**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION** ****


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**





**(Mark
      One)**


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





For
      the
      fiscal year ended December 31, 2007





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





For
      the
      transition period _________ to____________





Commission
      file number: 000-51248





**OPTIGENEX
      INC.**


(Exact
      name of small business issuer as specified in its charter)





Delaware
            
            20-1678933(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS
                Employer I.D. Number)





1170
                Valley Brook Ave., 2nd Floor, Suite B, Lyndhurst, NJ
            
            07071(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer's
      telephone number, including area code: (201) 355-2098





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act: Common Stock, par value
      $0.001 per share.





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days.
      Yes xNo o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes oNo x





Issuer's
      revenues for the fiscal year ended December 31, 2007 were $465,970.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant, as of May 2, 2008, was $66,533 based upon
      the
      closing price of $0.001 for such date as reported on the Over-the-Counter
      Bulletin Board.





There
      were 66,533,776 shares of Common Stock outstanding as of May 2, 2008.





Transitional
      Small Business Disclosure Format (check one): Yes oNo x







**ANNUAL
      REPORT ON FORM 10-KSB**


**FOR
      THE FISCAL YEAR ENDED DECEMBER 31, 2007**




TABLE
      OF
      CONTENTS





PART
                I.Item
                1.
            Business
            1Item
                2.
            Description
                of Properties
            6Item
                3.
            Legal
                Proceedings
            6Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            7PART
                II.Item
                5.
            Market
                for Common Equity and Related Stockholder Matters
            8Item
                6.
            Management's
                Discussion and Analysis or Plan of Operation
            9Item
                7.
            Financial
                Statements
            16Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure
            16Item
                8A.
            Controls
                and Procedures
            16Item
                8B.
            Other
                Information
            16PART
                III.Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act
            17Item
                10.
            Executive
                Compensation
            18Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            19Item
                12.
            Certain
                Relationships and Related Transactions
            20Item
                13.
            Exhibits
            21Item
                14.
            Principal
                Accountant Fees and Services
            22SIGNATURES
            23







**CAUTIONARY
      NOTE REGARDING FORWARD LOOKING STATEMENTS**





Certain
      statements in this Annual Report on Form 10-KSB constitute forward-looking
      statements for purposes of the securities laws. Forward-looking statements
      include all statements that do not relate solely to the historical or current
      facts, and can be identified by the use of forward looking words such as "may",
      "believe", "will", "expect", "expected", "project", "anticipate", "anticipated",
      "estimates", "plans", "strategy", "target", "prospects" or "continue". These
      forward looking statements are based on the current plans and expectations
      of
      our management and are subject to a number of uncertainties and risks that
      could
      significantly affect our current plans and expectations, as well as future
      results of operations and financial condition and may cause our actual results,
      performances or achievements to be materially different from any future results,
      performances or achievements expressed or implied by such forward-looking
      statements. This Form 10-KSB contains important information about the risk
      factors above. In making these forward-looking statements, we claim the
      protection of the safe-harbor for forward-looking statements contained in the
      Private Securities Reform Act of 1995. Although we believe that the expectations
      reflected in such forward-looking statements are reasonable, there can be no
      assurance that such expectations will prove to have been correct. We do not
      assume any obligation to update these forward-looking statements to reflect
      actual results, changes in assumptions, or changes in other factors affecting
      such forward-looking statements.




**PART
      I**





**Item
      1.****Description
      of Business**





**Overview**





Optigenex
      Inc. (“we”, “our”, “us”) was incorporated in the State of Delaware under the
      name Idunna, Inc. on July 10, 2002. Idunna, Inc. changed its name to Kronogen
      Sciences Inc. ("Kronogen") on November 21, 2002.





On
      April
      4, 2003, Kronogen acquired certain assets of the Giampapa Institute for
      Anti-Aging Medical Therapy, a sole proprietorship of the State of New Jersey
      and
      Optigene-X LLC, a New Jersey limited liability company (collectively
      "Giampapa"). This acquisition provided Kronogen with an exclusive license to
      certain intellectual property including patents, patents pending and trademarks
      that Giampapa utilized in its business. In this transaction, Kronogen issued
      an
      aggregate of 1,400,000 shares of its common stock to three individuals and
      a
      note payable of $173,080 to an individual for the release of his existing
      license agreement to utilize the same intellectual property. On July 30, 2003,
      Kronogen changed its name to Optigenex Inc.





On
      November 6, 2003, Optigenex acquired certain assets and assumed certain
      liabilities of CampaMed LLC, a New Jersey limited liability company
      ("CampaMed"). This acquisition provided Optigenex with certain intellectual
      property including patents, patents pending and trademarks that CampaMed
      utilized in its business. In this transaction, Optigenex issued an aggregate
      of
      1,156,250 shares of its common stock to seven individuals and note payable
      to
      CampaMed of $150,000. Optigenex also assumed certain liabilities of CampaMed
      in
      the amount of $128,512. In addition, Optigenex issued options to purchase an
      aggregate of 150,000 shares of its common stock at an exercise price of $0.001
      to four individuals in exchange for the release of an existing royalty
      obligation related to the intellectual property that Optigenex was acquiring
      from CampaMed.





On
      July
      30, 2004, Optigenex entered into an Asset Purchase Agreement (the "Transaction")
      with Vibrant Health International, a Nevada corporation ("Vibrant"), Optigenex
      Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Vibrant
      ("Acquisition Corp"), and Thomas McAdam ("McAdam), who, prior to the closing
      of
      the Transaction, was the principal shareholder and the sole officer and director
      of Vibrant. At the time of the Transaction, Vibrant was a reporting company
      for
      SEC purposes, however, its common stock was not registered with the SEC and
      as
      such, its shares were not listed on an established exchange or quoted on the
      Over-the-Counter Bulletin Board.





Vibrant
      was holding company that conducted its business of selling nutraceutical
      products through its wholly owned subsidiary Vibrant Health Inc. a Colorado
      corporation ("VHI"). At the time of the Transaction, in addition to Acquisition
      Sub and VHI, Vibrant also had another wholly owned subsidiary, Optigenex Merger
      Inc., a Delaware corporation ("Merger Inc."). Prior to the closing of this
      Transaction on July 30, 2004, Vibrant sold 100% of the common stock of VHI
      to
      McAdam in exchange for 3,417,560 shares of Vibrant that were owned by McAdam.
      These shares were cancelled and returned to the treasury of Vibrant. This
      reduced the total number of shares outstanding of Vibrant from 4,360,600 to
      943,040. Simultaneously, Vibrant affected a .599 to 1 reverse split of its
      common shares which reduced the total number of shares outstanding to 564,885.





In
      this
      Transaction, Acquisition Sub purchased all of the assets and assumed all of
      the
      liabilities of Optigenex in exchange for 8,621,255 shares of Vibrant common
      stock ("Vibrant Shares"), which represented approximately 94% of Vibrant's
      common stock outstanding immediately after the Transaction. The 8,621,255 shares
      issued by Vibrant to Optigenex were equal to the total number of Optigenex
      shares outstanding on July 30, 2004. Vibrant also issued 681,895 options
      ("Substitute Options") and 111,668 warrants ("Substitute Warrants") to purchase
      shares of Vibrant common stock to Optigenex. The number of Substitute Options
      and Substitute Warrants were equal to the number of Optigenex options and
      warrants that were issued and outstanding on the date of the Transaction. The
      Substitute Options and Substitute Warrants issued by Vibrant had the same
      exercise price and the same terms as the Optigenex options and warrants.


1





Simultaneous
      with the closing of the Transaction on July 30, 2004, Vibrant merged with and
      into its wholly owned Delaware subsidiary Merger Inc. with Merger Inc. being the
      surviving corporation. Also on July 30, 2004, Optigenex distributed its
      remaining assets, which consisted of the Vibrant Shares, the Substitute Options
      and the Substitute Warrants, directly to its shareholders, option holders and
      warrant holders. Upon the dissolution of Optigenex on July 30, 2004, Merger
      Inc.
      changed its name to Optigenex Inc.





On
      August
      25, 2004, Acquisition Sub, which contained the assets and liabilities that
      were
      acquired in the Transaction, merged with and into Optigenex with Optigenex
      being
      the surviving corporation. The effect of this merger was to eliminate
      Acquisition Sub as a legal subsidiary of Optigenex.





On
      April
      15, 2005, we registered our common stock under Section 12(g) of the Securities
      Exchange Act of 1934 and our shares began trading on the Over-the-Counter
      Bulletin Board under the ticker symbol OPGX.OB.





**Description
      of the Company's Business**





Optigenex
      Inc. is engaged in the manufacturing and licensing worldwide of unique health,
      wellness and beauty products based on its wholly natural botanical extract
      ingredient, AC-11®. A series of third party clinical, pre-clinical and other
      scientific studies documented in peer reviewed, published articles support
      the
      science behind AC-11®. Four (4) U.S. patents protect the extraction, testing,
      and manufacturing processes associated with the AC-11® proprietary compound.




The
      company licenses its technology for the manufacture and sale of privately
      labeled products containing AC-11® to third-party marketing companies in the
      personal care and nutraceutical industries. The company also develops and
      markets its own products featuring AC-11® as a core ingredient.




AC-11®
is
      a bioactive form of the medicinal herb known as Uncaria tomentosa, a plant
      indigenous to the Amazon rainforest and other tropical regions of South and
      Central America. AC-11® is manufactured for Optigenex by the Centroflora Group
      of Sao Paulo, Brazil, using a patented process that delivers an essentially
      alkaloid free, water-soluble extract, standardized to an 8% carboxyl alkyl
      ester
      concentration. Manufacturing takes place under the direction of Optigenex at
      Centroflora’s facilities utilizing specialized equipment developed and owned by
      Optigenex. The Centroflora Group is a U.S. FDA-approved manufacturer and
      complies with standards for quality control recognized and accepted worldwide.




In
      data
      compiled from over 10 years of scientific research and development, AC-11® has
      been shown to help the body’s natural ability to repair, on a cellular level,
      DNA damaged as a result of exposure to stress, pollution and the photochemical
      effects of the sun, which in turn may prevent premature aging of the skin.
      In
      separate clinical studies, AC-11® also has been shown to be an effective
      anti-inflammatory and anti-tumor agent, as well as an immune system enhancer.




The
      Optigenex product line consists of the Activar Skin Renewal System and AC-11®
sold as a bulk ingredient to domestic and international partners in the
      nutraceutical, cosmeceutical, personal care, skin care, and hair care
      industries. In March 2006, the company began selling the Activar Skin Renewal
      System of topical skin care products containing AC-11® as an active ingredient.
      The Activar line currently consists of a day, night and eye repair creams.
      Initially, Optigenex marketed these products directly to consumers through
      a
      celebrity-endorsed television infomercial. The infomercial aired in test markets
      in March 2006. After reviewing the results, the company decided not to expand
      the campaign nationally due to the insufficient levels of revenue generated
      based on the pricing models that had been adopted and the high cost of
      purchasing media time. Beginning in late 2007, Optigenex began repositioning
      the
      skin care line to appeal to higher-end retail, salon, MLM and other market
      customers by introducing the products to select domestic and international
      wholesale distributors experienced with products in these channels at these
      price points.





The
      Company’s ability to increase revenues is highly dependent upon its existing
      customers successful marketing of AC-11® based products and the company making
      further inroads licensing its technology to potential wholesale distribution
      partners. In addition, the company is focused on increasing its revenues and
      cash flows by expanding its marketing footprint through the development of
      new
      products in the personal care and wellness industries.





Research
      and Development





The
      benefits of AC-11 are supported by a 10 year history of research and development
      including pre-clinical and clinical studies and published peer reviewed
      articles, which demonstrate statistically significant reduction in DNA damage
      and measurable enhancement of DNA repair activity. In numerous in-vitro studies
      and clinical trials, AC-11 has demonstrated activity in the following areas.





DNA
      Repair - As the human body ages, its natural ability to repair DNA damage caused
      by both oxidative and non-oxidative stress decreases. This adversely affects
      health and well being. AC-11 has also been shown to protect and decrease damage
      to cellular DNA caused by free radicals as well as increase the human body’s DNA
      repair capacity. AC-11 also reduces non-oxidative damage to cellular DNA due
      to
      exposure to the sun’s harmful rays and damage caused by stress and/or viral or
      bacterial disease states.


2


Anti-Inflammatory
      - Animal and human studies have found that AC-11 inhibits the immune mediator
      NF-kB. Research has shown that the inhibition of NF-kB is a rational strategy
      for the treatment of chronic inflammation. This may create potential uses for
      AC-11 in the treatment of Arthritis, Chrohn’s Disease, Colitis, Irritable Bowel
      Syndrome, Lupus and other auto-immune diseases.





Immune
      System Enhancement - AC-11 has been shown to help increase the number of white
      blood cells, which help the body fight off infection. In addition, many
      chemotherapeutic and immunosuppressant agents reduce white blood cell counts
      predisposing the body to infection. In animal studies, AC-11 has also been
      shown
      to decrease the time for recovery caused by reduced white blood cell counts.
      A
      low white blood cell count is found in such conditions like HIV/AIDS, and is
      also seen following organ transplants and in chemotherapy.





From
      time
      to time, we have provided funding to academic and other institutions for
      pre-clinical and clinical studies to evaluate the efficacy and mechanisms of
      action of AC-11, and we may continue to do so in the future. We may also supply
      AC-11 for use in studies for which we provide no funding. We believe that
      positive results from these studies, whether or not funded by us, would provide
      benefits to us by furthering the acceptance of AC-11. We intend to make
      presentations at various meetings to gain acceptance of AC-11. If we obtain
      successful research outcomes, we plan to publicize these findings to reposition
      our products and increase the demand for AC-11. We believe that successful
      research studies, if obtained, would strengthen our chances of obtaining
      developmental funding from pharmaceutical or other strategic partners for
      further pre-clinical and clinical trials.





Government
      Regulation





In
      the
      United States, the manufacturing, processing, formulation, packaging, labeling,
      advertising and sale of dietary supplements are regulated primarily by the
      Federal Food, Drug and Cosmetic Act, as amended, among others, by the Dietary
      Supplemental Health and Education Act of 1994 ("DSHEA Act") and by various
      federal agencies, including the Food & Drug Agency (the "FDA") and the U.S.
      Federal Trade Commission (the "FTC") and, to a lesser extent, the Consumer
      Product Safety Commission and the United States Department of Agriculture.
      Our
      activities may also be subject to regulation by various governmental agencies
      for the states and localities in which our products are manufactured,
      distributed or sold, and may be regulated by governmental agencies in certain
      countries outside the United States in which our products may be distributed
      and
      sold. Among other matters, regulation by the FDA and FTC is concerned with
      product safety and claims that refer to a product's ability to treat or prevent
      disease or other adverse health conditions.





Under
      the
      DSHEA, the FDA regulates the formulation, manufacture and labeling of dietary
      supplements, including our products. The DSHEA Act (i) defines dietary
      supplements, (ii) permits "structure/function" statements under certain
      conditions and (iii) permits, under certain conditions, the use of published
      literature in connection with the sale of herbal products. As dietary
      supplements, our products do not require approval by the FDA prior to marketing
      but are nevertheless subject to various regulatory requirements concerning
      their
      composition, permissible claims (including substantiation of any claims),
      manufacturing procedures and other elements. DSHEA prohibits marketing dietary
      supplements through claims for, or with intended uses in, the treatment or
      prevention of diseases. There can be no assurance that our supplement products
      can be identified and differentiated from competing products sufficiently enough
      on the basis of permissible claims regarding composition to compete
      successfully.





FDA
      regulations require us and our suppliers to meet relevant regulatory good
      manufacturing practices for the preparation, packaging and storage of these
      products. Good manufacturing practices for dietary supplements have yet to
      be
      promulgated, but are expected to be proposed. The Dietary Supplement Health
      and
      Education Act of 1994 revised the provisions of the Federal Food, Drug and
      Cosmetic Act concerning the composition and labeling of dietary supplements,
      which we believe is generally favorable to the dietary supplement industry.
      The
      Dietary Supplement Health and Education Act created a new statutory class of
      "dietary supplements." This new class includes vitamins, minerals, herbs, amino
      acids and other dietary substances for human use to supplement the diet. In
      general, a dietary supplement is a product (other than tobacco) that is intended
      to supplement the diet that bears or contains one or more of the following
      dietary ingredients: a vitamin, a mineral, a herb or other botanical, an amino
      acid, a dietary substance for use by man to supplement the diet by increasing
      the total daily intake, or a concentrate, metabolite, constituent, extract,
      or
      combinations of these ingredients; is intended for ingestion in pill, capsule,
      tablet, or liquid form; is not represented for use as a conventional food or
      as
      the sole item of a meal or diet; and is labeled as a "dietary supplement."
      However, the DSHEA grandfathered, with certain limitations, dietary ingredients
      that were on the market before October 15, 1994. A dietary supplement containing
      a new dietary ingredient and placed on the market on or after October 15, 1994
      must have a history of use or other evidence establishing a basis for expected
      safety. Manufacturers of dietary supplements having a "structure-function"
      statement must have substantiation that the statement is truthful and not
      misleading.





As
      dietary products, our products are regulated by FDA regulations promulgated
      under the DSHEA. Dietary supplements do not require approval by the FDA prior
      to
      marketing but are nevertheless subject to various regulatory requirements
      concerning their composition, permissible claims (including substantiation
      of
      any claims), manufacturing procedures and other elements. DSHEA prohibits
      marketing dietary supplements through claims for, or with intended uses in,
      the
      treatment or prevention of diseases.


3





In
      general, a dietary supplement:





·
            is
                a product (other than tobacco) that is intended to supplement the
                diet
                that bears or contains one or more of the following dietary ingredients:
                a
                vitamin, a mineral, a herb or other botanical, an amino acid, a dietary
                substance for use by man to supplement the diet by increasing the
                total
                daily intake, or a concentrate, metabolite, constituent, extract,
                or
                combinations of these ingredients;





·
            is
                intended for ingestion in pill, capsule, tablet, or liquid form;





·
            is
                not represented for use as a conventional food or as the sole item
                of a
                meal or diet; and





·
            is
                labeled as a "dietary supplement."





Dietary
      supplements must follow labeling guidelines outlined by the FDA. Neither dietary
      supplements nor personal care products require FDA or other government approval
      or notification to market in the United States.





Under
      the
      DSHEA, companies that manufacture and distribute dietary supplements are limited
      in the statements that they are permitted to make about nutritional support
      on
      the product label without FDA approval. In addition, a manufacturer of a dietary
      supplement must have substantiation for any such statement made and must not
      claim to diagnose, mitigate, treat, cure or prevent a specific disease or class
      of disease.





The
      product label must also contain a prominent disclaimer. These restrictions
      may
      restrict our flexibility in marketing our product. Although product labels
      must
      be submitted to the FDA, they are not subject to that agency's prior approval.
      We believe that we have made all necessary filings with the FDA.





We
      believe that all of our existing and proposed products do not require
      governmental approvals to be marketed in the United States. However, the FDA
      could conclude that our products are drugs and either require us to conduct
      clinical trials to establish efficacy and safety or cease to market these
      products. If this were to occur, our business, financial condition and results
      of operations may be negatively impacted.





Compliance
      with applicable FDA and any state or local statutes is critical. Although we
      believe that we are in compliance with applicable statutes, there can be no
      assurance that, should the FDA amend its guidelines or impose more stringent
      interpretations of current laws or regulations that we would be able to comply
      with these new guidelines. We are unable to predict the nature of such future
      laws, regulations, interpretations or applications, nor can we predict what
      effect additional governmental regulations or administrative orders, when and
      if
      promulgated, would have on our business in the future. These regulations could,
      however, require the reformation of certain products to meet new standards,
      market withdrawal or discontinuation of certain products not able to be
      reformulated, imposition of additional record keeping requirements, expanded
      documentation regarding the properties of certain products, expanded or
      different labeling and/or additional scientific substantiation.





Federal
      agencies have a variety of available remedies, including initiating
      investigations, issuing warning letters and cease and desist orders, requiring
      corrective labels or advertising, requiring consumer redress (for example,
      requiring that a company offer to repurchase products previously sold to
      consumers), seeking injunctive relief or product seizure and imposing civil
      penalties or commencing criminal prosecution. In addition, certain state
      agencies have similar authority, as well as the authority to prohibit or
      restrict the manufacture or sale of products within their jurisdiction. There
      can be no assurance that the regulatory environment in which we operate and
      intend to operate will not change or that such regulatory environment, or any
      specific action taken against us, will not result in a material adverse effect
      on our business, financial condition or results of operations. In addition,
      we
      may incur significant costs in complying with government regulations, defending
      claims of non-compliance or both. Moreover, there can be no assurance that
      new
      legislation or regulation, including changes to existing laws or regulations,
      will not materially adversely affect our business, financial condition and
      results of operations.


4


**Intellectual
      Property**





**Patents**





Our
      core
      intellectual property lies in four U.S. patents   issued for the
      extraction, testing and manufacturing processes of AC-11. These patents are
      as
      follows:





US6039949:
      method of preparation and composition of a water soluble extract of the plant
      species Uncaria;





US6238675:
      method of preparation and composition of a water soluble extract of the plant
      species Uncaria for enhancing immune, anti-inflammatory and anti-tumor processes
      of warm blooded animals; and





US6361805:
      method of preparation and composition of a water soluble extract of the plant
      species Uncaria for enhancing immune, anti-inflammatory, anti-tumor and DNA
      repair processes of warm blooded animals.





US6964784:
      method of preparation and composition of a water soluble extract of the
      bioactive component of the plant species Uncaria for enhancing immune,
      anti-inflammatory, anti-tumor and DNA repair processes of warm blooded animals.
      This patent is directed to administering the isolated purified active ingredient
      of the composition claimed in the 6238675 patent as a quinic acid alkyl ester.





There
      are
      corresponding international patent filings for the above four patents. These
      patents expire between 2016 and 2022.





**Trademarks**





We
      own
      the following seven registered trademarks:





· "Time
      Machine"





· "Age
      Manager"





· "AC-11"





· "Age
      Manager Professional"





· "Optigene-X"





· "Optigene"





· “CMed-100”





In
      addition, we have a trademark application pending for the name "Activar" and
      “Optigenexx”





**Royalty
      Agreements**





In
      connection with the November 2003 acquisition of assets from CampaMed LLC,
      we
      entered into a separate agreement with Pierre Apraxine, Christian Flood, Peter
      Koepke and the Estate of John B. Elliott that obligates us to pay royalties
      in
      connection with the sale or licensing of any product that contains any compound,
      substance or ingredient derived or isolated from the Uncaria tomentosa vine
      such
      as our proprietary product AC-11, or its predecessor C-MED-100 (collectively
      referred to herein as "AC-11".) The maximum amount payable under this agreement
      is $347,700. The royalties are based on sales, as defined in the agreement,
      of
      any product that we sell or license. The royalty payments are calculated as
      follows: (i) 6% of gross sales for any product that we sell that contain AC-11
      as an ingredient which includes our nutritional supplement products and (ii)
      10%
      of gross sales of bulk AC-11.





Also
      in
      connection with the November 2003 acquisition of assets from CampaMed LLC,
      we
      agreed to pay CampaMed additional payments based on 6% of the gross sales of
      any
      product containing AC-11, and 10% of the gross sales of any bulk AC-11, until
      additional payments in an aggregate amount of $500,000 have been
      made.





5


**Competition**





We
      compete with companies engaged in the bulk ingredient, and personal care
      markets. Most of our competitors if not all, have significantly greater
      financial and human resources and have a longer operating history. In
      considering our competitive position, we distinguish between our bulk ingredient
      business, and skin care business.





The
      bulk
      ingredient business is dominated by well established market leaders including
      AHD International, Schouten and Applied Food Science who market and sell a
      multitude of ingredients, both proprietary and non-proprietary, through a number
      of diverse channels. Our bulk ingredient business consists of our proprietary
      product AC-11 and as such, we are dependent upon one product for all our sales.
      In addition, we utilize a few distributors who market our ingredient to
      nutracuetical and skin care manufacturers and marketers along with direct to
      consumer retail marketing companies who use our ingredient in private branded
      nutraceutical and skin care finished products.





In
      our
      skin care business, we expect to compete with offerings from large consumer
      product companies including; Unilever and Procter & Gamble, as well as large
      cosmetic companies such as Avon Products and Estee Lauder. Many of these
      products are marketed and advertised as having benefits similar to our skin
      care
      products. We will also compete with numerous companies that market skin care
      products via television infomercials. In addition we will compete with a number
      of companies that currently sell skin care products that contain Uncaria
      tomentosa as an ingredient. These companies include Joie de Vie, Murad and
      Optimal Outcome.





The
      Company’s ability to increase revenues is highly dependent upon its existing
      customers successful marketing of AC-11® based products and the company making
      further inroads licensing its technology to potential channel partners. In
      addition, the company is focused on increasing its revenues and cash flows
      by
      expanding its marketing footprint through the development of new products in
      the
      personal care and wellness industries.





**Employees**





As
      of
      March 31, 2008, we had 1 full-time employee who serves as our Chief Executive
      Officer and Chief Financial Officer.





**Item
      2.****Description
      of Property**





Our
      executive offices are located at 1170 Valley Brook Avenue, 2 nd Floor,
      Suite B, Lyndhurst, New Jersey. We currently sublease approximately 2,000 square
      feet of space on a month to month basis at a monthly rent of $5,325. Our
      sublease expires on July 31, 2008.





**Item
      3.**  **Legal
      Proceedings**





We
      are
      not currently involved in any legal proceedings.





We
      received a letter on April 10, 2008, listing a series of complaints on behalf
      of
      a former employee as follows:





1.
            The
                Company’s abandonment of patent application number 10/438,247 which names
                the former employee as inventor.





2.
            The
                assertion that the Company is in breach of an exclusive license agreement
                with the former employee and theCompany
                owes certain royalties for products sold by claims made under US
                patent
                no. 5,895,652 and that the Company wasobligated
                to pay maintenance fees on same.





We
      believe that the claims are without merit and responded on May 6, 2008. We
      maintain that the former employee filed the 10/438,247 patent application while
      under an employment contract with us. We believe that the former employee
      violated his employment agreement by filing the 10/438,247 patent in his name
      without filing the proper assignment to Optigenex.





We
      believe that the former employee is in breach of the aforementioned license
      agreement for a series of violations including but not limited to;





a)
            Failure
                to communicate with us on outstanding office
                actions.


b)
            The
                unauthorized marketing and sale of products by the former employee
                through
                his company Suracell.


c)
            The
                unauthorized sale and marketing of products containing AC-11® thus
                infringing on our patents and trademarks through
                Suracell.





Furthermore,
      we have not sold any products that might be covered by any claims of US patent
      no. 5,895,652.




6





**Item
      4.****Submission
      of Matters to a Vote of Security Holders**





No
      matters were submitted to a vote of security holders during the fourth quarter
      of the fiscal year ended December 31, 2007.


7


**PART
      II**





**Item
      5.****Market
      for Common Equity and Related Stockholder Matters**





Our
      common stock has been quoted on the OTC Bulletin Board under the symbol
      "OPGX.OB" since April 15, 2005.





The
      following table shows the reported high and low closing bid quotations per
      share
      for our common stock based on information provided by the OTC Bulletin Board.
      Such over-the-counter market quotations reflect inter-dealer prices, without
      markup, markdown or commissions and may not necessarily represent actual
      transactions or a liquid trading market .





High
            
            LowFirst
                Quarter ended March 31, 2006
            
            $
            0.80
            
            $
            0.13Second
                Quarter ended June 30, 2006
            
            $
            0.25
            
            $
            0.07Third
                Quarter ended September 30, 2006
            
            $
            0.10
            
            $
            0.07Fourth
                Quarter ended December 31, 2006
            
            $
            0.10
            
            $
            0.011First
                Quarter ended March 31, 2007
            
            $
            0.15
            
            $
            0.011Second
                Quarter ended June 30, 2007
            
            $
            0.06
            
            $
            0.015Third
                Quarter ended September 30, 2007
            
            $
            0.055
            
            $
            0.0022Fourth
                Quarter ended December 31, 2007
            
            $
            0.0062
            
            $
            0.0012




**Holders**





As
      of
      March 31, 2008, we had approximately 166 holders of record of our common stock.
      Certain of our shares were held in street name and as such, we believe that
      the
      actual number of beneficial owners is higher.




**Dividends**





We
      have
      never declared or paid any cash dividends on our common stock. For the
      foreseeable future, we intend to retain any earnings to finance the development
      and expansion of our business, and we do not anticipate paying any cash
      dividends on our common stock. Any future determination to pay dividends will
      be
      at the discretion of our board of directors and will be dependent upon then
      existing conditions, including our financial condition and results of
      operations, capital requirements, contractual restrictions, business prospects,
      and other factors that our board of directors considers relevant.




**Recent
      Sales of Unregistered Securities**





In
      the
      fourth quarter of the year ended December 31, 2007 we did not issue any
      restricted securities.


8




**Item
      6.****Management's
      Discussion and Analysis or Plan of Operation**





The
      following discussion should be read in conjunction with our consolidated
      financial statements including the notes thereto contained in this report.
      In
      addition to historical information, the following discussion and other parts
      of
      this annual report contain forward-looking information that involves risks
      and
      uncertainties.





**Cautionary
      Note Regarding Forward Looking Statements**





Certain
      statements in this Annual Report on Form 10-KSB constitute forward-looking
      statements for purposes of the securities laws. Forward-looking statements
      include all statements that do not relate solely to the historical or current
      facts, and can be identified by the use of forward looking words such as "may",
      "believe", "will", "expect", "expected", "project", "anticipate", "anticipated",
      "estimates", "plans", "strategy", "target", "prospects" or "continue". These
      forward looking statements are based on the current plans and expectations
      of
      our management and are subject to a number of uncertainties and risks that
      could
      significantly affect our current plans and expectations, as well as future
      results of operations and financial condition and may cause our actual results,
      performances or achievements to be materially different from any future results,
      performances or achievements expressed or implied by such forward-looking
      statements. Such risks and uncertainties include those in this report on Form
      10-KSB. In making these forward-looking statements, we claim the protection
      of
      the safe-harbor for forward-looking statements contained in the Private
      Securities Reform Act of 1995. Although we believe that the expectations
      reflected in such forward-looking statements are reasonable, there can be no
      assurance that such expectations will prove to have been correct. We do not
      assume any obligation to update these forward-looking statements to reflect
      actual results, changes in assumptions, or changes in other factors affecting
      such forward-looking statements.





**Overview**





We
      supply
      bulk material and
      finished products  featuring our
      patented and wholly natural compound AC-11® (“AC-11”) as a core ingredient to
      wholesale distributors, skin care and nutrace u tical marketing companies. These companies create their own private labeled products
      utilizing our compound and technology for the retail market .
      In
      addition, we license our technology and trademark to third party marketers
      and
      manufacturers of skin care and nutraceutical
      products .





The
      decision to purchase our patented ingredient and license our technology is
      driven in large part by the scientific and clinical evidence validating the
      safety and efficacy of AC-11. In third party studies AC-11 has been shown to
      repair damage to DNA due to multiple factors including; over exposure to the
      sun, environmental pollution, stress and other toxins. In addition, AC-11 has
      demonstrated effectiveness as an inhibitor of pro-inflammatory agents and as
      an
      immune system enhancer.





AC-11
      is
      a bioactive form of the medicinal herb known as *Uncaria
      tomentosa* which is
      indigenous to the Amazon rainforest and other tropical areas of South and
      Central America. AC-11 is manufactured using
      our
      specialized equipment and patented process by the
      Centroflora Group of Sao Paulo, Brazil, to deliver a
      unique alkaloid
      free, water soluble extract, standardized to an 8% carboxyl alkyl ester
      concentration. This facility complies with worldwide, voluntary standards for
      quality management and Good
      Manufacturing Practices .





In
      October of 2007 we discontinued our direct to consumer sales of Activar AC-11
      oral nutritional supplements through our Internet website www.AC-11.com .
      The
      decision to cease sales through this channel was influenced by the exclusive
      rights we granted to Solgar Herb and Vitamin to market AC-11 supplements to
      the
      retail market. We have no plans to re-introduce the Activar AC-11 oral
      supplement through our Internet site in the near future.





We
      sell
      AC-11 as a bulk ingredient to companies in the nutraceutical , cosmeceutical ,
      skin
      care and hair care industries. Although we have executed  bulk
      ingredient supply and
      trademark license agreements with customers such as Itochu Corporation (Tokyo, Japan), Solgar Herb and Vitamin
      Company and Life
      Extension, we continue to be highly dependent on a small base of customers
      that
      purchase bulk AC-11 as an ingredient and as such, these customers make purchases
      from us only when required to do so in connection with their manufacturing
      cycle
      and market demand. We rely on independent commissioned sales people, consultants
      and management to introduce us to prospective marketing partners and
      customers.





We
      have
      developed a
      line of
      proprietary topical skin care products which contain AC-11 as an active
      ingredient. C onsist ing of a day
      cream, night cream and eye cream the
      products are
      designed to repair damage to the skin due
      to multiple
      causes including; exposure to ultraviolet rays, stress and pollution while
      enhancing skin elasticity, and reducing wrinkles and other visible signs of
      aging. Our products
      are marketed to
      appeal to a targeted demographic audience which includes women ages 30 and
      over. These skin
      care
      products are manufactured for us by Celmark, a division of Garden State Nutritional .


9





We are
      currently in discussions with wholesale marketing companies who may distribute
      our manufactured skin care products to the retail consumer. Also, through our
      partner Itochu Corporation Tokyo and on a direct basis, we are exploring
      strategies to license our technology and trademark (AC-11®) for use in a variety
      of skin care products containing our patented ingredient. We plan
      to
      seek other wholesale channels of distribution for bulk AC-11 ,
      manufactured skin care skin
      care products and our
      technology  to distribution
      networks both domestically and in international markets.





**Critical
      Accounting Policies and Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires us to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting periods. On an on-going basis, we evaluate our estimates, including
      those related to collection of accounts receivable, inventory obsolescence,
      sales returns and non-monetary transactions such as stock based compensation,
      impairment of intangible assets and derivative liabilities related to
      convertible notes payable. We base our estimates on historical experience and
      on
      other assumptions that are believed to be reasonable under the circumstances.
      As
      the number of variables and assumptions affecting the probable future resolution
      of the uncertainties increase, these judgments become even more subjective
      and
      complex. Actual results may differ from these estimates.





We
      have
      identified the following critical accounting policies, described below, that
      are
      the most important to the portrayal of our current financial condition and
      results of operations.





**Accounts
      Receivable and Bad Debt Expense**





Accounts
      receivable are reported at their outstanding unpaid principal balances net
      of an
      allowance for doubtful accounts. We estimate bad debt expense based upon past
      experience related to specific customers' ability to pay and current economic
      conditions. At December 31, 2007, our allowance for doubtful accounts was
      approximately $27,000.





**Inventory**





Our
      inventories are stated at the lower of cost, determined by the average cost
      method, or market. Our inventories consist of raw materials that we purchase
      from a sole supplier in Brazil and our proprietary compound known as AC-11
      which
      is manufactured in Brazil. We periodically review our inventories for evidence
      of spoilage and/or obsolescence and we remove these items from inventory at
      their carrying value. During 2007, we incurred inventory write-offs of
      approximately $174,000 as follows: (i) $162,000 of obsolete inventory which
      consisted of finished skin care products; (ii) $12,000 of bulk AC-11 which
      was
      damaged. An inventory valuation allowance is established when we determine
      that
      quantities of inventory items on hand may exceed projected demand prior to
      the
      expiration date of such inventory items. At December 31, 2007, we recorded
      an
      inventory allowance of approximately $161,000 related to the book value of
      finished goods that we determined may not be sold prior to their respective
      expiration dates. At December 31, 2007, our inventory valuation allowance is
      $1,233,000.




**Revenue
      Recognition**





Revenue
      is recognized when persuasive evidence of an arrangement exists, the product
      has
      been delivered, the rights and risks of ownership have passed to the customer,
      the price is fixed and determinable, and collection of the resulting receivable
      is reasonably assured. For arrangements that include customer acceptance
      provisions, revenue is not recognized until the terms of acceptance are met.





For
      our
      nutritional supplements, we provide a 100% money back guarantee on all unopened
      and undamaged products that are returned to us within 60 days of purchase.
      We
      estimate an allowance for product returns at the time of shipment based on
      historical experience. In 2007, product returns were negligible. We monitor
      our
      estimates on an ongoing basis and we may revise our allowance for product
      returns to reflect recent experience. To date, we have not made any significant
      changes in our allowance for returns. Products returned as a result of damage
      incurred during shipment are replaced at our cost. We do not estimate an
      allowance for returns due to damage as historically the level of returns has
      been negligible. For our bulk sales of AC-11, our standard return policy
      provides for a reimbursement of the full purchase price for any bulk AC-11
      that
      does not conform with the stated specifications. We must receive notification
      of
      a return request within 30 days from the date that the customer accepts
      delivery


10





**Intangibles**





We
      account for long-lived assets and certain identified intangible assets such
      as
      patents and trademarks in accordance with Statement of Financial Accounting
      Standard No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").
      Management reviews these long-lived assets for impairment whenever events or
      changes in circumstances indicate that the carrying amount of an asset may
      not
      be recoverable. An asset is considered to be impaired when the sum of the
      undiscounted future net cash flows expected to result from the use of the asset
      and its eventual disposition is less than its carrying amount. The amount of
      impairment loss, if any, is measured as the difference between the net book
      value of the asset and its estimated fair value. We monitor our projections
      of
      expected future net cash flows on an ongoing basis. If we determine that our
      projections require revision due to specific events such as a delayed product
      launch or a change in our product mix, or changes in economic conditions, we
      may
      incur additional write-offs. We did not incur an impairment charge in 2007.
      We
      recorded an impairment charge of approximately $935,000 in 2006.





**Derivative
      Instrument Liabilities related to Convertible Notes and Warrants**





In
      connection with the sale of convertible notes and warrants on August 31, 2005,
      October 17, 2005, February 17, 2006, September 15, 2006 and February 14, 2007,
      we determined that in accordance with EITF No. 00-19, "Accounting for Derivative
      Financial Instruments Indexed To, and Potentially Settled in, a Company's Own
      Stock," and SFAS 133, "Accounting for Derivative Instruments and Hedging
      Activities," that the conversion feature of the convertible notes represents
      an
      embedded derivative. As such, we are required to estimate the fair value of
      the
      embedded derivative and the warrants at of the end of each reporting period
      and
      these values are recorded as liabilities. We estimate fair value using the
      Black-Scholes option pricing model. This model requires us to make estimates
      such as the expected holding period, the expected future volatility of our
      common stock and the risk-free rate of return over the holding period. These
      estimates directly affect the reported amounts of the derivative instrument
      liabilities.





**Employee
      Stock Options and Stock Based Compensation**





Effective
      January 1, 2006, we adopted the provisions of Statement of Financial
      Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, (“SFAS
      123(R)”), which requires the measurement and recognition of compensation expense
      for all share-based payment awards to employees and directors based on estimated
      fair values. We adopted SFAS 123(R) using the modified prospective transition
      method. Under this transition method, share-based compensation expense
      recognized during 2006 included: (a) compensation expense for all
      share-based awards granted prior to, but not yet vested, as of January 1, 2006,
      based on the grant date fair value estimated in accordance with the original
      provisions of SFAS 123, and (b) compensation expense for all share-based
      awards granted on or after January 1, 2006, based on the grant date fair value
      estimated in accordance with the provisions of SFAS 123(R). In accordance with
      the modified prospective transition method, our consolidated financial
      statements for prior periods have not been restated to reflect the impact of
      SFAS 123(R).





Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      accompanying financial statements.





**RESULTS
      OF OPERATIONS**





**For
      the year ended December 31, 2007 compared to the year ended December 31,
      2006.**





**Net
      Sales**





Our
      net
      sales are derived primarily from the sale of AC-11 as a bulk ingredient to
      other
      companies in the nutritional supplement and cosmeceutical industries who utilize
      it in their own proprietary products. During 2006 and 2007, we also sold our
      line of proprietary skin care products which contain AC-11 as a core ingredient
      to domestic and international distributors. Currently we do not sell our skin
      care products direct to consumers. In October 2007, we discontinued our direct
      to consumer sales of our Activar AC-11 oral nutritional supplements through
      our
      Internet website. The decision to cease sales through this channel was
      influenced by the exclusive rights we granted to Solgar Herb and Vitamin to
      market their own proprietary AC-11 supplements to the retail market. We have
      no
      plans to re-introduce the Activar AC-11 oral supplement through our Internet
      site in the near future.


11





Net
      sales
      for the year ended December 31, 2007 were $465,970 compared to net sales of
      approximately $300,924 for the year ended December 31, 2006, an increase of
      $165,046 or 54.8%. Our net sales by product category are summarized in the
      following table:





$
            
            %2007
            
            2006
            
            Inc/(Dec)
            
            Inc/(Dec)Activar
                AC-11
            
            $
            21,790
            
            $
            44,829
            
            
            (23,039
            )
            
            (51.4
            )%Bulk
                AC-11
            
            
            381,843
            
            
            163,100
            
            
            218,743
            
            
            134.1
            %Skin
                Care Products
            
            
            20,498
            
            
            61,947
            
            
            (41,449
            )
            
            (66.9
            )%License
                Fee
            
            
            39,960
            
            
            —
            
            
            39,960
            
            
            NAOther
            
            
            1,879
            
            
            31,048
            
            
            (29,169
            )
            
            (93.9
            )%Total
                Revenue
            
            $
            465,970
            
            $
            300,924
            
            $
            165,046
            
            
            54.8
            %





For
      the
      year ended December 31, 2007, sales of our nutritional supplement product
      Activar AC-11 decreased $23,039 or 51.4% compared to the year ended December
      31,
      2006. This decrease was due to lower unit volume and not the result of a price
      decrease or discounting.




For
      the
      year ended December 31, 2007, sales of bulk AC-11 increased $218,743 or 134.1%
      compared to the year ended December 31, 2006. This increase was due primarily
      to
      sales made to new customers in 2007.





For
      the
      year ended December 31, 2007, sales of our skin care products decreased $41,449
      or 66.9% compared to the year ended December 31, 2006. In 2006, we sold our
      skin
      care products via a TV infomercial which we discontinued during the third
      quarter of 2006.





In
      July
      2007, we sold a two-year exclusive trademark license in exchange for an upfront
      fee of $159,840. We recorded the upfront license fee as deferred income and
      we
      will amortize it to revenue in equal monthly amounts of $6,660 over the two-year
      period of the license. During year ended December 31, 2007, the Company recorded
      license fee revenue of $39,960. The balance of deferred income at December
      31,
      2007 was $119,880.




Other
      sales consist primarily of sales that we made to our joint venture companies
      PMO
      Products and Prometheon Labs in 2006. Also included in other sales are royalties
      that we earned from products sold by third parties that utilize our trademark
      AC-11®. We did not make sales to these joint venture companies in 2007 as we
      sold our joint venture interests in 2006 .





**Cost
      of Sales**





Cost
      of
      sales includes direct and indirect costs associated with manufacturing AC-11
      and
      our line of nutritional supplement and skin care products that contain AC-11
      as
      an ingredient. Cost of sales was $568,936 and $1,515,688 for the years ended
      December 31, 2007 and 2006, respectively. Included in cost of sales are
      write-offs of obsolete inventory of approximately $174,000 and $280,000 in
      2007
      and 2006 respectively. Also included in cost of sales are inventory allowances
      of $160,000 and $1,073,000 in 2007 and 2006, respectively, related to certain
      inventory items which we determined may not be sold prior to the items
      expiration date. As a result of the inventory write-offs and valuation
      allowance, we incurred a gross loss of $102,966 in 2007 compared to a gross
      loss
      of $1,214,764 in 2006. Excluding the effect of the inventory write-offs and
      valuation allowance, our gross profit would have been $231,034 or 49.6% in
      2007
      compared to $138,236 or 45.9%.





**Selling,
      General and Administrative Expenses**





Selling,
      general and administrative (SG&A) expenses include salaries, employee
      benefits, marketing and advertising costs, professional fees related to
      scientific research, legal and accounting fees, rent and other office related
      expenses. Also included in SG&A are various non-cash expenses such as
      depreciation, amortization of intangible assets including patents and other
      intellectual property, and stock-based compensation.




12





The
      table
      below highlights the major components of our SG&A expenses:





Years
                ended
              December
                31,
            
            $
            
            %2007
            
            2006
            
            Inc/(Dec)
            
            Inc/(Dec)Employee
                compensation and benefits
            
            $
            224,931
            
            $
            559,235
            
            $
            (334,304
            )
            
            (59.8
            )%Marketing,
                advertising and promotion
            
            
            197,114
            
            
            507,326
            
            
            (310,212
            )
            
            (61.2
            )%Research
                and development
            
            
            8,715
            
            
            98,675
            
            
            (89,960
            )
            
            (91.2
            )%Consulting
                and other professional services
            
            
            44,751
            
            
            147,628
            
            
            (102,877
            )
            
            (69.7
            )%Legal
                and accounting
            
            
            309,779
            
            
            553,000
            
            
            (243,221
            )
            
            (44.0
            )%General
                and administrative
            
            
            155,292
            
            
            225,078
            
            
            (69,786
            )
            
            (31.0
            )%Occupancy
            
            
            99,776
            
            
            153,680
            
            
            (53,904
            )
            
            (35.1
            )%Stock
                based compensation
            
            
            —
            
            
            213,175
            
            
            (213,175
            )
            
            (100.0
            )%Depreciation
                and amortization
            
            
            247,511
            
            
            294,731
            
            
            (47,220
            )
            
            (16.0)
            %Total
                SG&A
            
            $
            1,287,869
            
            $
            2,752,528
            
            $
            (1,464,659
            )
            
            (53.2)
            %





In
      total,
      SG&A expenses decreased $1,464,659 or 53.2% from $2,752,528 for the year
      ended December 31, 2007 to $1,287,869 for the comparable period in 2006. Areas
      where we achieved significant cost savings are as follows:





·
            Employee
                compensation expense decreased $334,304 or 59.8% in 2007 compared
                to 2006.
                This decrease is due to a reduction in the number of full-time
                employees.




·
            Marketing,
                advertising and promotion expenses decreased $310,212 or 61.2% in
                2007
                compared to 2006. During 2006, we incurred one time costs related
                to the
                production of our TV infomercial and the purchase of media
                time.





·
            Research
                and development expenses decreased $89,960 or 91.2% in 2007 compared
                to
                2006. This decrease was due to higher product development costs and
                higher
                costs related to services provided by scientific advisors in 2006
                compared
                to 2007.





·
            Consulting
                and other professional services decreased $102,877 or 69.7% in 2007
                compared to 2006. A majority of this decrease is due to the fact
                that in
                2006, we engaged the services of consultants in the areas of strategic
                planning, mergers and acquisitions, investor relations and business
                development. We terminated many of these relationships during
                2007.





·
            Legal
                and accounting expenses decreased $243,221 or 44.0% in 2007 compared
                to
                2006. In 2006 we incurred one time costs related to (i) an accounting
                system conversion and (ii) the filing of a Form SB-2 registration
                statement with the SEC. We also incurred higher legal costs in 2006
                related to the maintenance of our patent
                portfolio.




·
            We
                incurred stock based compensation expense of $213,175 in 2006 related
                to
                stock options and equity awards issued to employees and consultants
                pursuant to FASB 123R. We did not incur stock based compensation
                during
                2007.****





**Interest
      Expense**





Interest
      expense for the year ended December 31, 2007 was $2,798,935 compared to
      $9,968,557 in the comparable period in 2006. Of the total in 2007, $2,434,864
      was non-cash interest expense resulting from the accounting treatment of our
      convertible notes. The remaining $364,071 was interest due under the convertible
      notes. As of December 31, 2007, we had not paid $584,062 of interest due under
      our convertible notes. This amount was subsequently paid to the note holders
      on
      January 31, 2008 through the issuance of callable secured convertible
      notes.





**Impairment
      of Intangible Assets**





In
      connection with an evaluation of the projected demand for the Company’s
      products, management determined that certain patents related to these products
      were not impaired at December 31, 2007. These patents cover the extraction,
      manufacturing and testing processes for the Company’s proprietary compound
      AC-11. Management’s determination that there was no impairment was based on an
      analysis of the expected future net cash flows generated from the sale of
      finished goods in inventory as of December 31, 2007. These finished goods
      consisted of finished bulk AC-11 that the Company sells as an ingredient to
      its
      customer base. Management determined that the projected future net cash flows
      generated from product sales was greater than the carrying value of the
      underlying patents at December 31, 2007. A key assumption contained in
      management’s analysis was the length of the projection period which was limited
      to two years due to the fact that the bulk AC-11 currently in inventory will
      reach its stated expiration date over this two year period. In addition,
      management assumed that it would not manufacture and sell additional bulk AC-11
      during the projection period. The sum of the expected future net cash flows
      generated over the two year period was $1,169,794 which was approximately equal
      to the net book value of the underlying patents at December 31, 2007, of
      $1,175,309.


13




At
      December 31, 2006, the Company performed a similar evaluation of the expected
      future net cash flows generated from the sale of finished goods in inventory
      as
      of December 31, 2006. These finished goods consisted of the Company’s
      nutritional supplement product, skin care products and finished bulk AC-11.
      Management determined that the projected future net cash flows generated from
      product sales was less than the carrying value of the underlying patents at
      December 31, 2006. A key assumption contained in management’s analysis was the
      length of the projection period, which was limited to three years due to the
      fact that certain products held in inventory at December 31, 2006, would reach
      their stated expiration date over the three year projection period. In addition,
      management assumed that it would not manufacture and sell additional quantities
      of products during the projection period. The sum of the expected future net
      cash flows generated from sales over the three year period was $1,302,826,
      which
      was less than the net book value of the underlying patents at December 31,
      2006
      of $2,238,274. Accordingly, the Company recorded an impairment charge of
      $935,448 at December 31, 2006.





**Net
      Change in Value of Common Stock Warrants and Embedded Derivative
      Liability**





We
      are
      required to measure the fair value of the warrants and the embedded conversion
      feature related to our convertible notes on the date of each reporting period.
      The effect of this re-measurement is to adjust the carrying value of the
      liabilities related to the warrants and the embedded conversion feature.
      Accordingly, during the year ended December 31, 2007, we recorded non-cash
      other
      income of $1,292,010 related to the decrease in the fair value of the warrants
      and embedded derivative liability.





**Net
      Loss**





Net
      loss
      for the year ended December 31, 2007 was $2,897,760 or $0.17 per share, compared
      to a net loss of $7,357,459 or $0.68 for the year ended December 31,
      2006.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Based
      upon our recurring losses from operations, a stockholders’ deficit of
      $25,822,860 as of December 31, 2007, our current rate of cash consumption and
      the uncertainty of liquidity related initiatives described below, there is
      substantial doubt as to our ability to continue as a going concern. Future
      losses are likely to continue unless we successfully implement our business
      plan. At December 31, 2007, we had cash of approximately $6,758 and a net
      working capital deficit of $4,516,543. We have callable secured convertible
      notes in the principal amounts of $1,064,768 and $1,350,000 that are due and
      payable on August 31, 2008 and October 19, 2008, respectively.





On
      January 31, 2008, we entered into three (3) callable secured convertible notes
      with our existing note holders for the purpose of capitalizing interest owed
      under all previously executed notes dated August 31, 2005, October 19, 2005,
      February 14, 2006, September 15, 2006 and February 12, 2007. The aggregate
      principal amount of the three notes is $584,062 which was equal to the aggregate
      amount of interest owed to the note holders as of December 31, 2007. We did
      not
      receive any funds in connection with entering into these notes. The notes carry
      an interest rate of 2% and a maturity date of January 31, 2011 and are
      convertible into shares of our common stock at 60% (the “Applicable Percentage”)
      multiplied by the average of the three lowest intra-day trading prices for
      our
      common stock as quoted on the Over-the-Counter Bulletin Board for the 20 trading
      days preceding the conversion date. The full principal amount of the notes
      is
      due upon the occurrence of an event of default. Interest on the notes is paid
      quarterly in arrears.





On
      April
      15, 2008, we entered into a Securities Purchase Agreement with our four existing
      note holders for the sale of $155,000 in callable secured convertible notes
      and
      warrants to purchase 10,000,000 shares of our common stock. The notes bear
      interest at 8% and mature on April 15, 2011. We are not required to make any
      principal payments during the term of the notes. The notes are convertible
      into
      shares of our common stock at the note holders' option, at the lower of (i)
      $0.10 per share or (ii) 45% (the “Applicable Percentage”) multiplied by the
      average of the three lowest intra-day trading prices for our common stock as
      quoted on the Over-the-Counter Bulletin Board for the 20 trading days preceding
      the conversion date. The full principal amount of the notes is due upon the
      occurrence of an event of default. Interest on the notes is paid quarterly
      in
      arrears.





The
      warrants are exercisable for a period of seven years from the date of issuance
      and have an exercise price of $0.001 per share. In addition, the conversion
      price of the notes and the exercise price of the warrants will be adjusted
      in
      the event that we issue common stock at a price below the fixed conversion
      price
      of $0.001, with the exception of any shares of common stock issued in connection
      with the notes. We have the right to prepay the entire outstanding balance
      of
      the notes under certain circumstances at premiums ranging from 35% to 50%.
      We
      also have the right to prepay a portion of the notes each month in an amount
      equal to 104% of the then outstanding principal balance divided by 36, plus
      one
      month’s interest.


14


In
      connection with entering into the notes on April 15, 2008, we also amended
      all
      previously executed notes with our existing note holders to reduce the
      Applicable Percentage under such notes from 60% to 45%. The aforementioned
      notes
      were entered into on August 31, 2005, October 19, 2005, February 14, 2006,
      September 15, 2006, February 12, 2007 and January 31, 2008.





As
      a
      result of this sale of additional notes, at April 30, 2008, we have an aggregate
      of $5,254,526 of callable secured convertible notes outstanding, which may
      hinder our ability to raise additional debt or equity capital. In addition,
      we
      have granted a security interest in substantially all of our assets to the
      holders of the notes. If we were required to repay all or a portion of the
      outstanding balance of the notes in cash due to the occurrence of an event
      of
      default, we would be required to raise additional funds in the event that we
      do
      not have sufficient cash available. There can be no assurance that any
      additional financing will be available when needed, on commercially reasonable
      terms or at all. If we were to seek asset based financing, we would need the
      approval of the existing note holders which we may not receive. Any additional
      equity financing may involve substantial dilution to our then existing
      shareholders. Consequently, if we were unable to repay the notes, the note
      holders could commence legal action against us and foreclose on all of our
      assets to recover the amounts due. Any such action would require us to curtail
      or cease operations.





We
      plan
      to seek other channels of wholesale distribution for our nutritional supplement
      product, bulk AC-11 and proprietary skin care products such as multi-level
      marketing organizations and other distribution networks both domestically and
      in
      certain international markets. Future sales generated from our products will
      depend on numerous factors including the degree to which consumers' perceive
      that these products offer superior benefits compared to other more established
      brands. If consumers do not believe that our products offer benefits
      commensurate with the purchase price, our sales may suffer.





We
      maintain high levels of inventory relative to our historical product sales.
      We intend to aggressively market our existing inventory of bulk AC-11 in order
      to convert this inventory into cash. The shelf life of our bulk AC-11 is
      approximately three years from the date of processing. In October 2006, we
      began
      testing certain lots of our existing inventory of bulk AC-11 using established
      and accepted protocols to determine the stability of the active ingredient
      and
      its microbiology profile. We contracted with an independent laboratory to
      perform these tests. Based on the results of this testing, we extended the
      shelf
      life of these specific lots for an additional 24 month period. As a result,
      the
      earliest expiration date for our inventory of bulk AC-11 is December 2008.
      In
      the event that future lots are retested and the test results indicate that
      the
      active ingredient and/or microbiology profile do not meet our specifications,
      we
      will be required to write-off the value of this inventory. We are unable to
      predict the likelihood at this time of future write-offs related to our bulk
      inventory however at December 31, 2007, we incurred an allowance for inventory
      obsolescence of approximately $174,000 to reflect the uncertainty of being
      able
      to sell our existing inventory prior to its expiration.




Given
      our
      limited cash on hand, we have taken steps to decrease the amount of cash
      required to fund our existing operations. We estimate that we will require
      approximately $900,000 over the next twelve months or $75,000 per month to
      fund
      our existing operations. These costs include (i) compensation and healthcare
      benefits for our full-time employee, (ii) compensation for consultants who
      we
      deem critical to our business, (iii) general office expenses including rent
      and
      utilities, (iv) insurance, (v) outside legal and accounting services and, (vi)
      order fulfillment operations.





We
      currently do not have the required cash on hand and therefore, we will be
      relying on product sales to augment our existing cash. In addition, this
      estimated “burn-rate” does not include costs related to (i) marketing and
      advertising our products, (ii) cash needed to satisfy existing accounts payable,
      (iii) research and new product development and; (iv) interest payable under
      our
      notes.


15





**Item
      7. Financial Statements**





The
      financial statements are included in this annual report on Form 10-KSB at page
      F-1.





**Index
      to Financial Statements**




Report
                of Independent Registered Public Accounting Firm
            F-2Report
                of Independent Registered Public Accounting Firm
            F-3Balance
                Sheets as of December 31, 2007 and 2006
            F-4Statements
                of Operations for the years ended December 31, 2007 and 2006.
            F-5Statement
                of Changes in Shareholders’ Equity (Deficit) for the years ended December
                31, 2007 and 2006
            F-6Statements
                of Cash Flows for the years Ending December 31, 2007 and 2006
            F-7Notes
                to Financial Statements
            F-8





**Item
      8. Changes In and Disagreements With Accountants on Accounting and Financial
      Disclosure**





None.




**Item
      8A. Controls and Procedures**





As
      of the
      end of the period covered by this report, an evaluation was carried out under
      the supervision and with the participation of Daniel Zwiren, our Chief Executive
      Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of
      our
      disclosure controls and procedures. The system of disclosure controls and
      procedures was designed to be effective at a reasonable assurance level. Based
      on that evaluation, Mr. Zwiren has concluded that our disclosure controls and
      procedures are effective at the reasonable assurance level to timely alert
      him
      of information required to be disclosed by us in reports that we file or submit
      under the Securities Act of 1934. During the quarter ended December 31, 2007,
      there were no changes in our internal controls over financial reporting that
      have materially affected, or are reasonably likely to materially affect our
      internal controls over financial reporting.





**Item
      8B. Other Information**





None.


16


**PART
      III**





**Item
      9. Directors, Executive Officers, Promoters, Control Persons and Corporate
      Governance; Compliance With Section 16(a) of the Exchange
      Act.**





The
      following table sets forth certain information about each of our directors
      and
      our executive officer as of December 31, 2007:





Name
            
            Age
            
            Positions
            
            Director
              SinceWilliam
                Walters
            
            70
            
            Chairman
                of the Board
            
            2004(1)Daniel
                Zwiren
            
            52
            
            President,
                Chief Executive Officer and Chief Financial Officer
            
            2008(2)Michael
                Mullarkey
            
            40
            
            Director
            
            2004(3)





(1)
            Mr.
                Walters resigned as a Director of the Company on April 15,
                2008.


(2)
            Mr.
                Zwiren was appointed as a Director of the Company on February 28,
                2008.


(3)
            Mr.
                Mullarkey resigned as a Director of the Company on February 28,
                2008.





**William
      Walters** was
      appointed Chairman of our Board of Directors on July 30, 2004. Mr. Walters
      was
      previously the Chairman of the Board of Optigenex Inc. ("Old Optigenex") from
      July 2002 until July 30, 2004, the date on which a subsidiary of Vibrant Health
      International acquired the assets of Old Optigenex. From November 2001 until
      October 2004, Mr. Walters was the Vice-Chairman of Sands Brothers & Co.
      Ltd., a New York based investment banking group. From November 2005 to May
      2005,
      Mr. Walters was employed by Laidlaw Inc., a New York based investment banking
      group. In June 2005, Mr. Walters became Chairman of Commonwealth Associates,
      a
      New York based investment banking group. Mr. Walters founded Whale Securities
      in
      1984 and served as its Chairman until Whale sold its customer assets and
      discontinued its operations in November 2001.





**Daniel
      Zwiren** was
      appointed as our Chief Financial Officer on May 13, 2006 and as our President
      and Chief Executive Officer on September 14, 2006. From August 2004 to January
      2006, Mr. Zwiren was Managing Director of Valued Ventures LLC an
      advisory/capital procurement firm located in New York, New York specializing
      in
      the biotech and technology industries. From January 2003 to July 2004, Mr.
      Zwiren served as a private equity advisor at UBS in New York, New York. From
      January 2002 to January 2003, Mr. Zwiren was the Managing Partner of Osprey
      Capital LLC, a capital procurement/advisory services company based in Ponte
      Vedra Beach, Florida. From January 2000 to December 2000, Mr. Zwiren was
      Executive V.P. of telic.net, an early stage Internet telephony service provider
      located in New York, New York.





**Michael
      Mullarkey** was
      appointed as a Director of our Company on October 1, 2004. Since November 2001,
      he has been the Chairman of the Board of Directors of Workstream Inc., a company
      that offers software and services that address the needs of companies to
      recruit, train, evaluate, motivate and retain their employees and has been
      Workstream's Chief Executive Officer since April 2001. In April 2003, Mr.
      Mullarkey assumed the responsibilities of President of Workstream, a position
      in
      which he previously served from April 2001 until November 2001. From January
      2001 to April 2001, Mr. Mullarkey was the President of Allen and Associates
      Inc., a full service outplacement firm in the United States, which Workstream
      acquired in April 2001. From October 1999 to December 2000, Mr. Mullarkey served
      as General Manager of Sony Corporation. From January 1998 to September 1999,
      Mr.
      Mullarkey was the co-founder and managing director of Information Technology
      Mergers & Acquisitions, LLC, an investment capital group managing private
      equity funding and investing in emerging technology markets and organizations.
      From March 1997 to December 1998, he was the Senior Vice President of sales
      and
      marketing for Allin Communications, a publicly traded enterprise solution
      provider. From October 1989 to February 1997, Mr. Mullarkey was Vice President
      and General Manager at Sony Corporation of America, a US subsidiary of Sony
      Corporation.




**Employment
      Agreements with Management**





None.




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





Section 16(a)
      of the Securities Exchange Act of 1934 requires our executive officers and
      directors, and persons who beneficially own more than 10% of a registered class
      of our equity securities, to file reports of ownership and changes in ownership
      with the Securities and Exchange Commission (“SEC”). Executive officers,
      directors and greater than 10% stockholders are also required to furnish us
      with
      copies of all Section 16(a) forms they file. Based solely on our review of
      the reports furnished to us, or written representations from certain reporting
      persons, we believe that all filing requirements applicable to our executive
      officers, directors and greater than ten percent beneficial owners were timely
      made during the fiscal year ended December 31, 2007.





**Board
      Committees**





We
      do not
      currently have an audit committee or a compensation committee. The full Board
      acts in place of a nominating committee to investigate qualified nominees for
      election to the Board when vacancies occur.


17





**Code
      of Ethics**





In
      November 2005 we adopted a code of ethics that applies to all of our employees
      including our principal executive officer, principal financial officer and
      principal accounting officer to our Board of Directors. We will provide to
      any
      person without charge, a copy of our code of ethics upon the receipt of a
      written request sent to our headquarters at 1170 Valley Brook Avenue,
      2 nd Floor,
      Suite B, Lyndhurst, NJ 07071.




**Item
      10. Executive Compensation**





The
      following table sets forth information with respect to compensation earned
      by
      the executive officers of the Company for 2007 and 2006.





**SUMMARY
      COMPENSATION TABLE**




Name
                and
              Principal
                Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Option
              Awards
              ($)
            
            Total
              ($)Daniel
                Zwiren, Chief Executive
            
            
            2007
            
            
            140,000
            
            
            0
            
            
            0
            
            
            140,000Officerand
                Chief Financial Officer (1)
            
            
            2006
            
            
            87,500
            
            
            0
            
            
            0
            
            
            87,500





(1)
            Mr.
                Zwiren joined the Company as Chief Financial Officer on May 13, 2006
                and
                was appointed as Chief Executive Officer on September 14,
                2006.




**Grants
      of Plan-Based Awards**





We
      did
      not issue any stock options or other plan-based equity awards in
      2007.


18


**Director
      Compensation**





Name
            
            Fees
                Earned
              or
                Paid in
              Cash
              ($)
            
            All
              Other
              Compensation
              ($)
            
            Total
              ($)William
                Walters (1)
            
            
            0
            
            
            0
            
            
            0Michael
                Mullarkey (2)
            
            
            0
            
            
            0
            
            
            0





(1)
            Mr.
                Walters resigned as a Director of the Company on April 15,
                2008.


(2)
            Mr.
                Mullarkey resigned as a Director of the Company on February 28,
                2008.





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters**





The
      following table sets forth information as of March 31, 2008 regarding the
      beneficial ownership of our Common Stock, based on information provided by
      (i)
      each of our executive officers and directors; (ii) all executive officers and
      directors as a group; and (iii) each person who is known by us to beneficially
      own more than 5% of the outstanding shares of our Common Stock.





Unless
      otherwise indicated, the address of each beneficial owner is in care of
      Optigenex Inc., 1170 Valley Brook Avenue, 2 nd Floor,
      Suite B, Lyndhurst, NJ 07071. Unless otherwise indicated, we believe that all
      persons named in the following table have sole voting and investment power
      with
      respect to all shares of Common Stock that they beneficially own.





For
      purposes of this table, a person is deemed to be a beneficial owner of the
      securities if that person has the right to acquire such securities within 60
      days of March 31, 2008 upon the exercise of options or warrants. In determining
      the percentage ownership of the persons in the table below, we assumed in each
      case that the person exercised all options and warrants which are currently
      held
      by that person and which are exercisable within such 60 day period, but that
      options and warrants held by all other persons were not exercised, and based
      the
      percentage ownership on 66,533,776 shares outstanding on March 31,
      2008.





****


**Name
                and Address of Beneficial Owner**
            
            **Number of Shares (1)**
            
            **Percent of Class (2)***Directors
                and Executive Officers:*William
                Walters, Former Chairman of the Board
            
            
            1,410,000
            (3)
            
            2.1
            %Daniel
                Zwiren, Chairman, Chief Executive Officer and Chief Financial
                Officer
            
            
            0
            
            
            *All
                Directors and Executive Officers as a Group (2 persons)
            
            
            1,410,000
            
            
            2.1
            %





*
      less
      than 1.0%





(1)  All
      entries exclude beneficial ownership of shares issuable pursuant to options
      that
      have not vested or that are not otherwise exercisable as of the date hereof
      and
      which will not become vested or exercisable within 60 days of March 31,
      2008.





(2)  Percentages
      are based on 66,533,776 shares of common stock outstanding on March 31, 2008
      and
      are rounded to nearest one-tenth of one percent. Options that are presently
      exercisable or exercisable within 60 days are deemed to be beneficially owned
      by
      the person holding the options for the purpose of computing the percentage
      ownership of that person, but are not treated as outstanding for the purpose
      of
      computing the percentage of any other person.





(3)  Mr.
      Walters resigned as a Director of the Company on April 15, 2008. Includes
      options to purchase 400,000 shares of our common stock which are presently
      exercisable.


19





**Equity
      Compensation Plan Information**





The
      following table sets forth certain information, as of December 31, 2007
      concerning shares of common stock authorized for issuance under the Company’s
      equity compensation plans.





(c)Number of SecuritiesRemaining Available(a)
            
            (b)
            
            for Future IssuanceNumber of Securities
            
            Weighted Average
            
            Under Equityto be Issued Upon
            
            Exercise Price of
            
            Compensation PlansExercise of
            
            Outstanding
            
            (Excluding SecuritiesOutstanding Options,
            
            Options, Warrants
            
            Reflected inWarrants and Rights
            
            and Rights
            
            Column (a))Equity
                compensation plans approved by shareholders
            
            
            325,000
            
            $
            1.15
            
            
            4,675,000Equity
                compensation plans not approved by shareholders
            
            
            1,339,605
            
            $
            2.31
            
            
            0Total
            
            
            1,664,605
            
            $
            2.08
            
            
            4,675,000





In
      July
      2004, our shareholders approved the 2004 Stock Incentive Plan (the "Plan").
      The
      purpose of the Plan is to further the growth of Optigenex by allowing the
      Company to compensate employees and consultants who have provided bona fide
      services to the Company, through the award of Common Stock of the Company.
      The
      maximum number of shares of common stock that may be issued under the Plan
      is
      5,000,000.





The
      Board
      of Directors is responsible for the administration of the Plan and has full
      authority to grant awards under the Plan. Awards may take the form of (i) Stock
      Options, (ii) Restricted Stock, (iii) Deferred Stock, and/or (iv) Other
      Stock-Based Awards. The Board of Directors has the authority to determine;
      (a)
      the employees and other persons that will receive awards under the Plan, (b)
      the
      number of shares covered by each award to be granted to each employee or other
      person, and (c) the exercise price, term and vesting periods, if any, in
      connection with the granting of an award.





**Issuance
      of Non-Plan Options during 2007**





We
      did
      not issue any non-plan options in 2007.





**Item
      12. Certain Relationships and Related Transactions**





During
      the fiscal year ended December 31, 2006, we paid Dr. Kenji Kitatani, a former
      director of our Company consulting fees totaling $39,000. These payments were
      made pursuant to a consulting agreement between the Company and Dr. Kitatani
      dated October 1, 2004. Dr. Kitatani provided business development services
      to
      the Company and was paid at a rate of $13,000 per month. Our agreement with
      Dr.
      Kitatani expired on September 30, 2005, however the Company extended the
      agreement on a month to month basis until March 31, 2006. Dr. Kitatani resigned
      as a director on May 8, 2006.


20


**Item
      13. Exhibits**





ExhibitNo.
            
            Title2.1
            
            Asset
                Purchase Agreement dated as of July 30, 2004 by and among Vibrant
                Health
                International, Optigenex Acquisition Corp., Thomas H. McAdam and
                Optigenex
                Inc. (i)2.2
            
            Certificate
                of Ownership and Merger of Vibrant Health International into Optigenex
                Merger Inc. (i)2.3
            
            Asset
                Purchase Agreement dated November 6, 2003 by and among Optigenex
                Inc.
                CampaMed LLC, the Pero Family Limited Partnership, Ronald W. Pero,
                Michael
                W. Moers, Gerald E. Morris, Oxigene, Inc., E. Gerald Kay, Allen Williams
                and Anthony Worth (iv)3.1
            
            Certificate
                of Incorporation of Registrant - formerly known as Optigenex Merger
                Inc.
                (i)3.2
            
            By-laws
                of Optigenex Inc. (i)4.1
            
            Form
                of Callable Secured Convertible Note (v)4.2
            
            Form
                of Stock Purchase Warrant (v)10.1
            
            Service
                Agreement dated as of October 1, 2004 by and between Communications
                Policy
                and Management Corporation and Optigenex Inc. (ii)10.2
            
            Employment
                Agreement dated as of April 10, 2003 by and between Kronogen Sciences
                Inc.
                (predecessor to Old Optigenex) and Richard Serbin.
                (iii)10.3
            
            Employment
                Agreement dated as of April 10, 2003 by and between Kronogen Sciences
                Inc.
                (predecessor to Old Optigenex) and William Walters.
                (iii)10.4
            
            Employment
                Agreement dated as of April 4, 2003 between Kronogen Sciences Inc.
                (predecessor to Old Optigenex) and Dr. Vincent C. Giampapa.
                (iii)10.5
            
            Employment
                Agreement dated as of June 15, 2004 by and between Old Optigenex
                and
                Joseph W. McSherry. (iii)10.6
            
            Employment
                Agreement dated as of August 16, 2004 by and between Optigenex Inc.
                and
                Anthony Bonelli. (iii)10.7
            
            Optigenex
                Inc. 2004 Incentive Stock Plan (iii)10.8
            
            Securities
                Purchase Agreement, dated August 31, 2005, by and among Optigenex,
                Inc.,
                AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC
                and New
                Millennium Capital Partners II, LLC. (v)10.9
            
            Registration
                Rights Agreement, dated August 31, 2005, by and among Optigenex,
                Inc., AJW
                Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and
                New
                Millennium Capital Partners II, LLC. (v)10.10
            
            Security
                Agreement, dated as of August 31, 2005, by and among Optigenex, Inc.,
                AJW
                Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and
                New
                Millennium Capital Partners II, LLC. (v)10.11
            
            Intellectual
                Property Security Agreement, dated August 31, 2005, by and among
                Optigenex, Inc., AJW Offshore, Ltd., AJW Qualified Partners, LLC,
                AJW
                Partners, LLC and New Millennium Capital Partners II, LLC.
                (v)10.12
            
            Agreement
                dated November 6, 2003 by and among Optigenex, Pierre Apraxine, Michael
                L.K. Hwang as executor for the Estate of John B. Elliott, Anthony
                Christian Flood and Peter Koepke (iv)23.1
            
            Consent
                of Independent Registered Public Accountant (vi)31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 (vi)32.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 (vi)





(i)
            Incorporated
                by reference to our Form 8-K filed on August 12, 2004.





(ii)
            Incorporated
                by reference to our Form 8-K filed on October 7, 2004.





(iii)
            Incorporated
                by reference to our Form 10-QSB filed on January 24, 2005.





(iv)
            Incorporated
                by reference to our Form 10-KSB filed on April 15,
                2005.





(v)
            Incorporated
                by reference to our Form 8-K filed on September 7,
                2005.





(vi)
            Filed
                Herewith.


21





**Item
      14. Principal Accountant Fees and Services**





The
      following is a summary of the fees paid or accrued for the audit and other
      services provided by our registered independent accounting firms for the fiscal
      years ended December 31, 2007 and 2006.




2007
            
            2006Audit
                Fees
            
            $
            53,350
            (1)
            $
            82,000
            (2)Audit
                - Related Fees
            
            
            —
            
            
            —Tax
                Fees
            
            
            8,674
            (3)
            
            —All
                Other Fees
            
            
            —
            
            
            —Audit
                Fees
            
            $
            62,024
            
            $
            82,000





(1)
      On
      May 3, 2007, we retained Stark Winter Schenkein & Co., LLP (“Stark Winter”)
      as our new registered independent accountants. All fees paid in 2007 were paid
      to Stark Winter Schenkein.





(2)
      The
      firm of Goldstein Golub Kessler LLP (“GGK”) acted as our principal accountant
      through May 1, 2007, at which time we dismissed GGK as reported on a Current
      Report on Form 8-K filed on May 7, 2007. GGK had a continuing relationship
      with
      RSM McGladrey, Inc. (“RSM”), from which it leases auditing staff who are full
      time, permanent employees of RSM and through which its partners provide
      non-audit services. GGK has no full time employees and therefore, none of the
      audit services performed were provided by permanent full-time employees of
      GGK.  GGK managed and supervised the audit and audit staff, and was
      exclusively responsible for the opinion rendered in connection with this
      examination.





(3)
      We
      incurred $8,674 of fees for tax compliance services provided by RMS McGladrey,
      Inc.


22





**SIGNATURES**





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





**OPTIGENEX
                INC.**/s/
                Daniel ZwirenDaniel
                ZwirenChief
                Executive Officer





Dated:
      May 15, 2008




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




Signature
            
            Title
            
            Date/s/
                Daniel Zwiren
            
            Chairman
                of the Board, Chief Executive Officer (Principal Executive
                Officer)
            
            May
                15, 2008Daniel
                Zwiren
            
            Chief
                Financial Officer (Principal Financial and Accounting
                Officer)




23





OPTIGENEX
      INC.





INDEX
      TO
      FINANCIAL STATEMENTS





December
      31, 2007





Report
                of Independent Registered Public Accounting Firm
            
            
            F-2Report
                of Independent Registered Public Accounting Firm
            
            
            F-3Financial
                Statements:Balance
                Sheets
            
            
            F-4Statements
                of Operations
            
            
            F-5Statement
                of Stockholders' Equity (Deficiency)
            
            
            F-6Statements
                of Cash Flows
            
            
            F-7Notes
                to Financial Statements
            
            
            F-8





REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Stockholders
      and Board of Directors


Optigenex,
      Inc.





We
      have
      audited the accompanying balance sheet of Optigenex, Inc. as of December 31,
      2007, and the related statements of operations, stockholders’ (deficiency) and
      cash flows for the year ended December 31, 2007. These financial statements
      are
      the responsibility of the Company's management. Our responsibility is to express
      an opinion on these financial statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates 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, the financial statements referred to above present fairly, in all
      material respects, the financial position of Optigenex, Inc. as of December
      31,
      2007, and results of its operations and its cash flows for the year ended
      December 31, 2007, in conformity with accounting principles generally accepted
      in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 18 to the financial
      statements, the Company has incurred significant losses from operations and
      has
      working capital and stockholder deficiencies. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Management’s
      plans in regard to this matter are also discussed in Note 18. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





Stark
      Winter Schenkein & Co., LLP





/s/Stark
      Winter Schenkein & Co., LLP





Denver,
      Colorado


May
      8,
      2008


F-2


REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To
      the
      Board of Directors


Optigenex
      Inc.





We
      have
      audited the accompanying balance sheet of Optigenex Inc. as of December 31,
      2006, and the related statements of operations, stockholders' equity
      (deficiency), and cash flows for the year then ended. These financial statements
      are the responsibility of the Company's management. Our responsibility is to
      express an opinion on these financial statements based on our audit.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Optigenex Inc. as of December
      31,
      2006, and the results of its operations and its cash flows for the year then
      ended in conformity with United States generally accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has suffered recurring losses
      from
      operations and has a stockholders deficiency which raises substantial doubt
      about its ability to continue as a going concern. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.





As
      discussed in Note 1 to the financial statements, effective January 1, 2006,
      the Company changed its method of accounting for share-based payments to adopt
      Statements of Financial Accounting Standards No. 123(R) Share-Based Payments.





/S/
      Goldstein Golub Kessler LLP





GOLDSTEIN
      GOLUB KESSLER LLP


New
      York,
      New York





April
      13,
      2007


F-3


OPTIGENEX
      INC.




BALANCE
      SHEETS


December
      31,





2007
            
            2006ASSETSCurrent
                Assets:Cash
            
            $
            6,758
            
            $
            153,153Accounts
                receivable, net of allowance for doubtful accounts of $27,426 in
                2007 and
                2006
            
            
            10,882
            
            
            34,510Inventories,
                net
            
            
            468,774
            
            
            916,645Prepaid
                expenses and other current assets
            
            
            16,541
            
            
            56,396Total
                current assets
            
            
            502,955
            
            
            1,160,704Property
                and equipment, net
            
            
            19,868
            
            
            70,023Intangible
                assets, net
            
            
            1,325,859
            
            
            1,479,815Other
                assets
            
            
            39,608
            
            
            114,183Total
                Assets
            
            $
            1,888,290
            
            $
            2,824,725LIABILITIES
                AND STOCKHOLDERS' DEFICIENCYCurrent
                Liabilities:Accounts
                payable
            
            $
            340,949
            
            $
            248,565Accrued
                expenses
            
            
            45,000
            
            
            272,855Current
                portion of callable secured convertible notes
            
            
            4,513,669
            
            
            -Deferred
                income
            
            
            119,880
            
            
            -Total
                current liabilities
            
            
            5,019,498
            
            
            521,420Callable
                secured convertible notes including embedded derivative
                liability
            
            
            4,427,067
            
            
            6,152,065Common
                stock warrants
            
            
            124,054
            
            
            1,001,047Total
                liabilities
            
            
            9,570,619
            
            
            7,674,532CommitmentsStockholders'
                deficiency:Preferred
                stock – $0.001 par value; 5,000,000 shares authorized, none
                issued
            
            $
            -
            
            $
            -Common
                stock – $0.001 par value; 100,000,000 shares authorized, 52,212,067 and
                10,958,736 issued and outstanding respectively
            
            
            52,212
            
            
            10,959Additional
                paid-in capital
            
            
            18,088,319
            
            
            18,064,334Accumulated
                deficit
            
            
            (25,822,860
            )
            
            (22,925,100
            )Total
                stockholders' deficiency
            
            
            (7,682,329
            )
            
            (4,849,807
            )Total
                Liabilities and Stockholders' Deficiency
            
            $
            1,888,290
            
            $
            2,824,725





See
      Notes
      to Financial Statements


F-4


OPTIGENEX
      INC.




STATEMENTS
      OF OPERATIONS


Years
      Ended December 31,





2007
            
            2006Net
                sales
            
            $
            465,970
            
            $
            300,924Cost
                of sales
            
            
            568,936
            
            
            1,515,688Gross
                loss
            
            
            (102,966
            )
            
            (1,214,764
            )Selling,
                general and administrative
            
            
            1,287,869
            
            
            2,752,528Impairment
                of intangible assets
            
            
            –
            
            
            935,448Loss
                from operations
            
            
            (1,390,835
            )
            
            (4,902,740
            )Other
                (income) expense:Interest
                expense, net
            
            
            2,798,935
            
            
            9,968,557Equity
                in loss from joint ventures
            
            
            –
            
            
            18,145Net
                (income)due to change in fair value common stock warrants and derivative
                liability
            
            
            (1,292,010
            )
            
            (7,531,983
            )Net
                loss
            
            $
            (2,897,760
            )
            $
            (7,357,459
            )Net
                loss per common share – basic and diluted
            
            $
            (0.17
            )
            $
            (0.68
            )Weighted-average
                number of common shares outstanding – basic and diluted
            
            
            17,066,532
            
            
            10,784,159





See
      Notes
      to Financial Statements


F-5


OPTIGENEX
      INC.




STATEMENT
      OF STOCKHOLDERS’ DEFICIENCY


For
      the
      Years Ended December 31, 2006 and 2007





Additional
            
            
            
            Stockholders'Paid-in
            
            Accumulated
            
            EquityNumber of Shares
            
            Amount
            
            Capital
            
            Deficit
            
            (Deficiency)Balance
                at January 1, 2006
            
            
            10,450,234
            
            $
            10,450
            
            $
            17,797,247
            
            $
            (15,567,641
            )
            $
            2,240,056Issuance
                of options to consultants
            
            
            -
            
            
            -
            
            
            17,500
            
            
            -
            
            
            17,500Issuance
                of options to employees
            
            
            -
            
            
            -
            
            
            182,675
            
            
            -
            
            
            182,675Issuance
                of stock for services
            
            
            100,000
            
            
            100
            
            
            12,900
            
            
            -
            
            
            13,000Conversion
                of convertible notes into shares of common stock
            
            
            408,502
            
            
            409
            
            
            54,012
            
            
            -
            
            
            54,421Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (7,357,459
            )
            
            (7,357,459
            )Balance
                at December 31, 2006
            
            
            10,958,736
            
            
            10,959
            
            
            18,064,334
            
            
            (22,925,100
            )
            
            (4,849,807
            )Conversion
                of convertible notes into shares of common stock
            
            
            41,253,331
            
            
            41,253
            
            
            23,985
            
            
            -
            
            
            65,238Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,897,760
            )
            
            (2,897,760
            )Balance
                at December 31, 2007
            
            
            52,212,067
            
            $
            52,212
            
            $
            18,088,319
            
            $
            (25,822,860
            )
            $
            (7,682,329
            )





See
      Notes
      to Financial Statements


F-6


OPTIGENEX
      INC.




STATEMENTS
      OF CASH FLOWS


Years
      Ended December 31,





2007
            
            2006Cash
                flows from operating activities:Net
                loss
            
            $
            (2,897,760
            )
            $
            (7,357,459
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            50,155
            
            
            46,811Amortization
                of intangibles
            
            
            153,956
            
            
            207,348Amortization
                of debt discount
            
            
            1,572,364
            
            
            1,255,036Amortization
                of deferred financing costs
            
            
            43,400
            
            
            40,572Reserve
                for obsolete inventory
            
            
            160,378
            
            
            1,072,622Bad
                debt expense (recovery)
            
            
            -
            
            
            (10,000
            )Stock-based
                compensation
            
            
            -
            
            
            213,175Non-cash
                financing costs
            
            
            862,500
            
            
            8,406,927Impairment
                of intangible assets
            
            
            -
            
            
            935,448Equity
                in loss from joint ventures
            
            
            -
            
            
            36,145Net
                income from change in value of warrants and embedded derivative
                liability
            
            
            (1,292,010
            )
            
            (7,531,983
            )Changes
                in operating assets and liabilities:Decrease
                in accounts receivable
            
            
            23,628
            
            
            69,735Decrease
                in inventories
            
            
            287,493
            
            
            14,511Decrease
                in prepaid expenses and other current assets
            
            
            39,855
            
            
            64,259Decrease
                in other assets
            
            
            31,175
            
            
            50,000Increase
                (decrease) in accounts payable
            
            
            92,384
            
            
            (194,614
            )Increase
                in accrued expenses
            
            
            356,207
            
            
            200,315Increase
                (decrease) in deferred income
            
            
            119,880
            
            
            (22,036
            )Net
                cash used in operating activities
            
            
            (396,395
            )
            
            (2,503,188
            )Cash
                flows from investing activities:Patent
                costs
            
            
            -
            
            
            (44,034
            )Proceeds
                from sale of joint venture interest
            
            
            -
            
            
            6,841Investment
                in joint venture
            
            
            -
            
            
            (5,000
            )Net
                cash used in investing activities
            
            
            -
            
            
            (42,193
            )Cash
                flows from financing activities:Proceeds
                from the sale of convertible notes
            
            
            250,000
            
            
            1,865,000Deferred
                financing costs
            
            
            -
            
            
            (20,200
            )Repayment
                of convertible notes
            
            
            -
            
            
            (115,555
            )Net
                cash provided by financing activities
            
            
            250,000
            
            
            1,729,245Net
                increase (decrease) in cash
            
            
            (146,395
            )
            
            (816,136
            )Cash
                – beginning of year
            
            
            153,153
            
            
            969,289Cash
                – end of year
            
            $
            6,758
            
            $
            153,153Supplemental
                schedule of cash flow information:Cash
                paid for interest
            
            $
            -
            
            $
            205,123Supplemental
                schedule of non-cash investing and financing activities:Debt
                discount in connection with recording value of embedded derivative
                liability
            
            $
            250,000
            
            $
            1,865,000Allocation
                of convertible note proceeds to warrants
            
            $
            800,000
            
            $
            8,021,094Common
                stock issued in connection with conversion of convertible
                notes
            
            $
            65,238
            
            $
            54,421





See
      Notes
      to Financial Statements


F-7


OPTIGENEX
      INC.





NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007 and 2006





1.
      PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:





Optigenex
      Inc. (the "Company") is engaged in the business of developing and marketing
      proprietary products based on its patented compound known as AC-11.





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, the disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenue and expenses
      during the reporting period. Actual results could differ from those estimated
      by
      management.





The
      Company considers all highly liquid investments with an original maturity of
      three months or less to be cash equivalents. The Company maintains cash in
      bank
      deposit accounts which, at times, may exceed federally insured limits. The
      Company has not experienced any losses on these accounts.





Accounts
      receivable are reported at their outstanding unpaid principal balances reduced
      by an allowance for doubtful accounts. The Company estimates doubtful accounts
      based on historical bad debts, factors related to specific customers' ability
      to
      pay and current economic trends. The Company writes off accounts receivable
      against the allowance when a balance is determined to be
      uncollectible.





Inventories
      are stated at the lower of cost, determined by the average cost method, or
      market. Inventories consists of (i) raw materials that are purchased from a
      sole
      supplier in Brazil and (ii) the Company’s proprietary compound known as AC-11
      which is manufactured in Brazil. The Company periodically reviews its
      inventories for evidence of spoilage and/or obsolescence and removes these
      items
      from inventory at their carrying value. An inventory valuation allowance is
      established when management determines that quantities on hand may exceed
      projected demand prior to the expiration date of the inventory
      item.





The
      Company reviews long-lived assets for impairment whenever events or changes
      in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. An asset is considered to be impaired when the sum of the
      undiscounted future net cash flows expected to result from the use of the asset
      and its eventual disposition is less than its carrying amount. The amount of
      impairment loss, if any, is measured as the difference between the net book
      value of the asset and its estimated fair value. At December 31, 2007 and 2006,
      management performed an evaluation of the carrying value of intangible assets,
      which consist primarily of patents and patents pending that were acquired in
      2003. This resulted in impairment charges of $935,448 in 2006. The Company
      did
      not incur an impairment charge in 2007.





Fair
      value estimates discussed herein are based upon certain market assumptions
      and
      pertinent information available to management. The respective carrying value
      of
      certain on-balance-sheet financial instruments approximated their fair values.
      These financial instruments include cash, accounts receivable, accounts payable
      and accrued expenses. Fair values were assumed to approximate carrying values
      for these financial instruments because they are short term in nature and their
      carrying amounts approximate fair values. The carrying value of the Company’s
      Callable Secured Convertible Notes approximated its fair value based on the
      current market conditions for similar debt instruments.





Revenue
      is recognized when persuasive evidence of an arrangement exists, the product
      has
      been delivered, the rights and risks of ownership have passed to the customer,
      the price is fixed and determinable, and collection of the resulting receivable
      is reasonably assured. For arrangements that include customer acceptance
      provisions, revenue is not recognized until the terms of acceptance are met.
      Reserves for sales returns and allowances are estimated and provided for at
      the
      time of shipment.





We
      estimate an allowance for product returns at the time of shipment based on
      historical experience. In 2007, product returns were negligible. We monitor
      our
      estimates on an ongoing basis and we may revise our allowance for product
      returns to reflect recent experience. To date, we have not made any significant
      changes in our allowance for returns. Products returned as a result of damage
      incurred during shipment are replaced at our cost. We do not estimate an
      allowance for returns due to damage as historically the level of returns has
      been negligible. For our bulk sales of AC-11, our standard return policy
      provides for a reimbursement of the full purchase price for any bulk AC-11
      that
      does not conform with the stated specifications. We must receive notification
      of
      a return request within 30 days from the date that the customer accepts
      delivery





The
      Company follows SFAS 109 "Accounting for Income Taxes" for recording the
      provision for income taxes. Deferred tax assets and liabilities are computed
      based upon the difference between the financial statement and income tax basis
      of assets and liabilities using the enacted marginal tax rate applicable when
      the related asset or liability is expected to be realized or settled. Deferred
      income tax expenses or benefits are based on the changes in the asset or
      liability each period. If available evidence suggests that it is more likely
      than not that some portion or all of the deferred tax assets will not be
      realized, a valuation allowance is required to reduce the deferred tax assets
      to
      the amount that is more likely than not to be realized. Future changes in such
      valuation allowance are included in the provision for deferred income taxes
      in
      the period of change.





Depreciation
      of office and production equipment is provided for by the straight-line method
      over the estimated useful lives of the related assets. Leasehold Improvements
      are amortized over the shorter of the lease agreement or the useful lives of
      the
      related assets.


F-8


Shipping
      costs are included in cost of sales and amounted to approximately $3,000 and
      $7,159 for the years ended December 31, 2007 and 2006,
      respectively.




Research
      and development costs are expensed when incurred. Research and development
      costs
      were approximately $8,700 and $99,000 for the years ended December 31, 2007
      and
      2006, respectively.





Costs
      incurred for producing and communicating advertising are expensed as incurred
      and included in selling, general and administrative expenses in the accompanying
      statement of operations. Advertising expenses were approximately $297,000 for
      the year ended December 31, 2006. The Company did not incur any advertising
      expenses in 2007.





Effective
      January 1, 2006, the Company adopted the provisions of Statement of
      Financial Accounting Standards No. 123 (revised 2004), “Share-Based
      Payment”, (“SFAS 123(R)”), which requires the measurement and recognition of
      compensation expense for all share-based payment awards to employees and
      directors based on estimated fair values. The Company adopted SFAS 123(R) using
      the modified prospective transition method. Under this transition method,
      share-based compensation expense recognized during the year
      ended December 31, 2006 includes: (a) compensation expense for
      all share-based awards granted prior to, but not yet vested, as of January
      1,
      2006, based on the grant date fair value estimated in accordance with the
      original provisions of SFAS 123, and (b) compensation expense for all
      share-based awards granted on or after January 1, 2006, based on the grant
      date
      fair value estimated in accordance with the provisions of SFAS 123(R).





As
      a
      result of adopting SFAS 123R, the Company recorded pretax compensation expense
      of $182,675 for the year ended December 31, 2006. Stock-based compensation
      is
      included in each expense category that includes salary expense. The Company
      has
      recorded a full valuation allowance on the deferred tax asset related to
      stock-based compensation and therefore, no tax benefit is recognized for the
      year ended December 31, 2006.





The
      Company does not use derivative instruments to hedge exposures to cash flow,
      market, or foreign currency risks.





The
      Company reviews the terms of convertible debt and equity instruments issued
      to
      determine whether there are embedded derivative instruments, including the
      embedded conversion option, that are required to be bifurcated and accounted
      for
      separately as a derivative financial instrument. In circumstances where the
      convertible instrument contains more than one embedded derivative instrument,
      including the conversion option, that is required to be bifurcated, the
      bifurcated derivative instruments are accounted for as a single, compound
      derivative instrument. Also, in connection with the sale of convertible debt
      and
      equity instruments, the Company may issue freestanding options or warrants.
      When
      the ability to physical or net-share settle the conversion option or the
      exercise of the freestanding options or warrants is deemed to be not within
      the
      control of the company, the embedded conversion option or freestanding options
      or warrants may be required to be accounted for as a derivative financial
      instrument liability.





The
      Company may also issue options or warrants to non-employees in connection with
      consulting or other services they provide.





Certain
      instruments, including convertible debt and equity instruments and the
      freestanding options and warrants issued in connection with those convertible
      instruments, may be subject to registration rights agreements, which impose
      penalties for failure to register the underlying common stock by a defined
      date.





Derivative
      financial instruments are initially measured at their fair value. For derivative
      financial instruments that are accounted for as liabilities, the derivative
      instrument is initially recorded at its fair value and is then re-valued at
      each
      reporting date, with changes in the fair value reported as charges or credits
      to
      income. For option-based derivative financial instruments, the Company uses
      the
      Black-Scholes option pricing model to value the derivative
      instruments.





If
      freestanding options or warrants were issued in connection with the issuance
      of
      convertible debt or equity instruments and will be accounted for as derivative
      instrument liabilities (rather than as equity), the total proceeds received
      are
      first allocated to the fair value of those freestanding instruments. If the
      freestanding options or warrants are to be accounted for as equity instruments,
      the proceeds are allocated between the convertible instrument and those
      derivative equity instruments, based on their relative fair values. When the
      convertible debt or equity instruments contain embedded derivative instruments
      that are to be bifurcated and accounted for as liabilities, the total proceeds
      allocated to the convertible host instruments are first allocated to the fair
      value of all the bifurcated derivative instruments. The remaining proceeds,
      if
      any, are then allocated to the convertible instruments themselves, usually
      resulting in those instruments being recorded at a discount from their face
      amount.





To
      the
      extent that the fair values of the freestanding and/or bifurcated derivative
      instrument liabilities exceed the total proceeds received, an immediate charge
      to income is recognized, in order to initially record the derivative instrument
      liabilities at their fair value.





The
      discount from the face value of the convertible debt, together with the stated
      interest on the instrument, is amortized over the life of the instrument through
      periodic charges to income, usually using the effective interest method.





The
      classification of derivative instruments, including whether such instruments
      should be recorded as liabilities or as equity, is re-assessed periodically,
      including at the end of each reporting period. If re-classification is required,
      the fair value of the derivative instrument, as of the determination date,
      is
      re-classified. Any previous charges or credits to income for changes in the
      fair
      value of the derivative instrument are not reversed. Derivative instrument
      liabilities are classified in the balance sheet as current or non-current based
      on whether or not net-cash settlement of the derivative instrument could be
      required within twelve months of the balance sheet date.


F-9


The
      Company amortizes fees associated with obtaining debt instruments over the
      term
      of the related debt using the effective interest method. Deferred financing
      fees
      aggregated $34,283 and $77,683 at December 31, 2007 and 2006.





Recent
      Pronouncements





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
      standard establishes a standard definition for fair value, establishes a
      framework under generally accepted accounting principles for measuring fair
      value and expands disclosure requirements for fair value measurements. This
      standard is effective for financial statements issued for fiscal years beginning
      after November 15, 2007. Adoption of this statement is not expected to have
      any
      material effect on our financial position or results of operations.





In
      September 2006, the FASB issued Financial Accounting Standard No. 158,
      Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans, an amendment of FASB Statement Nos. 87, 88, 106, and 132(R), or FAS
      158.
      This Statement requires an employer that is a business entity and sponsors
      one
      or more single-employer defined benefit plans to (a) recognize the funded status
      of a benefit plan—measured as the difference between plan assets at fair value
      (with limited exceptions) and the benefit obligation—in its statement of
      financial position; (b) recognize, as a component of other comprehensive income,
      net of tax, the gains or losses and prior service costs or credits that arise
      during the period but are not recognized as components of net periodic benefit
      cost pursuant to FAS 87, Employers’ Accounting for Pensions, or FAS 106,
      Employers’ Accounting for Postretirement Benefits Other Than Pensions; (c)
      measure defined benefit plan assets and obligations as of the date of the
      employer’s fiscal year-end statement of financial position (with limited
      exceptions); and (d) disclose in the notes to financial statements additional
      information about certain effects on net periodic benefit cost for the next
      fiscal year that arise from delayed recognition of the gains or losses, prior
      service costs or credits, and transition assets or obligations. An employer
      with
      publicly traded equity securities is required to initially recognize the funded
      status of a defined benefit postretirement plan and to provide the required
      disclosures as of the end of the fiscal year ending after December 15, 2006.
      This statement has not had a significant effect on our financial
      statements.





In
      February 2007, the FASB issued Financial Accounting Standard No. 159 The Fair
      Value Option for Financial Assets and Financial Liabilities—Including an
      amendment of FASB Statement No. 115 or FAS 159. This Statement permits entities
      to choose to measure many financial instruments and certain other items at
      fair
      value. Most of the provisions of this Statement apply only to entities that
      elect the fair value option.




The
      following are eligible items for the measurement option established by this
      Statement:




1.
      Recognized financial assets and financial liabilities except:




a.
            An
                investment in a subsidiary that the entity is required to
                consolidate




b.
            An
                interest in a variable interest entity that the entity is required
                to
                consolidate




c.
            Employers’
                and plans’ obligations (or assets representing net overfunded positions)
                for pension benefits, other postretirement benefits (including health
                care
                and life insurance benefits), post employment benefits, employee
                stock
                option and stock purchase plans, and other forms of deferred compensation
                arrangements.




d.
            Financial
                assets and financial liabilities recognized under leases as defined
                in
                FASB Statement No. 13, Accounting for Leases.




e.
            Deposit
                liabilities, withdrawable on demand, of banks, savings and loan
                associations, credit unions, and other similar depository
                institutions




f.
            Financial
                instruments that are, in whole or in part, classified by the issuer
                as a
                component of shareholder’s equity (including “temporary equity”). An
                example is a convertible debt security with a noncontingent beneficial
                conversion feature.




2.
      Firm
      commitments that would otherwise not be recognized at inception and that involve
      only financial instruments




3.
      Nonfinancial insurance contracts and warranties that the insurer can settle
      by
      paying a third party to provide those goods or services




4.
      Host
      financial instruments resulting from separation of an embedded nonfinancial
      derivative instrument from a nonfinancial hybrid instrument.




The
      fair
      value option:




1.
      May be
      applied instrument by instrument, with a few exceptions, such as investments
      otherwise accounted for by the equity method




2.
      Is
      irrevocable (unless a new election date occurs)




3.
      Is
      applied only to entire instruments and not to portions of
      instruments.


F-10


The
      Statement is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007. Early adoption is permitted as of the beginning
      of a fiscal year that begins on or before November 15, 2007, provided the entity
      also elects to apply the provisions of FASB Statement No. 157, Fair Value
      Measurements. We have not yet determined what effect, if any, adoption of this
      Statement will have on our financial position or results of
      operations.





In
      December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in
      Consolidated Financial Statements—an amendment of ARB No. 51. SFAS 160
      establishes accounting and reporting standards for the noncontrolling interest
      in a subsidiary and for the deconsolidation of a subsidiary. The guidance will
      become effective as of the beginning of the Company’s fiscal year beginning
      after December 15, 2008. The Company has not yet determined the impact, if
      any,
      of SFAS 160 on its consolidated financial statements.





In
      June
      2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
      Uncertainty in Income Taxes”, an interpretation of SFAS No. 109. FINS 48
      prescribes a comprehensive model for how companies should recognize, measure,
      present and disclose uncertain tax positions taken or expected to be taken
      on a
      tax return. Under FIN 48, we shall initially recognize tax positions in the
      financial statements when it is more likely than not the position will be
      sustained upon examination by the tax authorities. We shall initially and
      subsequently measure such tax positions as the largest amount of tax benefit
      that is greater than 50% likely of being realized upon ultimate settlement
      with
      the tax authority assuming full knowledge of the position and all relevant
      facts. FIN 48 also revises disclosure requirements to include an annual tabular
      roll-forward of unrecognized tax benefits. The Company has adopted this
      interpretation as required in 2007 and has applied its provisions to all tax
      positions upon initial adoption with any cumulative effect adjustment recognized
      as an adjustment to retained earnings. Adoption of this statement did not have
      any material effect on our financial position or results of
      operations.





In
      September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108),
      Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements. SAB 108 provides guidance
      on
      the consideration of the effects of prior year unadjusted errors in quantifying
      current year misstatements for the purpose of a materiality assessment. Adoption
      of this statement is not expected to have any material effect on our financial
      position or results of operations.




In
      December 2006, the FASB issued Staff Position FSP EITF 00-19-2, "Accounting
      for
      Registration Payment Arrangements". This statement is effective for existing
      registration payment arrangements as of January 1, 2007, with earlier
      application permitted in previously-unissued financial statements. As discussed
      in Note 8 and as permitted by the FSP, we adopted the provisions of this FSP
      in
      our fourth quarter of 2006, resulting in re-classification of certain of our
      outstanding warrants from derivative instrument liabilities to
      equity.





2.
      LOSS
      PER SHARE:





Basic
      loss per share is computed by dividing net loss by the weighted-average number
      of shares of common stock outstanding during the period. Diluted earnings per
      share gives effect to dilutive options, warrants and other potential common
      stock outstanding during the period.





Potential
      common stock consists of the following:




At
                December 31,
            
            2007
            
            2006Stock
                options
            
            
            1,664,605
            
            
            1,664,605Common
                stock warrants
            
            
            120,891,918
            
            
            100,891,918Common
                stock issuable upon conversion of convertible notes (1)
            
            
            6,291,369,444
            
            
            482,780,444Total
            
            
            6,413,925,967
            
            
            585,336,967





(1)
      At
      December 31, 2007 and 2006, the Company had Callable Secured Convertible Notes
      outstanding of $4,529,786 and $4,345,024, respectively. The Notes are
      convertible into shares of the Company's common stock at the Note Holders'
      option, at the lower of (i) $3.20 per share or (ii) 60% of the average of the
      three lowest intra-day trading prices for the common stock as quoted on the
      Over-the-Counter Bulletin Board for the 20 trading days preceding the conversion
      date. At December 31, 2007 and 2006, the Notes would have been convertible
      into
      shares of the Company’s common stock at prices of $0.00072 and $0.009,
      respectively. See Note 8 for a complete discussion of the Callable Secured
      Convertible Notes. The Company does not currently have sufficient authorized
      common shares to affect the exercise of the stock options or warrants or
      conversion of the notes.


F-11


3.
      INVENTORIES:





At
      December 31, 2007 and 2006, inventories net of reserves, were as
      follows:





2007
            
            2006Raw
                materials
            
            $
            789,274
            
            $
            789,274Finished
                goods
            
            
            912,500
            
            
            1,199,993Inventory
                reserves
            
            
            (1,233,000
            )
            
            (1,072,622
            )$
            468,774
            
            $
            916,645





The
      Company recorded inventory valuation allowances of $160,378 and $1,072,622
      at
      December 31, 2007 and 2006, respectively. These allowances relate to quantities
      of raw materials and finished goods that management determined would not be
      sold
      prior to their respective expiration dates. The total inventory allowance of
      $1,233,000 is equal to the book value of the inventory items at December 31,
      2007, which was $691,355 for raw materials and $541,645 for finished goods.





During
      2007, the Company incurred inventory write-offs totaling approximately $174,000
      as follows:





(1)
      Approximately $12,000 of finished bulk AC-11 powder that was damaged in
      transit.





(2)
      Approximately $162,000 of finished skin care products that it no longer intends
      to sell.





During
      2006, the Company incurred inventory write-offs totaling approximately $280,000
      as follows:





(1)
      Approximately $152,000 related to obsolete inventory which consisted of finished
      nutritional supplements that reached their stated expiration date.





(2)
      Approximately $77,000 of raw material inventory in connection with the
      production of finished bulk AC-11 powder that did not conform to the Company’s
      specifications.





(3)
      Approximately $51,000 of obsolete packaging components for the Company’s skin
      care and nutritional supplement products.




4.
      PROPERTY AND EQUIPMENT:





Property
      and equipment, at cost, consists of the following:





December
                31,
            
            2007
            
            2006
            
            Useful LifeOffice
                equipment
            
            $
            88,739
            
            $
            88,739
            
            
            3
                to 7 yearsLeasehold
                improvements
            
            
            66,160
            
            
            66,160
            
            
            3
                yearsProduction
                equipment
            
            
            47,550
            
            
            47,550
            
            
            3
                to 7 years202,449
            
            
            202,449Less
                accumulated depreciation
            
            
            (182,581
            )
            
            (132,426
            )$
            19,868
            
            $
            70,023





5.
      INTANGIBLE ASSETS:





Intangible
      assets, at cost, consist of the following at December 31:





2007
            
            2006Gross
            
            Accumulated
            
            Gross
            
            AccumulatedAmount
            
            Amortization
            
            Amount
            
            AmortizationTrademarks,
                  trade names and
                  copyrights
            
            $
            259,712
            
            $
            109,162
            
            $
            259,712
            
            $
            82,722Patents
            
            
            1,720,656
            
            
            686,079
            
            
            1,720,656
            
            
            558,563Patents
                pending
            
            
            140,732
            
            
            -
            
            
            140,732
            
            
            -$
            2,121,100
            
            $
            795,241
            
            $
            2,121,100
            
            $
            641,285





The
      Company's long-lived assets and certain identified intangible assets such as
      patents, patents pending and trademarks are reviewed in accordance with
      Statement of Financial Accounting Standard No. 142, "Goodwill and Other
      Intangible Assets" ("SFAS No. 142") whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be
      recoverable.


F-12


In
      connection with an evaluation of the projected demand for the Company’s
      products, management determined that certain patents related to these products
      were not impaired at December 31, 2007. These patents cover the extraction,
      manufacturing and testing processes for the Company’s proprietary compound
      AC-11. Management’s determination that there was no impairment was based on an
      analysis of the expected future net cash flows generated from the sale of
      finished goods in inventory as of December 31, 2007. These finished goods
      consisted of finished bulk AC-11 that the Company sells as an ingredient to
      its
      customer base. Management determined that the projected future net cash flows
      generated from product sales was greater than the carrying value of the
      underlying patents at December 31, 2007. A key assumption contained in
      management’s analysis was the length of the projection period which was limited
      to two years due to the fact that the bulk AC-11 currently in inventory will
      reach its stated expiration date over this two year period. In addition,
      management assumed that it would not manufacture and sell additional bulk AC-11
      during the projection period. The sum of the expected future net cash flows
      generated over the two year period was $1,169,794 which was approximately equal
      to the net book value of the underlying patents at December 31, 2007, of
      $1,175,309.





At
      December 31, 2006, the Company performed a similar evaluation of the expected
      future net cash flows generated from the sale of finished goods in inventory
      as
      of December 31, 2006. These finished goods consisted of the Company’s
      nutritional supplement product, skin care products and finished bulk AC-11.
      Management determined that the projected future net cash flows generated from
      product sales was less than the carrying value of the underlying patents at
      December 31, 2006. A key assumption contained in management’s analysis was the
      length of the projection period, which was limited to three years due to the
      fact that certain products held in inventory at December 31, 2006, would reach
      their stated expiration date over the three year projection period. In addition,
      management assumed that it would not manufacture and sell additional quantities
      of products during the projection period. The sum of the expected future net
      cash flows generated from sales over the three year period was $1,302,826,
      which
      was less than the net book value of the underlying patents at December 31,
      2006
      of $2,238,274. Accordingly, the Company recorded an impairment charge of
      $935,448 at December 31, 2006.





Patents
      are amortized over periods ranging from of 12 to 18 years, which represents
      the
      remaining lives of the patents. Patent pending applications will be amortized
      when the patents are issued. Trademarks, trade names and copyrights are being
      amortized over 10 years, the remaining estimated useful lives.





Amortization
      expense amounted to approximately $154,000 and $207,000 for the years ended
      December 31, 2007 and December 31, 2006, respectively. Estimated amortization
      expense for the next five years is as follows:





Year
      ending December 31,





2008
            
            $
            154,0002009
            
            $
            154,0002010
            
            $
            154,0002011
            
            $
            154,0002012
            
            $
            154,000





6.
      ACCRUED EXPENSES:





Accrued
      expenses consist of the following at December:





2007
            
            2006Accrued
                professional fees
            
            $
            45,000
            
            $
            50,000Accrued
                interest
            
            
            -
            
            
            219,991Other
            
            
            -
            
            
            2,864$
            45,000
            
            $
            272,855


F-13




7.
      DEFERRED INCOME





In
      July
      2007, the Company sold a two-year exclusive license to a customer in exchange
      for an upfront fee of $159,840. The entire amount of the license fee was
      received as of September 30, 2007. The Company recorded the upfront license
      fee
      as deferred income and will amortize it to revenue in equal monthly amounts
      of
      $6,660 over the two year term of the license. During 2007, the Company recorded
      license fee revenue of $39,960. The balance of deferred income at December
      31,
      2007 was $119,880.





8.
      CALLABLE SECURED CONVERTIBLE NOTES AND COMMON STOCK WARRANTS





Between
      August 31, 2005 and April 15, 2008, the Company entered into a series of seven
      Securities Purchase Agreements with a group of four accredited investors (New
      Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
      Ltd. and AJW Partners, LLC, collectively the "Note Holders") for the sale of
      an
      aggregate of $5,504,062 of Callable Secured Convertible Notes (the "Convertible
      Notes") and warrants to purchase up to 130,625,000 shares of its common stock
      (the “Warrants”).





The
      first
      five tranches of the Convertible Notes, which were issued between August 31,
      2005 and February 14, 2007, bear interest at 8% per annum. Tranche six, which
      was issued on January 31, 2008 to settle all accrued interest of $584,062
      outstanding as of December 31, 2007, bears interest at 2% per annum. Tranche
      seven, which was issued on April 15, 2008 for $155,000, bears interest at 8%
      per
      annum. All notes mature three years from the date of issuance. The Company
      is
      not required to make any principal payments during the term of the Convertible
      Notes. At December 31, 2007, tranche one has been partially converted by the
      Note Holders.





The
      Convertible Notes are convertible into shares of the Company's common stock
      at
      the Note Holders' option, at the lower of (i) a fixed price which, depending
      on
      the note, is between $0.10 and $3.20 per share or (ii) the “Applicable
      Percentage” (60% for tranches one to six and 45% for tranche seven) of the
      average of the three lowest intra-day trading prices for the common stock as
      quoted on the Over-the-Counter Bulletin Board for the 20 trading days preceding
      the conversion date. In connection with the issuance of tranche seven on April
      15, 2008, the Applicable Percentage for tranches one to six was reduced to
      45%.




As
      of
      December 31, 2007, the average of the three lowest intra-day trading prices
      for
      the common stock as quoted on the Over-the-Counter Bulletin Board for the 20
      preceding trading days was $0.0012, resulting in an effective conversion price
      at that date for the tranches outstanding at that date of $0.00072 per share.
      During the three months and the year ended December 31, 2007, the Note Holders
      converted a total of $40,423 and $65,238, respectively, of the Convertible
      Notes
      due August 31, 2008 into 35,893,293 and 41,253,331 shares, respectively, of
      the
      Company's common stock at conversion prices ranging from $0.0091 to $0.001
      per
      share.





The
      Convertible Notes provide for certain Events of Default, which include
      non-payment of principal and interest when due and failure to effect
      registration of the common shares underlying conversion of the Convertible
      Notes
      and exercise of the Warrants, if and when required. If an Event of Default
      occurs, the Holders may demand repayment at the greater of (a) 140% of the
      “Default Sum”, being principal outstanding, together with accrued interest,
      default interest due (if any) and registration penalties due (if any) or the
      “parity value” of the Default Sum, where parity value means (a) the number of
      shares of Common Stock issuable upon conversion of the Default Sum, treating
      the
      trading day immediately preceding the repayment date as the “conversion date”
for purposes of determining the applicable conversion price, multiplied by
      (b)
      the highest closing price for the Common Stock during the period beginning
      on
      the date of first occurrence of the Event of Default and ending one day prior
      to
      the repayment date.





If
      the
      Convertible Notes are not in default, the Company has the right to prepay the
      Convertible Notes under certain circumstances at a premium ranging from 35%
      to
      50% of the principal amount, depending on the timing of such prepayment. The
      Company has granted the Note Holders a security interest in substantially all
      of
      the Company's assets.





The
      130,625,000 warrants issued (of which 120,625,000 were issued in connection
      with
      tranches one to five and 10,000,000 were issued on April 15, 2008 in connection
      with tranche seven) are exercisable for a period of seven years from the date
      of
      issuance and have exercise prices that range from $0.001 per share to $4.50
      per
      share.





The
      conversion price of the Convertible Notes and the exercise price of the warrants
      will be adjusted in the event that the Company issues common stock at a price
      below the initial fixed conversion or exercise price, with the exception of
      any
      shares of common stock issued in connection with the Convertible Notes. The
      conversion price of the Convertible Notes and the exercise price of the warrants
      may also be adjusted in certain circumstances such as if the Company pays a
      stock dividend, subdivides or combines outstanding shares of common stock into
      a
      greater or lesser number of shares, or takes such other actions as would
      otherwise result in dilution of the Note Holders' position.




The
      Note
      Holders have contractually agreed to restrict their ability to convert their
      Notes or exercise their Warrants and receive shares of the Company's common
      stock such that the number of shares of common stock held by the Note Holders
      and their affiliates after such conversion or exercise does not exceed 4.99%
      of
      the then issued and outstanding shares of common stock.





The
      Company has the right to prepay the entire outstanding balance of the notes
      under certain circumstances at a premium of 50%. The Company also has the right
      to prepay a portion of the notes (“Partial Call Option”) each month in an amount
      equal to 104% of the then outstanding principal balance divided by 36, plus
      one
      month’s interest. The Company may only prepay the notes in the event that no
      event of default exists, there are a sufficient number of shares available
      for
      conversion of the notes and the market price is at or below $3.20 per share.
      This partial call option has the effect of preventing the Note Holders from
      converting their notes into shares of the Company’s common stock in the
      succeeding month.


F-14


As
      of
      December 31, 2007, the total amount of accrued but unpaid interest due under
      the
      Convertible Notes was $584,062. This amount was settled by the issuance of
      additional Convertible Notes (tranche six) on January 31, 2008, and is included
      in the carrying value of the Convertible Notes summarized below.





Pursuant
      to Registration Rights Agreements entered into with the Note Holders, the
      Company may be required to register for resale, within defined time periods,
      the
      shares underlying the Warrants and the shares issuable on conversion of the
      Convertible Notes. The terms of the Registration Rights Agreements provide
      that,
      in the event that the required registration statements are not filed or do
      not
      become effective within the required time periods, the Company is required
      to
      pay to the Note Holders, as liquidated damages, an amount equal to 2% per month
      of the principal amount of the Convertible Notes. This amount may be paid in
      cash or, at the Company’s option, in shares of common stock priced at the
      conversion price then in effect on the date of the payment. The estimated cost
      of any such liquidated damages is accrued when the Company believes it is
      probable they will be incurred. The required registration statement for tranches
      one to three became effective on February 15, 2006. For tranches four to seven,
      the Company is required to file a registration statement only if requested
      by
      the Note Holders. As of April 30, 2008, no request for registration has been
      received from the Note Holders and, at December 31, 2007, no accrual for
      liquidated damages has been made.





Because
      the number of shares that may be required to be issued on conversion of the
      Convertible Notes is dependent on the price of the Company’s common stock and is
      therefore indeterminate, the embedded conversion option of the Convertible
      Notes
      and the Warrants are accounted for as derivative instrument liabilities (see
      below) i n
      accordance with EITF Issue 00-19, "Accounting for Derivative Financial
      Instruments Indexed To, and Potentially Settled In, a Company's Own Common
      Stock" (EITF 00-19). Accordingly, the initial fair values of the embedded
      conversion options and the Warrants were recorded as derivative instrument
      liabilities. For option-based derivative instruments, the Company estimates
      fair
      value using the Black-Scholes valuation model, based on the market price of
      the
      common stock on the valuation date, an expected dividend yield of 0%, a
      risk-free interest rate based on constant
      maturity rates published by the U.S. Federal Reserve applicable to the remaining
      term of the instruments ,
      and an
      expected life equal to the remaining term of the instruments. Because
      of the limited historical trading period of our common stock, the expected
      volatility of our common stock over the remaining life of the conversion options
      and Warrants has been estimated based on a review of the volatility of companies
      considered by management to be comparable to the Company. The
      Company is required to re-measure the fair value of these derivative instrument
      liabilities at each reporting period.





The
      Company calculated the fair value of the embedded conversion feature related
      to
      the $250,000 Convertible Notes issued on February 14, 2007 to be $312,500,
      using
      the Black-Scholes valuation model with the following assumptions: market price
      of $0.04; exercise price of $0.024, risk free interest rate of 4.76%; expected
      volatility of 111% and an expected life of 3 years. The Company calculated
      the
      fair value of the warrants issued on February 14, 2007 to be $800,000, using
      the
      Black-Scholes valuation model with the following assumptions: market price
      of
      $0.04; exercise price of $0.07; risk free interest rate of 4.76%; expected
      volatility of 162% and an expected life of 7 years. Because the aggregate fair
      values of the Warrants and the embedded conversion feature of $1,112,500
      exceeded the principal amount of the notes by $862,500, this excess amount
      was
      charged directly to expense on February 14, 2007, and the Convertible Notes
      were
      initially recorded with no carrying value. The resulting discount from the
      face
      amount of the Convertible Notes is being amortized over their three year term
      using the effective interest rate method.





A
      summary
      of the Callable Secured Convertible Notes at December 31, 2007, is as follows:





Issue Date
            
            Due Date
            
            Face Amount
            
            Principal Outstanding08-31-2005
            
            
            08-31-2008
            
            $
            1,300,000
            
            $
            1,064,78610-19-2005
            
            
            10-19-2008
            
            
            1,350,000
            
            
            1,350,00002-17-2006
            
            
            02-17-2009
            
            
            1,350,000
            
            
            1,350,00009-15-2006
            
            
            09-15-2009
            
            
            515,000
            
            
            515,00002-14-2007
            
            
            02-14-2010
            
            
            250,000
            
            
            250,000$
            4,765,000
            
            $
            4,529,786Less:
                unamortized discount
            
            
            
            
            (1,698,399
            )2,831,387Add:
                embedded derivative liability
            
            5,525,287Add:
                accrued interest settled January 31, 2008 by issuance of additional
                notes
            
            584,0628,940,736Less:
                current portion
            
            (4,513,669
            )$
            4,427,067





The
      current portion represents the net carrying value of tranches one and two,
      including the embedded derivative liability.


F-15


Re-measurement
      of the fair value of common stock warrants





The
      Company is required to re-measure the fair value of the Warrants at the end
      of
      each reporting period and adjust the carrying value of the liability related
      to
      the Warrants. Accordingly, the Company re-measured the fair value of the
      120,625,000 Warrants outstanding at December 31, 2007, using the Black-Scholes
      valuation model with the following assumptions: market price of common stock
      on
      the measurement date of $0.0014, exercise prices ranging from $0.07 to $4.50,
      risk-free interest rates ranging from 3.07% to 3.58%, expected volatility
      ranging from 125% to 162% and expected lives equal to the remaining term of
      the
      warrants, ranging from 2.6 to 5.9 years. This resulted in an aggregate fair
      value for the 120,625,000 warrants of $124,054 at December 31, 2007. As a result
      of this re-measurement, for the year ended December 31, 2007, the Company
      recorded non-cash other income of $1,676,993 related to the re-measurement
      of
      the fair value of the Warrants.




Re-measurement
      of the fair value of the embedded conversion feature




The
      Company is required to re-measure the fair value of the embedded conversion
      feature related to the outstanding Convertible Notes on the date of each
      reporting period. The effect of this re-measurement is to adjust the carrying
      value of the liability related to the embedded conversion feature. Accordingly,
      the Company measured the fair value of the embedded conversion feature at
      December 31, 2007, using the Black-Scholes valuation model with the following
      assumptions: market price of common stock on the measurement date of $0.0014,
      exercise price of $0.00072; risk-free interest rates ranging from 3.05% to
      3.34%, expected volatility of 115% and expected lives ranging from 0.6 to 2.1
      years. This resulted in an aggregate fair value for the embedded conversion
      feature of $5,525,287 at December 31, 2007. As a result of this re-measurement,
      the Company recorded non-cash other expense of $384,983 for the year ended
      December 31, 2007.





In
      total,
      for the year ended December 31, 2007, the Company recorded non-cash other income
      of $1,292,010 related to the net change in the fair value of the liabilities
      related to the Warrants and embedded conversion feature.





9.
      COMMITMENTS AND CONTINGENCIES:





From
      time
      to time, the Company conducts research and development activities to support
      its
      proprietary compound AC-11. The Company generally utilizes the services of
      outside contractors such as physicians, scientists and academic institutions.
      These outside contractors are compensated on an hourly or fixed price basis.
      To
      date, the Company has not entered into any research arrangements that require
      it
      to pay according to research and development milestones. At December 31, 2007,
      the Company is not a party to any material research and development
      agreement.





The
      Company received a letter on April 10, 2008, listing a series of complaints
      on
      behalf of a former employee:





The
      Company’s abandonment of patent application number 10/438,247 which names the
      employee as inventor, the assertion that the company is in breach of an
      exclusive license agreement with the employee and the company owes certain
      royalties for products sold by claims made under US patent no. 5,895,652 and
      that the company was obligated to pay maintenance fees on same.





The
      company believes the claims are without merit and responded on May 6, 2008,
      accordingly. The Company maintains that the employee filed the 247 patent
      application while under an employment contract with the company. The company
      believes that the employee violated his employment agreement by filing the
      247
      patent in his name without filing the proper assignment to
      Optigenex.





The
      company believes that the employee is in breach of the aforementioned license
      agreement for a series of violations including but not limited to;





a)
            Failure
                to communicate with the company on outstanding office
                actions


b)
            The
                unauthorized marketing and sale of products through his company
                Suracell


c)
            The
                unauthorized sale and marketing of products containing AC-11® infringing
                on the company’s patents and trademarks through
                Suracell





Furthermore,
      the company has not sold any products that might be covered by any claims of
      US
      patent no. 5,895,652.





10.
      STOCKHOLDERS' DEFICIENCY:





During
      2006, the holders of the Company’s Callable Secured Convertible Notes converted
      an aggregate principal amount of $54,421 of their Notes into 408,502 shares
      of
      common stock at conversion prices ranging from $0.026 to $0.20 per
      share.





In
      May
      2006, the Company issued 100,000 shares to its former law firm in exchange
      for
      services rendered. The fair market value of the shares on the date of issuance
      was $0.13 and accordingly, the Company recorded stock based compensation expense
      of $13,000 in connection with this transaction. These shares were issued
      pursuant to an effective registration statement on Form S-8.


F-16


In
      May
      2006, the Company issued options to purchase an aggregate of 100,000 shares
      of
      its common stock to a consultant in exchange for services rendered. The options
      have an exercise price of $0.30 per share and are exercisable for a period
      of
      three years from the dates of the grant. Of the total, 50,000 options vested
      immediately and 50,000 vested in December 2006. The fair value of the option
      of
      $6,000 has been included in selling, general and administrative expenses for
      the
      year ended December 31, 2006. The fair value of the option grant was estimated
      on the date of grant using the Black-Scholes option pricing model with the
      following assumptions: expected volatility 100%; risk-free interest rate of
      5.0%; expected life of 3 years; and no expected dividends.





During
      2007, the holders of the Company’s Callable Secured Convertible Notes converted
      an aggregate principal amount of $65,238 of their Notes into 41,253,331 shares
      of common stock at conversion prices ranging from $0.0091 to $0.001 per
      share.





11.
      STOCK
      OPTION PLANS:





In
      July
      2004, the Board of Directors and then sole stockholder of the Company adopted
      the 2004 Stock Incentive Plan, pursuant to which 5,000,000 shares of common
      stock have been reserved for issuance. The plan provides for grants of incentive
      stock options, non-qualified stock options and shares of common stock to
      employees, non-employee directors and others. In the case of an incentive stock
      option, the exercise price cannot be less than the fair market value of the
      Company's common stock on the date of grant. Vesting schedules for options
      and
      stock awards and certain other conditions are to be determined by the Board
      of
      Directors or a committee appointed by the Board of Directors.





The
      fair
      value of each option award is estimated on the date of each option grant using
      the Black-Scholes option valuation model using the assumptions noted in the
      following table. Because the Company’s common stock has only traded publicly
      since April 2005, the expected volatility for was estimated based on a sampling
      of similar size companies. The Company has limited history by which to estimate
      the expected holding period of the options, and therefore, has estimated that
      the expected holding period for all stock options granted is equal to the
      contractual life of the option. As a result of the adoption of FASB 123R, the
      Company recorded stock based compensation expense related to employee and
      consultant stock options of $200,175 for the year ended December 31, 2006.
      The
      Company did not issue any stock options in 2007.





The
      following table summarizes the assumptions used for options granted during
      the
      years ended December 31, 2007 and 2006.





Year Ended December 31,2007(i)
            
            2006Expected
                life (in years)
            
            
            NA
            
            
            3-5Risk-free
                interest rate
            
            
            NA
            
            
            4.66-5.20%Volatility
            
            
            NA
            
            
            100%Dividend
                yield
            
            
            NA
            
            
            None





(i)
      The
      Company did not issue any stock options in 2007.





On
      March
      1, 2006, the Board of Directors of the Company approved the following stock
      option issuances:





Quantity
            
            Exercise Price
            
            VestingAnthony
                Bonelli
            
            
            500,000
            
            $
            0.13
            
            
            Immediately(President
                and
            
            
            250,000
            
            $
            1.00
            
            
            February 28, 2007Chief
                Executive Officer)
            
            
            250,000
            
            $
            1.00
            
            
            February 28, 2008Joseph
                McSherry
            
            
            300,000
            
            $
            0.13
            
            
            Immediately(Chief
                Financial Officer)
            
            
            100,000
            
            $
            1.00
            
            
            February
                28, 2007100,000
            
            $
            1.00
            
            
            February
                28, 2008





In
      connection with his voluntary resignation on May 13, 2006, Mr. McSherry
      forfeited all of his outstanding options including options to purchase 300,000
      shares which were issued to him in August 2004.





In
      connection with his voluntary resignation on August 23, 2006, Mr. Bonelli
      forfeited all of his outstanding options including options to purchase 250,000
      shares which were issued to him in August 2004 and options to purchase 300,000
      shares which were issued to him in February 2005.


F-17


A
      summary
      of the status of the Company's options as of December 31, 2007 is presented
      below:





Number
              of
              Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Aggregate
              IntrinsicValueOutstanding at January
                1, 2006
            
            
            3,301,605
            
            $
            2.73Granted
            
            
            1,600,000
            
            $
            0.52Exercised
            
            
            —Forfeited
            
            
            (3,237,000
            )
            $
            1.79Outstanding
                at December 31, 2006
            
            
            1,664,605
            
            $
            2.44Granted
            
            
            —Exercised
            
            
            —Forfeited
            
            
            —Outstanding
                at December 31, 2007
            
            
            1,664,605
            
            $
            2.44
            
            $
            4.00Options
                exercisable at December 31, 2007
            
            
            1,664,605
            
            $
            2.44
            
            $
            4.00





A
      summary
      of the status of the Company’s non-vested stock options as of December 31, 2007,
      and of changes during the year ended December 31, 2007, is presented
      below:





Number
                of
              Options
            
            Weighted
              Average
              Option PriceNon-vested
                at December 31, 2006
            
            
            —
            
            
            NAGranted
            
            
            —
            
            
            NAVested
            
            
            —
            
            
            NAForfeited/Cancelled
            
            
            —
            
            
            NAOutstanding
                at December 31, 2007
            
            
            —
            
            
            NA





The
      Company did not issue any stock options during the year ended December 31,
      2007.
      The weighted-average grant date fair value of options granted during the years
      ended December 31, 2006 was $0.08.





The
      following table summarizes information for options currently outstanding and
      exercisable at December 31, 2007:





Options Outstanding
            
            Options ExercisableRange of
              Exercise Prices
            
            Shares
              Underlying
              Options
            
            Weighted-
              Average
              Remaining
              Life
            
            Weighted-
              Average
              Exercise
              Price
            
            Shares
              Underlying
              Options
            
            Weighted-
              Average
              Exercise
              Price$
            0.001
            
            
            9,210
            
            
            .91
                years
            
            $
            0.001
            
            
            9,210
            
            $
            0.001$
            0.01
            
            
            16,000
            
            
            1.75
                years
            
            
            0.01
            
            
            16,000
            
            
            0.01$
            0.30
            
            
            100,000
            
            
            1.40
                years
            
            
            0.30
            
            
            100,000
            
            
            0.01$
            1.00
            
            
            165,000
            
            
            .01
                years
            
            
            1.00
            
            
            165,000
            
            
            1.00$
            2.00
            
            
            259,395
            
            
            .08
                years
            
            
            2.00
            
            
            259,395
            
            
            2.00$
            3.00
            
            
            1,115,000
            
            
            1.67
                years
            
            
            3.00
            
            
            1,115,000
            
            
            3.00$
            0.001-$3.00
            
            
            1,664,605
            
            
            1.24
                years
            
            $
            2.44
            
            
            1,664,605
            
            $
            2.44


F-18


The
      table
      below summarizes warrants outstanding as of December 31, 2007 and
      2006:








Exercise
            
            Shares Underlying
              Warrants Outstanding
              as of December 31,Expiration Date
            
            Price
            
            
            2007
            
            
            2006May 2009
            
            $
            3.30
            
            
            16,667
            
            
            16,667June
                2009
            
            $
            3.30
            
            
            89,667
            
            
            89,667July
                2009
            
            $
            3.30
            
            
            5,334
            
            
            5,334March
                2010
            
            $
            3.00
            
            
            66,786
            
            
            66,786June
                2010
            
            $
            3.00
            
            
            30,664
            
            
            30,664July
                2010
            
            $
            3.00
            
            
            57,800
            
            
            57,800August
                2010
            
            $
            4.50
            
            
            203,124
            
            
            203,124October
                2010
            
            $
            4.50
            
            
            210,938
            
            
            210,938February
                2011
            
            $
            4.50
            
            
            210,938
            
            
            210,938September
                2013
            
            $
            0.10
            
            
            100,000,000
            
            
            100,000,000February
                2014
            
            $
            0.07
            
            
            20,000,000
            
            
            —120,891,918
            
            
            100,891,918





12.
      INCOME TAXES





The
      Company has net operating loss carry-forwards of approximately $16,785,000
      available to offset taxable income through the year 2028.





The
      tax
      effects of loss carry-forwards and the valuation allowance that give rise to
      deferred tax assets are as follows:





Net
                operating losses
            
            $
            5,707,000Temporary
                book/tax difference related to:Impairment
                of intangible assets
            
            
            1,238,000Non
                employee stock based compensation
            
            
            270,000Inventory
                allowance
            
            
            419,0007,634,000Less
                valuation allowance
            
            
            (7,634,000
            )Deferred
                tax assets
            
            $
            -0-





The
      difference between income taxes computed at the statutory federal rate of 34%
      and the benefit for income taxes relates to the following:





December
                31,
            
            2007
            
            2006Tax
                benefit at the federal statutory rate
            
            
            34
            %
            
            34
            %Valuation
                allowance
            
            
            (34
            )%
            
            (34
            )%-0-
            %
            
            -0-
            %





The
      principal difference between the operating loss for tax purposes and the
      reported operating loss results principally from stock compensation and the
      accounting treatment of derivatives. The use of the operating loss may be
      limited by any change of control of the Company.





13.
      RELATED PARTY TRANSACTIONS:





The
      following are related party transactions:





Year
                ended December 31,
            
            2007
            
            2006Consulting
                fees paid to a director of the Company (a)
            
            
            —
            
            $
            39,000





(a)
      This
      director resigned on May 8, 2006.





At
      December 31, 2006, 44% of accounts receivable or approximately $27,000 was
      due
      from a company whose significant stockholder was also a 5% stockholder of the
      Company on such date. This account receivable is still past due as of December
      31, 2007, and there is substantial doubt that the full amount of the receivable
      will be paid. Accordingly, the Company has reserved the entire balance of the
      account receivable of $27,000.


F-19


14.
      ROYALTY AGREEMENTS:





In
      connection with the November 2003 acquisition of assets from CampaMed LLC,
      the
      Company entered into a separate agreement with a group of four individuals
      which
      obligated the Company to pay royalties in connection with the sale or licensing
      of any product that contains any compound, substance or ingredient derived
      or
      isolated from the Uncaria tomentosa vine such as its proprietary product AC-11,
      or its predecessor C-MED-100 (collectively referred to as "AC-11".) The maximum
      amount payable under this agreement is $347,700. The royalties are based on
      sales, as defined in the agreement, of any product that we sell or license.
      The
      royalty payments are calculated as follows: (i) 6% of gross sales for any
      products that contain AC-11 as an ingredient which includes the Company’s
      nutritional supplement products and (ii) 10% of gross sales of bulk AC-11.
      As of
      December 31, 2007, total royalties under this agreement were $111,964 however
      of
      this total, the Company has not paid $49,403. Prior to January 1, 2007, these
      royalty payments were recorded as additional purchase cost as they were
      incurred. Beginning on January 1, 2007, these royalty payments are expensed
      as
      they are incurred. The total remaining royalty obligation under the agreement
      as
      of December 31, 2007 is $235,736 and the agreement remains in effect until
      this
      amount is paid.





Also
      in
      connection with the November 2003 acquisition of assets from CampaMed LLC,
      the
      Company agreed to pay CampaMed LLC additional payments based on 6% of the gross
      sales of any product containing AC-11, and 10% of the gross sales of any bulk
      AC-11, until such additional payments in an aggregate amount of $500,000 have
      been made. As of December 31, 2007, total royalties under this agreement were
      $111,964 however of this total, the Company has not paid $49,403. Prior to
      January 1, 2007, these royalty payments were recorded as additional purchase
      cost as they were incurred. Beginning on January 1, 2007, these royalty payments
      are expensed as they are incurred. The total remaining royalty obligation under
      the agreement as of December 31, 2007, is $388,036 and the agreement remains
      in
      effect until this amount is paid.





Additionally,
      in connection with the CampaMed acquisition, the Company has assumed a royalty
      obligation based on sales of certain products using the Thiol or Nicoplex
      Technology. The maximum amount of royalties due is $3,500,000 and will be paid
      based on product sales, as defined in the agreement. Currently, the Company
      is
      not marketing these products and it is not required to make any payments under
      the agreement, other than payments based on product sales.





15.
      SIGNIFICANT CUSTOMERS:





In
      2007,
      the Company’s three largest customers accounted for 36.3%, 17.1% and 10% of
      total sales and the Company’s five largest customers accounted for an aggregate
      of 74.0% of total sales.





In
      2006,
      the Company’s two largest customers accounted for 10.2% and 10.0% of total sales
      and the Company’s five largest customers accounted for an aggregate of 41.1% of
      total sales. At December 31, 2006, the Company’s largest customer accounted for
      an aggregate of 16.4% of accounts receivable and the Company’s five largest
      customers accounted for an aggregate of 32.2% of total accounts
      receivable.





16.
      SIGNIFICANT SUPPLIER:





The
      Company purchases 100% of the raw material for its products from a single
      supplier located in Brazil. In addition, the Company's proprietary manufacturing
      and processing equipment is located in a warehouse that is owned by this
      supplier. The Company is not contractually obligated to make minimum purchases
      from this supplier.





17.
      JOINT
      VENTURES:





PMO
      Products Inc.





In
      November 2004, the Company entered into a joint venture with the two principals
      of Pierre Michel Salon, a leading New York City based hair salon to develop
      and
      market a line of professional hair care products that contain AC-11 as an
      ingredient. The Company contributed $25,000 in cash for a 50% ownership interest
      in a newly formed corporation named PMO Products Inc., a New York corporation
      ("PMO"). In August 2005, PMO began selling these products exclusively to the
      Pierre Michel Salon in New York City.




The
      Company accounted for its investment in PMO under the equity method. Since
      inception in November 2004 and through August 31, 2006, PMO incurred a total
      net
      loss of $36,318 of which the Company’s 50% share was $18,159.





On
      August
      31, 2006, the Company and PMO entered into an agreement whereby PMO purchased
      the Company’s 50% ownership interest in exchange for $6,841 in cash. The
      purchase price represented the net book value of the Company’s investment in PMO
      as of such date. The parties also entered into a seven-year Supply Licensing
      Agreement with PMO which allows PMO to utilize the Company’s registered
      trademark AC-11® for the sale of hair-care products in North America, South
      America and Japan. PMO granted the Company a seven-year trademark license to
      use
      its trademark “RepHair, by Pierre Michel” for hair-care products sold in Europe,
      all of Asia (except Japan) and Australia.





Since
      inception in November 2004 and through August 31, 2006, the Company sold
      approximately $26,000 of products to PMO. The Company recorded as deferred
      income, the profit from any sales it made to PMO until such time that the
      products were resold by PMO to an independent third party. At August 31, 2006,
      deferred income related to product sales made to PMO was $7,837. In connection
      with the sale of its ownership interest in PMO on such date, the Company
      reclassified the remaining deferred income of $7,837 to revenue as it no longer
      had any rights to the remaining inventory of PMO.


F-20


Prometheon
      Labs LLC





In
      September 2005, the Company contributed $40,000 in cash for a 50% ownership
      interest in Prometheon Labs LLC, (“Prometheon”) a New York limited liability
      company which was formed for the purpose of developing and marketing an oral
      nutritional supplement containing the Company’s ingredient AC-11. The Company’s
      joint venture partner Prometheon Holding LLC, contributed $40,000 in cash for
      its 50% ownership interest in Prometheon. In June 2006, the Company and
      Prometheon Holding each advanced an additional $5,000 in cash to Prometheon
      for
      working capital purposes.





The
      Company accounted for its investment in Prometheon under the equity method.
      Since inception in September 2005 through November 30, 2006, Prometheon incurred
      a total net loss of $125,600 of which the Company’s 50% share was $62,800
      however the Company only recorded losses totaling $45,000 which represented
      the
      entire amount of its investment.




On
      November 19, 2006, the Company and its joint venture partner Prometheon Holding
      entered into an agreement whereby Prometheon Holding purchased the Company’s 50%
      ownership interest in Prometheon in exchange for $18,000 in cash. The purchase
      price exceeded the net book value of the Company’s investment in Prometheon
      which on November 30, 2006, the date of closing of the transaction, was $0.
      The
      parties also entered into a five-year Supply and Trademark Licensing Agreement
      which allows Prometheon to continue to develop and market oral nutritional
      supplement products containing AC-11.





Since
      inception in September 2005 and through November 30, 2006, the Company sold
      approximately $27,000 of products to Prometheon. The Company recorded as
      deferred income, the profit from any sales it made to Prometheon until such
      time
      that the products were resold by Prometheon to an independent third party.
      At
      November 30, 2006, deferred income related to sales made to Prometheon was
      $5,253 and in connection with the sale of its ownership interest in Prometheon
      on such date, the Company reclassified the remaining deferred income of to
      revenue as it no longer had any rights to the remaining inventory of
      Prometheon.





18.
      GOING
      CONCERN:





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has suffered recurring losses
      from
      operations aggregating $25,822,860 and has working capital and stockholders’
deficiencies of $4,516,543 and $7,682,329 which raises substantial doubt about
      its ability to continue as a going concern. In the event that the Company’s
      operations do not generate sufficient cash flow in the future, the Company
      will
      need to obtain additional debt or equity capital. There can be no assurances
      that the Company will be successful in raising additional debt or equity capital
      on terms acceptable to the Company or at all. The accompanying financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





19.
      SUBSEQUENT EVENTS (UNAUDITED):




In
      January 2008, the holders of the Company’s Callable Secured Convertible
      Debentures converted the principal amount of $14,322 into 14,321,709 shares
      of
      the Company’s common stock.




On
      January 31, 2008, the Company entered into three (3) Callable Secured
      Convertible Notes (the “Notes”) with its existing note holders for the purpose
      of capitalizing interest owed under all previously executed notes dated August
      31, 2005, October 19, 2005, February 14, 2006, September 15, 2006 and February
      12, 2007. The aggregate principal amount of the three Notes is $584,062 which
      was equal to the aggregate amount of interest owed to the Investors as of
      December 31, 2007. The Company did not receive any funds in connection with
      entering into these Notes. The Notes carry an interest rate of 2% and a maturity
      date of January 31, 2011. The Notes are convertible into shares of the Company’s
      common stock at 60% of the average of the three lowest intra-day trading prices
      for the Company’s common stock as quoted on the Over-the-Counter Bulletin Board
      for the 20 trading days preceding the conversion date.





On
      April
      15, 2008, the Company entered into four (4) Callable Secured Convertible Notes
      (the “Notes”) with its existing note holders for working capital purposes. The
      aggregate principal amount of these notes was $155,000. The Notes carry an
      interest rate of 8% per annum and mature on April 15, 2011. At the election
      of
      the note holder, the Notes are convertible into shares of the Company’s common
      stock at the lesser of (i) $3.20 or (ii) 45% of the average of the three lowest
      intra-day trading prices for the Company’s common stock as quoted on the
      Over-the-Counter Bulletin Board for the 20 trading days preceding the conversion
      date. The Company also granted the note holders warrants to purchase 10,000,000
      shares of the Company’s common stock at an exercise price of $0.001. The
      warrants expire seven years from the date of issuance.





Simultaneously
      on April 15, 2008, the Company amended all previously executed Notes with its
      note holders to reduce the Applicable Percentage under such Notes from 60%
      to
      45%. The aforementioned notes were entered into on August 31, 2005, October
      19,
      2005, February 14, 2006, September 15, 2006, February 12, 2007 and January
      31,
      2008.


F-21