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 September 30, 2004.



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

For 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 September 30, 2004, there were 35,129,338 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)



SEPTEMBER 30, 2004









2



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AGRONIX, INC.

(A Development Stage Company)







SEPTEMBER 30, 2004



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 – 24

3



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| | 
| | 

AGRONIX, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

ASSETS

|                                                                 | September 30 | December 31
|---------------------------------------------------------------- | ------------ | -----------
|                                                                 | 2004         | 2003       
|                                                                 | (Unaudited)  |            
|CURRENT                                                          |              |            
|Cash                                                             | $     477    | $   38,281 
|Receivables                                                      | 4,281        | 10,589     
|Prepaid expenses and deposits (Note 11)                          | 269,182      | 179,976    
|                                                                 | 273,940      | 228,846    
|FIXED ASSETS                                                     | 755          | 6,306      
|DEPOSIT ON ACQUISITION OF TERRALIFT IRELAND LTD.(Note 3)         | -            | 50,000     
|INVESTMENT IN 3884171 CANADA INC. (Note 4)                       | -            | 1          
|                                                                 | $274,695     | $285,153   
|                                                                 |              |            
|LIABILITIES AND STOCKHOLDERS' DEFICIT                           
|                                                                 |              |            
|CURRENT LIABILITIES                                              |              |            
|Accounts payable and accrued liabilities                         | $  463,013   | $  388,262 
|Due to related parties (Note 5)                                  | 63,440       | 63,440     
|                                                                 | 526,453      | 451,702    
|                                                                 |              |            
|STOCKHOLDERS' DEFICIT                                            |              |            
|CAPITAL STOCK (Note 6)                                           |              |            
|Authorized:                                                      |              |            
|50,000,000 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:                                          |              |            
|35,129,338 (2003: 27,503,715) common shares                      | 25,408       | 17,782     
|Additional paid in capital                                       | 5,857,141    | 4,778,622  
|Common stock subscribed                                          | 4,710        | 35,155     
|Less: stock subscriptions receivable                             | _______      | -          
|                                                                 | 5,859,259    | 4,831,559  
|                                                                 |              |            
|DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE                 | (6,111,017)  | (4,998,108)
|                                                                 | (251,758)    | (166,549)  
|                                                                 | $274,695     | $285,153   

Continuance of operations (Note 1)

Commitments (Notes 3 and 8)



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                     | For the                 | For the                 | For the               | For the               
|                                    | From Inception                 | Nine Months             | Nine Months             | Three Months          | Three Months          
|                                    | (Jan 20, 2000) to September 30 | Ended
September 30      | Ended
September 30      | Ended
September 30    | Ended
September 30    
|                                    | 2004                           | 2004                    | 2003                    | 2004                  | 2003                  
|INTEREST INCOME                     | $        3,811                 | $             54        | $                   571 | $          1          | $            68       
|EXPENSES                            |                                |                         |                         |                       |                       
|Consulting and management fees      | 3,431,569                      | 847,756                 | 740,738                 | 273,227               | 164,540               
|Depreciation                        | 23,730                         | 3,101                   | 3,230                   | 1,034                 | 1,040                 
|General and administrative          | 269,336                        | 67,802                  | 75,290                  | 39,283                | 16,938                
|Loss on sale of equipment           | 2,549                          | 2,549                   | -                       | 2,549                 | -                     
|Professional fees                   | 342,157                        | 105,311                 | 52,249                  | 1,361                 | 22,373                
|Rent                                | 66,732                         | 9,604                   | 11,081                  | -                     | 2,141                 
|Research and development            | 1,174,542                      | -                       | 409,025                 | -                     | -                     
|Salaries and benefits (recovery)    | 174,895                        | (21,155)                | 62,484                  | (27,755)              | 18,450                
|Shareholder communications          | 86,647                         | 28,857                  | 10,573                  | 760                   | 5,479                 
|Travel and promotion                | 392,520                        | 69,137                  | 62,852                  | 10,095                | 36,771                
|                                    | 5,964,677                      | 1,112,962               | 1,427,522               | 300,554               | 267,732               
|LOSSbefore the following            | (5,960,866)                    | (1,112,908)             | (1,426,951)             | (300,553)             | (267,664)             
|Loss on impairment of investment in |                                |                         |                         |                       |                       
|and advances to 3884171 Canada Inc. | (150,151)                      | (1)                     | (429)                   | (1)                   | (429)                 
|NET LOSS                            | $          (6,111,017)         | $       (1,112,909)     | $       (1,427,380)     | $        (300,554)    | $         (268,093)   
|                                    |                                |                         |                         |                       |                       
|Basic loss per share                |                                | $                (0.04) | $                (0.06) | $              (0.01) | $               (0.01)
|Weighted average common             |                                |                         |                         |                       |                       
|shares outstanding                  |                                | 31,652,328              | 23,038,855              | 35,481,360            | 24,156,283            
|                                    |                                |                         |                         |                       |                       
|                                    |                                |                         |                         |                       |                       











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) | Nine Months                     | Nine Months                    
|                                                  | to September 30    | Ended September 30              | Ended September 30             
|                                                  | 2004               | 2004                            | 2003                           
|Cash derived from (applied to):                   |                    |                                 |                                
|OPERATING ACTIVITIES                              |                    |                                 |                                
|Net loss                                          | $(6,111,017)       | $ (1,112,909)                   | $ (1,427,380)                  
|Depreciation                                      | 23,730             | 3,101                           | 3,230                          
|Loss on sale of equipment                         | 2,549              | 2,549                           | -                              
|Non-cash research and development                 | 779,856            | -                               | 396,000                        
|Stock based compensation                          | 1,123,831          | 187,981                         | 169,200                        
|Impairment of investment in 3884171 Canada Inc.   | 149,722            | 1                               | -                              
|Impairment of Terralift deposit                   | 50,000             | 50,000                          | -                              
|Wages paid through the issuance of common shares  | 61,900             | 6,600                           | 50,800                         
|Rent paid through issuance of common shares       | 23,209             | -                               | -                              
|Consulting, management and professional fees paid |                    |                                 |                                
|through the issuance of common shares             | 1,700,991          | 633,327                         | 450,017                        
|Change in non-cash working capital                |                    |                                 |                                
|Receivables                                       | (4,281)            | 6,308                           | 13,827                         
|Prepaid expense and deposits                      | (179,496)          | 480                             | (120,344)                      
|Payables and accruals                             | 449,909            | 74,751                          | 72,561                         
|                                                  | (1,929,097)        | (147,811)                       | (392,089)                      
|FINANCING ACTIVITIES                              |                    |                                 |                                
|Advances under a credit facility with a company   |                    |                                 |                                
|with director in common, net of repayments        | 63,440             | -                               | -                              
|Advances to shareholder                           | (14,267)           | -                               | -                              
|Shares issued for cash                            | 2,102,444          | 140,551                         | 287,763                        
|Shares subscribed                                 | 4,710              | (30,445)                        | 200,922                        
|                                                  | 2,156,327          | 110,106                         | 488,685                        
|INVESTING ACTIVITIES                              |                    |                                 |                                
|Acquisition of property and equipment             | (28,059)           | (1,127)                         | (218)                          
|Proceeds on sale of equipment                     | 1,028              | 1,028                           | -                              
|Deposit on acquisition of Terralift Ireland Ltd.  | (50,000)           | -                               | -                              
|Investment in and advances to 3884171 Canada Inc. | (149,722)          | -                               | -                              
|                                                  | (226,753)          | (99)                            | (218)                          
|Increase (decrease) in cash                       | 477                | (37,804)                        | 96,378                         
|Cash, beginning of the period                     | -                  | 38,281                          | 23,093                         
|Cash, end of the period                           | $ 477              | $ 477                           | $ 119,471                      
|Supplemental cash flow information:               |                    |                                 |                                
|Shares issued for research and development        | $
779,856          | $                             - | $
396,000                      
|Stock based compensation                          | $
1,024,600        | $
187,981                       | $
169,200                      
|Shares issued for rent                            | $
23,209           | $                           -   | $                             -
|Shares issued for consulting and legal services   | $
1,805,572        | $
856,069                       | $
457,930                      
|Shares issued for wages                           | $
61,900           | $
6,600                         | $
50,800                       



6



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(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. 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, for identifying prime international locations to build commercial plants, and forming strategic alliances for the implementation of its global business plan.  No revenues have been realized and planned principal operations have not yet 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 revenues and has incurred substantial losses since inception.  At September 30, 2004 the Company had a working capital deficiency of $252,513 and a capital deficiency of $251,758.  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 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 generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2003 included in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.  The interim unaudited 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 nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

7



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

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, AWR.

Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation.  Depreciation is recorded on the straight-line method at the following rates:



|Office equipment   | 20% | straight line
|------------------ | --- | -------------
|Computer equipment | 30% | straight line

Investments

The Company uses the equity method to account for investments in companies such as 3884171 Canada Inc. and other business ventures over which it exercises significant influence.

Loss Per Share

The Company follows SFAS No. 128 Earnings Per Share to calculate earnings (loss) per share.  Basic loss per share is computed using the weighed effect of all common shares issued and outstanding.  Fully diluted earnings per share has not been presented as the effect on basic earnings per share is anti-dilutive.

8



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock Based Compensation

In December 2002, the Financial Accounting Standards Board issued Financial Accounting Standard No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" ("SFAS No. 148"), an amendment of Financial Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No. 123").  The purpose of SFAS No. 148 is to: (1) provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation, (2) amend the disclosure provisions to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation, and (3) to require disclosure of those effects in interim financial information.  The disclosure provisions of SFAS No. 148 were effective for the Company for the year ended December 31, 2003.

The Company has elected to continue to account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25") and to comply with the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148 as described above.  In addition, in accordance with SFAS No. 123 the Company applies the fair value method using the Black-Scholes option-pricing model in accounting for options granted to consultants.  Under APB No. 25, compensation expense is recognized immediately for past services and pro rata for future services over the option-vesting period. The Company has also adopted the provisions of the Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation - An Interpretation of APB Opinion No. 25 (FIN 44"), which provides guidance as to certain applications of APB 25.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force in Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services" ("EITF 96-18").  Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

During the nine month period ended September 30, 2004, the Company granted stock options to consultants to acquire up to 4,000,000 common shares at a price of 50% of the market value of the shares on the date of exercise, and 500,000 shares at a price of 70% of the market value of the shares on the date of exercise. Accordingly, the Company has recognized related stock-based compensation of $126,231.

9



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

During the nine month period ended September 30, 2004, the Company granted stock options to a director to acquire 100,000 common shares at a price of $0.50 per share exercisable to April 7, 2010. The fair value of the options granted during the period was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk free interest rate of 3.23%, expected volatility of 200%, an expected option life of five years and no expected dividends. The weighted average fair value of options granted was $0.14 per share. Had the Company determined compensation cost based on the fair value at the date of grant for its employee stock options, the net loss would have increased by $14,373 for the nine months ended September 30, 2004.

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 awards in each period.



| |  | Three months ended
September 30, | Nine months ended
September 30,
| |  | -------------------------------- | -------------------------------

|                                                                            |  | 2004
$    | 2003
$    | 2004
$      |  | 2003
$     
|--------------------------------------------------------------------------- |  | --------- | --------- | ----------- |  | -----------
|                                                                            |  |           |           |             |  |            
|Net loss — as reported                                                      |  | (300,554) | (268,093) | (1,112,909) |  | (1,427,380)
|Add: Stock-based compensation expense included in net loss — as reported    |  | 126,231   | 169,200   | 126,231     |  | 169,200    
|Deduct: Stock-based compensation expense determined under fair value method |  | (140,604) | (169,200) | (140,604)   |  | (169,200)  
|                                                                            |  |           |           |             |  |            
|Net loss — pro forma                                                        |  | (314,927) | (268,093) | (1,127,282) |  | (1,427,380)
|                                                                            |  |           |           |             |  |            
|Net loss per share (basic and diluted) — as reported                        |  | (0.01)    | (0.01)    | (0.04)      |  | (0.06)     
|Net loss per share (basic and diluted) — pro forma                          |  | (0.01)    | (0.01)    | (0.04)      |  | (0.06)     





10



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Research And Development

The Company records all research and development costs in accordance with SFAS 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.

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 the disclosure of contingent assets and liabilities at the dates of the financial statements for the reporting period.  Actual results may differ from those estimates.

Foreign Currency Translation

The financial statements are presented in United States dollars.  In accordance with Statement of Financial Accounting Standards 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.  Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

3.

DEPOSIT ON 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. whereby the Company would acquire an 82% interest in Terralift Ireland which would be renamed Agronix Ireland. OWR will own the remaining 18% of Agronix Ireland. On September 22, 2003 the parties signed a formal agreement which was subsequently

11



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



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 Company has elected, with the permission of Terralift Ireland and OWR to complete the purchase without a formal agreement, in order to preserve working capital. Due to this concession and the declining US dollar, the Company has agreed to the following purchase terms: The purchase price at closing 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.

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. 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 Company has executed the OPIC loan agreement and is pursuing the matching funds with various financial sources.

The acquisition of the Ireland plant, if completed, will include the existing plant (land, buildings and equipment) which 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.

Under new agreement with ONRS (Organic Nutrient Recycling Systems) (formerly BCBV) will manage the Operations Division of Agronix. ONRS will supervise, project manage and train personnel to operate the new retrofit of the 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, at an agreed market value, over a two year term for the purpose of developing organic fertilizers and market development for Agronix end products.

12



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



4.

INVESTMENT IN AND ADVANCES TO 3884171 CANADA INC.

The Company has elected to dissolve the jointly-owned Canadian federal company, 3884171 Canada Inc., and continues its direct relationship with Bio-Max Inc.  All investments in and advances to 3884171 Canada Inc. have been written off.

5.

DUE TO RELATED PARTIES



| |                                                            | September 30 | December 31
| | ---------------------------------------------------------- | ------------ | -----------
| |                                                            | 2004         | 2003       
| | Demand loan from a company controlled by a director        |              |            
| | - unsecured, principal in the amount of $63,440; 12%       |              |            
| | annum simple interest; interest payable monthly; repayable |              |            
| | on demand or on December 31, 2004                          | $ 63,440     | $ 63,440   

For the nine-month period ended September 30, 2004, the Company has accrued interest of $5,709. At September 30, 2004, $15,199 is owing for interest and is included in accounts payable.

6.

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 amended its authorized number of shares from 50,000,000 to 100,000,000 common shares.

Effective March 5, 2004 the Company filed a form S-8 Registration Statement in connection with its newly adopted 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 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 10,000,000 shares.

The Company issues shares in payment for certain consulting, management and professional fees incurred.  The shares are previously registered by way of a form S-8 Registration Statement.  During the nine month period ended September 30, 2004, the Company incurred $847,244 to certain officers, consultants and other shareholders as wages, legal and consulting fees through the issuance of 6,932,065 common shares, net of 1,800,000 shares valued at $172,000 previously issued for prepaid consulting fees which were returned and cancelled during the quarter.

The Company also has an ongoing offering memorandum which is renewed every six months.The

13



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



current offering commenced on May 1, 2004 and closed on October 31, 2004. During the nine month period ended September 30, 2004 the Company issued 1,118,077 common shares for proceeds of $153,796, of which $18,245 was received at December 31, 2003. Subsequently, the Company issued 1,228,115 common shares for proceeds of $65,210, of which $4,710 was received at December 31, 2003.

Stock Options and Warrants

The following table summarizes information about outstanding and exercisable share options at September 30, 2004:



|Options Outstanding | Options Exercisable
|------------------- | -------------------

|            |            |           | Average     | Weighted  |             | Weighted 
|----------- | ---------- | --------- | ----------- | --------- | ----------- | ---------
|            |            |           | Remaining   | Average   |             | Average  
|            |            | Exercise  | Contractual | Exercise  |             | Exercise 
|Number      |            | Price     | Life        | Price     | Number      | Price    
|Outstanding | Grant Date | Per Share | (In Years)  | Per Share | Exercisable | Per Share
|840,000     | 01/27/00   | $ 0.25    | 2.08        | $ 0.25    | 840,000     | $ 0.25   
|400,000     | 01/28/00   | 0.25      | 2.08        | 0.25      | 400,000     | 0.25     
|300,000     | 02/17/00   | 0.25      | 2.14        | 0.25      | 300,000     | 0.25     
|500,000     | 08/04/00   | 0.25      | 2.60        | 0.25      | 500,000     | 0.25     
|150,000     | 10/30/00   | 0.34      | 2.83        | 0.34      | 150,000     | 0.34     
|400,000     | 01/17/01   | 0.50      | 2.05        | 0.50      | 400,000     | 0.50     
|80,000      | 07/03/01   | 0.50      | 3.51        | 0.50      | 80,000      | 0.50     
|1,000,000   | 07/09/01   | 0.25      | 2.53        | 0.25      | 1,000,000   | 0.25     
|20,000      | 02/07/03   | 0.50      | 5.11        | 0.50      | 20,000      | 0.50     
|100,000     | 04/07/04   | 0.50      | 5.75        | 0.50      | 100,000     | 0.50     
|1,000,000   | 07/14/04   | 0.03      | 0.20        | 0.03      | 1,000,000   | 0.03     
|1,000,000   | 07/14/04   | 0.03      | 0.20        | 0.03      | 1,000,000   | 0.03     
|            |            |           |             |           |             |          
|5,790,000   |            |           |             | $ 0.20    | 5,790,000   | $ 0.20   

14



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

6.

CAPITAL STOCK (continued)

Summary of share option activity and information concerning options at September 30, 2004:

| |  | 
| |  | 

| |                              | Nine Months Ended  | Year Ended       
| | ---------------------------- | ------------------ | -----------------
| |                              | September 30, 2004 | December 31, 2003
| | Balance, beginning of period | 6,690,000          | 6,870,000        
| | Granted                      | 4,600,000          | 520,000          
| | Exercised                    | (961,538)          | -                
| | Expired                      | (1,538,462)        | (200,000)        
| | Cancelled                    | (3,000,000)        | (500,000)        
| |                              |                    |                  
| | Balance, end of period       | 5,790,000          | 6,690,000        

During the third quarter of 2004, the Company granted options to purchase 4,000,000 shares of the Company’s common stock to certain consultants at a price of 50% of the market value of the shares on the date of exercise for a period of five months. Compensation expense of $114,231 related to these options has been recorded using their intrinsic value under the variable option method of accounting. During the third quarter of 2004, the Company granted options to purchase 500,000 shares of the Company’s common stock to a consultant at a price of 70% of the market value of the shares on the date of exercise. Compensation expense of $12,000 related to these options has been recorded using their intrinsic value under the variable option method of accounting.

During the first quarter of 2003, the Company granted options to purchase 520,000 shares of the Company's common stock to certain consultants at a price of $0.50 per share for a period of six years.  Compensation expense of $169,200 related to these options has been recorded.  The fair value of these consultant stock options was estimated at the grant date using the Black-Scholes option-pricing model applying the market value per share and the risk-free interest rate in effect at the grant date of 3.14%, 204% volatility, and an expected life of six years.

During 2003 the Company entered into a five-year non-exclusive financial services consulting agreement.  In consideration the Company granted 2,000,000 common stock purchase warrants entitling the holder to purchase restricted shares of the Company's common stock for a period of five years as follows:  500,000 shares at $0.40 per share; 500,000 shares at $0.75 per share; 500,000 shares at $1.00 per share; and 500,000 shares at $1.50 per share.  The warrants vest as follows:  500,000 effective November 30, 2003 and 500,000 at the end of each of the six, twelve and eighteen months. The fair value of these warrants of $355,000 was estimated at the grant date using the Black-Scholes option pricing model applying the market value per share and the risk-free interest rate in effect at the grant date of 3%, expected volatility of 188% and an expected life of five years.  The fair value of these warrants will be recorded as a consulting fee upon vesting of the warrants, of which $88,750 was expensed to December 31, 2003, and a further $88,750 to September 30, 2004.



15



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

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 September 30, 2004 and are not included in common shares issued and outstanding.

7.

RESEARCH AND DEVELOPMENT

During 2000, AWR acquired certain soil and organic matter expertise and intellectual property from an unrelated organic residue consultant based in Ottawa, Canada.  The consideration for this acquisition was 300,000 AWR common shares issued at an estimate of their fair value of $0.50 per share. This research and development acquired has yet to be proven commercially and its cost of acquisition was expensed.

During 2001, 220,000 Agronix shares were issued with an estimated fair value of $0.32 per share to three separate parties with soil science and engineering expertise.  The shares were consideration for engineering activity which was required to advance the design of the BCIR system to the point that it meets specific functional, manufacturing and economic requirements.

A further 500,000 shares were issued during 2001 with an estimated fair value of $0.32 per share to three separate parties with soil science and engineering expertise.  The shares were consideration for routine, on-going efforts to refine, enrich, and otherwise improve upon the qualities of the existing BCR system, and the engineering follow-through to commercial production.

16



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)



7.

RESEARCH AND DEVELOPMENT  (continued)

British Columbia Bio Ventures (BCBV)

On September 1, 2002, the Company entered into a consulting agreement with BCBV whereby the Company agreed to pay a minimum of CDN$10,000 per month for a period of 36 months.  At that time the Company and its President also agreed that the President would transfer his 1,000,000 performance shares to the consultants.  These shares were not transferred.  On March 7, 2003 the agreement was terminated and the intended transfer of the 1,000,000 performance shares was cancelled.  A new agreement dated March 7, 2003 was entered into whereby the Company purchased from BCBV the rights to their intellectual and technological properties and technical systems and processes in exchange for 1,200,000 common shares with a fair value of $0.33 per share for a total of $396,000.

The Company incurred research and development expenses as follows:



|                                                         | Cumulative         |                    |                   
|-------------------------------------------------------- | ------------------ | ------------------ | ------------------
|                                                         | From Inception     | For the            | For the           
|                                                         | (January 20, 2000) | Nine Months        | Nine Months       
|                                                         | to September 30    | Ended September 30 | Ended September 30
|                                                         | 2004               | 2004               | 2003              
|Acquisition of organic matter expertise and intellectual |                    |                    |                   
|property                                                 | $        164,500   | $      -           | $             -   
|Technical development of BCR System                      | 331,878            | -                  | 4,558             
|Technical development of BCIR System                     | 282,164            | -                  | 8,467             
|BCBV intellectual property, systems and processes        | 396,000            | -                  | 396,000           
|                                                         |                    |                    |                   
|                                                         | $       1,174,542  | $     -            | $     409,025     



8.

COMMITMENTS

Collaborative Research and Development Agreement

The Company consolidated its research and development activities at Carleton University 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 approximately $440,000 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

17



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

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 University, subject to a royalty-free non-exclusive license to the Company.  To date the Company has incurred $220,141 (CAD$279,508) for research and development and $77,679 in accrued interest leaving $297,820 due to Carleton as at September 30, 2004.

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

Licensing Agreement

On February 28, 2003 the Company entered into a licensing agreement with a newly formed company in Jamaica named Agronix Caricom Inc., where the Company committed the exclusive rights to provide 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.



Consulting Agreements

The Company has entered into certain consulting agreements whereby the Company has committed to issue a total of 49,500 shares per month to consultants for each month of service provided subject to monthly renewals.

18



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

8.

COMMITMENTS  (continued)

Executive Employment Agreements

The Company entered into an executive employment agreement effective August 15, 2002 whereby the Company has agreed to pay $20,000 per month if and when those funds are available to its CEO for a period of sixty months.  The Company may issue up to 20,000 shares of common stock in lieu of salary in any month where the funds are not available.  Under the terms of this agreement the Company also granted stock options to the CEO providing the right to acquire 3,000,000 shares of common stock at $1.00 per share for a period of five years. See Note 6.  This agreement was terminated upon the resignation of the Executive Officer on June 15, 2004 and the options were cancelled.

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.

9.

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. No future tax benefit has been recorded in the financial statements, as the Company believes that it is more likely than not that the carryforwards will expire unused between the 2018 and 2024 taxation years.  Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.

10.

RELATED PARTY TRANSACTIONS

During the nine month period ended September 30, 2004, the Company paid $66,070 (2003 - $100,825) in salary and consulting fees to its senior executives including cash payments of $47,356 (2003 - $50,025) and 156,775 common shares valued at $18,714 (2003 – 160,000 common shares valued at $50,800).  During the prior nine month period ended September 30, 2003, the Company also paid $552,618 to certain officers and other shareholders as legal and consulting fees comprised of cash payments of $94,688 and 1,598,611 common shares valued at $457,930.  The Company paid 1,200,000 common shares valued at $396,000 for research and development to BCBV.

11.

PREPAID EXPENSES

Effective November 28, 2003 the Company entered into a one year public relations and shareholder relations agreement whereby the Company paid a total of $145,000 by way of cash of $30,000 and

19



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AGRONIX, INC.

(A Development Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Unaudited)

500,000 shares of the Company's restricted common stock with a fair value of $115,000 of which $105,823 was included in prepaids at December 31, 2003.  The parties have terminated the agreement and the shares of restricted common stock valued at $115,000 were cancelled in the second quarter.

During the nine month period ended September 30, 2004, the Company issued a total of 4,778,538 shares of the Company's common stock with a fair value of $620,745 pursuant to consulting agreements entered into.  Of these, 400,000 shares were issued as restricted common stock and 4,378,538 were issued as S8 registered common stock.  As at September 30, 2004 $261,103 has been included in prepaid expenses.  These consulting agreements were with: (1) consultants for professional services and (2) consultants providing corporate development services which include business development strategies, strategic alliances, asset-backed debt financing, technology transfer license opportunities and introductions to sources of capital partners in order to match the Overseas Private Investment Corporation (OPIC) funding.

20



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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 10QSB 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 10QSB 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 to 100,000,000 common 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 waste streams (ICI)) 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 "G.O. Systems", which is now fully engineered and ready to enter the market. The Company has identified a suitable permitted facility in Ireland, has paid a deposit with the intention of acquiring and retrofitting this site as its first operating demonstration plant.  The Company anticipates this facility will provide significant revenues while showcasing all components of the flow-through G.O. Systems technology.



The Company remains in the development stage and does not have an established source of revenue sufficient to cover its operating costs. As of September 30, 2004, the Company had cash on hand of $477, 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. It will also continue to pursue strategic alliances and secure plants where market opportunities exist.

The Company experienced a net loss of $300,554 for the third quarter and a net loss of $1,112,909 for the 9 months ended September 30, 2004, compared with losses of $268,093 for the third quarter and $1,427,380 for the 9 months ended September 30th of the previous fiscal year. The loss for the period ending September 30, 2004 is approximately $314,000 less than the loss for the same period of 2003.



Agronix remains specifically focused on negotiating joint venture Global Organic Systems (G.O. Systems) plants in Ireland, Europe and China. These locations meet the criteria established by Agronix to become profitable operations.



During the third quarter, the Company focused on raising capital for the acquisition of the facility in Ireland and opportunities that exist in China.  In December 2003, Agronix sent a team of representatives to China to complete a market evaluation of the opportunities available, and determined that China presented Agronix with an enormous opportunity to enter their organic waste industry. The structuring of a cohesive partnership is essential to building a solid organization in this region, so Agronix is actively assembling a team to implement their technologies.



During the third quarter, the Company’s past Chairman and CEO, Mr. Peter Drummond entered into an agreement with the Company to direct the Company’s activities in SE Asia and China from his home base in New Zealand.



The Honourable Charles J. Mayer, PC, Chairman of the Board and Chairman of the Independent Audit Committee for Agronix, Inc. is actively introducing the Company to the agricultural industry in North America.  Mr. Mayer, a former Member of Parliament and international trade negotiator, brings to the Company extensive credentials in international trade practices and policies, and a solid background in running successful business operations related to the agriculture industry.



Representatives of the Company continue to visit financial partners in Ireland to review the G.O. Systems which will be implemented at the Castleblayney site.



The Company has received the final loan agreement from the Overseas Private Investment Corporation (OPIC) which has been executed by both parties.



Further to the signed formal agreement between the Company and Terralift Ireland, Ltd. regarding the acquisition of the Castleblayney site, a verbal extension has been granted, allowing the Company to complete its financing.  The completion of the Castleblayney Ireland plant will be a significant step forward for the Company, providing immediate revenues derived from existing in-feed and take-out contracts.



The Company is working with strategic partners globally, including Goodworks International, which could result in advancements for the Company in 2004. 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 private placements. These funds have been sufficient to cover day-to-day operational costs.



The Company is listed for trading on the OTC Bulletin Board under the symbol "AGNI."

21



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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.

22





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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 September 30, 2004, the Company issued a total of 2,463,265 common shares and cancelled 1,800,000 shares previously issued for compensation.  These were returned to Treasury. Thus the Company issued a net total of 663,265 shares.  Since January 1, 2002, 25,464,820 net shares have been issued.  The 1,800,000 cancelled shares had been originally issued pursuant to exemptions from registration.  175,200 of these shares in this quarter, and 4,614,277 shares since January 1, 2002 were issued for cash in transactions which were made in reliance upon exemptions from registration under the Securities Act of 1933.  The gross offering proceeds received from the sale of these shares was $12,164 (which was received during the quarter ending June 30, 2004) and $1,163,957 respectively, 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 dates between June 2002 and August 2004 to subscribers for purchases of such shares pursuant to the terms of offering memoranda dated April 1, 2002, October 1, 2002, April 30, 2003, November 1, 2003, and May 1, 2004.  Each offering memorandum was effective for 6 months, the latest of which closed on October 31, 2004.



Of the new shares issued this quarter, 2,288,065 shares were issued as compensation for services valued at $179,491, and of which 961,538 shares were issued as options for the total exercise price of $43,000, with a net value of $136,491.  During the period since January 1, 2002, a net total of 9,929,456 shares (including 2,300,000 cancelled and returned to Treasury) have been issued for compensation, for a net value of $2,059,873.  Of this total, a net 1,935,000 shares (excluding 2,300,000 cancelled shares) were issued as compensation in reliance upon exemptions from registration provided by Section 4(2) under the Securities Act of 1933.  These shares were issued on various dates between June 18, 2002 and May 7, 2004.



Of the total shares issued since January 1, 2002, 9,720,997 shares were issued on January 9, 2002 to complete the two-for-one stock split for all issued and outstanding shares at that date, and 1,200,000 shares, valued at $394,800 were issued on March 7, 2003 as payment for research and development.



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:



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.





23



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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:

November 12, 2004



24