UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB



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

For the fiscal year ended December 31, 2004



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

For the transition period from _____ to ______.





AGRONIX, INC.

(Name of small business 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 Office         | Zip Code

Issuer's telephone number: (604) 714-1606



Securities to be registered under Section 12(b) of the Act:

Title of each class

N/A

Securities to be registered under Section 12(g) of the Act:

Common Stock, $0 .001 par value

(Title of Class)





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

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

State issuer's revenue for its most recent fiscal year: $ 0

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $ 979,759 based upon close price as of $0.028 as of March 29, 2005.

Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

(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 REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of December 31, 2004, the Company had 38,191,197 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes ____; No _X__





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PART I

ITEM 1.

DESCRIPTION OF BUSINESS

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This section and other parts of this 10KSB contain forward-looking statements that are, by their nature, subject to risks and uncertainties. These forward-looking statements include, without limitation, statements relating to our company's operations, economic performance, financial condition, growth and acquisition strategies, investments, and operation plans. Any such statements that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the generality of the foregoing, words such as "believe", "expect", "intend", "anticipate", "may", "will", "should", "expects", "plans", "anticipates", "estimates", "predicts", "potential", "continue", "projects" or the negative or other variations or comparable terminology or derivatives thereof denote forward-looking statements. These statements are only predictions and by their nature involve substantial risks and uncertainties, many of which are beyond control. Thus, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those discussed herein under the heading " RISK FACTORS."

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no obligation to publicly update any of the forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

General

The Company was incorporated under the laws of Florida on May 6, 1996, as RCA Trading Co. The Company changed its name to Agronix, Inc. on June 18, 2001.

Pursuant to a share exchange agreement entered into on October 16, 2000 and closed on March 26, 2001, between the shareholders of Agronix and shareholders of a private Company, American Waste Recovery, Inc. ("AWR"), the Company acquired 6,622,250 shares of common stock, or all of the outstanding shares of AWR, solely in exchange for 6,622,250 shares of common stock of the Company. As a result of this transaction, AWR became a wholly-owned subsidiary of Agronix, and the former shareholders of AWR in turn became owners of the majority of the issued and outstanding shares of Agronix.

Agronix, Inc. is in the business of acquiring and developing technologies that convert organic wastes (animal manure, sewage sludge, bio-solids, produce processing waste etc.) into agricultural products such as growth substrates, organic fertilizer, soil amendments and other value added agri-products. The Company is also engaged in the business of developing a technology that is used to recover chemical commodities from organic waste for a wide variety of industries such as agriculture, food, oil and gas, paper, clothing and pharmaceuticals.

Background

Description of the Technology

A worldwide problem facing society is how to deal with organic wastes, such as sewage sludge, manure from intensive livestock operations and food wastes from homes, restaurants and commercial food producers. In particular, the solid, liquid and gaseous materials remaining from those organic waste streams are significant sources of pollution. Increases in animal production, especially hogs and poultry, together with the application of liquid manures and dewatered biosolids onto land, have created serious air, soil and water pollution problems. These matters have resulted in an urgent need for solutions to reduce and deal with these environmental pollutants. As a result of societal pressures, governments are now enacting strict laws and regulations to reduce pollution and to require producers to effectively deal with organic wastes.

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Recognizing this urgent need, Agronix has acquired and developed two independent technical processes that can be operated independently or in conjunction with one another to produce fully sanitized and bio-chemically stabilized end products from sewage sludge, animal manures and other organic residues that can be sold into the market as agronomic and chemical commodities. These two processes are:

1) GLOBAL ORGANIC (G.O.) SYSTEMS

The G.O. SYSTEMS processes a wide spectrum of organic waste sources and content into high-grade organically-based fertilizers and growth substrates. The system is designed and engineered to create a unique and cost-efficient flow-through system. This technology is fully engineered and being marketed internationally.

The G.O. SYSTEMS consist of a series of component technological processes which can be operated independently or in conjunction with one another to meet the specific needs of the infeed waste material and desired output products. The BCR System forms the core component of the system, while the other processes include technologies to store, dewater, screen, sort, mix, compost, monitor and post-process.

2) BIO-CHEMICAL INTEGRATED RECYCLING ("BCIR")

The BCIR SYSTEM or Xtraction System recovers chemicals and other commodities in an environmentally friendly manner which can be profitably sold to the polymer, surfactant, lubricant, de-icer and adhesive industries, and as agri-chemicals.

To date, the Company has successfully identified and removed 65 of these chemical commodities, but there is the potential to recover in excess of 1,000 chemical commodities from various sources of organic waste.

Upon the completion of the final phase of Research & Development for the BCIR System, Agronix expects to have an environmentally-friendly process that will be able to recover chemicals and other commodities from organic wastes that can be sold profitably to a wide variety of industries.

Competing Technologies

There are a number of companies, which state that they have technologies for dealing with and processing organic wastes. These companies include Thermo Tech Technologies, Bedminster, and International Bio-Recovery Corp. Given the enormous volume of organic waste generated each year, the Company has determined that no competitor has the capacity to deal with all these wastes and that even with the presence of these and other competitors, there will be enough demand for the Company's services in the foreseeable future. The Company has further determined that if the end product of converted organic waste is not in a bio-stabilized form, it will ultimately prove harmful to the environment. The primary in-feed for competitors' plants is from municipal solid waste, while the Company's in-feed is intended to be primarily sewage sludge and animal manures. To the Company's knowledge, none of its competitors makes the claim they can fully bio-stabilize their end product and no other company is bio-converting sewage sludge and animal manures to a fully bio-stabilized commercial organic end product. In addition, the Company knows of no competing technologies that are able to extract viable chemical commodities from organic wastes.

The Business of the Company

Description of Business

The Company intends to initially use its G.O. Systems technology to treat a wide range of organic wastes that are high in nutrient content, to process into growth substrates and high-grade organically-based fertilizers. The Company has identified areas in Europe, North America, China and other global locations with concentrated organic waste and demand for environmental solutions. It intends to acquire operating and licensed plants in strategic areas and to quickly retrofit the plants with their G.O. Systems technologies.

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Agronix has identified a global market for its technologies, however the Company's primary focus is on Europe and North America, where regulations favor the Company's technologies.

The Market for the Service

In North America and Europe, an increasing number of municipalities are imposing regulations and financial burden to compel producers of organic waste to deal with these substances in an environmentally responsible manner. The fact that new companies such as Agronix will be able to treat organic waste in an environmentally-friendly manner may eventually provide the incentive for local governments to close landfill sites to organic waste altogether.The Company expects these trends to continue which should result in an increasing demand for the Company's Service. Tipping fees are available in certain situations, which would provide immediate revenue for the Company.

Marketing the Service

The Company is presently negotiating with producers and strategic partners in areas with compatible organic waste streams and high demand for environmental solutions for organic waste.

The Products

The Agronix G.O. Systems is designed to process organic waste residues under specific optimally controlled conditions to manufacture high-quality bio-converted organic fertilizers and growth substrates. These products are designed to restore and maintain soil organic matter quality and quantity, improve soil aggregation and porosity, increase water infiltration and retention and reduce erosion. The finished bioconverted product can be sold as is, or can be further processed into two categories of products:

1. Organically-based Fertilizers designed to supply nitrogen (N), Phosphorus (P), Potassium (K) and other elements necessary for the full growth cycle of plants on a bio-modulated release basis; and

2. Growth Substrates used for houseplants and greenhouse production. The composition of Agronix's growth substrates are designed to maintain and enhance gas and carbon exchange, supply nutrients, improve root development, and increase water retention.

A study conducted by Agriculture and Agri-Food Canada compared organic fertilizers similar to the Company's intended organic fertilizer product with commercial chemical fertilizers for three major types of crops. The study found that the performance of the organic fertilizer met or exceeded that of the chemical fertilizers.

Market studies show an increasing demand for organic products. The Company believes it can fill the growing demand of this niche market by providing a fully bio-stabilized growing media and at the same time solving a major environmental problem (i.e., the current practice of spreading non-bio-stabilized sewage sludge and animal manure on agricultural land).

Market for the Product

The market for fertilizer in North America is mainly supplied with chemical fertilizers.Demand for fertilizers in North America is estimated at over 50 million tons per year (primarily for chemical fertilizers). While the total market for organic fertilizers is relatively small, this niche market is growing in excess of 20% per year. Increasing consumer demand for organic food products means that the demand for organic fertilizers is expected to continue to increase. In North America, an estimated one million acres are under organic cultivation while in Europe the area is an estimated five million acres, which is projected to grow to 20 million acres over the next five years. In the past few years governments have begun to regulate or increase the costs for disposing organic wastes and are also restricting the use of chemical fertilizers, herbicides and pesticides.

The Company's primary market will be bulk sales to commercial producers, manufacturers and distributors. An aging baby boomer segment of the population is expected to lead to further increases in the home garden market. Accordingly, the Company intends to supply its products to manufacturers who will meet the needs of consumers who are interested in organic and enhanced fertilizer products.

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Distribution will likely be through garden centers, major grocery chains that have a garden department, and hardware chains that sell gardening supplies. The consumer product will likely be marketed through established firms that have high levels of market acceptance for their brand of fertilizers.

The Company also intends to supply its products to municipalities, golf courses and parks that want organic and enhanced fertilizers.

Competition for the Product

The major manufacturers of fertilizer that are actively marketing to the retail sector are Bayer-Pursell which manufactures Vigoro, a slow release chemical fertilizer, the Scotts Company which manufactures Miracle Gro and the Shultz Company. The Company is aware of many companies that are focused solely on providing organic fertilizer products to the market. However, none of these companies appears to be able to provide a fully bioconverted organic fertilizer to the market.

Product Pricing and Marketing

With respect to marketing the Product, the Company's intention is to seek out one or more distributors of fertilizer products with a view to negotiating long-term buy-out agreements to sell the entire output of each plant. This will enable the Company to focus all of its efforts on building and managing the operations of its plants.

The following are some of the key selling points that the Company will use when promoting its Product to distributors:

The Company's product is fully bioconverted, free of harmful pathogens, and converts the heavy metals into a water insoluble form which makes them harmless to the environment. The end-product can be post-processed to meet the specific nutrient and physical properties required by the end-user. The Company's product restores and maintains soil organic matter quality and quantity, improves soil aggregation and porosity, and improves root and plant growth. The product is also more environmentally friendly than conventional chemical fertilizers.

Environmental Considerations

Animal manures, waste from produce growers and industrial food processors and sewage sludge constitute serious environmental hazards. All these organic wastes can leach into soils and ground waters causing contamination of soils and underground aquifers. The Company's G.O. Systems can contribute to remediating environmental pollution problems from these sources. The Company's BCIR (Xtraction) System is designed to extract marketable chemical commodities from sewage sludge without harming the environment. Presently more than 65 different commodity chemicals can be extracted using the BCIR system.

Setting up new plants will likely require environmental permits from the applicable government authorities having jurisdiction over the proposed plant locations. Given the fact that the Company's processes will turn organic wastes (which, if untreated, can cause serious environmental hazards) into safe organic fertilizers and will extract commodity chemicals without harm to the environment, the Company is confident the environmental permitting process will be facilitated wherever possible. However, the Companys strategy is to acquire permitted operating plants to avoid any long start-up periods.

RISK FACTORS

Investment in the securities of the Companymust be considered as highly speculative and should only be undertaken by those investors who have sufficient financial resources to enable them to assume such risks and who have no need for immediate liquidity in their investment. The Shares should not be purchased by persons who cannot afford the possibility of the loss of their entire investment, and an investment in the Shares should not constitute a major portion of an individual's portfolio. In addition to the usual risks associated with an investment in a business, a prospective investor should carefully consider the following factors:

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a)  Limited Capital - Need for Additional Financing

The Company has very limited capital. The Company will need to raise significant additional funds through public or private equity or debt financing or from other sources for the acquisition and operation of each plant. The sale of additional equity or convertible debt may result in additional dilution to the Company's shareholders and such securities may have rights, preferences or privileges senior to those of the common stock. To the extent that the Company relies upon debt financing, the Company will incur the obligation to repay the funds borrowed with interest and may become subject to covenants and restrictions that restrict operating flexibility. No assurance can be given that additional equity or debt financing will be available or that, if available, it can be obtained on terms favorable to the Company or its shareholders. If sufficient funding is not secured, then the Company may not able to establish and run a viable business.

b)  Start-Up Company - Limited Operating History

The operating Company was incorporated in January 2000, has limited assets, has a limited operating history and is at an early stage of development. All of these factors make it subject to the risks associated with start-up companies. The Company believes that its growth and future success will, to a certain degree, be dependent upon receiving operating permits from local governments over which it will have no control. The Company has had no experience in installing or operating the plants used to process organic waste and may not be successful in running such a business. Future operating results will depend on many factors, including local acceptance of the Company's licensed technology, securing local government approvals for the construction and operation of the Company's intended plants, purchasing decisions by consumers of organic fertilizers and growing media and others, the ability to obtain adequate sources of suitable organic waste for its plants, the level of product and price competition, market acceptance of the Company's product, evolving industry products, general economic conditions and other factors.

c)  Lack of Profitability

To date the Company has not had any operations. There can be no assurance that the Company will succeed in building up a successful operating company, in generating sales, or in running its operations on a profitable basis. The Company has had no revenues. Because the Company is still in an emerging stage, there can be no assurance that the Company will ever achieve profitability. The revenue and profit potential of the Company's business and the industry is unproven, and the Company's limited operating history makes its future operating results difficult to predict. There can be no assurance that the Company will have positive gross margins.

d)  Dependence on Key Personnel

The business of the Company will be dependent upon the active participation of its officers and directors. To the extent any of them becomes unavailable for any reason, it could have a serious adverse impact on the Company. Any officer or employee of the Company can terminate his or her relationship with the Company at any time. The Company's future success will also depend on its ability to attract, train, retain and motivate highly qualified engineering, marketing, sales and management personnel. Competition for such personnel is intense, and there can be no assurance that the Company will be able to attract and retain key personnel.

e)  Market Acceptance

The Company's overall economic performance is affected by two different markets: the organic waste treatment market and the fertilizer market. There are no assurances that the Company's service or product will be successfully marketed.

f)  Economic Recession/Price Competition

The Company's business may be affected by many factors which are beyondits control, such as an economic recession and aggressive pricing policies of its competitors. The delivery of a supply of waste

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to each plant is dependent upon the Company offering competitive tipping fees. If these fees are not competitive, the Company may not be able to reach or sustain the capacity of its plants.

g)  Strength of the Company's Intellectual Property, Proprietary Soil Science Expertise and Technology

The Company does not intend to seek patent protection for its processes or its technology at this time. There can be no assurance that the Company will be able to protect its licensed technology from use by competitors. The Company intends to rely primarily on a combination of copyright law, industrial design legislation and employee and third party nondisclosure agreements to protect its intellectual property. There can be no assurance of effective protection of the Company's intellectual property and there can be no assurance that others will not independently develop a similar technology or obtain access to the Company's technology.

h)  Competition

The Company faces competitive pressures from a variety of companies in each of the markets it intends to enter, primarily from established companies, most of which have greater financial, marketing and technical resources than the Company. These competitors may be better able to withstand pressure on price or other margin pressures. There is no assurance that companies with competitive technology and greater financial resources will not begin competing with the Company in the future.

i)  Inexperience in Emerging Markets

Purchasers of organic fertilizers may prefer to purchase such products from larger, more established companies than the Company, as other manufacturers may be better able to supply large volumes of products on short notice or better prices. In addition, such potential purchasers may be reluctant to adopt a new Product that has not gained wide acceptance in the industry. Certain competitors of the Company may establish relationships in the marketplace, further limiting the Company's ability to sell its Products.

j)  Environmental Matters

The Company will be subject to stringent standards designed to reduce air, water and soil emissions through federal, state and local laws and regulations relating to the protection of human health and the environment. The issue of whether the proposed plants will meet standards imposed by various jurisdictions has not been determined.

k)  Risks of Product Defects, Product Returns and Product Liability

The Product, the Service or the operation of the plants that the Company intends to build and operate may contain undetected problems or defects. The occurrence of such problems or defects could result in product returns and other losses to the Company or its customers. Such occurrence(s) could also result in the loss of or delay in market acceptance of the Product and/or Services, which could have a material adverse effect on the Company's business, operating results and financial condition. Further, although the Company hopes to enter into purchase agreements with customers that will contain provisions designed to limit the Company's exposure to potential product or service liability claims, it is possible that such provisions limiting liability will not be effective as a result of federal, state or local laws or ordinances or unfavorable judicial decisions. Although the Company has not experienced any product, service or liability claims, the future sale and support of the Company's products or services, if any, entails the risk of such claims. A successful product or service liability claim brought against the Company or its licensees, if any, could have a material adverse effect on the Company's business, operating results and financial condition.

l)  Conflicts of Interest

Directors of the Company may serve as director of, or have significant shareholdings in, other reporting companies. To the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and

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concluding terms respecting the extent of such participation. Legally, directors of the Company must act honestly, in good faith and in the best interests of the Company in resolving any conflicts, which may arise, and all directors of the Company are aware of these fiduciary responsibilities. In determining whether or not the Company will participate in a particular venture, the directors will primarily consider the degree of risk to which the Company may be exposed, its financial position at that time and, depending on the magnitude of the venture and the absence of any disinterested directors, whether or not to subject any ventures in question to the shareholders of the Company for their approval.

m)  Lack of Liquid Public Market

Although there is currently a limited public market for the Company's stock, there is no assurance that a more active or liquid market will develop in the future. There is a possibility that even if a more active or liquid market does develop for a period of time, it may not be maintained. It may also be adversely affected by future issuances of shares. Therefore, persons who acquire stock in the Company may have a difficult time liquidating their investment.

n)  Not a Diversified Company

The Company does not expect to be a diversified company in the near future.

o)  Risks of Leverage, Debt Financing

The Company may utilize debt or other leverage techniques in order to finance its operations or the construction of its proposed plants. This has certain risks among which are the risk of foreclosure or unavailability of other debt if unsuccessful.

p)  No Dividends

To date, the Company has not paid any cash dividends on its capital stock and shareholders should not expect to receive any dividends. At present the Company has no assets from which to pay dividends. If it did, the Company most likely would use such assets for business operations. The Company does not anticipate paying any cash dividends in the foreseeable future.

q)  Control by Current Management and Shareholders

The Company's executive officers, directors, and greater than 5% shareholders (and their affiliates) currently beneficially own approximately 28.8% of the Company's outstanding Common Stock (including performance shares held in escrow).

r)  Penny Stock Rules

At present, the Company would be considered a penny stock, which generally is a stock trading under $5.00. Because of abuses in such stocks, the United States Securities Exchange Commission (the SEC) has promulgated certain rules regulating the activities of broker dealers who wish to recommend purchase of such securities to their customers. This often has the result of reducing trading in such stocks and making it more difficult for investors to sell their shares.



ITEM 2.

DESCRIPTION OF PROPERTY

The Company currently has no investments in real estate, real estate mortgages, or real estate securities. The Company's principal executive office is 1666 West 75th Avenue, Vancouver, B.C., Canada V6P 6G2. The Company's telephone number is (604) 714-1606.



ITEM 3.

LEGAL PROCEEDINGS

None.



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ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders of the Company during the fourth quarter of the fiscal year which ended December 31, 2004.



PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is currently traded under the symbol "AGNI." These securities are quoted in the over-the-counter market. AGNI was listed for trading in May 2002, and began trading in June 2002. The following table sets forth the Company's high and low bids for the Company's common stock as reported on the Bulletin Board for the periods indicated:

|Fiscal Year 2004 | High | Low  
|---------------- | ---- | -----
|First Quarter    | 0.22 | 0.14 
|Second Quarter   | 0.21 | 0.06 
|Third Quarter    | 0.12 | 0.03 
|Fourth Quarter   | 0.08 | 0.031
|Fiscal Year 2003 | High | Low  
|First Quarter    | .36  | .20  
|Second Quarter   | .82  | .21  
|Third Quarter    | .42  | .15  
|Fourth Quarter   | .25  | .16  

The closing bid price of the Company's common stock as reported on the Over-the-Counter Bulletin Board on March 29, 2005 was $0.0280 per share. The prices presented are bid prices which represent prices between broker-dealers and don't include retail mark-ups and mark-downs or any commission to the dealer. The prices may not reflect actual transactions. These securities are currently held of record by a total of approximately 700 persons.

No dividends have been declared or paid on the Company's securities, and it is not anticipated that any dividends will be declared or paid in the foreseeable future. Income will be retained for the development and expansion of the Company's business. Dividend policy for the future is subject to the discretion of the Board of Directors, and will depend upon a number of factors, including earnings, debt service, capital requirements, business conditions and other factors that the Board of Directors may deem relevant.

During the year ended December 31, 2004, the Company issued a total of 10,687,482 shares, of which 2,346,192 shares 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 such shares was $219,007, of which $35,155 had been received in 2003, and 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 January 1, 2004 and October 26, 2004, to persons who subscribed for purchase of such shares pursuant to the terms of an offering memorandum dated November 1, 2003 or May 1, 2004.

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

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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 10KSB 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 10KSB 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 to enter the market.

The Companys primary focus has been the acquisition and retrofit of a permitted facility in Castleblayney, 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 the Castleblayney site.  A verbal extension on 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, it is now likely the Company will be required to reapply to OPIC for the loan, if the Company elects to finance through this means.

With the Ireland location and strength of the Euro, the Company is focusing its efforts on finding European investors.  In order to raise funds for the Castleblayney acquisition, continued operations and increase European investor awareness, the Company plans to offer for sale up to 10,000,000 Regulation-S shares, which will be restricted from returning to the United States for 1 year, on the Berlin Stock Exchange. The Company has named a trustee, in Germany, for these shares and any proceeds and benefits from sale.  A minimum selling price of $0.15, which is well above the recent OTC.BB trading price, has been set.  At this time, the 10,000,000 Regulation-S shares have been authorized, but not yet transferred to the trustee.

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.

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Mr. Peter Drummond, the Companys past Chairman and CEO has agreed to direct the Companys activities in SE Asia and China from his home base in New Zealand.  Mr. Drummond reports progress is being made for financing in China.

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 December 31, 2004, the Company had cash on hand of $7,181, 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 $1,464,885 for the year ended December 31, 2004, compared with a loss of $1,937,835 for 2003. The loss for the year ending December 31, 2004 is approximately $472,950 less than the loss for 2003. The difference is due to lower stock-based compensation for consultants.

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.

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



ITEM 7.

FINANCIAL STATEMENTS

See the following pages.

12







---



AGRONIX, INC.



(A Development Stage Company)



CONSOLIDATED FINANCIAL STATEMENTS



DECEMBER 31, 2004

















---

DECEMBER 31, 2004







|                                                         | Page   
|-------------------------------------------------------- | -------
|CONSOLIDATED FINANCIAL STATEMENTS                        |        
|Report of Independent Registered Public Accounting Firm  | 17     
|Consolidated Balance Sheets                              | 18     
|Consolidated Statements of Operations                    | 19     
|Consolidated Statements of Cash Flows                    | 20     
|Consolidated Statement of Stockholders Equity (Deficit) | 21     
|Notes to Consolidated Financial Statements               | 25 - 33





---











REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Board of Directors of Agronix, Inc.

(A Development Stage Company)



We have audited the accompanying consolidated balance sheets of Agronix, Inc. (A Development Stage Company) as of December 31, 2004 and 2003 and the related consolidated statements of operations, stockholders equity and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company, as of December 31, 2004 and 2003, and the results of its operations and its cash flows and the changes in stockholders equity for the years then ended, in conformity with generally accepted accounting principles used in the United States of America.



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, to date the Company has not generated any significant revenues from operations and requires additional funds to meet its obligations and fund the costs of its operations.  These factors raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans in this regard are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Dale Matheson Carr-Hilton LaBonte



CHARTERED ACCOUNTANTS





Vancouver, Canada

February 28, 2005













17





---

AGRONIX, INC.



(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS



ASSETS

|                                                          | December 31 | December 31
|--------------------------------------------------------- | ----------- | -----------
|                                                          | 2004        | 2003       
|                                                          |             |            
|CURRENT ASSETS                                            |             |            
|Cash                                                      | $ 7,181     | $ 38,281   
|Receivables                                               | 5,632       | 10,589     
|Prepaid expenses and deposits (Note 11)                   | 152,911     | 179,976    
|                                                          | 165,724     | 228,846    
|EQUIPMENT                                                 | 827         | 6,306      
|DEPOSIT ON ACQUISITION OF TERRALIFT IRELAND LTD.(Note 3)  | -           | 50,000     
|INVESTMENT IN AND ADVANCES TO 3884171 CANADA INC.(Note 4) | -           | 1          
|                                                          | $ 166,551   | $ 285,153  

LIABILITIES AND STOCKHOLDERS' DEFICIT

|CURRENT LIABILITIES                      |           |          
|---------------------------------------- | --------- | ---------
|Accounts payable and accrued liabilities | $ 478,400 | $ 388,262
|Due to related parties (Note 5)          | 63,440    | 63,440   
|                                         | 541,840   | 451,702  
|STOCKHOLDERS' DEFICIT                    |           |          
|CAPITAL STOCK(Note 6)                    |           |          
|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:                     |             |            
|------------------------------------------- | ----------- | -----------
|38,191,197 (2003: 27,503,715) common shares | 38,191      | 27,503     
|Additional paid in capital                  | 6,073,013   | 4,768,901  
|Common stock subscribed                     | -           | 35,155     
|Less: Stock subscriptions receivable        | (23,500)    | -          
|                                            | 6,087,704   | 4,831,559  
|DEFICIT ACCUMULATED DURING THE              |             |            
|DEVELOPMENT STAGE                           | (6,462,993) | (4,998,108)
|                                            | (375,289)   | (166,549)  
|                                            | $ 166,551   | $ 285,153  

Going Concern (Note 1)

Commitments (Notes 3 and 8)





See accompanying notes to the consolidated financial statements.

18





---

AGRONIX, INC.



(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                     |                                   |                          |                             
|---------------------------------------------------- | --------------------------------- | ------------------------ | ----------------------------
|                                                     | Cumulative                        |                          |                             
|                                                     | From Inception                    | For the Year             | For the Year                
|                                                     | (January 20, 2000) to December 31 | Ended
December 31        | Ended
December 31           
|                                                     | 2004                              | 2004                     | 2003                        
|INTEREST INCOME                                      | $                    3,945        | $                    199 | $                        773
|EXPENSES                                             |                                   |                          |                             
|Consulting and management fees                       | 3,751,069                         | 1,167,256                | 1,111,151                   
|Depreciation                                         | 23,865                            | 3,236                    | 4,239                       
|General and administrative                           | 300,016                           | 98,495                   | 107,141                     
|Loss on sale of equipment                            | 2,549                             | 2,549                    | -                           
|Professional fees                                    | 332,948                           | 96,102                   | 62,271                      
|Rent                                                 | 69,532                            | 12,404                   | 14,915                      
|Research and development (Note 7)                    | 1,174,542                         | -                        | 404,389                     
|Salaries and benefits (recovery)                     | 174,919                           | (21,131)                 | 122,484                     
|Shareholder communications                           | 92,585                            | 34,795                   | 23,860                      
|Travel and promotion                                 | 394,760                           | 71,377                   | 87,729                      
|                                                     | 6,316,787                         | 1,465,083                | 1,938,179                   
|LOSS BEFORE THE FOLLOWING                            | (6,312,842)                       | (1,464,884)              | (1,937,406)                 
|Loss on impairment of investment in                  |                                   |                          |                             
|and advances to 3884171 Canada Inc.                  | (150,151)                         | (1)                      | (429)                       
|NET LOSS                                             | $          (6,462,993)            | $       (1,464,885)      | $       (1,937,835)         
|                                                     |                                   |                          |                             
|Basic loss per share                                 |                                   | $                (0.05)  | $                (0.08)     
|                                                     |                                   |                          |                             
|Weighted average number of common shares outstanding | 32,054,083                        | 23,944,045              
|                                                     |                                   |                          |                             
|                                                     |                                   |                          |                             











See accompanying notes to the consolidated financial statements.



19





---

AGRONIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                            | Cumulative From Inception |                                 |                                
|----------------------------------------------------------- | ------------------------- | ------------------------------- | -------------------------------
|                                                            | (January 20, 2000)        | For the Year                    | For the Year                   
|                                                            | to December 31            | Ended December 31               | Ended December 31              
|Cash derived from (applied to):                             | 2004                      | 2004                            | 2003                           
|OPERATING ACTIVITIES                                        |                           |                                 |                                
|Net loss for the year                                       | $ (6,462,993)             | $ (1,464,885)                   | $ (1,937,835)                  
|Depreciation                                                | 23,865                    | 3,236                           | 4,239                          
|Loss on sale of equipment                                   | 2,549                     | 2,549                           | -                              
|Non-cash research and development                           | 779,856                   | -                               | 396,000                        
|Stock based compensation                                    | 1,227,498                 | 291,648                         | 257,950                        
|Impairment of investment in 3884171 Canada Inc.             | 450,151                   | 1                               | 429                            
|Impairment of Terralift deposit                             | 50,000                    | 50,000                          | -                              
|Wages paid through the issuance of common shares            | 70,320                    | 15,020                          | 50,800                         
|Rent paid through issuance of common shares                 | 23,209                    | -                               | -                              
|Settlement of debt through issuance of common shares        | 45,711                    | 45,711                          | -                              
|Consulting, management and professional fees paid           |                           |                                 |                                
|through the issuance of common shares                       | 1,806,120                 | 743,456                         | 687,404                        
|Change in non-cash working capital                          |                           |                                 |                                
|Receivables                                                 | (5,632)                   | 4,957                           | 12,008                         
|Prepaid expense and deposits                                | (176,453)                 | 3,523                           | (164,891)                      
|Accounts payable and accruals                               | 464,867                   | 90,138                          | 128,755                        
|                                                            | (2,000,932)               | (214,646)                       | (565,141)                      
|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, net of shares subscribed            | 2,185,900                 | 183,852                         | 630,547                        
|                                                            | 2,235,073                 | 183,852                         | 630,547                        
|INVESTING ACTIVITIES                                        |                           |                                 |                                
|Acquisition of equipment                                    | (28,266)                  | (1,334)                         | (218)                          
|Proceeds on sale of equipment                               | 1,028                     | 1,028                           | -                              
|Deposit on acquisition of Terralift Ireland Ltd.            | (50,000)                  | -                               | (50,000)                       
|Investment in and advances to 3884171 Canada Inc.           | (149,722)                 | -                               | -                              
|                                                            | (226,960)                 | (306)                           | (50,218)                       
|Increase (decrease) in cash                                 | 7,181                     | (31,100)                        | 15,188                         
|Cash, beginning of the year                                 | -                         | 38,281                          | 23,093                         
|Cash, end of the year                                       | $ 7,181                   | $ 7,181                         | $ 38,281                       
|Supplemental cash flow information:                         |                           |                                 |                                
|Shares issued for research and development                  | $ 779,856                 | $                             - | $ 396,000                      
|Stock based compensation                                    | $ 1,227,498               | $ 291,648                       | $ 257,950                      
|Shares issued for rent                                      | $ 23,209                  | $                             - | $                             -
|Shares issued for settlement of debt                        | $ 45,711                  | $ 45,711                        | $                             -
|Shares issued for consulting, management and legal services | $ 1,806,120               | $ 743,456                       | $ 687,404                      
|Shares issued for wages                                     | $ 70,320                  | $ 15,020                        | $ 50,800                       
|Subscriptions receivable                                    | $ (23,500)                | $ (23,500)                      | $                             -
|Cash paid during the year for:                              |                           |                                 |                                
|Interest                                                    |                           | $                             - | $                             -
|Income taxes                                                |                           | $                             - | $                             -

See accompanying notes to the consolidated financial statements.

20





---

AGRONIX, INC.



(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (JANUARY 20, 2000) TO DECEMBER 31, 2004



|                                       |             |          |             |            | Deficit       |          
|-------------------------------------- | ----------- | -------- | ----------- | ---------- | ------------- | ---------
|                                       |             |          |             |            | Accumulated   |          
|                                       | Common      | Common   | Additional  |            | During the    |          
|                                       | Shares      | Shares   | Paid-In     | Shares     | Development   |          
|                                       | (Number)    | (Amount) | Capital     | Subscribed | Stage         | Total    
|                                       |             |          |             |            |               |          
|Shares issued for cash:                |             |          |             |            |               |          
|at $0.001 per share                    | 5,250,000   | $ 5,250  | $ -         | $ -        | $ -           | $ 5,250  
|at $0.30 per share                     | 40,000      | 40       | 7,960       | -          | -             | 8,000    
|at $0.50 Cdn per share                 | 1,000,000   | 1,000    | 337,287     | -          | -             | 338,287  
|at $1.00 Cdn per share                 | 182,250     | 182      | 122,780     | -          | -             | 122,962  
|                                       |             |          |             |            |               |          
|Shares issued to acquire               |             |          |             |            |               |          
|research and development               | 150,000     | 150      | 149,850     | -          | -             | 150,000  
|                                       |             |          |             |            |               |          
|Shares subscribed for cash:            |             |          |             |            |               |          
|At $1.00 per share                     | -           | -        | -           | 22,500     | -             | 22,500   
|                                       |             |          |             |            |               |          
|Stock based compensation               | -           | -        | 181,250     | -          | -             | 181,250  
|                                       |             |          |             |            |               |          
|Net loss for the year                  | -           | -        | -           | -          | (740,239)     | (740,239)
|                                       |             |          |             |            |               |          
|Balance, December 31, 2000             | 6,622,250   | 6,622    | 799,127     | 22,500     | (740,239)     | 88,010   
|                                       |             |          |             |            |               |          
|Acquisition of AWR (Note 1)            | 6,622,250   | 6,622    | (33,990)    | -          | -             | (27,368) 
|                                       |             |          |             |            |               |          
|Reverse merger adjustment              | (4,939,000) | (4,939)  | 4,939       | -          | -             | -        
|                                       |             |          |             |            |               |          
|Shares issued for cash:                |             |          |             |            |               |          
|at $0.50 Cdn per share                 | 231,000     | 231      | 73,196      | -          | -             | 73,427   
|at $1.00 Cdn per share                 | 669,357     | 670      | 404,543     | (22,500)   | -             | 382,713  
|                                       |             |          |             |            |               |          
|Shares issued for premises             |             |          |             |            |               |          
|lease at $1.00 Cdn per share           | 15,680      | 15       | 10,094      | -          | -             | 10,109   
|                                       |             |          |             |            |               |          
|Shares issued for consulting services: |             |          |             |            |               |          
|at $1.00 Cdn per share                 | 442,500     | 443      | 282,627     | -          | -             | 283,070  
|                                       |             |          |             |            |               |          
|Stock based compensation               | -           | -        | 295,750     | -          | -             | 295,750  
|                                       |             |          |             |            |               |          
|Net loss for the year                  | -           | -        | -           | -          | (945,584)     | (945,584)
|                                       |             |          |             |            |               |          
|Balance, December 31, 2001             | 9,664,037   | 9,664    | 1,836,286   | -          | (1,685,823)   | 160,127  
|                                       |             |          |             |            |               |          
|Shares issued for premises lease:      |             |          |             |            |               |          
|at $0.64 ($1.00 Cdn) per share         | 1,960       | 2        | 1,230       | -          | -             | 1,232    
|                                       |             |          |             |            |               |          
|Shares issued for consulting services: |             |          |             |            |               |          
|at $0.64 ($1.00 Cdn) per share         | 55,000      | 55       | 35,132      | -          | -             | 35,187   
|                                       |             |          |             |            |               |          
|Pre-split subtotal                     | 9,720,997   | 9,721    | 1,872,648   | -          | (1,685,823)   | 196,546  
|                                       |             |          |             |            |               |          
|Two-for-one stock split                | 9,720,997   | 9,721    | (9,721)     | -          | -             | -        
|                                       |             |          |             |            |               |          
|Shares issued for consulting services: |             |          |             |            |               |          
|at $0.15 per share                     | 40,500      | 41       | 6,034       | -          | -             | 6,075    
|at $0.25 per share                     | 16,000      | 16       | 3,984       | -          | -             | 4,000    
|at $0.29 per share                     | 20,500      | 21       | 5,924       | -          | -             | 5,945    
|at $0.34 per share                     | 139,000     | 139      | 47,121      | -          | -             | 47,260   
|at $0.36 per share                     | 4,500       | 4        | 1,616       | -          | -             | 1,620    
|at $0.37 per share                     | 1,000       | 1        | 369         | -          | -             | 370      
|at $0.40 per share                     | 16,000      | 16       | 6,384       | -          | -             | 6,400    
|at $0.45 per share                     | 30,500      | 30       | 13,695      | -          | -             | 13,725   
|at $0.64 ($1.00 Cdn) per share         | 164,500     | 164      | 105,299     | -          | -             | 105,463  
|at $1.00 per share                     | 100,000     | 100      | 99,900      | -          | -             | 100,000  
|                                       |             |          |             |            |               |          
|Balance carried forward                | 19,974,494  | $ 19,974 | $ 2,153,253 | $ -        | $ (1,685,823) | $ 487,404



See accompanying notes to the consolidated financial statements.





21





---

AGRONIX, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (JANUARY 20, 2000) TO DECEMBER 31, 2004



|                                       |            |          |             |            | Deficit       |            
|-------------------------------------- | ---------- | -------- | ----------- | ---------- | ------------- | -----------
|                                       |            |          |             |            | Accumulated   |            
|                                       | Common     | Common   | Additional  |            | During the    |            
|                                       | Shares     | Shares   | Paid-In     | Shares     | Development   |            
|                                       | (Number)   | (Amount) | Capital     | Subscribed | Stage         | Total      
|                                       |            |          |             |            |               |            
|Balance carried forward                | 19,974,494 | $ 19,974 | $ 2,153,253 | $ -        | $ (1,685,823) | $ 487,404  
|                                       |            |          |             |            |               |            
|Shares issued for premises lease:      |            |          |             |            |               |            
|at $0.15 per share                     | 2,300      | 2        | 343         | -          | -             | 345        
|at $0.25 per share                     | 2,300      | 2        | 573         | -          | -             | 575        
|at $0.29 per share                     | 2,300      | 3        | 664         | -          | -             | 667        
|at $0.32 ($0.50 Cdn) per share         | 19,720     | 20       | 6,241       | -          | -             | 6,261      
|at $0.34 per share                     | 2,300      | 2        | 780         | -          | -             | 782        
|at $0.40 per share                     | 2,300      | 2        | 918         | -          | -             | 920        
|at $0.45 per share                     | 2,300      | 3        | 1,032       | -          | -             | 1,035      
|at $0.56 ($0.85 Cdn) per share         | 2,300      | 2        | 1,281       | -          | -             | 1,283      
|                                       |            |          |             |            |               |            
|Shares issued for wages:               |            |          |             |            |               |            
|at $0.45 per share                     | 10,000     | 10       | 4,490       | -          | -             | 4,500      
|                                       |            |          |             |            |               |            
|Shares issued for cash:                |            |          |             |            |               |            
|at $0.35 ($0.55 Cdn) per share         | 450,000    | 450      | 155,623     | -          | -             | 156,073    
|at $0.39 ($0.60 Cdn) per share         | 16,667     | 17       | 6,559       | -          | -             | 6,576      
|at $0.45 ($0.70 Cdn) per share         | 30,000     | 30       | 13,683      | -          | -             | 13,713     
|at $0.50 per share                     | 384,000    | 384      | 191,616     | -          | -             | 192,000    
|at $0.75 per share                     | 67,000     | 67       | 49,933      | -          | -             | 50,000     
|                                       |            |          |             |            |               |            
|Stock-based compensation               | -          | -        | 200,900     | -          | -             | 200,900    
|                                       |            |          |             |            |               |            
|Net loss                               | -          | -        | -           | -          | (1,374,450)   | (1,374,450)
|                                       |            |          |             |            |               |            
|Balance, December 31, 2002             | 20,967,981 | 20,968   | 2,787,889   | -          | (3,060,273)   | (251,416)  
|                                       |            |          |             |            |               |            
|Shares issued for salary and wages:    |            |          |             |            |               |            
|at $0.22 per share                     | 20,000     | 20       | 4,380       | -          | -             | 4,400      
|at $0.25 per share                     | 40,000     | 40       | 9,960       | -          | -             | 10,000     
|at $0.28 per share                     | 20,000     | 20       | 5,580       | -          | -             | 5,600      
|at $0.46 per share                     | 20,000     | 20       | 9,180       | -          | -             | 9,200      
|at $0.48 per share                     | 20,000     | 20       | 9,580       | -          | -             | 9,600      
|                                       |            |          |             |            |               |            
|Shares issued for legal services:      |            |          |             |            |               |            
|at $0.45 per share                     | 11,111     | 11       | 4,989       | -          | -             | 5,000      
|                                       |            |          |             |            |               |            
|Shares issued for consulting services: |            |          |             |            |               |            
|at $0.18 per share                     | 4,500      | 4        | 784         | -          | -             | 788        
|at $0.20 per share                     | 246,500    | 246      | 49,054      | -          | -             | 49,300     
|at $0.21 per share                     | 150,000    | 150      | 31,350      | -          | -             | 31,500     
|at $0.22 per share                     | 214,500    | 215      | 46,975      | -          | -             | 47,190     
|at $0.23 per share                     | 779,500    | 780      | 178,505     | -          | -             | 179,285    
|at $0.25 per share                     | 39,000     | 40       | 9,710       | -          | -             | 9,750      
|at $0.26 per share                     | 225,000    | 225      | 58,275      | -          | -             | 58,500     
|at $0.27 per share                     | 449,500    | 450      | 120,915     | -          | -             | 121,365    
|at $0.28 per share                     | 14,500     | 15       | 4,045       | -          | -             | 4,060      
|at $0.29 per share                     | 10,000     | 10       | 2,890       | -          | -             | 2,900      
|at $0.30 per share                     | 69,500     | 69       | 20,781      | -          | -             | 20,850     
|at $0.31 per share                     | 25,000     | 25       | 7,725       | -          | -             | 7,750      
|at $0.33 per share                     | 89,500     | 90       | 29,445      | -          | -             | 29,535     
|at $0.34 per share                     | 10,000     | 10       | 3,390       | -          | -             | 3,400      
|at $0.37 per share                     | 230,000    | 230      | 84,870      | -          | -             | 85,100     
|at $0.38 per share                     | 40,000     | 40       | 15,160      | -          | -             | 15,200     
|at $0.45 per share                     | 10,000     | 10       | 4,490       | -          | -             | 4,500      
|at $0.46 per share                     | 4,500      | 5        | 2,066       | -          | -             | 2,071      
|at $0.48 per share                     | 44,500     | 44       | 21,316      | -          | -             | 21,360     
|                                       |            |          |             |            |               |            
|Balance carried forward                | 23,755,092 | $ 23,757 | $ 3,523,304 | $ -        | $ (3,060,273) | $ 486,788  

See accompanying notes to the consolidated financial statements.

22





---

AGRONIX, INC.



(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (JANUARY 20, 2000) TO DECEMBER 31, 2004



|                                    |            |          |             |            | Deficit       |            
|----------------------------------- | ---------- | -------- | ----------- | ---------- | ------------- | -----------
|                                    |            |          |             |            | Accumulated   |            
|                                    | Common     | Common   | Additional  |            | During the    |            
|                                    | Shares     | Shares   | Paid-In     | Shares     | Development   |            
|                                    | (Number)   | (Amount) | Capital     | Subscribed | Stage         | Total      
|                                    |            |          |             |            |               |            
|Balance carried forward             | 23,755,092 | $ 23,757 | $ 3,523,304 | $ -        | $ (3,060,273) | $ 486,788  
|                                    |            |          |             |            |               |            
|Shares issued for cash:             |            |          |             |            |               |            
|at $0.15 per share                  | 431,800    | 432      | 64,338      | (4,770)    | -             | 60,000     
|at $0.17 per share                  | 208,123    | 208      | 35,115      | (11,022)   | -             | 24,301     
|at $0.18 per share                  | 84,000     | 84       | 15,036      | -          | -             | 15,120     
|at $0.20 per share                  | 975,000    | 975      | 194,025     | (170,000)  | -             | 25,000     
|at $0.21 per share                  | 91,428     | 91       | 19,084      | -          | -             | 19,175     
|at $0.22 per share                  | 35,901     | 36       | 7,888       | (6,320)    | -             | 1,604      
|at $0.23 per share                  | 153,693    | 153      | 35,205      | -          | -             | 35,358     
|at $0.26 per share                  | 49,461     | 49       | 12,811      | -          | -             | 12,860     
|at $0.27 per share                  | 11,629     | 12       | 3,128       | -          | -             | 3,140      
|at $0.29 per share                  | 16,241     | 16       | 4,694       | -          | -             | 4,710      
|at $0.32 per share                  | 156,562    | 156      | 49,974      | (22,250)   | -             | 27,880     
|at $0.34 per share                  | 18,470     | 18       | 6,262       | -          | -             | 6,280      
|at $0.35 per share                  | 142,543    | 142      | 49,748      | (11,633)   | -             | 38,257     
|at $0.39 per share                  | 10,512     | 11       | 4,089       | (4,100)    | -             | -          
|at $0.47 per share                  | 10,414     | 10       | 4,880       | -          | -             | 4,890      
|at $0.51 per share                  | 51,553     | 52       | 26,293      | -          | -             | 26,345     
|at $0.52 per share                  | 9,615      | 10       | 4,990       | -          | -             | 5,000      
|at $0.57 per share                  | 60,051     | 60       | 34,155      | -          | -             | 34,215     
|at $0.67 per share                  | 31,627     | 31       | 21,132      | -          | -             | 21,163     
|                                    |            |          |             |            |               |            
|Shares issued for research:         |            |          |             |            |               |            
|at $0.33 per share (Note 7)         | 1,200,000  | 1,200    | 394,800     | -          | -             | 396,000    
|                                    |            |          |             |            |               |            
|Common stock subscriptions          | -          | -        | -           | 265,250    | -             | 265,250    
|                                    |            |          |             |            |               |            
|Stock-based compensation            |            |          | 257,950     |            | -             | 257,950    
|                                    |            |          |             |            |               |            
|Net loss for the year               | -          | -        | -           | -          | (1,937,835)   | (1,937,835)
|                                    |            |          |             |            |               |            
|Balance, December 31, 2003          | 27,503,715 | 27,503   | 4,768,901   | 35,155     | (4,998,108)   | (166,549)  
|                                    |            |          |             |            |               |            
|Shares issued for cash:             |            |          |             |            |               |            
|at $0.05 per share                  | 1,210,000  | 1,210    | 59,290      | -          | -             | 60,500     
|at $0.07 per share                  | 175,200    | 175      | 12,089      | -          | -             | 12,264     
|at $0.10 per share                  | 87,623     | 88       | 8,675       | -          | -             | 8,763      
|at $0.12 per share                  | 41,666     | 42       | 4,958       | -          | -             | 5,000      
|at $0.13 per share                  | 214,151    | 214      | 27,626      | -          | -             | 27,840     
|at $0.14 per share                  | 60,114     | 60       | 8,355       | -          | -             | 8,415      
|at $0.16 per share                  | 62,688     | 63       | 9,967       | -          | -             | 10,030     
|at $0.17 per share                  | 446,735    | 447      | 75,498      | (30,445)   | -             | 45,500     
|at $0.18 per share                  | 14,111     | 14       | 2,526       | -          | -             | 2,540      
|at $0.19 per share                  | 15,789     | 16       | 2,984       | -          | -             | 3,000      
|at $0.26 per share                  | 18,115     | 18       | 4,692       | (4,710)    | -             | -          
|at $0.047 per share                 | 500,000    | 500      | 23,000      | (23,500)   |               |            
|                                    |            |          |             |            |               |            
|Shares issued for legal services:   |            |          |             |            |               |            
|at $0.18 per share                  | 200,000    | 200      | 35,628      | -          | -             | 35,828     
|                                    |            |          |             |            |               |            
|Shares issued for wages and salary: |            |          |             |            |               |            
|at $0.071 per share                 | 20,000     | 20       | 1,400       | -          | -             | 1,420      
|at $0.165 per share                 | 40,000     | 40       | 6,560       | -          | -             | 6,600      
|at $0.17 per share                  | 20,000     | 20       | 3,380       | -          | -             | 3,400      
|At $0.18 per share                  | 20,000     | 20       | 3,580       |            |               | 3,600      
|                                    |            |          |             |            |               |            
|Balance carried forward             | 30,649,907 | $ 30,650 | $ 5,059,109 | $(23,500)  | $ (4,998,108) | $ 68,151   

See accompanying notes to the consolidated financial statements.



23





---

AGRONIX, INC.



(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (JANUARY 20, 2000) TO DECEMBER 31, 2004



|                                           |            |          |             |              | Deficit       |            
|------------------------------------------ | ---------- | -------- | ----------- | ------------ | ------------- | -----------
|                                           |            |          |             |              | Accumulated   |            
|                                           | Common     | Common   | Additional  | Shares       | During the    |            
|                                           | Shares     | Shares   | Paid-In     | Subscribed   | Development   |            
|                                           | (Number)   | (Amount) | Capital     | (Receivable) | Stage         | Total      
|                                           |            |          |             |              |               |            
|Balance carried forward                    | 30,649,907 | $ 30,650 | $ 5,059,109 | $ (23,500)   | $ (4,998,108) | $ 68,151   
|                                           |            |          |             |              |               |            
|Shares issued for settlement of debt:      |            |          |             |              |               |            
|at $0.032 per share                        | 650,000    | 650      | 19,955      | -            | -             | 20,605     
|at $0.037 per share                        | 100,000    | 100      | 3,577       | -            | -             | 3,677      
|at $0.05 per share                         | 253,752    | 254      | 12,258      | -            | -             | 12,512     
|at $0.09 per share                         | 100,000    | 100      | 8,817       | -            | -             | 8,917      
|                                           |            |          |             |              |               |            
|Shares issued for consulting services:     |            |          |             |              |               |            
|at $0.0325 per share                       | 461,538    | 462      | 14,538      | -            | -             | 15,000     
|at $0.04 per share                         | 19,500     | 19       | 761         | -            | -             | 780        
|at $0.041 per share                        | 344,000    | 344      | 13,760      | -            | -             | 14,104     
|at $0.045 per share                        | 310,000    | 310      | 13,640      | -            | -             | 13,950     
|at $0.049 per share                        | 100,000    | 100      | 4,786       | -            | -             | 4,886      
|at $0.05 per share                         | 129,500    | 129      | 6,346       | -            | -             | 6,475      
|at $0.055 per share                        | 34,500     | 34       | 1,864       | -            | -             | 1,898      
|at $0.06 per share                         | 750,000    | 750      | 44,250      | -            | -             | 45,000     
|at $0.065 per share                        | 300,000    | 300      | 19,200      | -            | -             | 19,500     
|at $0.071 per share                        | 9,500      | 10       | 665         | -            | -             | 675        
|at $0.08 per share                         | 119,000    | 119      | 9,401       | -            | -             | 9,520      
|at $0.082 per share                        | 25,000     | 25       | 2,015       | -            | -             | 2,040      
|at $0.09 per share                         | 440,000    | 440      | 38,455      | -            | -             | 38,895     
|at $0.10 per share                         | 760,000    | 760      | 75,240      | -            | -             | 76,000     
|at $0.104 per share                        | 10,000     | 10       | 1,030       | -            | -             | 1,040      
|at $0.15 per share                         | 105,000    | 105      | 15,645      | -            | -             | 15,750     
|at $0.16 per share                         | 910,000    | 910      | 144,690     | -            | -             | 145,600    
|at $0.17 per share                         | 1,088,500  | 1,088    | 183,947     | -            | -             | 185,035    
|at $0.175 per share                        | 10,000     | 10       | 1,740       | -            | -             | 1,750      
|at $0.18 per share                         | 604,500    | 605      | 108,205     | -            | -             | 108,810    
|at $0.185 per share                        | 367,000    | 367      | 67,528      | -            | -             | 67,895     
|at $0.19 per share                         | 10,000     | 10       | 1,890       | -            | -             | 1,900      
|at $0.20 per share                         | 30,000     | 30       | 5,970       | -            | -             | 6,000      
|                                           |            |          |             |              |               |            
|Shares returned to treasury and cancelled: |            |          |             |              |               |            
|at $0.23 per share                         | (500,000)  | (500)    | (114,500)   | -            | -             | (115,000)  
|                                           |            |          |             |              |               |            
|Stock-based compensation                   | -          | -        | 308,231     | -            | -             | 308,231    
|                                           |            |          |             |              |               |            
|Net loss for the year                      | -          | -        | -           | -            | (1,464,885)   | (1,464,885)
|                                           |            |          |             |              |               |            
|Balance, December 31, 2004                 | 38,191,197 | $ 38,191 | $ 6,073,013 | $ (23,500)   | $ (6,462,993) | $ (375,289)





See accompanying notes to the consolidated financial statements.

24





---

AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

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.

Pursuant to a share exchange agreement entered into on October 16, 2000 and closed on March 26, 2001, between the shareholders of Agronix and shareholders of a private company, American Waste Recovery, Inc. ("AWR"), the Company purchased all of the outstanding shares of AWR.  AWR was incorporated under the laws of Nevada, U.S.A. on January 20, 2000 as American Bio Recovery, Inc. and on January 26, 2000, its name was changed to American Waste Recovery, Inc.  The consideration for this acquisition was the issuance by the Company of 6,622,250 common shares.

As a result of this transaction, AWR became a wholly-owned subsidiary of Agronix and the former shareholders of AWR in turn became owners of the majority of the issued and outstanding shares of Agronix.  Since the former shareholders of AWR acquired control of Agronix through this transaction, it is considered a reverse acquisition and these financial statements are presented from the perspective of AWR (the accounting parent in this transaction).  These financial statements present the consolidated results of operations from AWR's date of incorporation (January 20, 2000) to December 31, 2004 including the results of operations of Agronix since March 26, 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.

Going Concern

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 December 31, 2004 the Company had a working capital deficiency of $376,116 and a capital deficiency of $375,289.  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

a)

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, which is inactive.

b)

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% | 

c)

Investments



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

25





---

AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d)

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 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.

e)

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.

During the year ended December 31, 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 3 lowest bid value of the shares for the five days prior to the date of exercise. Accordingly, the Company has recognized related stock-based compensation of $130,731.  Refer to Note 6.

During the year ended December 31, 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 year ended December 31, 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 stock option awards in each period.

|                                                                                         |  |  |  | 2004
$      |  | 2003
$     
|---------------------------------------------------------------------------------------- |  |  |  | ----------- |  | -----------
|                                                                                         |  |  |  |             |  |            
|Net loss  as reported                                                                   |  |  |  | (1,464,885) |  | (1,937,835)
|Add: Employee stock-based compensation expense included in net loss 
     as reported   |  |  |  | -           |  | -          
|Deduct: Employee stock-based compensation expense
    determined under fair value method |  |  |  | (145,373)   |  | -          
|                                                                                         |  |  |  |             |  |            
|Net loss  pro forma                                                                     |  |  |  | (1,479,258) |  | (1,937,835)
|                                                                                         |  |  |  |             |  |            
|Net loss per share (basic and diluted)  as reported                                     |  |  |  | (0.05)      |  | (0.08)     
|Net loss per share (basic and diluted)  pro forma                                       |  |  |  | (0.05)      |  | (0.08)     



26





---

AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004



2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f)

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.

g)

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.

h)

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.

i)

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.  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.

j)

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.



k)

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.



l)

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 have a material impact on the Companys financial condition or results of operations.

In November 2005, 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.

27





---

AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In December 2005, 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(e) 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 2005, 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.



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 Ltd. 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 may 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.



4.

INVESTMENT IN AND ADVANCES TO 3884171 CANADA INC.

The Company has elected to dissolve the jointly-owned Canadian federal company, 3884171 Canada Inc.  All investments in and advances to 3884171 Canada Inc. have been written off.

28





---

AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004



5.

DUE TO RELATED PARTIES



| |                                                            | 2004     | 2003    
| | ---------------------------------------------------------- | -------- | --------
| | 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 June 30, 2005                              | $ 63,440 | $ 63,440



For the year ended December 31, 2004, the Company has accrued interest of $7,612 (2003 - $7,612).  At December 31, 2004, $17,092 (2003 - $9,480) is owing for interest and is included in accounts payable and accrued liabilities.





6.

CAPITAL STOCK

On October 27, 2004, the Company increased its authorized number of common shares from 50,000,000 to 100,000,000 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 increase the number of options to 10,000,000 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 year ended December 31, 2004, the Company issued a total of 8,841,290 common shares to certain officers, employees, consultants and other shareholders for wages, legal, consulting fees and settlement of debt valued at $910,562.

The Company also has an ongoing offering memorandum which is renewed every six months.  The current offering commenced on November 1, 2004 and will close on April 30, 2005. During the year ended December 31, 2004 the Company issued 2,346,192 common shares for proceeds of $219,007, of which $35,155 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 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.

Stock Options and Warrants

The following table summarizes information about outstanding and exercisable share options at December 31, 2004:



|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                          

29





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AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004



6.

CAPITAL STOCK (continued)

Summary of share option activity and information concerning options at December 31, 2004:



| |                            |            
| | -------------------------- | -----------
| |                            | 2004       
| | Balance, beginning of year | 6,690,000  
| | Granted                    | 4,600,000  
| | Exercised                  | (961,538)  
| | Expired                    | (3,538,462)
| | Cancelled                  | (4,000,000)
| |                            |            
| | Balance, end of year       | 2,790,000  

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 $177,500 to December 31, 2004.

During the year ended December 31, 2004, the Company granted options to purchase 4,000,000 shares of the Companys common stock to certain consultants at a price equal to 50% of the market value of the shares on the date of exercise for a period of five months.  A charge to additional paid in capital of $114,231 related to these options has been recorded using their intrinsic value under the variable option method of accounting.  The Company also granted options to purchase 500,000 shares of the Companys common stock to a consultant at a price equal to 70% of the 3 lowest market bid price of the shares for the five days prior to the date of exercise. A charge to additional paid in capital of $16,500 related to these options has been recorded using their intrinsic value under the variable option method of accounting for a total in the year of $130,731 of which $16,583 is in prepaids.

During the year ended December 31, 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.

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 December 31, 2004.

30





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AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004



7.

RESEARCH AND DEVELOPMENT

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 has incurred research and development expenses as follows:



|Cumulative From Inception                                         | For the Year      | For the Year       
|----------------------------------------------------------------- | ----------------- | -------------------
|(January 20, 2000)
to December 31                                 | Ended December 31 | Ended December 31  
|                                                                  | 2004              | 2004               
|                                                                  |                   |                    
|Acquisition of organic matter expertise and intellectual property | $ 164,500         | -                  
|Technical development of BCR System                               | 331,878           | -                  
|Technical development of BCIR System                              | 282,164           | -                  
|BCBV intellectual property, systems and processes                 | 396,000           | -                  
|                                                                  |                   |                    
|                                                                  | $
1,174,542       | $                 -

8.

COMMITMENTS

a)

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 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 University, subject to a royalty-free non-exclusive license to the Company.  To date the Company has incurred $232,076 for research and development and $92,334 in accrued interest leaving $324,410 due to Carleton University as at December 31, 2004 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 newly formed company in Jamaica named Agronix Caricom Inc., 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 a 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.

31





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AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

8.

COMMITMENTS (continued)

c)

Consulting Agreements

The Company has entered into certain consulting agreements whereby the Company has committed to issue a total of 34,500 shares 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.

d)

Executive Employment Agreements

The Company entered into an executive employment agreement effective August 15, 2002 whereby the Company had agreed to pay $20,000 per month if and when those funds were 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 were 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. This agreement was terminated upon the resignation of the CEO on June 15, 2004 and the options were unexercised and were cancelled.

e)

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. As of this date, no Regulation-S shares have been transferred to the Trustee and no shares have been sold.

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. As at December 31, 2004, the Company had net operating loss carry forwards of approximately $3,200,000 that may be available to reduce future years taxable income and will expire between the years 2018 and 2024.  Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in managements judgment about the realizability of future tax assets the impact of the change on the valuation allowance is generally reflected in current income.

10. RELATED PARTY TRANSACTIONS

During the year ended December 31, 2004, the Company paid $89,513 (2003 - $100,825) in salary and consulting fees to its senior executives including cash payments of $71,453, of which $40,835 is recorded as a payable at December 31, 2004 (2003 - $50,025) and 145,000 common shares valued at $18,060 (2003  160,000 common shares valued at $50,800).  In addition, the Company issued 326,775 shares valued at $20,256 to its senior executives as settlement for expenses incurred.  During the year ended December 31, 2003, the Company also paid $552,618 to certain officers and other shareholders for legal and consulting fees comprised of cash payments of $94,688 and 1,598,611 common shares valued at $457,930.  Also in 2003, the Company paid 1,200,000 common shares valued at $396,000 for research and development to BCBV.

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.

11. PREPAID EXPENSES AND DEPOSITS

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, comprised of $30,000 cash and 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 of 2004.

32





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AGRONIX, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

11. PREPAID EXPENSES AND DEPOSITS (continued)

During the year ended December 31, 2004, the Company issued a total of 4,888,538 shares of the Company's common stock with a fair value of $620,795 pursuant to consulting agreements with up to one year terms.  400,000 of these shares were issued as restricted common stock and 4,488,538 were issued as S-8 registered common stock.  As at December 31, 2004, $147,064 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.

12. SUBSEQUENT EVENTS

The Company issued a total of 699,000 shares of the Company's common stock pursuant to consulting agreements, comprised of 10,000 shares issued to the Chairman of the Audit Committee, and 589,000 shares issued to various consultants.  These shares were issued as S-8 registered common stock.

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.

33





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ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.



ITEM 8A.

CONTROLS AND PROCEDURES

The Securities and Exchange Commission defines the term disclosure controls and procedures to mean a companys controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms.

Based on an evaluation performed, the Company's certifying officers have concluded that the disclosure controls and procedures were effective as of December 31, 2004, to provide reasonable assurance of the achievement of these objectives.

During 2004, the Company formed an Audit Committee, chaired by Charlie Mayer to review its financial reporting procedures and financial statements.



ITEM 8B.

OTHER INFORMATION.

None.



PART III

ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The directors and executive officers currently serving the Company are as follows:

|Name             | Age | Positions Held and Tenure                        
|---------------- | --- | -------------------------------------------------
|Brian Hauff      | 57  | President, CEO, CFO and Director since March 2001
|Peter J. Barnett | 66  | Secretary and Director since March 2001          
|Charles Mayer    | 68  | Chairman since February 2004                     

The directors named above will serve until the next annual meeting of the Company's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.

The directors and officers will devote their time to the Company's affairs on an "as needed" basis, which, depending on the circumstances, could amount to as little as two hours per month, or more than forty hours per month, but more than likely will fall within the range of five to ten hours per month.

34





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Biographical Information

Brian Hauff

Brian Hauff is the President, Chief Executive Officer, Chief Financial Officer and a director of the Company. Mr. Hauff is the founder of the Company and has worked for the Company since its inception. He has also been an investor/developer for the past 20 years. Mr. Hauff has a combined Economics and Commerce degree (Hons.) from Simon Fraser University and a law degree from the University of British Columbia. He is a resident of Vancouver, B.C. Canada.

Peter J. Barnett

Peter Barnett is the Chairman and a director of the Company. He is a co-founder of a number of restaurant companies including Pizza Patio, Elephant and Castle, and most recently the Canadian division of the Rainforest Café. Mr. Barnett is well known for his involvement in community and charitable services. Mr. Barnett was honored by Canada with the 125th Centennial Medal of Honor for contributions to the development of Canadian society. He is the Past President of Variety Club International, a worldwide charity that supports children in need. Mr. Barnett is a resident of Vancouver, B.C. Canada.

Charles Mayer

Mr. Mayer is the newest appointed director. He is also Chair of the Manitoba Crop Insurance Corporation and a board member of Canada Bread. He received his B.Sc. from the University of Saskatchewan, and has been a mixed farmer and agrologist, a member of multiple farming associations, as well as having been President of the Manitoba Beef Growers Association. He was first elected as a Conservative Member of Parliament in 1979, and remained for two more terms until 1993. As an MP, Charlie was active in setting federal agricultural policy, being Minister of Agriculture and Agri-Food, holding various junior cabinet positions as well as being involved in the GATT negotiations.

Audit Committee

The Companys audit committee members are Charlie Mayer, Philip Dayson and Ron Niven. The audit committee's primary function is to provide advice with respect to the Companys financial matters and to assist the Board of Directors in fulfilling oversight responsibilities regarding finance, accounting, tax and legal compliance. The audit committees primary duties and responsibilities are to: (i) serve as an independent and objective party to monitor the financial reporting process and internal control system; (ii) review and appraise the audit efforts of the Companys independent accountants; (iii) evaluate the quarterly financial performance as well as compliance with laws and regulations; (iv) oversee managements establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and the board of directors.

The Companys audit committee has considered whether the provision of non-audit service is compatible with maintaining the principal independent accountant's independence.

Code of Ethics

On November 12, 2003, the Company adopted a Code of Ethics for its principal executive officer, principal financial officer, principal accounting officer or controller and other persons performing similar functions.

Compliance With Section 16(a) of the Exchange Act.

The Companys officers, directors and principal shareholders have each filed Initial Statements of Beneficial Ownership of Securities on Form 3 and Statements of Changes in Beneficial Ownership of Securities on Form 4.



35





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ITEM 10.

EXECUTIVE COMPENSATION

During the year ended December 31, 2004, the Company incurred $89,513 in salary and consulting fees to its senior officers, including cash payments and accounts payable of $71,453 and 145,000 common shares valued at $18,060.  Of this total, the two CEOs holding office during 2004 received a total of $71,453 and 100,000 common shares valued at $15,020, and the Chair of the Audit Committee received 45,000 common shares valued at $3,040. The Company also settled expenses owed to two of the Companys directors through the issuance of 326,775 common shares valued at $20,256.

In April 2004, the Company granted 100,000 options to the new Chairman to purchase 100,000 shares of the Companys common stock at the exercise price of $0.50. During the third quarter of 2002, the Company granted options to purchase 3,000,000 shares of the Company's common stock to the Company's CEO at a price of $1.00 per share for a period of five years. One third of these options vest immediately, one third will vest upon the completion of five years of service and one third when the Company's share capitalization reaches $100 million. These 3,000,000 options remained unexercised and were cancelled upon the resignation of the CEO.



ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5.0% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.

|Name and Address                                                           | Number of Shares Owned Beneficially | Percent of Class
|-------------------------------------------------------------------------- | ----------------------------------- | ----------------
|Brian Hauff (1)1666 West 75th Avenue
Vancouver, B.C., Canada V6P 6G2       | 1,900,000(2)                        | 5.0%            
|Peter J. Barnett (1)
1666 West 75th Avenue
Vancouver, B.C., Canada V6P 6G2 | 1,028,000(3)                        | 2.7%            
|Charles Mayer (1)1666 West 75th Avenue
Vancouver, B.C., Canada V6P 6G2     | 272,775 (4)                         | 0.7%            
|Epsom Investment Services
16 Pietermaai
Curacao, Netherlands, Antilles     | 7,800,000                           | 20.4%           
|All directors and executive officers as a group
(3 in number)              | 3,200,775                           | 8.4%            



(1) The person listed is an officer, a director, or both, of the Company.

(2) Includes 1,000,000 performance shares which are currently held in escrow pursuant to an agreement dated January 27, 2000. Such shares shall be released from escrow based upon the Company's cumulative cash flow. For each $0.25 of cash flow, one share will be released. Any performance shares not released from escrow on or before January 27, 2010, shall be cancelled. Also includes 600,000 options to purchase 600,000 shares of common stock at a price of $0.50. The options expire on January 27, 2006.

(3) Includes 128,000 shares owned by family members, of which Mr. Barnett may be deemed to be the beneficial owner. Also includes 400,000 options to purchase 400,000 shares of common stock at a price of $0.50. The options expire on January 28, 2006.

(4) Includes 100,000 options to purchase 100,000 shares of common stock at a price of $0.50. The options expire on April 7, 2010.

36





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ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On March 1, 2002, the Company approved a stock option plan whereby 3 million shares will be available to compensate some of the company's key contributing consultants and allow the company to retain and hire qualified personnel.

On January 27, 2000, 1,000,000 post-split performance shares were issued into escrow for the Company's President. 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 December 31, 2004 and are not included in common shares issued and outstanding.

On September 1, 2002, the Company and its President agreed to transfer these shares to a consultant under the same terms and conditions. This agreement was cancelled during 2004, so the transfer of the performance shares has been rescinded, and remain issued into escrow for the Companys President.

The Company has entered into an executive employment agreement effective August 15, 2002, whereby the Company has agreed to pay $20,000 per month to its CEO for a period of sixty months. The Company may issue up to 20,000 shares in lieu of salary any months where the funds are not available. The Company must pay four months salary on termination. 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. This executive employment agreement was terminated upon the CEOs resignation, and all options remained unexercised and were cancelled.

During the year ended December 31, 2004, the Company paid $89,513 in salary and consulting fees to its senior officers, including cash payments and accounts payable of $71,453 and 145,000 common shares valued at $18,060.  Of this total, the two CEOs holding office during 2004 received a total of $71,453 and 100,000 common shares valued at $15,020, and the Chair of the Audit Committee received 45,000 common shares valued at $3,040. The Company also settled expenses owed to two of the Companys directors through the issuance of 326,775 common shares valued at $20,256.

During 2004, the Chairman was granted 100,000 options at the exercise price of $0.50 per share.  As Chairman of the Audit Committee, the Chairman has been issued 5,000 common shares per month, since April 2004.  In lieu of cash reimbursement for expenses incurred on behalf of the Company, the Chairman has been issued 127,775 common shares valued at $6,339.

During 2004, Peter Barnett, a director has been issued 200,000 common shares, valued at $13,917 in lieu of cash reimbursement for expenses incurred on behalf of the Company.



ITEM 13.

EXHIBITS

The Exhibits listed below are filed as part of this Annual Report.

Exhibit No. Document

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.

31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

37



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

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



ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate audit and audit related fees billed by Dale Matheson Carr-Hilton LaBonte for audit of the Company's annual financial statements for review of the Company's quarterly financial statements filed on Form 10-QSB were $16,000 for the fiscal year ended December 31, 2004, and $18,000 for the fiscal year ended December 31, 2003.

Tax Fees

The aggregate fees billed by Dale Matheson Carr-Hilton LaBonte for tax compliance, advice and planning were $Nil for the fiscal year ended December 31, 2004, and $Nil for the fiscal year ended December 31, 2003.

All Other Fees

Dale Matheson Carr-Hilton LaBonte did not bill the Company for any products and services other than the foregoing during the fiscal years ended December 31, 2004 and December 31, 2003.

38





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SIGNATURES

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



AGRONIX, INC.

By: /S/ BRIAN HAUFF
Brian Hauff, President, Chief Financial Officer and a Director

Date:  March 30, 2005



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



By: /S/ BRIAN HAUFF
Brian Hauff, President, Chief Executive Officer, Chief Financial Officer and a Director

Date:  March 30, 2005



By:/S/ CHARLES MAYER
Charles Mayer, Chairman

Date:  March 30, 2005



By:/S/ PETER J. BARNETT
Peter J. Barnett, Secretary and Director

Date:  March 30, 2005

39