UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-QSB





XQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005



__TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____ to ____.





AGRONIX, INC.

(Exact name of registrant as specified in its charter)



|Florida                                        | 0-15893                  | 65-0664961                          
|---------------------------------------------- | ------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number)



|1666 West 75th Avenue
Vancouver, B.C., Canada | V6P 6G2   
|--------------------------------------------- | ----------
|(Address of principal executive offices)      | (Zip Code)



Registrants telephone number, include area code:  (604) 714-1606



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



Applicable only to 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.....



Applicable only to corporate issuers



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:  At June 30, 2005 there were 42,291,137 shares outstanding.



Transitional Small Business Disclosure Format (Check one):  Yes...     No ..X..



1



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PART 1 - FINANCIAL  INFORMATION



ITEM 1.  FINANCIAL STATEMENTS AND EXHIBITS











AGRONIX, INC.



(A Development Stage Company)



INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



JUNE 30, 2005



2

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AGRONIX, INC.

(A Development Stage Company)



JUNE 30, 2005

(Unaudited)



CONTENTS



|                                                   | Page
|-------------------------------------------------- | ----
|INTERIM CONSOLIDATED FINANCIAL STATEMENTS          |     
|Consolidated Balance Sheets                        | 4   
|Interim Consolidated Statements of Operations      | 5   
|Interim Consolidated Statements of Cash Flows      | 6   
|Notes to Interim Consolidated Financial Statements | 7-13



3

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AGRONIX, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

ASSETS

|                                       | June 30     | December 31
|-------------------------------------- | ----------- | -----------
|                                       | 2005        | 2004       
|                                       | (Unaudited) |            
|CURRENT                                |             |            
|Cash                                   | $ 359       | $ 7,181    
|Receivables                            | 4,175       | 5,632      
|Prepaid expenses and deposits (Note 8) | 14,705      | 152,911    
|                                       | 19,239      | 165,724    
|EQUIPMENT                              | 601         | 827        
|                                       | $ 19,840    | $ 166,551  

LIABILITIES AND STOCKHOLDERS' DEFICIT

|CURRENT LIABILITIES                      |           |          
|---------------------------------------- | --------- | ---------
|Accounts payable and accrued liabilities | $ 566,355 | $ 478,400
|Due to related party (Note 4)            | 63,440    | 63,440   
|                                         | 629,795   | 541,840  
|STOCKHOLDERS' DEFICIT                    |           |          
|CAPITAL STOCK(Note 5)                    |           |          
|Authorized:                              |           |          

100,000,000 common shares with a par value of $0.001 per share

10,000,000 preferred shares with a par value of $0.001 per share

|Issued and outstanding:                                  |             |            
|-------------------------------------------------------- | ----------- | -----------
|42,291,137 (December 31, 2004: 38,191,197) common shares | 42,291      | 38,191     
|Additional paid in capital                               | 6,157,225   | 6,073,013  
|Less: Stock subscriptions receivable                     | (23,500)    | (23,500)   
|                                                         | 6,176,016   | 6,087,704  
|DEFICIT ACCUMULATED DURING THE                           |             |            
|DEVELOPMENT STAGE                                        | (6,785,971) | (6,462,993)
|                                                         | (609,955)   | (375,289)  
|                                                         | $ 19,840    | $ 166,551  

Continuance of operations (Note 1)

Commitments (Notes 3 and 6)





See accompanying notes to the interim consolidated financial statements.



4



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AGRONIX, INC.

(a Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                        | Cumulative         |                       |                      |                       |                      
|----------------------------------------------------------------------- | ------------------ | --------------------- | -------------------- | --------------------- | ---------------------
|                                                                        | From Inception     | For the               | For the              | For the               | For the              
|                                                                        | (Jan 20, 2000)     | Six Months            | Six Months           | Three Months          | Three Months         
|                                                                        | to June 30         | Ended June 30         | Ended June 30        | Ended June 30         | Ended June 30        
|                                                                        | 2005               | 2005                  | 2004                 | 2005                  | 2004                 
|INTEREST INCOME                                                         | $           3,954  | $                   9 | $                 53 | $                   3 | $                   -
|EXPENSES                                                                |                    |                       |                      |                       |                      
|Consulting and management fees                                          | 4,019,221          | 268,150               | 574,529              | 112,803               | 427,110              
|Depreciation                                                            | 24,091             | 226                   | 2,067                | 151                   | 1,033                
|General and administrative                                              | 324,063            | 24,047                | 28,519               | 11,019                | 9,678                
|Loss on sale of equipment                                               | 2,549              | -                     | -                    | -                     | -                    
|Professional fees                                                       | 359,427            | 26,479                | 103,950              | 13,249                | 43,587               
|Rent                                                                    | 69,532             | -                     | 9,604                | -                     | 6,247                
|Research and development                                                | 1,174,542          | -                     | -                    | -                     | -                    
|Salaries and benefits                                                   | 174,919            | -                     | 6,600                | -                     | -                    
|Shareholder communications                                              | 95,332             | 2,747                 | 28,097               | 958                   | 5,983                
|Travel and promotion (recovery)                                         | 396,098            | 1,338                 | 59,042               | (1,450)               | 34,831               
|                                                                        | 6,639,774          | 322,987               | 812,408              | 136,730               | 528,469              
|LOSSbefore the following                                                | (6,635,820)        | (322,978)             | (812,355)            | (136,727)             | (528,469)            
|Loss on impairment of investment in and advances to 3884171 Canada Inc. | (150,151)          | -                     | -                    | -                     | -                    
|NET LOSS                                                                | $      (6,785,971) | $        (322,978)    | $   (812,355)        | $  (136,727)          | $      (528,469)     
|                                                                        |                    |                       |                      |                       |                      
|Basic loss per share                                                    |                    | $              (0.01) | $           (0.03)   | $           (0.00)    | $             (0.02) 
|Weighted average common                                                 |                    |                       |                      |                       |                      
|shares outstanding                                                      |                    | 39,774,000            | 29,382,875           | 40,627,000            | 30,244,942           
|                                                                        |                    |                       |                      |                       |                      
|                                                                        |                    |                       |                      |                       |                      





See accompanying notes to the interim consolidated financial statements.



5



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AGRONIX, INC.

(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                            | Cumulative                     |                              |                              
|----------------------------------------------------------- | ------------------------------ | ---------------------------- | -----------------------------
|                                                            | From Inception                 | For the                      | For the                      
|                                                            | (January 20, 2000)             | Six Months                   | Six Months                   
|                                                            | to June 30                     | Ended June 30                | Ended June 30                
|                                                            | 2005                           | 2005                         | 2004                         
|Cash derived from (applied to):                             |                                |                              |                              
|OPERATING ACTIVITIES                                        |                                |                              |                              
|Net loss                                                    | $ (6,785,971)                  | $ (322,978)                  | $ (812,355)                  
|Depreciation                                                | 24,091                         | 226                          | 2,067                        
|Loss on sale of equipment                                   | 2,549                          | -                            | -                            
|Non-cash research and development                           | 779,856                        | -                            | -                            
|Stock based compensation                                    | 1,227,498                      | -                            | 88,750                       
|Loss on impairment of Investment in 3884171 Canada Inc.     | 150,151                        | -                            | -                            
|Impairment of Terralift Deposit                             | 50,000                         | -                            | 50,000                       
|Wages paid through the issuance of common shares            | 70,320                         | -                            | 6,600                        
|Rent paid through issuance of common shares                 | 23,209                         | -                            | -                            
|Settlement of debt through the issuance of common stock     | 45,711                         | -                            | -                            
|Consulting, management and professional fees paid           |                                |                              |                              
|through the issuance of common shares                       | 2,001,851                      | 195,731                      | 417,643                      
|Change in non-cash working capital                          |                                |                              |                              
|Receivables                                                 | (4,175)                        | 1,457                        | 7,437                        
|Prepaid expense and deposits                                | (176,453)                      | -                            | 11,252                       
|Payables and accruals                                       | 567,585                        | 102,718                      | 87,884                       
|                                                            | (2,023,778)                    | (22,846)                     | (140,722)                    
|FINANCING ACTIVITIES                                        |                                |                              |                              
|Advances under a credit facility with a company             |                                |                              |                              
|with director in common, net of repayments                  | 63,440                         | -                            | - -                          
|Shareholder advances repaid                                 | (14,267)                       | -                            | -                            
|Shares issued for cash, net of shares subscribed            | 2,201,924                      | 16,024                       | 105,106                      
|                                                            | 2,251,097                      | 16,024                       | 105,106                      
|INVESTING ACTIVITIES                                        |                                |                              |                              
|Acquisition of equipment                                    | (28,266)                       | -                            | (1,127)                      
|Proceeds from sale of equipment                             | 1,028                          | -                            | -                            
|Deposit on acquisition of Terralift Ireland Ltd.            | (50,000)                       | -                            |                              
|Investment in and advances to 3884171 Canada Inc.           | (149,722)                      | -                            | -                            
|                                                            | (226,960)                      | -                            | (1,127)                      
|Increase (decrease) in cash                                 | 359                            | (6,822)                      | (36,743)                     
|Cash, beginning of the period                               | -                              | 7,181                        | 38,281                       
|Cash, end of the period                                     | $                        359   | $                      359   | $ 1,538                      
|Supplemental cash flow information:                         |                                |                              |                              
|Shares issued for research and development                  | $                779,856       | $                          - | $                           -
|                                                            |                                |                              |                              
|Shares issued for rent                                      | $ 23,209                       | $                          - | $                           -
|Shares issued for settlement of debt                        | $                      60,474  | $                14,763      | $                           -
|Shares issued for consulting, management and legal services | $ 1,878,408                    | $
72,288                     | $ 855,578                    
|Shares issued for wages                                     | $ 70,320                       | $................. -       | $ 6,600                      
|                                                            |                                |                              |                              
|Cash paid during the period for:                            |                                |                              |                              
|Interest                                                    | $                            - | $                         -  | $                          - 
|Income taxes                                                | $                            - | $                         -  | $                          - 

See accompanying notes to the interim consolidated financial statements.



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

1.

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The Company was incorporated under the laws of Florida, U.S.A. on May 6, 1996 as RCA Trading Co.  The Company changed its name to Agronix, Inc. (Agronix or the Company) on June 18, 2001.

Agronix is engaged in the acquisition, development and implementation of technologies that convert organic residues into agricultural products such as growth substrates, organic fertilizers, soil amendments and chemical commodities for agriculture and industry use.  Agronix has focused its activities on the development of its acquired technologies for commercial use, identifying prime international locations to build commercial plants, and forming strategic alliances in order to implement its global business plan.  To date, no revenues have been realized and planned principal operations have not commenced.

These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of operations.  The Company has not generated any significant revenues and has incurred substantial losses since inception.  At June 30, 2005 the Company had a working capital deficiency of $610,556 and a capital deficiency of $609,955.  Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern.  The Company's continued existence is dependent upon its ability to raise additional capital and to ultimately achieve profitable operations.  It is management's intention to continue to pursue market acceptance for its technological processes and to identify funding sources until such time that there is sufficient operating cash flow to fund operating requirements. If the going concern assumptions were not appropriate for these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

These accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and conforms with instructions to Form 10-QSB of Regulation S-B.  They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2004 included in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.  The interim unaudited consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-KSB.  In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made.  Operating results for the six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

Consolidation

These consolidated financial statements are presented in U.S. dollars unless otherwise stated, have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiary, American Waste Recovery, Inc, which is inactive.

Equipment

Equipment is recorded at cost less accumulated depreciation.  Depreciation is recorded on the straight-line method at the following annual rates:  Office equipment  20%; Computer equipment  30%.

Investments

The Company uses the equity method to account for its investments other business ventures over which it exercises significant influence.

Loss Per Share

The Company computes net earnings (loss) per share in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share (SFAS 128).  SFAS 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations.  Basis EPS is computed by dividing net income (loss) available to



7



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method.  In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.  The presentation is only of basic earnings (loss) per share as the effect of potential dilution of securities has no impact on the current periods basic earnings per share.

Stock Based Compensation

The Company accounts for stock-based awards using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25).  Under the intrinsic value method of accounting, compensation expense is recognized if the exercise price of the Companys employee stock options is less than the market price of the underlying common stock on the date of grant. SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS 123), established a fair value based method of accounting for stock-based awards.  Under the provisions of SFAS 123, companies that elect to account for stock-based awards in accordance with the provisions of APB 25 are required to disclose the pro forma net income (loss) that would have resulted from the use of the fair value based method under SFAS 123. The Company adopted the disclosure requirements of SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure an Amendment of FASB Statement No. 123, to require more prominent disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

The following table illustrates the effect on net loss per share as if the fair value method had been applied to all outstanding and vested stock option awards in each period.



|                                                                                                                                              | Six Months
Ended
June 30,
2005 | Six Months
Ended
June 30,
2004 | Three Months Ended
June 30,
2005 | Three Months
Ended
June 30,
2004
|--------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ------------------------------ | -------------------------------- | --------------------------------
|                                                                                                                                              |                                |                                |                                  |                                 
|Net loss, as reported                                                                                                                         | $
(322,978)                    | $
(812,355)                    | $
(136,727)                      | $
(528,469)                     
|                                                                                                                                              |                                |                                |                                  |                                 
|Add:  Stock-based employee compensation expense included in reported net income, net of related tax effects                                   | -                              | -                              | -                                | -                               
|                                                                                                                                              |                                |                                |                                  |                                 
|Deduct:  Total stock-based employee compensation expense determined  under fair value based method for all awards, net of related tax effects | -                              | (14,373)                       | -                                | (14,373)                        
|                                                                                                                                              |                                |                                |                                  |                                 
|Pro forma net loss                                                                                                                            | $
(322,978)                    | $
(826,728)                    | $
(136,727)                      | $
(542,842)                     



|Loss per share:                 |           |           |           |          
|------------------------------- | --------- | --------- | --------- | ---------
|                                |           |           |           |          
|Basic and Diluted - as reported | $  (0.01) | $  (0.03) | $  (0.00) | $  (0.02)
|Basic and Diluted - pro forma   | $  (0.01) | $  (0.03) | $  (0.00) | $  (0.02)

Research and Development

The Company records all research and development costs in accordance with SFAS No. 2 "Accounting for Research and Development Costs".  As such, all research and development costs are expensed as they are incurred, until such time as the research and development outcome is proven for commercial use, at which time the costs are capitalized and amortized. To date the Company has not capitalized any development costs.

Long Lived Assets

The Company monitors the recoverability of long-lived assets, including property and equipment, based on estimates using factors such as current market value, future asset utilization, and future undiscounted cash flows expected to result from its investment or use of the related assets.  The Company's policy is to record any impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable.  Any impairment loss is calculated as the excess of the carrying value over estimated realizable value.



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

In preparing financial statements in conformity with accounting principles accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and reported amounts of revenues and expenses during the reporting periods.  Actual results may differ from those estimates.



Foreign Currency Translation

The financial statements are presented in United States dollars.  In accordance with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date.  Revenue and expenses are translated at average rates of exchange during the period.  Gains or losses resulting from foreign currency transactions are included in results of operations.

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in SFAS No. 109, Accounting for Income Taxes.  Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates.  A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

Financial Instruments

The fair values of cash, receivables, accounts payable, accrued liabilities and due to related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company is currently not exposed to any significant credit or interest risk.

Recent Accounting Pronouncements

In March 2004, the Financial Accounting Standards Board (FASB) issued EITF No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-1).  The objective of EITF 03-1 is to provide guidance for identifying impaired investments.  EITF 03-1 also provides new disclosure requirements for investments that are deemed to be temporarily impaired.  In October 2004, the FASB delayed the recognition and measurement provisions of EITF 03-1 until implementation guidance is issued.  The disclosure requirements are effective for annual periods ending after June 15, 2004, and remain in effect.  Management believes that the adoption of EITF 03-1 will not have a material impact on the Companys financial condition or results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs (SFAS 151).  SFAS 151 requires issuers to treat idle facility expense, freight, handling costs and waste material (spoilage) as current-period charges regardless of whether such charges are considered abnormal.  In addition, SFAS 151 requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  SFAS 151 will be effective for all inventory costs incurred in fiscal years beginning after June 15, 2005.  Management believes the adoption of this standard will not have a material impact on the Companys financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS 123(R)), which requires the compensation cost related to share-based payments, such as stock options and employee stock purchase plans, be recognized in the financial statements based on the grant-date fair value of the award.  SFAS 123(R) is effective for all interim periods beginning after December 15, 2005.  Management is currently evaluating the impact of this standard on the Companys financial condition and results of operations.  See Note 2 for information related to the pro forma effects on the Companys reported net loss and net loss per share of applying the fair value recognition provisions of the previous SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions (SFAS 153) SFAS 153 requires that exchanges of non-monetary assets are measured based on fair value and eliminates the exception for exchanges of non-monetary, similar productive assets, and adds an exemption for non-monetary exchanges that do not have commercial substance.  SFAS 153 will be effective for fiscal periods beginning after June 15, 2005.  Management does not believe that the adoption of this standard will have a material impact on the Companys financial condition or results of operations.



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)



3.

ACQUISITION OF TERRALIFT IRELAND LTD.

On January 7, 2003 the Company entered into a Letter of Intent with Organic Waste Returns Ltd. ("OWR") and Terralift Ireland Ltd. (Terralift Ireland) whereby the Company would acquire an 82% interest in Terralift Ireland which would be renamed Agronix Ireland Ltd. (Agronix Ireland). OWR will own the remaining 18% of Agronix Ireland.  On September 22, 2003 the parties signed a formal agreement which was subsequently amended on March 12, 2004 and June 30, 2004 ("the Agreement").  In accordance with the terms of the Agreement the Company paid a non­refundable deposit of $50,000 which was written off in the first quarter of 2004. Although the closing date of October 28, 2004 has expired, the parties have verbally agreed to extend the closing date of the original agreement. With this concession and the declining US dollar, the Company has agreed to the following purchase terms: The purchase price for an 82% interest in Terralift Ireland shall be €1,500,000 (Euros) and US$1,000,000 worth of the Company's common stock paid out over 5 years at market value.

Upon completion of the acquisition, the OWR shareholders have agreed to loan $250,000 to Agronix Ireland on an interest free basis for a period of one year and will become part of the management team of the Ireland plant. Also concurrent with the closing of the Agreement, Agronix Ireland will enter into a separate agreement with Terralift UK Ltd. to handle marketing and sales of products manufactured by the Ireland plant.

The acquisition of the Ireland plant, if completed, will include the existing plant (land, buildings and equipment) which currently manufactures compost and organic fertilizers for the turf and golf course market.  As well, the parties plan a complete retrofit using Agronix technologies for a total investment of approximately $5,800,000.

The Company has executed the Overseas Private Investment Corporation  (OPIC) Loan Agreement, dated July 1, 2004, for $2.9 million based on the Company providing matching funds. OPIC is a US government agency which helps businesses invest overseas and fosters economic development in new and emerging markets. The Company continues to pursue various financial sources to obtain these matching funds but has been unsuccessful to date.  Since considerable time has lapsed since the initial loan application, the Company will be required to reapply for the loan amount.

Under a new agreement of October 13, 2004 with ONRS (Organic Nutrient Recycling Systems) (formerly BCBV), ONRS will manage the Operations Division of Agronix.  ONRS will manage the plant retrofit, commissioning and training personnel to operate the Agronix Ireland plant. The principals of ONRS are minority shareholders of OWR.

Under a separate consulting agreement, the Managing Director of Terralift Ireland will be granted a stock option of 500,000 shares issued quarterly from the date of closing the acquisition, at an agreed market value, over a two year term for the purpose of developing organic fertilizers and market development for Agronix end products.

At this time, the Company is also looking at alternate sites in Ireland, to identify the most appropriate location. The Company is also pursuing its funding opportunities through its executed Letters of Intent with two separate parties.



4.

DUE TO RELATED PARTY

| |                                                                                 | June 30,
2005   | December 31,
2004
| | ------------------------------------------------------------------------------- | --------------- | -----------------
| | Demand loan from a company controlled by a director                             |                 |                  
| | - unsecured, principal in the amount of $63,440; 12% per annum simple interest; |                 |                  
| | interest payable monthly; repayable on demand or on December 31, 2005           | $        63,440 | $         63,440 

For the six month period ended June 30, 2005, the Company has accrued interest of $3,806 (2004 - $3,806).  At June 30, 2005, $20,899 (December 31, 2004 - $17,092) is owing for interest and is included in accounts payable and accrued liabilities.



5.

CAPITAL STOCK

On June 11, 2001 the Company amended its Articles of Incorporation to change the authorized number of shares from 20,000,000 common shares to 25,000,000 and the authorized number of preferred shares from 5,000,000 to 10,000,000. On January 9, 2002 the Company amended its outstanding number of common shares to reflect a two-for-one split. As a result, the 9,720,997 issued and outstanding shares as of that date changed to a total of 19,441,994 issued and outstanding shares. In addition, the Company amended its Articles of Incorporation to change the authorized number of shares from 25,000,000 to 50,000,000 common shares. On October 27, 2004, the Company increased its authorized number of common shares from 50,000,000 to 100,000,000 shares.



10



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

5.

CAPITAL STOCK (continued)

Effective March 5, 2004 the Company filed a form S-8 Registration Statement in connection with a 2004 Stock Incentive Plan allowing for the direct award of shares or granting of options to acquire shares up to a total of 5,000,000 common shares.  On July 28, 2004, the Company filed an Amended Form S-8 to register an amendment to the 2004 Stock Incentive Plan number to increase the number of options to 10,000,000 shares.

Effective April 21, 2005, the Company filed a form S-8 Registration Statement in connection with its newly adopted 2005 Stock Incentive Plan allowing for the direct award of shares or granting of options to acquire shares up to a total of 30,000,000 shares.

The Company issues shares in payment for certain consulting, management, professional fees and expenses incurred.  The shares were previously registered by way of a form S-8 Registration Statement.  During the six month period ended June 30, 2005, the Company issued a total of 1,497,540 common shares to certain officers, employees, consultants and other shareholders for consulting fees valued at $47,288. During the six month period ended June 30, 2004, the Company issued a total of 6,444,000 common shares to certain officers, employees, consultants and other shareholders for wages and consulting fees valued at $855,578.

The Company receives proceeds through the issuance and exercise of shares under the Companys Employee Stock Incentive Program (ESIP).  During the six month period ended June 30, 2005, the Company issued a net 1,000,000 shares of common stock, valued at $25,000, to employees under the Companys ESIP.  Under the terms of the ESIP, the Company received cash proceeds of $13,570, net of the 15% discount offered to the employees under the ESIP, which has been credited against the value of the corresponding consulting expense. An additional 500,000 shares were issued to an employee, who subsequently resigned, and the shares were returned to treasury.

The Company also had issued an ongoing offering memorandum on November 1, 2004 and which terminated on April 30, 2005.  A new offering commenced on May 1, 2005 and will close on October 31, 2005.  During the six month period ended June 30, 2005, the Company issued 1,602,400 common shares under this offering memorandum to a director for cash proceeds of $16,024.  During the six month period ended June 30, 2004, the Company issued 942,877 common shares for proceeds of $141,532 which $18,245 was received at December 31, 2003.

In 2003, the Company had issued 500,000 common shares, valued at $115,000, to a consultant for compensation. During the three month period ended March 31, 2004, both parties agreed to terminate this agreement. The 500,000 shares were returned by the consultant, cancelled and returned to the Companys treasury.

Performance Shares

On January 27, 2000, 1,000,000 performance shares were issued into escrow for the Company's President and CEO.  For each $0.25 of cumulative cash flow generated by the Company from its operations, two performance shares will be released from escrow.  All shares remain in escrow at June 30, 2005.

Stock Options and Warrants

The following table summarizes information about outstanding and exercisable share options at June 30, 2005:



|Options Outstanding and Exercisable
|-----------------------------------
|                                   
|                                   
|                                   
|Number                             
|Outstanding                        
|840,000                            
|400,000                            
|300,000                            
|500,000                            
|150,000                            
|400,000                            
|80,000                             
|20,000                             
|100,000                            
|                                   
|2,790,000                          





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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

5.

CAPITAL STOCK (continued)

Summary of share option activity and information concerning options at June 30, 2005:



| |                              | Six months ended
June 30, 2005 | Year ended
December 31, 2004
| | ---------------------------- | ------------------------------ | ----------------------------
| | Balance, beginning of period | 2,790,000                      | 6,690,000                   
| | Granted                      | -                              | 4,600,000                   
| | Exercised                    | -                              | (961,538)                   
| | Expired                      | -                              | (3,538,462)                 
| | Cancelled                    | -                              | (4,000,000)                 
| |                              |                                |                             
| | Balance, end of period       | 2,790,000                      | 2,790,000                   



6.

COMMITMENTS

a)

Collaborative Research and Development Agreement

The Company consolidated its research and development activities at Carleton University (Carleton) in Ottawa, Canada where pursuant to an agreement (the "Agreement") effective May 1, 2001 and as amended July 17, 2001, the Company committed to fund a maximum of CAD$594,600 towards certain projects over the four year period ending April 30, 2005.  Under the terms of the Agreement interest accrues at 1.5% per month on Carleton's invoices that are not paid within 30 days.

The Company will own any new technologies and/or intellectual property arising out of these research and development activities.  Carleton will have the right to: (a) a royalty free non-exclusive license for research and educational purposes; (b) a reasonable royalty on any commercially exploitable projects; and (c) in the event the Company does not exploit the projects within a specified time to be agreed upon, the right to commercially exploit them shall be reassigned to Carleton, subject to a royalty-free non-exclusive license to the Company.  To date the Company has incurred $227,576 for research and development and $111,026 in accrued interest leaving $338,602 due to Carleton as at June 30, 2005 which is included in accounts payable and accrued liabilities.

The research and development agreement has been discontinued until such time that the Company is able to satisfy its obligation to Carleton University.

b)

Licensing Agreement

On February 28, 2003 the Company entered into a licensing agreement with a company in Jamaica named Agronix Caricom Inc. (Agronix Caricom), whereby the Company granted to Agronix Caricom Inc. the exclusive rights to employ its technologies throughout the Caribbean region.  Although the original agreement has expired, the Company has agreed to honour the agreement while negotiations continue with the Jamaican government and industry partners.  The first project has an estimated cost of $6,000,000, for which the Company will contribute 25%, or an estimated $1,500,000, in exchange for 25% non-dilutable equity interest in the plant.

c)

Letter of Intent

The Company has entered into a letter of intent with a Hungarian partner to launch Agronix Hungary, contingent upon the Hungarian partner providing the financing for the first plant in Hungary. The partner will provide all the funds, estimated at $3,200,000 required for the initial plant, and the Company would provide a turnkey plant, technology and staff training for a 25% interest in the plant.

d)

Letter of Intent

The Company entered into a Letter of Intent with BS Technologie GmbH (BS Technologie) to form joint ventures to build and operate organic waste processing facilities in the European Union.  The Company will provide the technology and intellectual property and BS Technologie has agreed to raise the required funding. This Letter of Intent has been cancelled and replaced by the Letter of Intent with Envosmart Technologies LLC in item e).

e)

Letter of Intent

The Company entered into a Letter of Intent with Envosmart Technologies LLC (Envosmart) to form a joint venture corporation in Ireland to be known as Agronix Europe, to build and operate a Pilot Plant in Ireland (the Pilot Plant) in cooperation with Terralift, and to build and operate various organic waste processing facilities in the European Union and in the Middle East.  The Company will



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(Unaudited)

6.

COMMITMENTS (continued)

provide the technology and intellectual property for the plants, and Envosmart Technologies has agreed to raise a minimum of $3,000,000 for the construction of the Pilot Plant. The Company will pay $160,000 and issue 8,000,000 common shares as a consulting fee upon Envosmart raising the required funding to build the Pilot Plant.

f)

Letter of Intent

The Company entered into a Letter of Intent with Circadian Group LLC (Circadian)to form a joint venture corporation in Ireland to be known as Agronix Europe, to build and operate a Plant in Ireland (the Irish Plant).  The Company will provide the technology and intellectual property for the plants, and Circadian has agreed to raise a minimum of $1,000,000 for the construction of the Irish Plant.

g)

Consulting Agreements

The Company has committed to issue a total of 24,500 shares per month and CAD$5,000 per month to consultants subject to monthly renewals.

Effective April, 2004, the Company agreed to issue 5,000 shares of common stock per month as compensation to the Chairman of the Audit Committee. Effective July 1, 2005, the Company increased the compensation to 30,000 shares per month.

h)

Trustee Agreement

The Company entered into a Trustee Agreement on November 16, 2004 with Karsten Behrens, a lawyer in Munich Germany, to be trustee for 10,000,000 Regulation-S common shares and any benefits and proceeds of the sale of the shares.  Under a separate sales agreement, the initial offering price for these Regulation-S common shares is set at a minimum of $0.15 per share, and the shares can be traded on the Berlin Stock Exchange. The trustee fee is 3% of the total shares held in trust upon issue of the stock. No Regulation-S shares have been transferred to the Trustee and no shares have been sold. The agreement was terminated on April 11, 2005.

7.  RELATED PARTY TRANSACTIONS

During the six month period ended June 30, 2005, the Company incurred $58,954 (June 30, 2004 - $56,356) in salary and consulting fees to its senior executives or their private companies, which includes 30,000 common shares valued at $855 (June 30, 2004  115,000 common shares valued at $16,525). Included in accounts payable is $96,412 (December 31, 2004  $40,835) owing to a private company owned by a senior executive.

All related party amounts are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Refer to Note 4.

8.  PREPAID EXPENSES AND DEPOSITS

During the six month period ended June 30, 2005, the Company issued a total of 700,000 shares of the Company's common stock as restricted common stock with a fair value of $25,500 pursuant to consulting agreements with up to one year terms.  As at June 30, 2005, $1,685 has been included in prepaid expenses.

During the six month period ended June 30, 2004 the Company entered into consulting agreements whereby the Company issued a total of 4,767,000 shares of the Company's restricted common stock with a fair value of $669,745.

9.  SUBSEQUENT EVENTS

The Company issued a total of 396,240 shares of the Company's common stock pursuant to consulting agreements, comprised of 130,000 shares issued to the Chairman of the Audit Committee, 24,500 shares issued to various consultants, and 241,740 shares issued toward settlement of accounts payable. These shares were issued as S-8 registered common stock.

The Company issued a total of 200,000 shares of the Company's common stock at a price of $0.03 per share for cash proceeds of $6,000.

The Company issued a total of 300,000 shares of the Company's common stock at a price of $0.02 per share for cash proceeds of $6,000.



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ITEM 6.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



The following discussion contains certain statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that refer to expectations, projections or other characterization of future events or circumstances, and especially those which include variations of the words "believes," "intends," "estimates," "anticipates," "expects," "plans," or similar words or variations thereof, are likely to be forward-looking statements, and as such, are likely to concern matters involving risk, uncertainty, unpredictability and other factors that could materially and adversely affect the outcome or results indicated by or inferred from the statements themselves. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this Form 10-QSB and in the Company's other filings with the Securities and Exchange Commission, and that no statements contained in the following discussion or in this Form 10-QSB should be construed as a guarantee or assurance of future performance or future results.



Overview

The number of authorized shares of common stock in the Company was 25,000,000, and 10,000,000 shares of preferred stock were also authorized. In January 2002, in conjunction with a 2:1 forward split of its issued and outstanding common stock, the Company increased its authorized common stock from 25,000,000 to 50,000,000 shares.  On, October 27, 2004, the Company increased its authorized common stock from 50,000,000 to 100,000,000 shares, with the preferred stock remaining unchanged at 10,000,000.



Plan of Operations

Agronix, Inc. is in the market-entry stage of its business plan:  remediating organic wastes (animal manure, sewage sludge and Industrial, Commercial, Institutional (ICI) waste streams) into agricultural products such as growth substrates, organic fertilizer, soil amendments and other value-added agri-products. The Company refers to its technology as the Global Organic Systems, or the "G.O. Systems, which is now fully engineered and ready for market entry.

The Companys primary focus has been the acquisition and retrofit of a permitted facility in Ireland, to become its first fully operational plant.  Immediate revenues would be derived from existing infeed contracts and take-out contracts.  The plant would showcase all components of the flow-through G.O. Systems technology, its efficiency and profitability, while also strategically positioning the Company within the European Union.

The Company has an agreement with Terralift Ireland, Ltd. for the purchase of a Castleblayney, Ireland site.  A verbal extension of this agreement has been granted, allowing the Company more time to complete its financing.  The delay in completion and the changes in the US dollar valuation, have prompted the purchase price to be renegotiated in Euros.

During 2004, the Company received the final executed loan agreement for $2,900,000 from the Overseas Private Investment Corporation (OPIC), toward the completion of the Castleblayney project.  Since the Company has been unable to raise the matching funds, the Company will be required to reapply to OPIC for the loan, if the Company elects to finance through this means.

In order to raise funds for the Irish site acquisition, the Company has signed a Letter of Intent to form a potential joint venture to acquire and build plants in the European Union.  The other party would provide the funding necessary for the initial and subsequent projects, while the Company would provide the technology, intellectual property and turn-key the plant(s).



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ITEM 6:

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)

With this current joint venture opportunity for funding, the Company has elected to cancel the issue of 10,000,000 Regulation S stock into the European market.  If the Company requires additional capital at some later date, the Company may once again look at this option.

Additionally, the Company is working with strategic partners including Goodworks International and key partners in the Caricom (Caribbean), Asian and European regions.  Developments in Jamaica, Hungary, Germany and China could result in advancements for the Company in 2005.  Agronixs objective remains to establish joint venture partners to implement plants in these various regions.

The Honourable Charlie Mayer, P.C., Chairman of the Board since February 2004 and Chairman of the Audit Committee continues to introduce the Company to the agricultural industry and potential partners in North America. Mr. Mayer, as a former member of Parliament and international trade negotiator, brings to the Company extensive credentials, understanding of international trade practices and policies, and a solid background in running successful farming and business operations.

The Company remains in the development stage and does not have an established source of revenue sufficient to cover its operating costs. As of June 30, 2005, the Company had cash on hand of $359, which is not sufficient to allow it to pay its operating expenses and carry out its plan of operation for the next twelve months. Therefore, it is the Company's intention to seek additional financing through private and public placements of its common stock. The Company experienced a net loss of$152,751 for the quarter ended June 30, 2005, compared with a loss of $528,469 for 2004. The loss for the quarter ending June 30, 2005 is approximately 375,000 less than the loss for 2004. The difference is due to a reduction in all expense categories. There are no assurances that the Company can continue to meet its financial obligations without a major funding. The Company has been able to cover its overhead and general administrative cost by selling common stock by private placements and through direct awards of stock to our employees and consultants.  The future funds are anticipated to come principally from Europe.

To maintain operations, in April 2005, the Company filed a Form S-8 Registration with the U.S. Securities and Exchange Commission for 30,000,000 S-8 Common Shares to be used to ensure key consultants can be issued some reasonable compensation for their services to the Company.  The Company is listed for trading on the OTC Bulletin Board under the symbol "AGNI."



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ITEM 3.

CONTROLS AND PROCEDURES



As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports.  It should be noted that design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions



ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REPORT REFLECT MANAGEMENTS BEST JUDGMENT BASED UPON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES.  ACTUAL RESULTS MAY VARY MATERIALLY.



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PART II



ITEM 1.  LEGAL PROCEEDINGS



None.



ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended June 30, 2005, the Company issued 1,602,400 shares for cash in reliance upon exemptions from registration under the Securities Act of 1933. The gross offering proceeds received from sale of these shares was $16,024, for which the company paid no underwriting discounts or commissions. The shares were issued in reliance upon the safe harbor provisions of Regulation S adopted under the Securities Act of 1933, for offers and sales that occurred outside the United States. The shares were issued on various on June 2, 2005 pursuant to the Company's May 1, 2005 offering memorandum, which remains in effect.



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ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.



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

None.



ITEM 6.  EXHIBITS



(a)

The following exhibits are filed herewith:



3.1

Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on May 17, 2000).

3.1a

Amendment to Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on May 17, 2000).

3.2

Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on May 17, 2000).

31.1

Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



18



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SIGNATURES



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



AGRONIX, INC.





By: /S/ BRIAN HAUFF

Brian Hauff, President, Chief Financial Officer and a Director





By:/S/

CHARLES MAYER

Charles Mayer, Director





By:/S/ PETER J. BARNETT

Peter J. Barnett, Director





Date:

August 15, 2005





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