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

                                  FORM 10-KSB/A



                                 Amendment No. 1



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 ______.

                        Commission file number 000-30790


                        CHINA YINGXIA INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)


           Florida                                    65-0664961
(State or other jurisdiction of          (IRS Employer Identification Number)
         incorporation)



  c/o American Union Securities 100 Wall Street
             15th Floor New York, NY                              10005
    Address of Principal Executive Office                        Zip Code


                    Issuer's telephone number: (212) 232-0120


                                  AGRONIX, INC.
                              1666 West 75th Avenue
                         Vancouver, B.C., Canada V6P 6G2

   (Former name, former address and former fiscal year, if changed since last
                                     report)

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

 Title of each class registered:      Name of each exchange on which registered:
               None                                   None

         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, par value $.001
                                (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

<PAGE>
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. [ ]


Revenues for year ended December 31, 2005: $6,184,469

The aggregate market value of the voting common stock held by non-affiliates of
the registrant as of August 1, 2006, based on the average bid and asked price of
$1.54 of the Common Stock on the NASD OTC Bulletin Board on said date was $
15,759,627.

 (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)


Number of shares of the registrant's common stock outstanding as of August 1,
2006 was: 33,607,415


                       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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<PAGE>
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.


                                        3
<PAGE>
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.


                                        4
<PAGE>
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.


                                        5

<PAGE>
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 Company must 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:


                                        6

<PAGE>
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 beyond its
control, such as an economic recession and aggressive pricing policies of its
competitors. The delivery of a supply of waste to each plant is dependent upon


                                        7

<PAGE>
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


                                        8
<PAGE>

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.


                                       9
<PAGE>
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 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


                                       10
<PAGE>
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.


                                       11
<PAGE>
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
<PAGE>



                                  AGRONIX, INC.



                          (A Development Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2004






<PAGE>
                                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



<PAGE>


                                       Partnership of:

                           Robert Burkhart, Inc.       James F. Carr-Hilton Ltd.
        DALE MATHESON      Alvin F. Dale, Ltd.         Wilfred A Jacobson, Inc.
  CARR-HILTON LABONTE      Robert J. Matheson, Inc.    Fraser G. Ross, Ltd.
CHARTERED ACCOUNTANTS      Peter J.  Donaldson,  Inc.  Reginald J. LaBonte, Ltd.
                           Rakesh I. Patel, Inc.       Bran A. Shaw, Inc.


--------------------------------------------------------------------------------

            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 fmancial  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 fmancial
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 consolidated  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"


                                     DALE MATHESON CARR-HILTON LABONTE
                                     CHARTERED ACCOUNTANTS


Vancouver, Canada
February 28, 2005 (except for Note 6 which is dated August 9, 2006)



A MEMBER OF MGI INTERNATIONAL, A WORLDWIDE NETWORK OF INDEPENDENT ACCOUNTANTS
AND BUSINESS ADVISORS

Vancouver   Suite 1500-1140 West Pender Street, Vancouver, B.C., Canada V6E 4G1,
            Tel: 604 687 4747 o Fax: 604 689 2778 - Main Reception Suite

                                       17

<PAGE>
<TABLE>
<CAPTION>
                                  AGRONIX, INC.


                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                                                                               December
                                                                             December 31             31
                                                                                      20           2003

CURRENT ASSETS
<S>                                                                               <C>            <C>
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
                                                                              -----------    -----------
</TABLE>
Going Concern (Note 1)
Commitments (Notes 3 and 8)

              See accompanying notes to the consolidated financial
                                  statements.


                                       18
<PAGE>
<TABLE>
<CAPTION>
                                  AGRONIX, INC.


                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                Cumulative
                                            From Inception            For the Year            For the Year
                                     (January 20, 2000) to                   Ended                   Ended
                                               December 31             December 31             December 31
                                                      2004                    2004                    2003

<S>                                                 <C>                   <C>                    <C>
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)
                                             -------------------------------------------------------------
                                             $   (6,462,993)       $    (1,464,885)       $     (1,937,835)
NET LOSS                                     =============================================================


Basic loss per share                                               $         (0.05)       $          (0.08)
                                                                   =======================================

Weighted average number of common shares outstanding                    32,054,083              23,944,045
                                                                   =======================================
</TABLE>

              See accompanying notes to the consolidated financial
                                  statements.


                                       19

<PAGE>
<TABLE>
<CAPTION>
                                  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
<S>                                                            <C>                        <C>               <C>
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                                                              $            -    $               -
                                                        ==============================================================
</TABLE>

              See accompanying notes to the consolidated financial
                                  statements.


                                       20
<PAGE>
<TABLE>
<CAPTION>
                                  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:
<S>                                  <C>           <C>          <C>              <C>            <C>            <C>
   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
<PAGE>
                                  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
<PAGE>
                                  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
<PAGE>
                                  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)
                          --------------------------------------------------------------------------------------------
</TABLE>

              See accompanying notes to the consolidated financial
                                  statements.

                                       24
<PAGE>
                                  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.


<PAGE>
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
<PAGE>
                                  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.
<TABLE>
<CAPTION>

                                                                       2004              2003
                                                                        $                  $

<S>                                                                    <C>                <C>
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)
</TABLE>

                                       26
<PAGE>
                                  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
<PAGE>
                                  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 (euro)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
<PAGE>
                                  AGRONIX, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

5.   DUE TO RELATED PARTIES
<TABLE>
<CAPTION>
                                                                                     2004                 2003
<S>                                                                                   <C>                  <C>
      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
                                                                                   ---------            --------
</TABLE>

     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

                                                       Average         Weighted
                                                     Remaining          Average
                                      Exercise     Contractual         Exercise
       Number                            Price            Life            Price
  Outstanding      Grant Date        Per Share      (In Years)        Per Share

      840,000        01/27/00           $ 0.50            1.07     $       0.50
      400,000        01/28/00             0.50            1.08             0.50
      300,000        02/17/00             0.50            1.13             0.50
      500,000        08/04/00             0.50            1.27             0.50
      150,000        10/30/00             0.67            1.83             0.67
      400,000        01/17/01             1.00            2.05             1.00
       80,000        07/03/01             1.00            2.18             1.00
       20,000        02/07/03             0.50            4.50             0.50
      100,000        04/07/04             0.50            5.51             0.50
--------------                                  --------------     -------------

    2,790,000                                             1.51     $       0.60
==============                                 =================================


                                       29
<PAGE>
                                  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                     2003
                                       -----------------------------------------
      Balance, beginning of year
                                                6,690,000             6,870,000
      Granted                                   4,600,000               520,000
      Exercised                                  (961,538)                    -
      Expired                                  (3,538,462)             (200,000)
      Cancelled                                (4,000,000)             (500,000)
                                       -----------------------------------------

      Balance, end of year                      2,790,000             6,690,000
                                       =========================================

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.


Mr. Hauff's initial performance shares were issued at par value for cash of
$.001 per share for a total of $500 which has been disclosed and accounted for
in the Statement of Stockholders' Equity since 2000.


No compensation expense was or has ever been recorded for Mr. Hauff's
performance shares, as they are and continue to be held in escrow. To date the
Company has not generated any cash flow and thus the performance shares are not
eligible for release under the terms of Mr. Hauff's Employment Agreement.


The performance shares were a portion of the equity allowance issued to nine
founders who participated in the initial share offering of 5,250,000 shares
issued at $.001 per share for total consideration of $5,250. Of these initial
shares, a total of 650,000 were issued to Mr. Hauff, 500,000 of which were
performance based. Mr. Hauff paid $.001 per share for all 650,000 founders'
shares that he received. Further, Mr. Hauff was the only founder who received
performance shares. These shares, held in escrow, were not included in the
weighted average share calculations because they were not eligible for release
by the end of the period.



                                       30
<PAGE>
                                  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:
<TABLE>
<CAPTION>

                                                         Cumulative From Inception
                                                                (January 20, 2000)       For the Year        For the Year
                                                                    to December 31  Ended December 31   Ended December 31
                                                                              2004               2004                2003

Acquisition of organic matter expertise and intellectual
<S>                                                                         <C>               <C>                 <C>
property                                                          $        164,500                 -                   -
Technical development of BCR System                                        331,878                 -               2,936
Technical development of BCIR System                                       282,164                 -               5,453
BCBV intellectual property, systems and processes                          396,000                 -             396,000
                                                               ---------------------------------------------------------

                                                                  $      1,174,542      $          -             404,389
                                                               =========================================================
</TABLE>

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

None.

ITEM 8A.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including
our principal executive officer, principal financial officer and Audit
Committee, we conducted an evaluation of our disclosure controls and procedures,
as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated
under the Securities Exchange Act of 1934, as amended (Exchange Act), as of
December 31, 2004. Based on this evaluation, our principal executive officer,
principal financial officer and Audit Committee have concluded that our
disclosure controls and procedures are effective at the reasonable assurance
level to ensure that information required to be disclosed by us in the reports
we file or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms and that our disclosure and controls are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer, principal financial
officer, Audit Committee, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Management necessarily applied its judgment in assessing the benefits
of controls relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote. Because of the inherent limitations
in a control system, misstatements due to error or fraud may occur and may not
be detected.

Changes in Internal Controls

We made a change to our internal controls in early 2004 as we formed an Audit
Committee, chaired by Charlie Mayer to review our financial reporting procedures
and financial statements. The other members of the Audit Committee are 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. As a result, we feel that we have improved the internal controls and
financial reporting requirements of the Company. We have not identified any
deficiencies or material weaknesses or other factors that could affect these
controls, and therefore, no corrective action was taken.


ITEM 8B.  OTHER INFORMATION.


In early 2004 we formed an Audit Committee, chaired by Charlie Mayer to review
our financial reporting procedures and financial statements. The other members
of the Audit Committee are 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.


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
<PAGE>
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 Cafe. 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
<PAGE>
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.

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

(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
<PAGE>
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, as adopted pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002.

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



                                       37
<PAGE>




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
<PAGE>
SIGNATURES


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

CHINA YINGXIA INTERNATIONAL, INC.


By:  /s/ Yingxia Jiao
     -------------------------------
     YINGXIA JIAO
     Chief Executive Officer,
     Chief Financial Officer, Director


Date:    August 9, 2006