development and guides its financial affairs. See Part I,
Item 3 regarding indictment of Timothy C. Moses.

The following persons are no longer officer(s) or director(s) of the Company.
These individuals served in the capacities indicated and for the time indicated
during all or a portion of fiscal year ended June 30, 2004.

Dr. Cecil Smith: Chairman of the Board, July 11, 2003 - December 22, 2003 Dr.
Cecil Smith has an extensive background in biohazard science, microbiology,
clinical trials and laboratory research. In 1983 he received his Doctorate of
Public Health - Biohazard Science and Laboratory Practice from the University of
North Carolina, received his Master of Public Health in 1980, and received his
Master of Science, Microbiology in 1977 from North Dakota State University.

Jerry Smith: President, July 11, 2003 - February 22, 2004 Mr. Smith has
extensive experience in the pharmaceutical industry serving over thirty four
(34+) at Pharmacia, Pharmacia-Upjohn and its predecessors and joins the Company
on July 1, 2004 as President. He has held positions in sales, marketing, field
research, and management. He received his Bachelor of Science in Biology and
Chemistry from Arkansas State University. Mr. Smith has been recognized for his
many achievements and accomplishments, Bachelor of Science, Biology and
Chemistry, Arkansas State University, Multiple recipient of The Upjohn Academy,
Nominee for The W.E. Upjohn Award, Multiple recipient of Outstanding Employee
Award, Advisory Board Committee Member, Georgia Academy of Family Physicians,
Advisory Board Committee Member, Alabama Academy of Family Physicians, Member
Alliance for Continuing Medical Education, Over thirty years of experience in
the pharmaceutical industry, Conducted numerous medical presentations, Involved
in numerous research studies with major medical institutions.

Todd Smith: Secretary and Treasurer, September 1, 2003 - July 12, 2004 Mr. Smith
has served as a financial advisor and investment banker for the past thirteen
years. Mr. Smith graduated from Auburn University with a bachelor's degree in
finance. Prior to joining Nova Biogenetics Mr. Smith held positions in the
brokerage community most recently as Vice President at Morgan Stanley Dean
Witter. See also Footnote 9 to audited financial statements.

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 2003 and 2004 (the "Named Executive
Officers"). No officer received in excess of $100,000 in 2003.

                                       27
<PAGE>
<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)            2004      $ -0-         $ -0-             $ -0-              $ -0-

Mr. Edwin Schwartz (Sec/Tres)     2004      $ -0-         $ -0-             $ -0-              $ -0-

Mr. Bradley Smith (Director)      2004      $ -0-         $ -0-             $ -0-              $ -0-

**Mr. Timothy C.  Moses (COO)     2004      $250,000      $ -0-             $ -0-              $ -0-
</TABLE>
__________
*  Dr. Kevin Smith has fore barred his salary for all of 2003
** Mr. Moses is currently accruing his salary, and has not received any payroll
   from the Company

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
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

                                       28
<PAGE>

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, 2004 (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               11.35%

Domus Trust Fund
5525 New Wellington Close
Atlanta, Georgia 30327              (4)   202,248                2.30%

M5 Trust Funds I and II
405 North Errol Court
Atlanta, Georgia 30327              (5) 2,431,451               27.67%

Timothy C. Moses
405 North Errol Court
Atlanta, Georgia 30350              (6)   756,347                8.61%

Cecil Smith
5281 Sheffield Avenue
Powell, Ohio 43065                  (7)   630,000                7.17%

Kevin Smith
5525 New Wellington Close
Atlanta, Georgia 30327              (8)   511,275                5.82%

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

Edwin Schwartz
5622 Ashford Lane
Marietta GA 30068                               0                    0

All Officers and Directors as
 a Group (4 persons)                (9) 1,469,870               16.73%

Represents less than 1% of the 8,787,148 shares outstanding as of October 11,
2004.

                                       29
<PAGE>

__________
(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.

(3) Consists of 500,369 shares in the name of Bioshield Technologies, Inc. and a
further 497,192 shares in the name of International Biochemical Industries,
Inc.,the former having changed its corporate name to the latter in September
2002.

(4) This Trust Fund was established for the benefit of Dr. Kevin Smith, Chief
Executive Officer of the Company.

(5) The M5Trust Funds are for the benefit of Mr. Moses' 3 children and the
Trustee is Dr. Kevin Smith.

(6) Includes, in addition to 456,311 shares owned of record and beneficially by
Timothy C. Moses, a further 100,000 shares owned by his wife and a further 36
shares (12 shares each) which Mr. Moses' holds as custodian for his three minor
children, in accordance with SEC Release 33-4819 (which states, in part, ..."a
person is regarded as the beneficial owner of securities held in the name of his
or her spouse and their minor children...".

(7) Subsequent to the October 11, 2004 date of the Transfer Agent records
utilized for stockholder information contained in this Form 10-KSB, Cecil Smith,
in accordance with agreement with the Company has tendered for cancellation
620,000 restrictive shares issued in his name.

(8) In addition to 511,124 shares owned of record and beneficially also included
are 124 shares, which Dr. Kevin Smith holds in joint ownership with Rodothea
Milatan and a further 27 shares in DWR C/F Kevin Smith Profit Sharing Plan.

(9) Includes all shares indicated in footnotes 5, 7 and 9.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following related party transactions occurred during the year ended June 30,
2004 and 2003 which are required to be disclosed pursuant to Item 404 of
Regulation S-B.

During the year ended June 30, 2004, the Company received $249,500 in short-term
borrowings from Pyramid Financial Group and repaid $50,000 during the same
period. The balance outstanding to Pyramid Financial Group at June 30, 2004, is
$199,500. The Company has not entered into any formalized note agreement
relating to these advances. (See Note 4 of financial statement).

During the year ended June 30, 2004, the Company issued 444,400 shares of common
stock to Timothy Moses, COO and Senior Vice President, pursuant to an
anti-dilution provision in his employment agreement. These shares were valued at
$66,660 at the time of issuance.

                                       30
<PAGE>

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

(a) Exhibits

3.1      (10) Registrant's Certificate of Incorporation

3.2      (12) Registrant's Amended and Restated By-Laws

10.1     (11) 2001 Non Statutory Stock Option Plan

10.2     (12) Employment Agreement between the Registrant and Dr. Cecil Smith

10.3     (12) Employment Agreement between the Registrant and Jerry Smith

10.4     (12) Employment Agreement between the Registrant and Todd Smith

10.5     (12) Employment Agreement between the Registrant and Timothy C. Moses

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, 2004, 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 2004 were approximately $38,000.

2. AUDIT RELATED FEES

         The aggregate fees billed for the fiscal year ended June 30, 2004, 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 2004 were approximately $5,000.

3. TAX FEES

         The aggregate fees billed for the fiscal year ended June 30, 2004, for
professional services rendered by Bouwhuis, Morrill & Company for tax
compliance, tax advice and tax planning for the fiscal year ended 2004 were
$-0-.

4. ALL OTHER FEES

         The aggregate fees billed for the fiscal year ended June 30, 2004, for
products and services provided by Bouwhuis, Morrill & Company other than those
services reported above, for the fiscal year ended 2004 were $-0-.

                                       31
<PAGE>
                                   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: December 12, 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               December 12, 2005


/s/ Bradley Smith
-----------------
Bradley Smith              Secretary/Treasurer, Director       December 12, 2005


                                       32
<PAGE>

                     NOVA BIOGENETICS, INC AND SUBSIDIARIES

                 Consolidated Financial Statements for the Years

                          Ended June 30, 2004 and 2003

                      and Report of Independent Registered

                             Public Accounting Firm



                                    CONTENTS

Report of Independent Registered Public Accounting Firm...............       F-2

Consolidated Balance Sheet............................................       F-3

Consolidated Statements of Operations.................................       F-4

Consolidated Statements of Stockholders' Deficit......................       F-5

Consolidated Statements of Cash Flows................................. F-6 & F-7

Notes to the Consolidated Financial Statements........................       F-8


                                       F-1
<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, 2004 and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
ended June 30, 2004 and 2003. 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, 2004 and the consolidated
results of their operations and their cash flows for the years ended June 30,
2004 and 2003 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 11 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 11. These
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 13, the accompanying financial statements have been
restated.

Bouwhuis, Morrill & Company, LLC
Layton, Utah
October 8, 2004, except for Note 13 as to which the date is August 28, 2005

                                       F-2
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                                  June 30, 2004
                                   (Restated)

                                     ASSETS
                                     ------

CURRENT ASSETS

  Cash and cash equivalents (Note 2) ..........................     $     1,691
  Accounts receivable, net (Note 2) ...........................          37,263
  Inventory (Note 2) ..........................................           3,622
                                                                    -----------

    Total Current Assets ......................................          42,576
                                                                    -----------

PROPERTY AND EQUIPMENT - NET (Note 2) .........................           3,444
                                                                    -----------

OTHER ASSETS

  Deposits ....................................................           4,475
                                                                    -----------

    Total Other Assets ........................................           4,475
                                                                    -----------

    TOTAL ASSETS ..............................................     $    50,495
                                                                    ===========

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

CURRENT LIABILITIES

  Accounts payable and accrued expenses .......................     $   241,984
  Due to related parties (Note 3) .............................         123,261
  Escrow payable (Note 4) .....................................         199,500
  Notes payable - related party (Note 7) ......................         490,404
                                                                    -----------

    Total Current Liabilities .................................       1,055,149
                                                                    -----------

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' DEFICIT

  Common stock, $0.0001 par value; 50,000,000 shares
   authorized, 7,351,272 shares issued and outstanding ........             735
  Additional paid-in capital ..................................          42,641
  Accumulated deficit .........................................      (1,048,030)
                                                                    -----------

    Total Stockholders' Deficit ...............................      (1,004,654)
                                                                    -----------

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ...............     $    50,495
                                                                    ===========

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

                                       F-3
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                                           For the Years
                                                           Ended June 30,
                                                    ---------------------------
                                                        2004            2003
                                                    -----------     -----------
                                                                     (Restated)

NET SALES ......................................    $   261,881     $   129,034

COST OF SALES ..................................         51,827          52,533
                                                    -----------     -----------

GROSS MARGIN ...................................        210,054          76,501
                                                    -----------     -----------

OPERATING EXPENSES

    Salaries and consulting ....................        558,524         242,694
    Professional fees ..........................         57,918          10,461
    Research and development ...................         22,108          29,206
    Rent expense ...............................         28,152           2,241
    Selling, general and administrative ........        215,479         112,138
                                                    -----------     -----------

        Total Operating Expenses ...............        882,181         396,740
                                                    -----------     -----------

LOSS FROM OPERATIONS ...........................       (672,127)       (320,239)
                                                    -----------     -----------

OTHER INCOME (EXPENSES)

    Interest expense ...........................        (32,409)        (24,105)
    Gain on sale of assets .....................            850               -
                                                    -----------     -----------

        Total Other Income (Expenses) ..........        (31,559)        (24,105)
                                                    -----------     -----------

LOSS BEFORE INCOME TAXES .......................       (703,686)       (344,344)

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

NET LOSS .......................................    $  (703,686)    $  (344,344)
                                                    ===========     ===========

BASIC AND DILUTED:
    Net loss per common share ..................    $     (0.11)    $     (0.09)
                                                    ===========     ===========

    Weighted average shares outstanding ........      6,353,924       3,680,947
                                                    ===========     ===========

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

                                       F-4
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                Consolidated Statements of Stockholders' Deficit
                   For the Years Ended June 30, 2004 and 2003
                                   (Restated)

                                    Common Stock       Additional
                                --------------------    Paid-in     Accumulated
                                  Shares      Amount    Capital       Deficit
                                ----------    ------   ----------   -----------

Balance at inception,
 July 22, 2002 ................          -    $   -      $     -       $      -

Common stock issued to
 incorporators for cash and
 services .....................  3,882,462      388      106,762              -

Recapitalization of Nova
 BioGenetics, Inc. through
 reverse merger with Healthcare
 Network Solutions, Inc. ......  2,031,259      203     (968,324)             -

Cancelation of former directors
 and officers shares ..........   (370,787)     (37)          37              -

Net loss for the year
 ended June 30, 2003 ..........          -        -            -       (344,344)
                                ----------    -----    ---------    -----------

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)
                                ==========    =====    =========    ===========

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

                                       F-5
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

                                                              For the Years
                                                              Ended June 30,
                                                          ---------------------
                                                            2004         2003
                                                          ---------   ---------
                                                          (Restated)  (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss ...............................................  $(703,686)  $(344,344)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Bad debt expense .....................................      1,106      21,588
  Depreciation .........................................        760         180
  Common stock issued for services rendered ............    137,800         900
  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)          -
Changes in assets and liabilities:
  Increase in accounts receivable ......................     (3,786)    (56,171)
  Increase in inventories ..............................     (3,622)          -
  Increase in deposits and other current assets ........     (1,000)     (3,475)
  Increase in accounts payable and accrued expenses ....    106,501     285,094
                                                          ---------   ---------

    Net Cash Used in Operating Activities ..............   (322,882)    (96,228)
                                                          ---------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Cash received from sale of fixed assets ..............        850           -
  Purchases of fixed assets ............................       (584)          -
  Cash received from acquisition of subsidiary .........          -       1,120
                                                          ---------   ---------

    Net Cash Provided by Investing Activities ..........        266       1,120
                                                          ---------   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Increase in due to related party .....................    123,261           -
  Repayments on notes payable - related party ..........       (500)     (9,096)
  Increase in escrow payable ...........................    199,500           -
  Proceeds from sale of common stock ...................          -     106,250
                                                          ---------   ---------

    Net Cash Provided by Financing Activities ..........  $ 322,261   $  97,154
                                                          ---------   ---------

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

                                       F-6
<PAGE>
                     NOVA BIOGENETICS, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)

                                                              For the Years
                                                              Ended June 30,
                                                          ---------------------
                                                            2004         2003
                                                          ---------   ---------
                                                          (Restated)  (Restated)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...  $    (355)  $   2,046

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

CASH AND CASH EQUIVALENTS, END OF YEAR .................  $   1,691   $   2,046
                                                          =========   =========

SUPPLEMENTAL CASH FLOW INFORMATION

  Cash Payments For:

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

  Non-Cash Investing and Financing Activities

    Common stock issued for services ...................  $ 137,800   $     900
    Exercise of common stock options for services ......  $ 132,250   $       -
    Issuance of note payable for joint venture agreement  $       -   $ 500,000
    Acquisition of capital assets for related party debt  $       -   $   3,800
    Accrued salaries contributed to the Company as a
     capital contribution by an Officer ................  $ 275,246   $       -
    Common stock issued for debt .......................  $ 347,406   $       -

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

                                       F-7
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

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. 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.

                                       F-8
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

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, 2004, the
         allowance for doubtful accounts was $-0-. Bad debt expense was $1,106
         and $21,588 for the years ended June 30, 2004 and 2003, 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 $3,622 at June 30, 2004.

                                       F-9
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

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          2004
                                               ---------      -------

         Furniture and Fixtures ...........    3-5 Years      $ 4,384
         Less - Accumulated Depreciation ..                      (940)
                                                              -------

              Net Property and Equipment ..                   $ 3,444
                                                              =======

         Depreciation expense for the years ended June 30, 2004 and 2003 was
         $760 and $180, 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.

         i. Recent Accounting Pronouncements

         In April 2002, the Financial Accounting Standards Board issued
         Statement No. 145 ("SFAS 145"), "Rescission of FASB Statements Nos. 4,
         44, and 64 and Amendment of FASB Statement No. 13." SFAS 145 addresses
         the presentation for losses on early retirements of debt in the
         statement of operations. The Company has adopted SFAS 145 and will not
         present losses on early retirements of debt as an extraordinary item.

         In June 2002, the Financial Accounting Standards Board issued Statement
         No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or
         Disposal Activities." The provisions of SFAS 146 become effective for
         exit or disposal activities commenced subsequent to December 31, 2002.
         The adoption of SFAS 146 had no impact on the Company's financial
         position, results of operations or cash flows.

                                      F-10
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         i. Recent Accounting Pronouncements (Continued)

         In November 2002, the Financial Accounting Standards Board issued FASB
         Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and
         Disclosure Requirements for Guarantees, Including Indirect Guarantees
         of Indebtedness of Others." This interpretation elaborates on the
         disclosures to be made by a guarantor in its interim and annual
         financial statements about its obligations under certain guarantees
         that it has issued. It also clarifies (for guarantees issued after
         January 1, 2003) that a guarantor is required to recognize, at the
         inception of a guarantee, a liability for the fair value of the
         obligations undertaken in issuing the guarantee. At June 30, 2004 and
         2003, the Company does not have any outstanding guarantees and
         accordingly does not expect the adoption of FIN 45 to have any impact
         on their financial position, results of operations or cash flows.

         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, 2004.

         At June 30, 2004, the Company had net operating loss carryforwards of
         approximately $1,000,000 that may be offset against future taxable
         income through 2024. 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.

         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. and Nova Specialty Chemicals, Inc. All
         significant intercompany accounts and transactions have been eliminated
         in the consolidation.

NOTE 3 - RELATED PARTY TRANSACTIONS

         At June 30, 2004, the Company had a related party payable of $123,261.
         This amount includes $24,197 payable to an officer of the Company,
         $38,035 in accrued interest (see Note 7), and $61,029 also payable to
         the company indicated in Note 7 for prior services rendered.

                                      F-11
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 4 - 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, 2004 is $199,500. See Note 9 - Contingencies.

NOTE 5 - EQUITY TRANSACTIONS

         Effective July 11, 2003, the Company approved and affected an 8.9-for-1
         reverse stock split. All references to shares issued and outstanding in
         the consolidated financial statements have been retroactively restated
         to reflect the effects of this change in capital structure. The par
         value and authorized shares have not changed as a result of this stock
         split.

         During the year ended June 30, 2003, as a condition of the plan of
         merger and reorganization between Nova BioGenetics, Inc. and Healthcare
         Network Solutions, Inc., 370,787 post-split shares of common stock of
         Nova BioGentics, Inc. held by three officers and directors were
         returned to the Company and canceled.

         During the year ended June 30, 2004 the Company issued 275,000
         post-split 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
         post-split 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
         post-split 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 (see Note 9), the Company issued 465,000 post-split
         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.

                                      F-12
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 6 - 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.

NOTE 7 - 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, 2004 was $490,404 with an additional amount of $38,035 in
         accrued interest relating to this note that is shown on the balance
         sheet in due to related parties (see Note 3).

NOTE 8 - STOCK OPTIONS

         Employee Stock Options
         ----------------------

         On October 30, 2003, the Company issued options to acquire 155,000
         shares of the Company's common stock. These options were issued at an
         exercise price of $0.25 per share for services related to employment
         with the Company. On November 19, 2003, these options were exercised by
         the employees for services rendered. Since no cash was received for the
         exercise of the options, the Company recorded compensation expense of
         $38,750 based on the exercise price of the options.

         The following tables summarize the information regarding employee stock
         options at June 30, 2004:

         Outstanding, June 30, 2003 .....................            -

             Granted ....................................      155,000
             Canceled ...................................            -
             Exercised ..................................     (155,000)
                                                             ---------

         Outstanding, June 30, 2004 .....................            -
                                                             =========

         Weighted average exercise price of options
          outstanding at June 30, 2004 ..................    $       -
                                                             =========

         The Company applies Accounting Principles Board ("APB") Opinion 25,
         "Accounting for Stock Issued to Employees," and related Interpretations
         in accounting for all stock options issued to employees at the time of
         issuance under the stock option plan. Under

                                      F-13
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 8 - STOCK OPTIONS (Continued)

         Employee Stock Options (Continued)
         ----------------------------------

         APB Opinion 25, compensation cost is recognized for stock options
         granted to employees when the option price is less than the market
         price of the underlying common stock on the date of grant.

         FASB Statement 123, "Accounting for Stock-Based Compensation" ("SFAS
         No. 123"), requires the Company to provide proforma information
         regarding net income and net income per share as if compensation costs
         for the Company's stock option plans and other stock awards had been
         determined in accordance with the fair value based method prescribed in
         SFAS No. 123. The Company estimates the fair value of each stock award
         at the grant date by using the Black-Scholes option pricing model with
         the following assumptions; dividend yield of zero percent for all
         years; expected volatility ranging from 260% to 413%; risk-free
         interest rates ranging from 1.0 to 5.0 percent and expected lives of
         zero to 5.0 years.

         Under the accounting provisions of SFAS No. 123, the Company's net loss
         would have been changed by the pro forma amounts indicated below:

                                                     June 30,
                                           ---------------------------
                                               2004            2003
                                           -----------     -----------
         Net loss:
           As reported ................    $  (703,686)    $  (327,549)
           Pro forma ..................    $  (709,258)    $  (327,549)

         Basic loss per share:
           As reported ................    $     (0.11)    $     (0.09)
           Pro forma ..................    $     (0.11)    $     (0.09)


         Non-Employee Stock Options
         --------------------------

         On October 30, 2003, the Company issued options to acquire 160,000
         shares of the Company's common stock. These options were issued at
         exercise prices ranging from $0.25 to $0.45 per share. The options were
         issued for consulting and other professional services. On November 19,
         2003, these options were exercised for services rendered. Since no cash
         was received for the exercise of the options, the Company recorded
         compensation expense of $56,000 based on the exercise price of the
         options.

         On December 2, 2003, the Company issued additional options to acquire
         150,000 shares of the Company's common stock. These options were issued
         at an exercise price of $0.25 per share. These options were issued for
         legal services and for work on creating a website for the Company. On
         December 22, 2003, these options were exercised for services rendered.
         Since no cash was received for the exercise of the options, the Company
         recorded compensation expense of $37,500 based on the exercise price of
         the options.

                                      F-14
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 8 - STOCK OPTIONS (Continued)

         Non-Employee Stock Options (Continued)
         --------------------------------------

         The following tables summarize the information regarding non-employee
         stock options at June 30, 2004:

         Outstanding, June 30, 2003 .....................            -

             Granted ....................................      310,000
             Canceled ...................................            -
             Exercised ..................................     (310,000)
                                                             ---------

         Outstanding, June 30, 2004 .....................            -
                                                             =========

         Weighted average exercise price of options
          outstanding at June 30, 2004 ..................    $       -
                                                             =========

         The Company applies FASB Statement 123, "Accounting for Stock-Based
         Compensation" ("SFAS No. 123") for options issued to non-employees,
         which requires the Company to estimates the fair value of each option
         issued at the grant date by using the Black-Scholes option pricing
         model with the following assumptions; dividend yield of zero percent
         for all years; expected volatility ranging from 260% to 413%; risk-free
         interest rates ranging from 1.0 to 5.0 percent and expected lives of
         zero to 5.0 years.

         As a result of applying SFAS No. 123, the Company had an expense of
         $11,645 and $-0- during the years ended June 30, 2004 and 2003,
         respectively. The expense is included in the salaries and consulting
         amount in the statements of operations.

NOTE 9 - 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 $2,300 at June 30, 2004.
         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, 2004 and 2003 was $27,974 and $2,241, respectively.

         The future minimum lease payments are as follows:

                  June 30, 2005.................    $  28,307
                           2006.................       29,156
                           2007.................       30,031
                           2008.................       28,354
                           2009.................            -
                                                    ---------

                           Total................    $ 115,848
                                                    =========

                                      F-15
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 9 - 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
         $250,000 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, 2004, the
         Company has deferred payment of a total of $125,569 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.
         For the year ended June 30, 2004, implementation of this bonus program
         has been deferred by the Company and the executive.

         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 the present as well as documents sufficient to identify any person
         or entity who invested in a private offering from September 1, 2003 to
         the present. 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 4) 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,
         2004 (see Note 4 - 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 4), the issuance
         of 400,000 shares of its common stock, or just the repayment of the
         $199,500 indicated in Note 4. 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

                                      F-16
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

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

         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 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, 2004.
         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 10 - CONCENTRATIONS OF RISK

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

         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 11 - 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 $1,000,000 from inception of the Company through June 30,
         2004. The Company's stockholders' deficit at June 30, 2004 was
         $1,004,654 and its current liabilities exceeded its current assets by
         $1,012,573. 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:

         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.

                                      F-17
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 11 - GOING CONCERN CONSIDERATIONS (Continued)

         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.

NOTE 12 - SUBSEQUENT EVENTS

         Subsequent to year end, the Company terminated the services of one of
         their executives for alleged wrongdoings. The vacated position has
         since been filled. Issues relating to these allegations are not yet
         resolved and the final outcome has yet to be determined (see Notes 4
         and 9).

NOTE 13 - RESTATED FINANCIAL STATEMENTS

         The Company's prior auditor would not re-issue its report on the
         Company's financial statements for the year ended June 30, 2003.
         Therefore, this necessitated a re-audit of the financial statements for
         the year ended June 30, 2003 by the Company's current auditor. During
         the course of the re-audit certain errors were noted in the previously
         issued financial statements for the year ended June 30, 2003, some of
         these errors gave rise to information that had residual effect into the
         financial statements for the year ended June 30, 2004. These financial
         statements have been restated to correct for these errors which are as
         follows:

         Accounts payable and accrued expenses were previously understated by
         $89,201 due to unrecorded accrued interest, unrecorded compensation
         payable, and a stock deposit which were subsequently satisfied through
         the issuance of common stock.

         Notes payable were understated by $275,000 due to a previously
         unrecorded loan which was subsequently satisfied through the issuance
         of common stock.

         Costs of a failed offering in the amount of $25,442 were incorrectly
         booked against additional paid-in capital.

         Certain errors were noted in relation to the accounting and disclosure
         of the reverse acquisition between Healthcare Network Services, Inc.
         and Nova BioGenetics, Inc.

         It was previously reported that there were 782,000 and 600,000 employee
         and non-employee stock options, respectively, outstanding at June 30,
         2003. During the re-audit it was noted that all options outstanding
         immediately prior to the reverse merger between Nova BioGenetics, Inc.
         and Healthcare Network Solutions, Inc. were eliminated pursuant to the
         reorganization agreement between the companies. Therefore, there were
         no stock options at June 30, 2003 to be carried forward into the fiscal
         year ended June 30, 2004.

                                      F-18
<PAGE>
                     NOVA BIOGENETICS, INC AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                             June 30, 2004 and 2003

NOTE 13 - RESTATED FINANCIAL STATEMENTS (Continued)

         The impact of these adjustments on the Company's financial statements
         as originally reported is as follows for the years ended June 30,
         (adjusted for stock split):

                                                    As Previously        As
         2003                                          Reported       Restated
         ----                                       -------------   ------------

         Balance sheet:
            Accounts payable and accrued expenses    $   321,720    $   394,126
            Loans payable .......................              -        275,000
            Accrued expenses ....................         24,457         10,157
            Additional paid-in capital (deficit)          74,984       (861,525)
            Accumulated deficit .................       (916,652)      (344,344)
            Number of common shares outstanding .      5,541,810      5,542,934

         Statement of operations:

            Salaries and consulting .............    $   224,999    $   242,694
            Professional fees ...................         12,650         10,461
            Selling, general and administrative .         85,407        112,138
            Interest expense ....................         16,156         24,105
            Net loss ............................       (294,158)      (327,549)
            Basic and diluted net loss per share     $     (0.05)   $     (0.09)


                                                    As Previously        As
         2004                                          Reported       Restated
         ----                                       -------------   ------------

         Balance sheet:

            Due to related parties ..............    $   106,466    $   123,261
            Common stock ........................            689            735
            Additional paid-in capital ..........        631,790         42,641
            Accumulated deficit .................     (1,620,338)    (1,048,030)
            Number of common shares outstanding .      6,892,148      7,351,272


                                      F-19