**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





FORM
      10K-SB/A





ANNUAL
        REPORT UNDER SECTION 13 OR 15(d) OF
 THE
        SECURITIES EXCHANGE ACT OF 1934
 
 For
        the
        Fiscal Year Ended December 31, 2006
  Commission
        File No. 000-27237








GENETHERA,
      Inc.


(Exact
      name of Registrant as specified in its charter)





FLORIDA
              65-0622463(State
                    or other jurisdiction of incorporation
                    or formation)
              (I.R.S.
                    employer identification
                    number)




3930
      Youngfield Street


Wheat
      Ridge, CO


80033


(Address,
      including zip code, of principal executive office)




(303)
        463-6371
 (Registrant’s
        telephone number, including area code)




Copies
      to:




Securities
        to be registered pursuant to Section 12(b) of the Act:  None
  Securities
        to be registered pursuant to Section 12(g) of the Act: Common Stock,
          $.001 per share


Check
      whether the issuer: (1) has filed all reports required to be filed
      by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past 90
      days: Yes
      |X|
      No | |





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B contained herein, 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. | |





The
      issuer's revenues for its most recent fiscal year was $150,000.





The
      aggregate market value of the issuer's voting stock held by non-affiliates
      of the issuer as of December 31, 2006 was $2,250,000





The
      number of shares outstanding as of the issuer's common stock as of December
      31,
      2006 was 35,474,736. The number of warrants outstanding as of December 31,
      2006
      was 597,826.





**EXPLANATORY** **NOTE**





This
        Amendment No. 1 on Form 10-KSB/A (the “Form 10-K/A”) to our Annual Report
        on Form 10-KSB for the year ended December 31, 2006, initially
        filed with the Securities and Exchange Commission (“SEC”) on April 13, 2006, is
        being filed to to include the financials and updating certain
        other financial information that where mistakenly left off from our
        initial 10-KSB filing.


**FORWARD-LOOKING
      AND CAUTIONARY STATEMENTS**





Sections
      of this Form 10-KSB, including the Management's Discussion and Analysis or
      Plan
      of Operation, contain "forward-looking statements" within the meaning of Section
      27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the
      Securities and Exchange Act of 1934 (the "Exchange Act"), and the Private
      Securities Litigation Reform Act of 1995. These forward-looking statements
      are
      subject to risks and uncertainties and other factors that may cause our actual
      results, performance or achievements to be materially different from the
      results, performance or achievements expressed or implied by the forward-looking
      statements. You should not unduly rely on these statements. Forward-looking
      statements involve assumptions and describe our plans, strategies, and
      expectations. You can generally identify a forward-looking statement by words
      such as "may," "will," "should," "would," could," "plan," "goal," "potential,"
      "expect," "anticipate," "estimate," "believe," "intend," "project," and similar
      words and variations thereof. This report contains forward-looking statements
      that address, among other things,





*
      our
      financing plans,


*
      regulatory environments in which we operate or plan to operate, and


*
      trends
      affecting our financial condition or results of operations, the impact of
      competition, the start-up of certain operations and acquisition
      opportunities.





Factors,
      risks, and uncertainties that could cause actual results to differ materially
      from those in the forward-looking statements ("Cautionary Statements") include,
      among others,





*
      our
      ability to raise capital,


*
      our
      ability to execute our business strategy in a very competitive
      environment,


*
      our
      degree of financial leverage,


*
      risks
      associated with our acquiring and integrating companies into our
      own,


*
      risks
      relating to rapidly developing technology,


*
      regulatory considerations;


*
      risks
      related to international economies,


*
      risks
      related to market acceptance and demand for our products and
      services,


*
      the
      impact of competitive services and pricing, and


*
      other
      risks referenced from time to time in our SEC filings.





All
      subsequent written and oral forward-looking statements attributable to us,
      or
      anyone acting on our behalf, are expressly qualified in their entirety by the
      cautionary statements. We do not undertake any obligations to publicly release
      any revisions to any forward-looking statements to reflect events or
      circumstances after the date of this report or to reflect unanticipated events
      that may occur.










**PART
      I.**





**Item
      1. Description of Business**





GeneThera,
      Inc. ("we" or "the Company"), formerly known as Hand Brand Distribution, Inc.,
      was incorporated in November 1995, under the laws of the State of Florida.
      Our
      Common Stock currently trades on the Over-the-Counter Bulletin Board ("OTC")
      under the symbol GTHA. Our executive offices are located at 3930 Youngfield
      Street, Wheat Ridge, Colorado 80033 and our telephone number is
      303-463-6371.





For
      the
      fiscal year 2006 the Company had one subsidiary, GeneThera, Inc., a Colorado
      corporation, ("GeneThera").





GeneThera's
      business is based on its Integrated Technology Platform (ITP) that combines
      a
      proprietary diagnostic solution called Gene Expression Assay (GEA) with PURIVAX,
      its system for analyzing large-scale DNA sequencing. The first part of this
      platform is the ongoing development of molecular diagnostic assays solutions
      using Real Time Fluorogenic Polymerase Chain Reaction (F-PCR) technology to
      detect the presence of infectious disease from the blood of live animals. The
      second part of the ITP is the development of therapeutic vaccines using RNA
      interference technology. It also allows for the efficient, effective, and
      continuous testing, management and treatment of animal populations. These facts
      distinguish the technology from any alternative testing and management
      methodology available to agriculture today -- all of which require the
      destruction of individual animals and even entire herds. Our testing and data
      analysis processes also allow us not only to separate infected from clean
      animals, but also to gain knowledge vital to development of preventative
      vaccines.





To
      date,
      GeneThera has successfully developed the ability to detect Chronic Wasting
      Disease (CWD), a disease affecting elk and deer in North America. GeneThera
      has
      also successfully developed an assay for the detection of Mad Cow Disease,
      a
      disease recently found in the United States, but has been in Europe for many
      years. Chronic Wasting Disease and Mad Cow Disease are both in the family of
      diseases called Transmissible Spongiform Encephalopathy (TSE).





**Government
      Regulations**





GeneThera's
      unique approach to the testing for various diseases allows it to begin
      commercialization of its diagnostic tests without the need for a long and
      enduring approval process from the USDA. All tests are done utilizing the blood
      of animals that can be collected in the field using the Company's proprietary
      Field Collection System (FCS). The collected blood is then sent to GeneThera's
      laboratory for testing. Since all of the testing for the diseases is done "in
      house," meaning tested at laboratories operated by GeneThera and using GeneThera
      developed testing methods, the USDA deems GeneThera's test to be under the
      category of Veterinary Services. The regulations on Veterinary Services are
      much
      different than that of third party testing. GeneThera's test is not a
      kit.





The
      Center for Biologics Evaluation and Research (CBER) regulates human gene therapy
      products - products that introduce genetic material into the body to replace
      faulty or missing genetic material, thus treating or curing a disease or
      abnormal medical condition. CBER uses both the Public Health Service Act and
      the
      Federal Food Drug and Cosmetic Act as enabling statutes for oversight. FDA
      has
      not yet approved any human gene therapy product for sale. However, the FDA
      is
      actively involved in overseeing this activity.








**Employees
      and Independent Contractors**





As
      of
      December 31, 2006, the Company had a total of two (2) full-time employees and
      two (2) independent contractors who devote substantial effort on the Company's
      behalf. None of the employees and independent contractors of the Company are
      represented by a collective bargaining unit.





**Risk
      Factors**





We
      encounter various risks related to our business and our industry. These include
      the following risks.





**The
      Loss of Key Personnel Could Adversely Affect the Company**





The
      Company depends to a large part on the efforts and continued employment of
      Antonio Milici, M.D., Ph.D., our President, Chairman of The Board, and Chief
      Executive Officer. The loss of the services of Dr. Milici could adversely affect
      our business.





**Rapid
      Growth May Place Significant Demands on our Resources**





We
      expect
      significant expansion of our operations. Our anticipated future growth will
      place a significant demand on our managerial, operational and financial
      resources due to:





*
      The
      need to manage relationships with various strategic partners and other third
      parties;





*
      Difficulties in hiring and retaining skilled personnel necessary to support
      our
      business;





*
      The
      need to train and manage a growing employee base; and





*
      Pressures for the continued development of our financial and information
      management systems.





If
      we
      have not made adequate allowances for the costs and risks associated with this
      expansion or if our systems, procedures or controls are not adequate to support
      our operations, our business could be harmed.





**Government
      Regulation**





The
      Company is subject to or affected by laws and regulations that govern, for
      example: (i) the vaccination of animals for certain diseases. The failure to
      comply with these laws and regulations, or to obtain applicable governmental
      approvals, could result in the imposition of penalties, cause delays in, or
      make
      impossible, the marketing of our products and services.





**Item
      2. Description of Property**





We
      lease
      a 5,730 square foot biotechnology laboratory located at 3930 Youngfield Street,
      Wheat Ridge, Colorado 80033. The lease is on a month-to-month basis and the
      rent
      is $5,235.26 per month. We believe that our existing facilities are adequate
      to
      meet our current requirements. We sub-lease 700 square foot office space to
      GTI
      Corporate Transfer Agents, LLC, a related party, located on the 3924 unit of
      our
      lease space reflected as 3930 Youngfield Street, Suite #2, Wheat Ridge, CO
      80033. The lease is on a month-to-month basis and the rent is $637.00 per month.
      We do not own any real property. If we are able to develop assays for different
      diseases, we intend to formalize the procedure into a commercial application
      through a series of laboratories to be owned and operated by GeneThera.
      Currently we do not have the funds to purchase or construct any such
      laboratories and do not have a commitment from any party to provide the funds
      for a laboratory.








**Item
      3. Legal Proceedings**





On
      or
      about July 23, 2004, Sisu Media sued the Company in Jefferson County District
      Court for breach of an alleged contract for website services for which the
      plaintiff seeks compensatory damages, plus costs, interest, and attorney’s fees
      in amounts to be determined at trial.




Trial
      was
      held on August 4, 2005, wherein the court determined that Sisu Media was
      entitled to compensation based only upon the breach of contract claim.
      Plaintiff’s claims in *quantum meruit* and for
      unjust enrichment were dismissed. The court also dismissed defendant GeneThera,
      Inc.’s claim of aiding and abetting a breach of fiduciary duty by third party.
      Entry of judgment was entered in favor of the plaintiff for approximately
      $49,000.00. On February 9, 2006, the Company appealed this judgment and is
      waiting for the Appeals Committee’s decision.




On
      or
      about August 5, 2004, Gary Langstaff, Nick Wollner and Springloose.com, LLC
      sued
      the Company in Jefferson County District Court to gain access to corporate
      records and seeking an accounting, a declaratory judgment determining their
      status as shareholders, and alleging unpaid wages owed to Mr. Langstaff and
      Mr.
      Wollner as employees in the amounts of $60,000.00 and $18,000.00 respectively,
      plus costs, interest, expert fees and attorney’s fees in amounts to be
      determined at trial. The trial date in July was vacated, to be reset upon notice
      based upon the plaintiffs’ counsel’s decision to possibly call GeneThera, Inc.’s
      counsel as an adverse witness at trial, thereby creating a conflict of interest
      for defense counsel, requiring him to withdraw from representation. GeneThera,
      Inc. retained other trial counsel. A new trial date was scheduled for May 16-19,
      2006. The plaintiffs settled with the Company on May 12, 2006. On July 20,
      2006,
      a Fairness Hearing was rescheduled to September 1 st ,
      2006 in
      which the plaintiffs, Langstaff and Wollner, after a lengthy litigation and
      to
      avoid extensive accrual of legal fees on both parties, settled with GeneThera
      in
      the amount of 300,000 common stock shares each. GeneThera Florida agreed to
      issue 150,000 stock options or warrants to each plaintiff, Langstaff and
      Wollner. GeneThera consented to the entry of a judgment in the amount of
      $55,000, which represents the plaintiff’s legal fees from their counsel; Cage,
      Williams, Abelman & Layden, which filed a levy against them.  Plaintiffs’
      stock certificates were mailed to their legal counsel.




OR
      Surgical, Inc. sued GeneThera, Inc. to recover money and/or stock it claims
      was
      owed as the result of a business arrangement involving an equipment lease OR
      Surgical defaulted on the payments. The parties settled the matter without
      further litigation and OR Surgical was issued 40,000 shares instead of 75,000
      shares the plaintiff wanted in March 2006.





On
      or
      about September 21, 2006, MAG Capital, a California Limited Liability Company
      (Mercator Momentum III, LP; Mercator Momentum Fund LP; Monarch Pointe Fund,
      Ltd;
      a British Virgin Islands Corporation), served GeneThera, Inc., a Florida
      corporation, GTI Corporate Transfer Agents, LLC, a Colorado limited liability
      company, Antonio Milici, an individual, Tannya L. Irizarry, and Laura Bryan,
      individuals with a Summons with the Federal Court, which was quashed. On October
      11, 2006, the above entities filed Superior Court State Complaint against
      GeneThera et al. for breach of written contract. The remaining 4,600 preferred
      stock will not be converted due to the above claim from MAG Capital, which
      is
      demanding at least $638,888 for damages suffered by MAG Capital due to breach
      of
      written contract by failure to convert the shares; the Company’s breach of
      written contract for failure to register shares; specific performance; breach
      of
      written contract by failure to pay dividends; breach of fiduciary duty;
      conspiracy to induce GeneThera to breach statutory duties; and conversion and
      trover. The Company retained legal counsel from Mark A. Shoemaker, located
      in
      Long Beach, CA, who was highly recommended by the Company’s Financial Advisor,
      Mr. Gary Rasmussen, who is also the primary beneficiary of Imperial Capital
      Holdings, LLC located in Costa Rica. It was exceedingly recommended by the
      primary beneficiary, Mr. Rasmussen, to open a line of credit for GeneThera,
      Inc.
      through his company, Imperial Capital Holdings, LLC. Although, Mr. Rasmussen’s
      name is not on the communications between Imperial and GeneThera, Inc., Maritza
      Sanabria, the Managing Director from Imperial notified the CAO of the Company
      that Mr. Rasmussen is the primary beneficiary of Imperial Capital Holdings,
      LLC.
      The Company filed a Form RW from the SEC requesting to withdraw the line of
      credit, which was granted on April 13, 2007. Mr. Rasmussen was the individual
      who generated the letter dated April 25, 2006 to the Plaintiffs concerning
      their
      erred calculations on the ownership of their GTHA shares; Rasmussen, through
      the
      CAO of the Company, was also the one who requested copies of the original
      brokerage statements from the Plaintiffs on their GTHA trading activities to
      reflect “Mercator Group and related parties is considered to be an “Affiliate,”
as defined under current SEC regulations.” Rasmussen also requested for the
      Plaintiffs to correct the error in their SEC filings Schedule 13G filed on
      April
      20 th ,
      2006
      for which MAG Capital failed to file promptly with the correct calculations.
      On
      November 16, 2006, the Company filed a Cross-Complaint for Declaratory Relief,
      Breach of Implied Covenant of Good Faith and Fair Dealing, Negligent
      Misrepresentation, Fraud, and Negligence against the Plaintiffs thanks to Mr.
      Rasmussen’s knowledge of securities.





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





None







**PART
      II.**





**Item
      5. Market For Common Equity And Related Shareholder
      Matters**


Our
      common stock currently trades on the Over The Counter Bulletin Board under
      the
      symbol GTHA. The following sets forth the range of high and low bid quotations
      for the periods indicated as reported by Yahoo Finance. Such quotations reflect
      prices between dealers, without retail mark-up, markdown or commission, and
      may
      not represent actual transactions.








**Year**
            **Quarter**
            **High**
            **Low**2006
            Fourth
            $0.08
            $
                0.02Third
            0.10
            0.05Second
            0.33
            0.08First
            0.28
            0.062005
            Fourth
            $0.49
            $
                0.10Third
            1.00
            0.40Second
            1.05
            0.54First
            1.25
            0.922004
            Fourth
            1.94
            0.88Third
            1.60
            0.70Second
            2.85
            0.90First
            4.39
            2.05


*Source
      Yahoo Finance.  There are no restrictions on the payment of dividends. We
      have paid no dividends to date and none are anticipated. There were
      approximately 229 record holders of common stock as of December 31,
      2006.




**Dividends**





We
      have
      not paid or declared any dividends on our common stock. We do anticipate in
      paying dividends on our common stock in the foreseeable future.





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








You
      should read the following discussion of our results and plan of operation in
      conjunction with the consolidated financial statements and the notes thereto
      appearing elsewhere in this Form 10-KSB. Statements in this Management's
      Discussion and Analysis or Plan of Operation that are not statements of
      historical or current objective fact are “forward-looking
      statements.”





**Overview**





We
      have
      developed proprietary diagnostic assays for use in the agricultural and
      veterinary markets. Specific assays for Chronic Wasting Disease (CWD) (among
      elk
      and deer) and Mad Cow Disease (among cattle) have been developed and are
      available currently on a limited basis. E.coli (predominantly cattle) and
      Johnne's disease (predominantly cattle and bison) diagnostics are in
      development. We are also working on vaccine solutions to meet the growing
      demands of today’s veterinary industry and tomorrow's agriculture and healthcare
      industries. The Company is organized and operated both to continually apply
      its
      scientific research to more effective management of diseases and, in so doing,
      realize the commercial potential of molecular biotechnology.





We
      have
      not generated significant operating revenues, and as of December 31, 2006 we
      had
      incurred a cumulative net loss from inception of $15,585,353.
      Our ability to generate substantial operating revenue will depend on our ability
      to develop and obtain approval for molecular assays and developing therapeutic
      vaccines for the detection and prevention of food contaminating pathogens,
      veterinary diseases, and diseases affecting human health.





Our
      independent auditors have expressed some doubt about our ability to continue
      as
      a going concern in their report on our consolidated financial statements for
      the
      fiscal year ended December 31, 2006. For the years ended December 31, 2006
      and
      2005, our operating losses were $1,499,961and
      $3,625,483 respectively. Our current liabilities exceeded current assets by
      $1,409,487and $832,246 for the years ended December 31, 2006 and 2005,
      respectively.





Although
      we completed an equity financing with gross proceeds of approximately $1.1
      million in 2005, we will require significant additional funding in order to
      achieve our business plan. Over the next 12 months, in order to have the
      capability of achieving our business plan, we believe that we will require
      at
      least $5,000,000 in additional funding. We will attempt to raise these funds
      by,
      both, means of one or more private offerings of debt or equity securities and
      revenues generated by our Project in Mexico. At this time, we have commitments
      for additional capital funds. This amount may exceed an additional $1,000,000
      depending on cost involved in the further development and commercialization
      of
      our products. In such event, we may need immediate additional funding. ** Our
      capital requirements will depend on many factors including, but not limited
      to,
      the timing of further development of assays to detect the presence of infectious
      disease from the blood of live animals, our hiring of additional personnel,
      the
      applications for, and receipt of, regulatory approvals for any veterinary
      vaccines that we may develop, and other factors. Our ability to raise capital
      will increase our ability to implement our business plan.





Over
      the
      next 12 months, we expect significant purchases and/or sales of plant or
      equipment and significant changes in the number of our employees for any
      off-balance sheet arrangements that will have current and future effect on
      our
      financial condition.





We
      also
      expect to spend a significant amount of our capital on research and development
      activities for commercialization relating to development and vaccine
      design/development. When we are able to develop assays for different diseases,
      we intend to formalize the procedure into a commercial application through
      a
      series of laboratories to be owned and operated by GeneThera. To date, we have
      introduced our diagnostic solution for Chronic Wasting Disease (CWD) and Mad
      Cow
      Disease on a very limited basis. We anticipate that significant funds will
      be
      spent on research and development throughout the life of the Company, as this
      is
      the source for new products to be introduced to the market. Our plan is to
      seek
      new innovations in the biotechnology field. We may be successful in developing
      or validating any new assays and, when we are successful in developing and
      validating any such assays, we may be able to successfully commercialize them
      or
      earn profits from sales of those assays. Furthermore, we may be able to design,
      develop, or successfully commercialize vaccines as a result of our research
      and
      development efforts.





**Recent
      Developments**





The
      Company is in continued negotiations with the Italian Government to open a
      laboratory facility in Northern Italy for the validation and testing of its
      live
      animal test for TSE. The parties are currently discussing space requirements
      and
      personnel needs.





The
      Company has begun to form an entity with a Mexican company to jointly own and
      operate a laboratory facility in Monterrey, Mexico for express purposes of
      testing cattle for TSE. The entity is currently being legally
      formed.





In
      March
      2006, the Company engaged a marketing consultant named CLX and Associates (CLX)
      to replace the marketing consultant engaged in March 2005. The previous
      marketing consultant returned all 1,375,000 shares previously issued. CLX
      received 1,000,000 shares that
      had
      a market value of approximately $180,000 on the date of issuance, which our
      board determined to be a reasonable amount for the marketing and public
      relations services to be provided by CLX.





The
      Company terminated its Investor Relations arrangement with The Regency Group
      in
      February 2006. The Company signed an Investor Relations agreement with The
      Mézey
      Howarth Group, Inc. in March 2007.





The
      Company opened a line of credit with Imperial Capital Holdings, LLC on the
      advice of the Company’s consulting financial advisor, Mr. Gary Rasmussen, who is
      also the primary beneficiary of Imperial. The Company was not aware of the
      relationship, but more importantly, after the CEO of the Company learned that
      Red Sea Management was the managing company of Imperial Capital, the CEO opted
      not to use the line of credit, requesting from the SEC to grant a withdrawal.
      It
      was approved on April 13 th ,
      2007.




On
            April
            10 th ,
            2007,
            Imperial Capital Holdings, LLC (Imperial) sent a letter to our independent
            auditors, Jaspers + Hall, PC with a copy to the PCAOB. In this letter,
            Imperial
            made several statements concerning transactions that allegedly took place
            between GeneThera and Imperial. Our auditors as well as the Company have
            requested on several occasions to provide documentation that will substantiate
            Imperial’s allegations. As for the date of this filing, the documentation
            provided by Imperial is untrue since the alleged statements were not
            with
            GeneThera, but with another entity. The Company is replying to the PCAOB
            and the
            SEC concerning the above matte through our auditors, Jaspers + Hall,
            P.C. The
            allegations from Imperial and its related party, Gary Rasmussen has proven
            to be
            unfounded. However, if such documentation, after extensive investigation
            are
            proven to be indeed unfounded, the Company will file litigation against
            all the
            related parties involved with Imperial Capital Holdings, LLC such as
            Gary
            Rasmussen, Rochester Capital Partners, LP, Red Sea Management, Mark Shoemaker;
            the legal counsel referred to the Company by Gary Rasmussen for failure
            to
            communicate with our Company, Dr. Hans George Huetter, Maritza Sanabria
            from Red
            Sea Management and also involved with Imperial Capital Holdings, LLC
            as their
            managing director, Lucia Shum, an individual named Charlie who, together
            with
            Lucia Shum were ‘working on it’ to provide documentation to our auditors, and
            Johann Arias, who failed to return signed put forms for the cancelled
            line of
            credit. Imperial Capital and Rochester Capital Partners share the same
            primary
            beneficiary; Gary Rasmussen, who was excessively paid for his services
            by
            generating false consulting agreements with his related parties for his
            financial benefit.
 The
            Company also believes that this is an attempt made by Imperial and its
            related
            party, Gary Rasmussen to delay the filing of the Company’s Annual Report.
  On
            March
            2, 2006, Imperial Capital received 375,000 shares at a share value of
            0.18 cents
            for a total amount of $67,500 through Wren & CO for marketing and investor
            relations. Imperial alleges GeneThera owes them $11,000 for marketing
            which is
            also untrue. Imperial received payment for marketing and investor relations
            for
            services rendered for which they state the Company did not pay. The Company
            did
            pay repeatedly through different related entities for the marketing services
            Imperial alleges we owe them.
  According
            to the false consulting agreement generated by Gary Rasmussen on October
            21,
            2005, there is a consulting agreement between GeneThera, Inc. and Rochester
            Capital Partners, LP located in Nevada, although Rasmussen, the General
            Partner
            is located in 11684 Ventura Blvd. #545, Studio City, CA 91604. The consulting
            agreement was signed and processed on February 28, 2006, not October
            21, 2005.
            Rasmussen was supposed to assist the Company as a financial advisor.
            Instead,
            Rasmussen utilized the false consulting agreement(s) and the line of
            credit from
            Imperial for an attempted hostile takeover for which he did not
            succeed.
 
 Imperial
            Capital is claiming that they are owed $101,000 on a note and $100,000
            for line
            of credit fees.  This liability is currently being disputed by the company.
            Genethera believes it has paid these debt in full. However, the company
            believes
            it should disclose this possible liability even though it is confident
            that the
            amount is currently not owed.


**Related
      Party Transactions**




Setna
        Holdings, LLC is a related party to the Company with a promissory note of
        $107,552. Setna is in the business of providing financial services and general
        business consulting services to privately held and publicly held corporations.
        Setna consult and assist GeneThera in implementing and also providing financial
        assistance while researching for appropriate plans for securing funds to
        meet
        the Company’s requirements for which Setna also introduce financial sources. Mr.
        Anthony J. Milici is the Managing Director of Setna Holdings. Upon the Company’s
        direction and approval, Setna disseminate information regarding GeneThera
        to
        shareholders, brokers, dealers, other investment community professionals
        and the
        general investing public.
 
 GTI
        Corporate Transfer Agents, LLC is the Company’s transfer agent. After the death
        of the original Managing Director, Ms. Juanita Pagan in March 2006, Ms. Tannya
        L. Irizarry became the Managing Director (Interim) of GTI Corporate Transfer
        Agents, LLC with a one third ownership and/or interest.
 Ms.
        Irizarry is also the Chief Administrative Officer and Chief Financial Officer
        (Interim) of the Company.
  GTI
        Corporate Transfer Agents LLC does not share employer identification number
        with
        GeneThera, Inc.
  Elia,
          Holdings, LLC (Elia) was paid 500,000 common shares in exchange for services
          rendered on May 2 nd 2006.
          Elia is partially owned by an independent contractor of GeneThera, Inc.
          Elia has
          paid $78,202 of GeneThera, Inc. expenses.


**Results
      of Operations**





**Fiscal
      Year Ending December 31, 2006 Compared to Fiscal Year Ending December 31,
      2005**





Personnel
      and professional expenses (consulting and professional fees and salaries)
      decreased to $928,091
      for the fiscal year ending December 31, 2006 from $2,421,904 for the year ending
      December 31, 2005. Consulting in return for equity made up the majority of
      this
      expense. Comparing the year ended December 31, 2006 to the year ended December
      31, 2005, expenses decreased to $585,170 from $3,547,018.





We
      recorded a net loss of $1,499,961for the year ended December 31, 2006 compared to $3,625,482 for the
      year
      ended December 31, 2005.





**Liquidity
      and Capital Resources**





We
      had a
      cash balance of $234 as of December 31, 2006 and a cash balance of $1,669 as
      of
      December 31, 2005. Our current cash balance is not sufficient to fund our
      business objectives and we will need significant additional capital over the
      next 12-18 months in order to fund our planned operations. We may be unable
      to
      secure any additional financing on terms that are acceptable to us, if at all.





Since
      we
      completed the reverse merger with Hand Brand Distribution, Inc., we have
      financed our operations, in large part, by private placements of our common
      and
      preferred stock and promissory notes convertible into our common stock. We
      have
      raised an aggregate of $2,613,900 **** through
      such sales, including the sale of approximately $1.1 million of our preferred
      stock in January 2005.





Despite
      our recent equity financing completed in January 2005, we will require
      significant additional funding in order to achieve our business plan.
      Specifically, we intend to spend significant funds on validating and testing
      our
      products, seeking necessary regulatory approvals and focusing on international
      expansion. Over the next 12 months, in order to have the capability of achieving
      our business plan, we believe that we will require at least
      $3,000,000. **** We
      will
      attempt to raise these funds by means of one or more private offerings of debt
      or equity securities or both. We may not be able to secure the financing that
      we
      believe is necessary to implement our strategic objectives, and even if
      additional financing is secured, we may not achieve our strategic objectives.
      As
      of the date of this Report, we do not have any firm commitments from any
      investors for any additional funding.





Our
      longer-term working capital and capital requirements will depend upon numerous
      factors, including revenue and profit generation, pre-clinical studies and
      clinical trials, the timing and cost of obtaining regulatory approvals, the
      cost
      of filing, prosecuting, defending, and enforcing patent claims and other
      intellectual property rights, competing technological and market developments,
      collaborative arrangements. Additional capital will be required in order to
      attain such goals. Such additional funds may not become available on acceptable
      terms and we cannot give any assurance that any additional funding that we
      do
      obtain will be sufficient to meet our needs in the long term.





**Critical
      Accounting Policies**





In
      December 2001, the SEC requested that all registrants discuss their most
“critical accounting policies” in Management’s Discussion and Analysis of
      Financial Condition or Plan of Operation. The SEC indicated that a “critical
      accounting policy” is one which is both important to the portrayal of the
      Company’s financial condition and results and requires management’s most
      difficult, subjective or complex judgments, often as a result of the need to
      make estimates about the effect of matters that are inherently uncertain. Our
      significant accounting policies are described in Note 1 to our consolidated
      financial statements included in this Report.





**Recently
      Issued Accounting Standards**





On
      December 16, 2004, the Financial Accounting Standards Board issued SFAS No.
      123
      (revised 2004), “Share-Based Payment”, which is a revision of SFAS No.123. SFAS
      No. 123 GeneThera supersedes APB No.25, and amends SFAS No.95, “Statement of
      Cash Flows”. Generally, the approach in SFAS No. 123 GeneThera is similar to the
      approach described in SFAS No. 123. However, SFAS No.123 GeneThera requires
      all
      share-based payments to employees, including grants of employee stock options,
      to be recognized in the income statement based on their fair values. Pro forma
      disclosure is no longer an alternative. SFAS No.123 GeneThera must be adopted
      no
      later than July 1, 2005. The Company has adopted SFAS No.123 GeneThera using
      a
“modified retrospective” method which includes the requirements of the modified
      prospective method described above, but also permits entities to restate based
      on the amounts previously recognized under SFASNo.123 for purposes of pro forma
      disclosures either (a) all prior periods presented or (b) prior interim periods
      of the year of adoption. In March 2005, the FASB issued FASB interpretation
      No.
      47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). FIN 47
      provides guidance relating to the identification of and financial reporting
      for
      legal obligations to perform an asset retirement activity. The Interpretation
      requires recognition of a liability for the fair value of a conditional asset
      retirement obligation when incurred if the liability’s fair value can be
      reasonably estimated. FIN 47 also defines when an entity would have sufficient
      information to reasonably estimate the fair value of an asset retirement
      obligation. The provision is effective no later than the end of fiscal years
      ending after December 15, 2005. The Company will adopt FIN 47 beginning the
      first quarter of fiscal year 2006 and does not believe the adoption will have
      a
      material impact on its consolidated financial position or results of operations
      or cash flows.





In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
(“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20
‘Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
      Financial Statements -An Amendment of APB Opinion No. 28.” SFAS 154 provides
      guidance on the accounting for and reporting of accounting changes and error
      corrections. It establishes retrospective application, or the latest practicable
      date, as the required method for reporting a change in accounting changes and
      a
      correction of errors made in fiscal years beginning after December 15, 2005
      and
      is required to be adopted by the company in the first quarter of 2006. The
      Company is currently evaluating





**Recently
      Issued Accounting Standards - Continued**





the
      effect that the adoption of SFAS 154 will have on its results of operations
      and
      financial condition but does not expect it to have a material
      impact.





In
      June
      2005, the Emerging Issues Task Force, or EITF, reached a consensus on Issue
      05-6, Determining the Amortization Period for Leasehold Improvements, which
      requires that leasehold improvements acquired in a business combination or
      purchased subsequent to the inception of a lease be amortized over the lesser
      of
      the useful life of the assets or a term that includes renewals that are
      reasonably assured at the date of the business combination or purchase. EITF
      05-6 is effective for periods beginning after July 1, 2005. We do not expect
      the
      provisions of this consensus to have a material impact on the financial
      position, results of operations or cash flows.





In
      February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial
      Instruments, which amends SFAS 133, Accounting for Derivative Instruments and
      Hedging Activities, and SFAS 140,
      Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities - a replacement of FASB Statement No. 125. SFAS 155 will be
      effective for the Company for all financial instruments issued or acquired
      after
      the beginning its fiscal year ending December 31, 2006. The Company not yet
      evaluated and determined the likely effect of SFAS 155 on future financial
      statements.





In
      June
      2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
      Income Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise's financial statements in accordance with FASB Statement No. 109,
      Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold
      and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return that results in
      a
      tax benefit. Additionally, FIN 48 provides guidance on de-recognition, income
      statement classification of interest and penalties, accounting in interim
      periods, disclosure, and transition. This interpretation is effective for the
      Company for its fiscal year ending December 31, 2007. The Company has not yet
      evaluated the effect that the application of FIN 48 may have, if any, on its
      future results of operations and financial condition.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, and expands disclosures about
      fair
      value measurements. This statement applies under other accounting pronouncements
      that require or permit fair value measurements. SFAS No. 157 is effective for
      the Company for its fiscal year beginning on July 1, 2008. The Company is
      currently assessing the impact the adoption of SFAS No. 157 will have on its
      financial statements.





In
      September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in order
      to eliminate the diversity of practice surrounding how public companies quantify
      financial statement misstatements. In SAB 108, the SEC staff established an
      approach that requires quantification of financial statement misstatements
      based
      on the effects of the misstatements on each of the Company’s financial
      statements and the related financial statement disclosures. SAB No. 108 is
      effective for the Company for its current fiscal year. The adoption of SAB
      No.
      108 did not have an impact on the Company’s financial statements.








**Recently
      Issued Accounting Standards - Continued**





On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115.” This standard permits an entity to measure many financial
      instruments and certain other items at estimated fair value. Most of the
      provisions of SFAS No. 115 (“Accounting for Certain Investments in Debt and
      Equity Securities) apply to all entities that own trading and available-for-sale
      securities. The fair value option created by SFAS No. 159 permits an entity
      to
      measure eligible items at fair value as of specified election dates. Among
      others, eligible items exclude (1) financial instruments classified (partially
      or in total) as permanent or temporary stockholders’ equity (such as a
      convertible debt security with a non-contingent beneficial conversion feature)
      and (2) investments in subsidiaries and interests in variable interests that
      must be consolidated. A for-profit business entity will be required to report
      unrealized gains and losses on items for which the fair value option has been
      elected in its statements of operations at each subsequent reposting date.
      The
      fair value option (a) may generally be applied instrument by instruments, (b)
      is
      irrevocable unless a new elections date occurs, and (c) must be applied to
      the
      entire instrument and not to only a portion of the instrument. SFAS No. 159
      is
      effective as of the beginning of the first fiscal year that begins after
      November 15, 2007. The Company has not yet evaluated the effect that the
      application of SFAS No. 159, may have, if any, on its future results of
      operations and financial condition.





**Business** **Overview**





GeneThera,
      Inc., a Florida corporation, was formerly known as Hand Brand Distribution,
      Inc., and was incorporated in November 1995, under the laws of the State of
      Florida. Up until 2002, GeneThera, Inc. was a private Colorado corporation
      (“GeneThera Colorado”). The Board of Directors at that time determined it would
      be in the best interests of the Company to become a publicly traded company
      in
      order to facilitate the business goals and objectives of the Company. That
      led
      to negotiations with the Board of Hand Brand Distribution to effect a reverse
      acquisition. The negotiations were on an “arms-length” basis at the time and
      resulted in the reverse acquisition being completed in October of 2003 with
      the
      distribution of shares to Dr. Milici for the acquisition from him of GeneThera,
      Inc. A total of 9,270,000 (after 2:1) shares were issued as consideration for
      the sale of the private corporation. GeneThera received all the assets of
      GeneThera Colorado including all laboratory equipment, laboratory supplies,
      research and development, processes, and intellectual property.





We
      are a
      biotechnology company that develops molecular assays and is currently in the
      process of developing therapeutic vaccines for the detection and prevention
      of
      food contaminating pathogens, veterinary diseases, and diseases affecting human
      health. We are in the development stage and have not generated significant
      revenues since our organization. Since June 2005, we had research contracts
      with
      Xpention Genetics, LLC for the development of a molecular test for early
      detection of cancer in dogs and the development of a molecular test for early
      detection of cancer in humans Stage 1. GeneThera’s business is based on its
      Integrated Technology Platform (ITP) that combines a proprietary diagnostic
      solution called Gene Expression Assay (GEA) with PURIVAX TM ,
      its
      system for analyzing large-scale DNA sequencing. The first part of this platform
      is the ongoing development of molecular diagnostic assays solutions using Real
      Time Fluorogenic Polymerase Chain Reaction (F-PCR) technology to detect the
      presence of infectious disease from the blood of live animals. The second part
      of the ITP is the development of therapeutic vaccines using RNA interference
      technology. It also allows for the efficient, effective, and continuous testing,
      management and treatment of animal populations. These facts distinguish the
      technology from any alternative testing and management methodology available
      to
      agriculture today - all of which require the destruction of individual animals
      and even entire herds. Our testing and data analysis processes also allow us
      not
      only to separate infected from clean animals, but also to gain knowledge vital
      to development of preventative vaccines.





To
      date,
      GeneThera has successfully developed the ability to detect Chronic Wasting
      Disease, a disease affecting elk and deer in North America. GeneThera has also
      successfully developed an assay for the detection of Mad Cow Disease, a disease
      recently found in the United States, but which has been in Europe for many
      years. Chronic Wasting Disease and Mad Cow Disease are both in the family of
      diseases called Transmissible Spongiform Encephalopathy (TSE). We are not
      currently in any regulatory or clinical trials for any of the tests we have
      developed to date.








**Business
      Model**





Summary .
      GeneThera’s animal disease assay development business is based on its Integrated
      Technology Platform (ITP) that combines a proprietary diagnostic solution called
      Gene Expression Assay (GEA )
      with
      PURIVAX ,
      its
      system for analyzing large-scale DNA sequencing. The first part of this platform
      is the ongoing development of molecular diagnostic assays solutions using real
      time Fluorogenic Polymerase Chain Reaction (F-PCR) technology to detect the
      presence of infectious disease from the blood of live animals. The second part
      of the ITP is the development of therapeutic vaccines using RNA interference
      technology. It also allows for the efficient, effective, and continuous testing,
      management and treatment of animal populations. These facts distinguish the
      technology from any alternative testing and management methodology available
      to
      agriculture today - all of which require the destruction of individual animals
      and even entire herds. Our testing and data analysis processes also allow us
      not
      only to separate infected from clean animals, but also to gain knowledge vital
      to development of preventative vaccines.





Each
      individual assay utilizes the proprietary Field Collection System (FCS) for
      the
      collection and transportation of blood samples to GeneThera’s laboratory. The
      FCS allows GeneThera to maintain the integrity of each sample by the addition
      of
      specific reagents to test tubes contained in the system. GeneThera’s FCS is
      designed to be an easy-to-use method of gathering blood samples from harvested
      or domesticated animals. It ensures consistency of samples as well as increased
      assurance of each sample’s integrity.





We
      are
      also continuing our research to develop vaccines for Chronic Wasting Disease
      and
      Johnne’s Disease. The Company will need the approval of the USDA before the
      vaccines can be manufactured or sold. The approval process for animal vaccines
      is time-consuming and expensive. We anticipate that such approval, if it is
      obtained, may require more than $5 million and may require more than two years
      for each vaccine for which approval is sought. Currently we do not have the
      capital necessary to seek approval of any of our candidate vaccines, and we
      cannot provide any assurance that we will be able to raise the capital necessary
      for such approval on terms that are acceptable to us, if at all. In addition,
      even if we are successful in raising the capital necessary to seek approval
      of
      any vaccine, there are no assurances that such an approval will be granted,
      or
      if granted, whether we will be able to produce and sell such vaccines following
      such an approval in commercial quantities or to make a profit from such
      production and sales.








**Integrated
      Technology Platform (ITP)**





GeneThera’s
      integrated technology platform is the foundation for “fast-track” rDNA vaccine
      development. At the present stage we are working on the development of a
      recombinant DNA vaccine for transmissible spongiform encephalopathy (TSE) and
      Johnne’s disease. Transmissible Spongiform Encephalopathy (TSE) is a group of
      invariably fatal neurodegenerative diseases that include Scrapie in sheep,
      Bovine Spongiform Encephalopathy (BSE) in cattle, Chronic Wasting Disease (CWD)
      in elk and deer, and Kuru Disease and variant Creutzfeld-Jacob Disease (vGCD)
      in
      humans. The pathological effects of the disease occur predominantly in the
      CNS
      (central nervous system) where the predominant hallmark is accumulation of
      an
      abnormally folded isoform of the prion protein (PrPsc). Johnne’s Disease is a
      chronic debilitating infectious disease of ruminants, characterized by weight
      loss and, particularly in cattle, by profuse diarrhea. The casual agent is
      a
      bacterium, Mycobacterium avium subspecies paratuberculosis. Infected animals
      may
      show no sign of the disease until years after the initial infection. Johnne’s is
      a slow, progressive disease with worldwide distribution.




Both
      vaccine developments are in the “in vitro” stage. We expect to initiate
      experimental animal studies for Johnne’s disease in the next 12 months. ** A
      longer
      time frame (24 months) will be needed to initiate experimental animal studies
      for TSE. ITP is the assembly of GEA and PURIVAX TM rAD and
      rAAV systems. This integrated technology platform yields fast-track vaccine
      development. Leveraging its ITP, GeneThera believes that it can develop a
      prototype vaccine within 4 to 6 months versus the current standard of 18 to
      24.
      We estimate that the cost to bring these vaccines to market is $2-5 million.
      There is no assurance that we will be able to raise the capital necessary to
      bring a vaccine to market and if the capital is raised, that we will be able
      to
      overcome the government regulations involved in bringing such a product to
      market. The GEA applied modular unit system utilizes robotics and is based
      on
      nucleic acid extraction in conjunction with F-PCR technology to develop gene
      expression assays. Using GEA assays, vaccine efficacy can be measured quickly
      because it will be unnecessary to wait for the antibody response to measure
      how
      well the vaccine is working. F-PCR will allow effective quantification of the
      precise number of viral or bacterial genetic particles before, during and after
      vaccine injection(s). We anticipate that the more effective the vaccine is,
      the
      stronger the decrease of the infectious disease particles will be.





**GEA
      System**





GEA
      is a
      proprietary assay development system. GEA was developed in 2001. To date the
      system has been used to develop our TSE molecular assay. GEA is a gene
      expression system to be used solely in our laboratory and will not be marketed
      for commercial sale. The core of GEA is Fluorogenic Polymerase Chain Reaction
      technology (F-PCR). GeneThera approaches the technical problems related to
      the
      use of conventional PCR in molecular diagnostics via our modular unit concept.
      Specifically, the modular unit consists of an Automated Nucleic Acid Workstation
      (ANAW) and a Sequence Detection System (SDS) that are integrated, allowing
      an
      operator to perform the entire procedure of DNA extraction and F-PCR analysis
      within a closed computerized system. This system results in minimal intervention
      and no post-PCR manipulation. GEA is a molecular genetic base system that
      utilizes fluorogenic polymerase chain reaction (F-PCR). Fluorogenic PCR (F-PCR)
      is a 5’ nuclease assay based on a sequence specific hybridization between a
      nucleic acid target and a fluorogenic probe complementary to the target
      sequence. The probe consists of an oligonucleotide with a reporter and quencher
      dye attached. Due to the unique design of the fluorogenic probe the 5’-3’
nuclease activity of the Taq Polymerase allows direct detection of PCR products
      by the release of the fluorogenic reporter during PCR. The reporter and the
      quencher dye are linked to the 5’ and 3’ end of the probe. A fluorescent
      reporter dye such as FAM (6-carboxyfluorescein) is covalently linked to the
      5’
end of the oligonucleotide. Each of the reporters is quenched by TAMRA
      (carboxytetramethylrhodamine) attached via linker arm that is typically located
      at the 3’ end of the probe. When the probe is intact, the proximity of the
      reporter dye to the quencher dye results in a suppression of the reporter
      fluorescence. During PCR, if the target of interest is present, the probe
      specifically anneals between the forward and the reverse primer site. The
      nuclease activity of the Taq DNA Polymerase cleaves the probe between the
      reporter and the quencher only if the region hybridizes to the target. The
      Taq
      Polymerase does not cleave free probe. After cleavage, the shortened probe
      dissociates from the target and the polymerization of the strand continues.
      This
      process occurs in every cycle and does not interfere with the exponential
      accumulation of the product. The cleavage of the oligonucleotide between the
      reporter and the quencher dye results in an increase of fluorescence of the
      reporter that is directly proportional to the amount of the product accumulated.
      The specificity of this 5’ nuclease assay results from the requirement of
      sequence complementary between probe and template in order for cleavage to
      occur. Thus the fluorogenic signal is generated only if the target sequence
      of
      the probe is generated by PCR. No signal is generated by non-specific
      amplification.





To
      perform GEA, specific laboratory equipment is needed. This involves some
      substantial initial costs to set up the laboratory operations. We have performed
      this substantial set up and are fully operational to perform GEA. We currently
      have all the specific equipment necessary to further development. However,
      the
      use of F-PCR represents a great advantage over other available systems because
      of its greater sensitivity, speed and accuracy.





The
      Automated Nucleic Acid Workstation is a highly flexible robotic system that
      extracts and purifies acids from a variety of complex samples, preparing them
      for F-PCR analysis. Data management system software includes a database to
      manage all run phases and record sample processing.





The
      Sequence Detection System detects the fluorescent signal generated by the
      cleavage of the reporter dye during each PCR cycle. This process confers
      specificity without the need of post-PCR hybridization. Most important, the
      SDS
      offers the advantage of monitoring real time increases in fluorescence during
      PCR. Specifically, monitoring real-time progress of the PCR completely changes
      the approach to PR-based quantitation of DNA and RNA, most particularly in
      improving the precision in both detection and quantitation of DNA and RNA
      targets.





GeneThera
      currently faces limited competition in the use of F-PCR technology and the
      modular unit concept for commercial testing of either infectious disease in
      animals or food pathogen contamination. Currently, most labs utilize
      conventional microbiology, immunological or conventional PCR methods for either
      veterinary diseases or food pathogen contamination detection. Specific to
      microbiology and immunological techniques, the drawbacks of these approaches
      are:





1.
            The
                antibodies-based culture media used to detect the presence of infectious
                diseases has a low level of
                sensitivity;


2.
            high
                background due to non-specific binding of antibodies and/or culture
                contamination; 3.
            sample
              preparation and storage creates artifacts; and long, cumbersome protocols
              necessary to perform these tests.







A
      major
      technical limitation of conventional PCR is the risk of contaminating a specimen
      with the products of previously amplified sequences. Known as
      cross-contamination, this phenomenon represents a constant challenge to any
      lab
      using conventional PCR. Managing these challenges is cumbersome and difficult
      to
      streamline. Fluorogenic PCR (F-PCR) attempts to overcome these drawbacks by
      making it possible for PCR to efficiently test large numbers of samples even
      when major laboratory facilities are not readily available. A novel methodology,
      F-PCR allows quantitative and qualitative detection of specific nucleic acid
      sequences in a sensitive, accurate and rapid fashion.






**Purivax** **TM** **Technology**





GeneThera
      has developed a large-scale process for highly purified and high viral titer
      Adenovirus and AAV recombinant vectors. This technology enables GeneThera to
      develop Adenovirus and AAV based recombinant DNA vaccines for veterinary
      diseases and food pathogens.





GeneThera’s
      PURIVAX TM is a
      multi-resin anion exchange chromatography system that dramatically improves
      biological purity and viral titer of recombinant Adenovirus and AAV vectors.
      PURIVAX TM is
      intended to completely eliminate toxic side effects associated with adenoviruses
      and AAV vectors, thereby making it possible to develop highly immunogenic and
      safe recombinant DNA vaccines. Importantly, recombinant DNA (rDNA) vaccine
      technology represents a powerful tool for an innovative vaccine design process
      known as “genetic immunization.”





Recombinant
      Adenovirus (rAD) and AAV (rAAV) vectors are the ideal candidates for a gene
      delivery system. These viruses can efficiently deliver genetic material to
      both
      dividing and non-dividing cells, thereby overcoming some of the obstacles
      encountered with first generation retroviral vectors.





Equally
      important, rAd and rAAV are engineered virus genomes that contain no viral
      gene.
      One of the key features for rAd and rAAV is their ability to transduce a large
      variety of cells. However, two technical challenges had to be overcome to fully
      utilize rAd and rAAV in the development of rDNA vaccines:





1.
            lack
                of large scale purification system;
                and


2.
            low
                viral titer





Traditional
      technologies and first generation chromatography processes are limited both
      in
      terms of purity and yield. And, due to the limitation of these purification
      technologies, adequate viral titers cannot be achieved. We believe that the
      result is that there is currently no efficient system to deliver immunogenic
      genetic sequences into cells.





This
      is
      the significance of GeneThera’s PURIVAX TM ,
      rAD and
      rAAV system for rDNA vaccine development. Succinctly stated, it is designed
      to
      be able to achieve both high purity and high viral titer (up to 10e16 viral
      particles/eulate) based on its proprietary multi-resin anion exchange
      chromatography system. GeneThera believes that biological contaminants such
      as
      endogenous retrovirus, bacterial, mycoplasma, non-specific nucleic acids,
      lipids, proteins, carbohydrates and endotoxins are eliminated during the
      purification process.








**Research
      and Development Services**





Molecular,
      Cellular, Viral Biology Research, and Consulting Services .
      We
      intend to provide independent research services to scientists in academia,
      the
      pharmaceutical industry, and the biotechnology industry. Primarily, we focus
      on
      technology relevant to animal and human immunotherapy. Our services are
      supported by more than 50 years of cumulative experience in research and
      development for both government and industry by GeneThera’s senior scientists.
      We intend to develop a commercial-scale implementation of Adenovector
      Purification Process to support R&D material production. Furthermore, we
      intend to evaluate and test commercially available expression vectors and
      incorporate them into our vector repertoire. These technologies are well
      established within the repertoire of GeneThera’s scientific staff. We cannot
      provide any assurance, however, that we will be able to successfully offer
      these
      services or that, if offered, we can provide them profitably.





We
      intend
      to offer the following research and development services.





*Molecular
      Biology* services
      consisting of:





Synthetic
      cDNA Construction


Prokaryotic
      Expression Vector Construction & Development coli
        Expression Strain Evaluation


Pilot
      Scale Fermentation


Mammalian
      Expression Vector Construction & Development


Baculovirus
      Expression


Protein
      Isolation


Protein
      Engineering: Complement Determining Region Conjugated Proteins


Monoclonal
      Antibody Production Chimerization & Humanization


Vector
      design for Prokaryotic Expression of Antibody Fragments (Fab) and Single Chain
      Antibody (ScFv)


Pilot
      Scale-up Development


Process
      Purification & Characterization


Assay
      Development & Quality Control Pharmaceutical Dosage and
      Formulation





*Molecular
      Biology Potential Agreement Structure* ,
      which
      refers to the following stages or options available to a potential customer
      interested in developing a gene/protein expression system for research
      purposes.





Stage
      I—cDNA Construction & Expression Vector Development Stage in which a
      specific gene sequence is cloned in an expression vector and screened by
      restriction enzyme analysis.





Stage
      II
      in which the expression vector is grown into bacteria and the protein produced
      is purified by chromatography techniques.





Stage
      III, Assay for the protein stability and activity in which protein activity
      is
      determined by testing the recombinant protein using a specific stabilizing
      buffer. The recombinant protein is tested against a substrate. The substrate
      is
      the target protein that is deactivated by the recombinant protein.





Stage
      IV—Quantification of protein yield per each cell line used for protein
      expression. Each type of cell line responds differently to each recombinant
      protein. Therefore, various cell lines that express each recombinant protein
      is
      tested to determine the recombinant protein yield. Cell lines that express
      the
      highest quantity of a specific recombinant protein are then used for large-scale
      recombinant protein production.





Stage
      V—Experimental animal model development for determination of proper biological
      active concentration and stability and determination of proper storage. A
      typical animal model is a mouse model. Mice are divided into 2 groups: 1) normal
      control and 2) mice injected with different concentrations of recombinant
      protein. The biological activity is determined by immunological assays such
      as
      an ELISA test or Western blot analysis.





Gene
      Therapy Testing Services .
      GeneThera offers GLP testing programs for somatic cell, viral and naked
      DNA-based gene therapies. Our scientists have over eight years experience in
      providing fully integrated bio-safety testing programs for the cell and gene
      therapy fields and have supported a number of successful BLA and IND
      applications. To date, the Company has not generated any revenues with regard
      to
      these services, and there is no assurance that we will generate any revenues
      from such services.





Replication-Competent
      Viral Vector Testing .
      Sensitive in vitro cell culture assays are used to detect replication-competent
      retroviruses or adenoviruses. GeneThera intends to work with clients to provide
      custom replication-competent virus detection assays for the particular vector
      construct.





Complete
      Somatic Cell and Viral Vector Packaging and Producer Cell Line
      Characterization .
      GeneThera offers all of the assays mandated by regulatory authorities worldwide
      for the bio-safety analysis and characterization of cells and cell lines used
      in
      gene therapy products.





Vector
      Stock Characterization .
      Custom
      purity and potency testing is available for gene therapy viral vector
      stocks.





Vector
      Purification Process Validation for Viral Clearance .
      Most
      biopharmaceuticals require viral clearance studies to validate the removal
      of
      potential contaminants, such as those from bovine components or from helper
      viruses (adenovirus in AAV production). GeneThera can provide custom design
      and
      performance of viral studies for various vector purification
      processes.





Custom
      Bio-safety Testing Programs for Somatic Cell, Ex Vivo Cell, and Tissue
      Therapies .
      GeneThera can guide our clients through the unique process of designing and
      implementing a bio-safety testing program that meets the needs of each specific
      project.





To
      date,
      we have not entered into any agreement for the provision of any of the services
      described above with any customer. We are currently pursuing agreements to
      provide some of these services to potential customers. There is no assurance
      that any agreement will be entered into for the provision of the Company’s
      services or that the Company will generate significant revenues or profits
      from
      any such agreement.




**Intellectual
      Property**





We
      do not
      own any patents on any of our technology and have not filed any applications
      for
      patents in any country. We cannot give any assurance that we will be able to
      file any patent applications or that, if we file one or more applications for
      patents, any patents will issue or that, if issued, the claims granted in any
      such patents will afford us adequate protection against competitors with similar
      technology.





We
      also
      depend upon the skills, knowledge and experience of our scientific and technical
      personnel, none of which is patentable. To help protect our proprietary know-how
      which is not patentable, and for inventions for which patents may be difficult
      to enforce, we rely on trade secret protection to protect our
      interests.





**Manufacturing**





We
      do not
      currently manufacture any products and do not have any facilities capable of
      manufacturing any products. If we are successful in developing a vaccine for
      veterinary purposes, we intend to contract with third parties or a collaborative
      partner to assist with production. We currently do not intend to establish
      a
      manufacturing facility to manufacture any products that we may develop. In
      the
      event we do decide to establish a commercial manufacturing facility, we will
      require substantial additional funds and will be required to hire and train
      significant numbers of employees and comply with the extensive federal and
      state
      regulations applicable to such a facility. In addition, we would be required
      to
      apply for a license from the United States Department of Agriculture’s Animal
      and Plant Health Inspection Service to manufacture any such vaccines at such
      facilities.





**Sales
      and Marketing**





We
      currently have no sales, marketing, or distribution capabilities and we do
      not
      anticipate having the resources in the foreseeable future to allocate to the
      sales and marketing of any products that we may develop. Our success will
      depend, in part, on our ability to either; (i) enter into and maintain
      collaborative relationships with third parties for the marketing, sales, and
      distribution of products that we develop, if any, or (ii) hire and retain our
      own sales and marketing capabilities. Initially we plan to market products
      that
      we develop and for which we obtain regulatory approval through marketing,
      licensing, distribution, or other arrangements with collaborative partners.
      We
      believe that this approach will both increase market acceptance of any products
      that we develop and enable us to avoid expending significant funds to develop
      a
      sales and marketing organization.





**Competition**





We
      face
      competition from many companies, universities, and research institutions in
      the
      United States and abroad. Virtually all of our competitors have substantially
      greater resources, experience in product commercialization, and obtaining
      regulatory approvals for their products, operating experience, research and
      development and marketing capabilities and manufacturing capabilities than
      we
      do. We will face competition from companies marketing existing products or
      developing new products for diseases targeted by our technologies. The
      development of new products for those diseases for which we are attempting
      to
      develop products could render our product candidates noncompetitive and
      obsolete. Our current competitors include Prionics AG, IDEXX Laboratories,
      Inc.,
      and Bio-Rad Laboratories, Inc.





Academic
      and government institutions are also carrying out a significant amount of
      research in the field of veterinary health, particularly in the fields of
      Chronic Wasting Disease and Mad Cow Disease. We anticipate that these
      institutions will become more aggressive in pursuing patent protection and
      negotiating licensing arrangements to collect royalties for use of technology
      that they have developed and to market commercial products similar to those
      that
      we seek to develop, either on their own or in collaboration with competitors.
      Any resulting increase in the cost or decrease in the availability of technology
      or product candidates from these institutions may affect our
      business.





Competition
      with respect to our veterinary technologies and potential products is and will
      be based, among other things, on effectiveness, safety, reliability,
      availability, price, and patent protection. Another important factor will be
      the
      timing of market introduction of products that we may develop and for which
      we
      may receive regulatory approval. Accordingly, the speed with which we can
      develop products, complete the required animal studies or trials and approval
      processes and ultimately supply commercial quantities of the products to the
      market is expected to be an important competitive factor. Our competitive
      position will also depend upon our ability to attract and retain qualified
      personnel, to obtain patent protection or otherwise develop proprietary products
      or processes, and to secure sufficient capital resources for the often
      substantial period between technological conception and commercial
      sales.





Several
      attempts have been made to develop technologies that compete with F-PCR. To
      our
      knowledge none of these technologies have resulted to date in any product
      available on the market. The field of biotechnology is very dynamic. The
      possibility that more advanced technologies could be developed into products
      that may compete with ours is very strong. However it is very difficult to
      predict the length of time necessary for this scenario to take
      place.








**Product
      Liability**





The
      testing, manufacturing and marketing of the Company’s proposed products involves
      an inherent risk of product liability attributable to unwanted and potentially
      serious health effects in animals that may receive any vaccines that we may
      develop and market. To the extent we elect to test, manufacture, or market
      veterinary vaccines and other products,, we will bear the risk of product
      liability directly. We do not currently have product liability insurance. There
      is no guarantee that we can obtain product liability insurance at a reasonable
      cost, or at all, or that the amount of such insurance will be adequate to cover
      any liability that we may be exposed to. In the absence of such insurance,
      one
      or more product liability lawsuits against us can be expected to have a material
      adverse effect on our business and could result in our ceasing
      operations.





**Government
      Regulation**





Our
      unique approach to the testing for various animal diseases allows us to begin
      commercialization of its diagnostic tests without the need for a long and
      enduring approval process from the USDA. All tests are done utilizing the blood
      of animals that can be collected in the field using the Company’s proprietary
      Field Collection System (FCS). The collected blood is then sent to our
      laboratory for testing. Since all of the testing for the diseases is done “in
      house,” meaning tested at laboratories operated by us and using our developed
      testing methods, the USDA deems our test to be under the category of Veterinary
      Services. The regulations on Veterinary Services are much different than that
      of
      third party testing. Our test is not a kit.





In
      the
      event that we develop a vaccine based on our research, the vaccine product
      and
      the facility at which commercial quantities of the vaccine will be produced
      will
      be subject to comprehensive regulation by the United States Department of
      Agriculture’s Animal and Plant Health Inspection Service. Before any “biological
      product” (which includes vaccines) can be prepared for commercial sale, APHIS
      must approve and license the product and the facility at which it is proposed
      to
      be manufactured. The approval process is lengthy and expensive. We will be
      required to submit an application containing, among other things, an outline
      of
      production for the proposed product, characterization data, and protocols for
      animal studies and trials of host animal immunogenicity, safety, efficacy,
      back
      passage, shed/spread, interference, and other studies.





We
      do not
      have the capability to conduct our own studies and trials of any candidate
      vaccine that we may develop and will rely on collaborative partners to conduct
      all such studies. Currently we do not have any such agreements with any partner,
      and we cannot give any assurance that we will be able to enter into such an
      agreement on terms that are favorable to the Company, if at all. If we do enter
      into one or more such agreements, we will not be able to control the timetable
      for completing such studies. Furthermore, we cannot give any assurance that
      any
      applications that we submit for any vaccine products will be approved by APHIS.
      The failure to receive such approval, or the receipt of approval following
      the
      approval of a competing product, would have an adverse material effect on the
      Company.





**Employees**





As
      of
      December 31, 2006, we had a total of two (2) full-time employees who devote
      substantial effort on our behalf. None of our employees are represented by
      a
      collective bargaining unit. We entered into an employment agreement with Antonio
      Milici, M.D., Ph.D, to serve as our Chief Executive Officer and Chief Scientific
      Officer through January 7, 2012. In consideration for his services, Dr. Milici
      will receive a base salary of $144,000 per annum plus bonuses as may be
      determined by the Board of Directors in its sole discretion. As part of his
      employment agreement, Dr. Milici is subject to non-disclosure and
      non-competition obligations and has transferred to the Company all of his
      interests in any idea, concept, technique, invention or written work. We also
      entered into an employment agreement with Tannya L. Irizarry to serve as our
      Chief Administrative Officer through January 7, 2012. Ms Irizarry’s base salary
      is $90,000 per annum. The above salaries have been accrued to be paid in common
      stock shares from the Company. There are no employee issues at this time.





**Research
      and Development**





We
      anticipate that R&D will be the source for both assay development and
      vaccine design/development. If we are able to develop assays for different
      diseases, we intend to formalize the procedure into a commercial application
      through a series of laboratories to be owned and operated by GeneThera. To
      date,
      we have introduced our diagnostic solution for Chronic Wasting Disease and
      Mad
      Cow Disease on a very limited basis. We anticipate that R&D will be ongoing
      during the life of the Company, as this is the source for new products to be
      introduced to the market. Our plan is to seek new innovations in the
      biotechnology field. We cannot assure you that we will be successful in
      developing or validating any new assays or, if we are successful in developing
      and validating any such assays, that we can successfully commercialize them
      or
      earn profits from sales of those assays. Furthermore, we cannot assure you
      that
      we will be able to design, develop, or successfully commercialize any vaccines
      as a result of our research and development efforts.





**Commercial
      Diagnostic Testing**





In
      the
      event that we are able to develop assays for the detection of diseases in
      animals, we intend to establish a series of diagnostic testing laboratories
      geographically proximate to the primary sources of individual diseases and/or
      according to specific available operating efficiencies. The specific number
      of
      labs to be built and operated will be based on assay demand (demand facilitated
      by the number of specific disease assays GeneThera develops), our ability to
      obtain the capital to build the labs, and our ability to successfully manage
      them from our principal office.





**Licensing**





Through
      our third division, Licensing, we intend to manage the marketing and sale of
      the
      vaccines developed by GeneThera’s Research & Development division. As
      GeneThera does not intend to be a vaccine manufacturer, we plan to use our
      Licensing division to license the technology related to any vaccines that may
      be
      developed and to manage the revenue potential available from the successful
      development and validation of specific vaccines. We cannot provide any assurance
      that we will develop any vaccines or that, if they are developed, we will be
      able to license them successfully or that any such license will produce
      significant revenues.





**Properties**





We
      lease
      a 5,730 square foot biotechnology laboratory located at 3930 Youngfield Street,
      Wheat Ridge, Colorado 80033. The lease expired in January 2007 and the rent
      is
      $5,235.26 per month. Currently, the Company is on a month-to-month basis. We
      sub-lease 700 square foot to GTI Corporate Transfer Agents, LLC. The monthly
      rent is $637. We believe that our existing facilities are adequate to meet
      our
      current requirements. We do not own any real property. If we are able to develop
      assays for different diseases, we intend to formalize the procedure into a
      commercial application through a series of laboratories to be owned and operated
      by GeneThera. Currently we do not have the funds to purchase or construct any
      such laboratories and do not have a commitment from any party to provide the
      funds for a laboratory.





**Item
      7. Financial Statements**




**GENETHERA,
        INC. AND SUBSIDIARY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **FOR
        THE PERIOD FROM**
 **OCTOBER
        5, 1998 (INCEPTION) TO DECEMBER 31, 2006**
 **TABLE
          OF CONTENTS**
  Independent
          Registered Public Accounting Firm’s Report        F- 2
 
 Consolidated
          Balance Sheets - December 31, 2006 and
          2005                                                                                             
F-3
 
 Consolidated
          Statements of Operations for the
 Period
          from October 5, 1998 (Inception) to December 31,
          2006                                                                                          
F-4
 
 Consolidated
          Statements of Changes in Stockholders’ Equity (Deficit) for the
 Period
          from October 5, 1998 (Inception) to December 31,
          2006                                                                                          
F-5
 
 Consolidated
          Statements of Cash Flows for the
 Period
          from October 5, 1998 (Inception) to December 31,
          2006                                                                                         
F-6
 
 Notes
          to
          Consolidated Financial
          Statements                                                                                                                        
F-7
 
  REPORT
            OF
            INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
            the
            Board of Directors
 GeneThera,
            Inc., and Subsidiaries
 Wheat
            Ridge, Colorado
 
 We
            have
            audited the accompanying consolidated balance sheets of GeneThera, Inc.
            (a
            development stage company) and Subsidiary as of December 31, 2006 and
            2005, and
            the related consolidated statements of operations, changes in stockholders'
            deficit, and cash flows for the years then ended. These financial statements
            are
            the responsibility of the Company's management. Our responsibility is
            to express
            an opinion on these financial statements based on our audit.
 
 We
            conducted our audits in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform the audit to obtain reasonable assurance about whether the
            consolidated financial statements are free of material misstatement.
            An audit
            includes examining, on a test basis, evidence supporting the amounts
            and
            disclosures in the consolidated financial statements. An audit also includes
            assessing the accounting principles used and significant estimates made
            by
            management, as well as evaluating the overall consolidated financial
            statement
            presentation. We believe that our audits provide a reasonable basis for
            our
            opinion.
 
 In
            our
            opinion, the consolidated financial statements referred to above present
            fairly,
            in all material respects, the consolidated financial position of GeneThera,
            Inc.
            and Subsidiary as of December 31, 2006 and 2005, and the consolidated
            results of
            its operations and its cash flows for the year then ended, in conformity
            with
            U.S. generally accepted accounting principles.
 
 The
            accompanying consolidated financial statements have been prepared assuming
            the
            Company will continue as a going concern. As discussed in Note 11 to
            the
            consolidated financial statements, the Company has no established or
            sufficient
            sources of revenue, and has incurred significant losses from its operations.
            This raises substantial doubt about its ability to continue as a going
            concern.
            Management's plan in regards to these matters is also described in Note
            11. The
            consolidated financial statements do not include any adjustments that
            might
            result from the outcome of this uncertainty.
 
 Jaspers
            +
            Hall, PC
 April
            18,
            2007
 Denver,
            CO
 F-2
  
  G**ENE****T****HERA,****I****NC.****AND****S****UBSIDIARY**
 (A DEVELOPMENT STAGE
        COMPANY)
 **CONSOLIDATED
        BALANCE SHEETS**
 ****
 **Assets****December
                  31, 2006**
              
              **2005**Current
                  AssetsCash
              $
                  234
              
              $
                  1,669Accounts
                  receivable - less reserve for uncollectible amount
              6,800
              
              5,810Accounts
                  receivable Related Parties
              17,390
              
              -Net
                  Accounts Receivable
              24,190
              
              5,810Prepaid
                  expenses
              1,890
              
              10,551Total
                  Current Assets
              26,314
              
              18,030Property
                  and equipment
              727,428
              
              727,428Accumulated
                  Depreciation
              (364,413)
              
              (287,399)Property
                  and equipment, net
              363,015
              
              440,029Other
                  AssetsDeposits
              5,278
              
              5,278Other
              -
              
              9,736Total
                  Other Assets
              5,278
              
              15,014Total
                  Assets
              $
                  394,607
              
              $
                  473,073**Liabilities
                  and Stockholders' Equity****2006**
              
              **2005**Current
                  LiabilitiesAccounts
                  payable
              $
                  493,095
              
              $185,328Accrued
                  expenses
              704,724
              
              589,921Leases
                  payable, current portion
              12,040
              
              14,351Notes
                  payable
              107,552
              
              55,775Contingency
                  Liability
              101,000
              
              -Total
                  Current Liabilities
              1,418,411
              
              845,375Long
                  Term LiabilitiesLong
                  Term Loan
              -
              
              4,901Total
                  Liabilities
              1,418,411
              
              850,276Stockholders'
                  EquityPreferred
                  stock, $.001 par value, 20,000,000 shares authorized;Series
                  A 4,600 shares issued and outstanding $.001 par value
              5
              
              5Series
                  B 2,250,000 shares issued and outstanding $.001 par value
              2,250Common
                  stock $.001 par value, 100,000,000 shares authorized;35,474,736
                  and
                  22,295,069 issued and outstandingat
                  December 31, 2006 and 2005 respectively
              35,476
              
              22,296Additional
                  paid
                  in capital
              14,506,428
              
              13,685,888Deficit
                  accumulated during development stage
              (15,567,963)
              
              (14,085,392)Total
                  Stockholders' Equity
              (1,023,804)
              
              (377,203)Total
                  Liabilities & Stockholders' Equity
              $
                  394,607
              
              $
                  473,073


The
        accompanying notes should be  read in conjunction with these financial
        statements.







**ENE** **T** **HERA,** **I** **NC.** **AND** **S** **UBSIDIARY**


(A
      DEVELOPMENT STAGE
      COMPANY)


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




**For
                      the period from****Year
                      End December 31,**
                  
                  
                  
                  **October
                      5, 1998****2006**
                  
                  **2005**
                  
                  **(inception)
                      to****December
                      31, 2006**IncomeSales
                  $
                      150,000
                  
                  $
                      190,982
                  
                  $
                      418,749Research
                      fees
                  -
                  
                  -
                  
                  188,382Total
                      income
                  150,000
                  
                  190,982
                  
                  607,131Cost
                      of sales
                  -
                  
                  -
                  
                  (30,352)Gross
                      profit
                  150,000
                  
                  190,982
                  
                  576,779ExpensesOther
                      compensation
                  -
                  
                  -
                  
                  3,283,009Consulting
                  444,420
                  
                  1,952,040
                  
                  4,583,837General
                      and administrative expenses
                  739,529
                  
                  973,376
                  
                  3,507,619Payroll
                      expenses
                  306,890
                  
                  469,864
                  
                  1,869,269Depreciation
                  77,014
                  
                  98,118
                  
                  403,116Settlement
                      expense
                  25,132
                  
                  -
                  
                  82,625Lab
                      expenses
                  39,592
                  
                  53,618
                  
                  294,517Total
                      expenses
                  1,632,577
                  
                  3,547,017
                  
                  14,079,706Loss
                      from operations
                  (1,482,577)
                  
                  (3,356,034)
                  
                  (13,502,927)Other
                      income (expenses)Beneficial
                      conversion expense
                  -
                  
                  (367,397)
                  
                  (1,987,991)Interest
                      expense
                  -
                  
                  (2,324)
                  
                  (46,758)Gain
                      on
                      settlements
                  -
                  
                  58,203
                  
                  58,203Other
                      income (expenses), net
                  6
                  
                  42,069
                  
                  33,575Net
                      loss
                  $
                      (1,482,571)
                  
                  $
                      (3,625,482)
                  
                  $
                      (15,567,963)Loss
                      per common share
                  $
                      (0.065)
                  
                  $
                      (0.17)Diluted
                      Weight Average
                  22,923,273
                  
                  20,978,467Weight
                      Average
                  22,923,273
                  
                  20,978,467Diluted
                      Per Share
                  $
                      (0.065)
                  
                  $
                      (0.17)
 F-4


The
      accompanying notes should be read in conjunction with these financial
      statements.









**G**ENE****T****HERA,****I****NC.****AND****S****UBSIDIARY****


(A
      DEVELOPMENT STAGE
      COMPANY)


CONSOLIDATEDSTATEMENTS
      OF CHANGES IN STOCKHOLDERS’ EQUITY


**Development****Stage****Preferred
                    Stock A**
                
                **Preferred
                    Stock B**
                
                **Common
                    Stock**
                
                **Paid
                    in**
                **Subscription**
                **Accumulated****Shares**
                **Amount**
                **Shares**
                **Amount**
                **Shares**
                **Amount**
                **Capital**
                **Agreement**
                **Deficit**
                **Total****Balance
                    December 31, 2003**
                -
                $
                    -
                -
                $
                    -
                4,743,002
                $
                    4,743
                $
                    3,890,811
                $
                    -
                $
                    (4,671,534)
                $
                    (775,980)Shares
                    issued in exchange for convertible notes payable
                
                
                
                
                1,434,409
                1,434
                1,103,179
                
                
                1,104,613Shares
                    issued for consulting and legal services
                
                
                
                
                698,805
                699
                1,126,164
                
                
                1,126,863Beneficial
                    conversion feature
                
                
                
                
                
                
                1,301,373
                
                
                1,301,373Shares
                    issued to founder for completion of reverse merger
                
                
                
                
                7,725,000
                7,725
                (7,725)
                
                
                -Shares
                    issued to founder for compensation
                
                
                
                
                1,473,339
                1,474
                2,117,535
                
                
                2,119,009Warrants
                    exercised
                
                
                
                
                2,382,979
                2,383
                235,915
                
                
                238,298Shares
                    issued to officer
                
                
                
                
                100,000
                100
                129,900
                
                
                130,000Shares
                    issued for cash and subscription agreement
                
                
                
                
                175,000
                175
                249,825
                $
                    (100,040)
                
                149,960Net
                    loss for the year 2004
                
                
                
                
                
                
                
                
                $
                    (5,742,037)
                (5,742,037)**Balance
                    December 31, 2004**
                **-**
                **$
                    -**
                **-**
                **$
                    -**
                **18,732,534**
                **$
                    18,733**
                **$
                    10,146,977**
                **$
                    (100,040)**
                **(10,413,571)**
                **(347,901)**Shares
                    issued in exchange for convertible notes payable
                
                
                
                
                19,000
                19
                18,981
                
                
                19,000Shares
                    issued for consulting services
                
                
                
                
                2,050,000
                2,050
                1,965,952
                
                
                1,968,002Shares
                    issued to officers
                
                
                
                
                90,000
                90
                73,260
                
                
                73,350Cancillation
                    of
                    Previously issued consulting shares
                
                
                
                
                (15,204)
                (15)
                (15,945)
                
                
                (15,960)Beneficial
                    conversion feature
                
                
                
                
                
                
                367,397
                
                
                367,397Preferred
                    stock
                    issued
                11,000
                11
                
                
                
                
                1,099,989
                
                
                1,100,000Preferred
                    dividends paid
                
                
                
                
                
                
                
                
                (46,338)
                (46,338)Repurchase
                    of
                    Common stock
                
                
                
                
                (1,400)
                (1)
                (1,609)
                
                
                (1,610)Shares
                    issued upon conversion of Preferred Shares
                (1,400)
                (1)
                
                
                318,182
                318
                (317)Additional
                    Paid in capital- related party - note payment
                
                
                
                
                
                
                20,000
                
                
                20,000Shares
                    issued to employees
                
                
                
                
                15,000
                15
                12,285
                
                
                12,300Shares
                    issued upon conversion of Preferred Shares
                (5,000)
                (5)
                
                
                1,086,957
                1,087
                (1,082)Satisfaction
                    of
                    Subscription Receivable
                
                
                
                
                
                
                
                100,040
                
                100,040Net
                    loss for the year 2005
                
                
                
                
                
                
                
                
                (3,625,483)
                (3,625,483)**Balance
                    December 31, 2005**
                **4,600**
                **$
                    5**
                
                
                **22,295,069**
                **$
                    22,296**
                **$
                    13,685,888**
                **$
                    -**
                **$(14,085,392)**
                **(377,203)**Shares
                    issued to officers in lieu of salary
                
                
                
                
                90,000
                $
                      90
                $
                      12,510
                
                
                12600Shares
                    issued to replace cancelled
                    certificate-settlement
                
                
                
                
                40,000
                $
                    40
                $
                    7,160
                
                
                7200Shares
                    issued for consulting services
                
                
                
                
                700,000
                700
                87,300
                
                
                88,000Share
                    sold to officer
                
                
                1,500,000
                1,500
                
                
                58,500
                
                
                60,000Shares
                    issued for consulting services
                
                
                
                
                5,796,667
                5,797
                326,003
                
                
                331,800Share
                    sold to officer
                
                
                750,000
                750
                
                
                29,250
                
                
                30,000Shares
                    issuedfor
                    Settlement
                
                
                
                
                600,000
                600
                35,400
                
                
                36,000Shares
                      issued to officers in lieu of accrued salary
                
                
                
                
                1,600,000
                1,600
                114,400
                
                
                116,000Shares
                    issued for consulting services
                
                
                
                
                4,353,000
                4,353
                150,017
                
                
                154,370Net
                    Loss December 31, 2006
                
                
                
                
                
                
                
                
                (1,482,571)
                (1,482,571)**Balance
                    December 31, 2006**
                **4,600**
                **$
                    5**
                **2,250,000**
                **$
                    2,250**
                **35,474,736**
                **$
                    35,476**
                **$
                    14,506,428**
                **$
                    -**
                **$(15,567,963)**
                **$(1,023,804)**


F-5


The
      accompanying notes should be read in conjunction with these financial
      statements.







**G** **ENE** **T** **HERA,** **I** **NC.** **AND** **S** **UBSIDIARY**
 (A
        DEVELOPMENT STAGE
        COMPANY)
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**




**For
                  the period from****Year
                  End December 31,**
              
              
              
              **October
                  5, 1998****(inception)
                  to****2006**
              
              **2005**
              
              **December
                  31, 2006**Cash
                  flows from operating activities:Net
                  loss
              $
                  (1,482,571)
              
              $
                  (3,625,483)
              
              $
                  (15,567,963)Adjustments
                  to reconcile net loss to netcash
                  provided by (used in) operating activities:Depreciation
                  and amortization
              77,014
              
              98,118
              
              $
                  364,413Bad
                  Debt Expense
              90,000
              
              
              
              $
                  90,000Compensation
                  in
                  exchange for common stock
              629,970
              
              2,037,692
              
              $
                  8,322,662Beneficial
                  conversion feature
              
              
              367,397
              
              $
                  1,987,990Changes
                  in operating assets and liabilities(Increase)
                  Decrease in:Accounts
                  receivable
              (90,990)
              
              (5,581)
              
              $
                  (96,800)Accounts
                  receivable Related Parties
              (17,390)
              
              
              
              $
                  (17,390)Inventory
              -
              
              -
              
              $
                  -Prepaid
                  expenses
              8,661
              
              38,227
              
              $
                  (1,890)Other
                  assets
              9,736
              
              (9,736)
              
              $
                  5,278Increase
                  in
                  accounts payableand
                  accrued liabilites
              533,669
              
              45,567
              
              $
                  1,418,411Total
                  adjustments
              1,240,670
              
              2,571,684
              
              12,072,674Net
                  cash used in operating activities
              (241,901)
              
              (1,053,799)
              
              (3,495,289)Cash
                  flows from investing activities:Cash
                  payments for the purchase of property
              -
              
              (107,674)
              
              (299,072)Cash
                  flows from financing activities:Bank
                  overdraft
              
              
              (338)
              
              -Capital
                  contributed as equipment
              
              
              
              
              272,376Principal
                  payments on notes & leases payable
              
              
              
              
              (240,119)Payment
                  of lease payable
              (2,311)
              
              (16,155)
              
              143,325Proceeds
                  from issuance of stock
              90,000
              
              1,100,000
              
              1,893,882Proceeds
                  from loans payable
              152,777
              
              7,543
              
              1,651,370Proceeds
                  from Subscription Recievable
              -
              
              100,040
              
              100,040Repurchase
                  of Common Stock
              -
              
              (1,610)
              
              (1,610)Reciept
                  of APIC
              -
              
              20,000
              
              20,000Payment
                  of Perfered Dividends
              -
              
              (46,338)
              
              (46,338)Net
                  cash provided by
                  financing activities
              240,466
              
              1,163,142
              
              3,792,926Net
                  increase (decrease) in cash
              (1,435)
              
              1,669
              
              (1,435)Cash,
                  beginning of year
              1,669
              
              -
              
              1,669Cash,
                  end of year
              $
                  234
              
              $
                  1,669
              
              $
                  234Supplemental
                  disclosures of cash flow information:Cash
                  paid during the period for interest expense
              $
                  936
              
              $
                  2,324
              
              $
                  47,694Cash
                  paid during the period for Taxes
              $
                  -
              
              $
                  80,522
              
              $
                  80,522




F-6


The
      accompanying notes should be read in conjunction with these financial
      statements.


















**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**











**NOTE
      1**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





***Organization
      and Nature of Operations***





The
      consolidated financial statements include GeneThera, Inc. and its wholly owned
      subsidiary GeneThera, Inc. (Colorado) (collectively the “Company”)





GeneThera,
      Inc., formerly known as Hand Brand Distribution, Inc., was incorporated in
      November 1995, under the laws of the State of Florida. On February 25, 2002,
      GeneThera, Inc. acquired 100% of the outstanding shares of GeneThera, Inc.
      (Colorado). A total of 16,611,900 shares of common stock were issued for the
      acquisition. For accounting purposes, the acquisition has been treated as a
      reversed merger and as a recapitalization of GeneThera, Inc. (Colorado).





GeneThera,
      Inc. (Colorado) is a biotechnology company that develops molecular assays for
      the detection of food contaminating pathogens, veterinary diseases and
      genetically modified organisms.





***Principles
      of Consolidation***





The
      accompanying consolidated financial statements include the accounts of
      GeneThera, Inc. (Florida) and GeneThera, Inc. (Colorado). All significant
      inter-company balances and transactions have been eliminated in consolidation.





***Use
      of Estimates***





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management 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 period.
      Actual results could differ from those estimates.





***Concentration
      of Credit Risk***





Financial
      instruments that potentially subject the Company to concentration risks are
      cash
      and accounts receivable. At various times during the year, the Company had
      deposits in excess of the federally insured limits. The Company maintains its
      cash with high quality financial institutions, which the Company believes limits
      these risks.




F-7











**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**











**NOTE
      1**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES - continued**





***Related
      Party Transactions***




Setna
            Holdings, LLC is a related party to the Company with a promissory note
            of
            $107,552. Mr. Anthony J. Milici is the Managing Director of Setna Holdings. GTI
            Corporate Transfer Agents, LLC is the Company’s transfer agent. On or about
            March 2006, Ms. Tannya L. Irizarry became the Managing Director (Interim)
            of GTI
            Corporate Transfer Agents after the death of the original Managing Director,
            Ms.
            Juanita Pagan. Ms. Irizarry currently owns a one third ownership and/or
            interest
            in GTI Corporate Transfer Agents. Ms. Irizarry is the Chief Administrative
            Officer and Chief Financial Officer (Interim) of the Company. Therefore,
            the
            accounts receivable transaction of $17,390 with GTI Corporate Transfer
            Agent is
            a transaction with a related party. GTI Corporate Transfer Agents LLC
            maintains
            separate employer identification and does not share any employer identification
            number with GeneThera, Inc. Elia
            Holdings, LLC (Elia) was paid 500,000 common shares in exchange for services
            rendered on May 2 nd 2006.
            Elia is partially owned by an independent contractor of GeneThera, Inc.
            Elia has
            paid $78,202 of GeneThera, Inc. expenses.


***Property
      and Equipment***





Property
      and equipment are stated at cost. Equipment under capital leases is stated
      at
      the present value of minimum lease payments. Depreciation is calculated on
      a
      straight-line basis over the estimated useful lives of the assets, which is
      5 to
      10 years. Betterments, which extend the life of the asset, are capitalized,
      and
      maintenance and repairs are expensed as incurred.





***Impairment
      of Long-Lived Assets***





The
      Company reviews the recoverability of its long-lived assets to determine whether
      events or changes in circumstances occurred that indicate the carrying value
      of
      the asset may not be recoverable. The assessment of possible impairment is
      based
      on the ability to recover the carrying value of the asset from the expected
      future cash flows of the related operations. If these cash flows are less than
      the carrying value of such asset, an impairment loss is recognized for the
      difference between the estimated fair value and carrying value. The measurement
      of impairment requires management to make estimates of these cash flows related
      to long-lived assets, as well as other fair value determinations.





***Revenue
      Recognition***





Revenue
          from Research and Development contracts are recognized per contract
          terms.  Revenues
          from sales are recognized when services are completed.





***Loss
      per Share***





Basic
        loss per share for each year is computed by dividing loss for the year by
        the
        weighted average number of common shares outstanding during the year. Diluted
        loss per share includes the effects of common stock equivalents to the extent
        they are dilutive. At December 31, 2006 and 2005 all common stock equivalents
        were antidilutive and therefore diluted loss per share equaled basic loss
        per
        share. The total outstanding warrants of 597,826, 150,000 of option or warrants
        my become exercisable from a law suit and the CEO exercisable option of 300,000
        would be added into the weighted average common shares if not antidilutive
        in
        calculating diluted loss per share




F-8










**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**











**NOTE
      1**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES - continued**





***Fair
      Value of Financial Instruments***





The
      respective carrying value of certain on-balance sheet financial instruments
      approximated their fair value. These instruments include cash, accounts
      receivable and accounts payable. Fair values were assumed to approximated
      carrying values for these financial instruments since they are short-term in
      nature and their carrying amounts approximate fair values or they are receivable
      or payable on demand.





***Net
      Cash and Cash Equivalents***





The
      Company considers all highly liquid debt instruments purchased with an original
      maturity of three months or less to be cash equivalents.





***Recent
      Accounting Pronouncements***





In
      March
      2005, the FASB issued FASB interpretation No. 47, “Accounting for Conditional
      Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
      the identification of and financial reporting for legal obligations to perform
      an asset retirement activity. The Interpretation requires recognition of a
      liability for the fair value of a conditional asset retirement obligation when
      incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
      defines when an entity would have sufficient information to reasonably estimate
      the fair value of an asset retirement obligation. The provision is effective
      no
      later than the end of fiscal years ending after December 15, 2005. The Company
      will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does
      not
      believe the adoption will have a material impact on its consolidated financial
      position or results of operations or cash flows.





In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
(“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20
‘Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
      Financial Statements -An Amendment of APB Opinion No. 28.” SFAS 154 provides
      guidance on the accounting for and reporting of accounting changes and error
      corrections. It establishes retrospective application, or the latest practicable
      date, as the required method for reporting a change in accounting changes and
      a
      correction of errors made in fiscal years beginning after December 15, 2005
      and
      is required to be adopted by the company in the first quarter of 2006. The
      Company is currently evaluating the effect that the adoption of SFAS 154 will
      have on its results of operations and financial condition but does not expect
      it
      to have a material impact.





In
      June
      2005, the Emerging Issues Task Force, or EITF, reached a consensus on Issue
      05-6, Determining the Amortization Period for Leasehold Improvements, which
      requires that leasehold improvements acquired in a business combination or
      purchased subsequent to the inception of a lease be amortized over the lesser
      of
      the useful life of the assets or a term that includes renewals that are
      reasonably assured at the date of the business combination or purchase. EITF
      05-6 is effective for periods beginning after July 1, 2005. We do not expect
      the
      provisions of this consensus to have a material impact on the financial
      position, results of operations or cash flows.





In
      February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial
      Instruments, which amends SFAS 133, Accounting for Derivative Instruments and
      Hedging Activities, and SFAS




F-9





**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**











**NOTE
      1**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES - continued**





***Recent
      Accounting Pronouncements - continued***





140,
      Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities - a replacement of FASB Statement No. 125. SFAS 155 will be
      effective for the Company for all financial instruments issued or acquired
      after
      the beginning its fiscal year ending December 31, 2006. The Company not yet
      evaluated and determined the likely effect of SFAS 155 on future financial
      statements.





In
      June
      2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
      Income Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise's financial statements in accordance with FASB Statement No. 109,
      Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold
      and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return that results in
      a
      tax benefit. Additionally, FIN 48 provides guidance on de-recognition, income
      statement classification of interest and penalties, accounting in interim
      periods, disclosure, and transition. This interpretation is effective for the
      Company for its fiscal year ending December 31, 2007. The Company has not yet
      evaluated the effect that the application of FIN 48 may have, if any, on its
      future results of operations and financial condition.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, and expands disclosures about
      fair
      value measurements. This statement applies under other accounting pronouncements
      that require or permit fair value measurements. SFAS No. 157 is effective for
      the Company for its fiscal year beginning on July 1, 2008. The Company is
      currently assessing the impact the adoption of SFAS No. 157 will have on its
      financial statements.





In
      September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in order
      to eliminate the diversity of practice surrounding how public companies quantify
      financial statement misstatements. In SAB 108, the SEC staff established an
      approach that requires quantification of financial statement misstatements
      based
      on the effects of the misstatements on each of the Company’s financial
      statements and the related financial statement disclosures. SAB No. 108 is
      effective for the Company for its current fiscal year. The adoption of SAB
      No.
      108 did not have an impact on the Company’s financial statements.





On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115.” This standard permits an entity to measure many financial
      instruments and certain other items at estimated fair value. Most of the
      provisions of SFAS No. 115 (“Accounting for Certain Investments in Debt and
      Equity Securities) applies to all entities that own trading and
      available-for-sale securities. The fair value option created by SFAS No. 159
      permits an entity to measure eligible items at fair value as of specified
      election dates. Among others, eligible items exclude (1) financial instruments
      classified (partially or in total) as permanent or temporary stockholders’
equity (such as a convertible debt security with a non-contingent beneficial
      conversion




F-10





**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**





**NOTE
      1**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES - continued**





***Recent
      Accounting Pronouncements - continued***





feature)
      and (2) investments in subsidiaries and interests in variable interests that
      must be consolidated. A for-profit business entity will be required to report
      unrealized gains and losses on items for which the fair value option has been
      elected in its statements of operations at each subsequent reposting date.
      The
      fair value option (a) may generally be applied instrument by instruments, (b)
      is
      irrevocable unless a new elections date occurs, and (c) must be applied to
      the
      entire instrument and not to only a portion of the instrument. SFAS No. 159
      is
      effective as of the beginning of the first fiscal year that begins after
      November 15, 2007. The Company has not yet evaluated the effect that the
      application of SFAS No. 159, may have, if any, on its future results of
      operations and financial condition.





**NOTE
      2 ACCOUNTS RECEIVABLE**





The
        Company has an outstanding Accounts Receivable to a related party as
        follows:
 
 2006 2005
 
 Receivable
        with no interest, due on demand, unsecured. $17,390 $
        0
  
 
 There
        was
        no interest revenue related to this obligation for the years ended December
        31,
        2006 and 2005. This transaction is with a related party as an officer of
        GeneThera, Inc. is a one-forth owner of GTI Corporate Transfer Agents, LLC.
        GTI
        paid GeneThera operations expenses in the beginning of 2007. The receivable
        of
        $90,000 for Xpention Genetics was written off to bad debt and reserve for
        uncollectible debt.





**NOTE
      3**  **PROPERTY
      AND EQUIPMENT**





Property
      and equipment at December 31, 2006 and 2005 consisted of the
      following:


2006    2005
 
  Office
        equipment                                             $84,344   
       $84,344
 Laboratory
        equipment 643,084  643,084
 727,428  
                727,428
 Less:
        Accumulated
        depreciation                 ( 364,413 ) (287,399 )
 $363,015        $440,029





Depreciation
      expense for the years ended December 31, 2006 and 2005 was $77,014 and $98,118,
      respectively.


F-11










**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELPOMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**





**NOTE
      4**  **LEASE
      OBLIGATIONS**





***Operating
      Leases***





The
        Company leases its office, warehouse, laboratory space on a month-to-month
        basis
        $5,235 and vehicle under non-cancelable operating leases, which have initial
        terms in a month-to-month basis. We sub-lease 700 square foot office space
        to
        GTI Corporate Transfer Agents, LLC located on the 3924 unit of our lease
        space
        reflected as 3930 Youngfield Street, Suite #2, Wheat Ridge, CO 80033. The
        Lease
        is on a month-to-month basis and the rent is $637.00 per
        month.


Total
      lease expense for the years ended December 31, 2006 and 2005 was $62,823, and
      $71,344, respectively.





***Capital
      Leases***





The
      Company’s property under capital leases is included in property and equipment
      (See Note 3) and is summarized as follows:








2006   2005




Laboratory
      Equipment$31,574$31,574


Computer2,6722,672


34,246 34,246




Less:
      Accumulated depreciation (21,486 ) (19,895 )





Net
      assets under capital
      leases $12,760 $14,351





Future
      annual minimum lease payments under these non-cancelable operating and capital
      leases at December 31, 2006 were as follows:




Capital


Leases




2007 12,040


2008 0


2009 0


2010
      and
      thereafter


Less
      amount representing 0


interest


Present value of minimum    12,040


lease payments


Less current
      portion (12,040 )




Long-term portion
      of $0


capital
      lease payable




Total
      interest expense, including late fees, under capital leases was $3,828 and
      $695
      for the years ended December 31, 2006 and 2005, respectively.




F-12







**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**





**NOTE
      5**  **LOAN
      PAYABLE**





The
      Company has an outstanding loan payable to a related party as
      follows:





2006   2005





Loan
      payable with no interest,due on demand


unsecured $107,552 $20,000


Less
      current
      portion (0 ) (20,000 )





Total
      Current loan payable - related
      party $107,552 $0





There
      was
      no interest expense related to this obligation for the years ended December
      31,
      2006 and 2005. The loan was contributed to additional paid in capital in 2005.
      Setna Holdings is a shareholder and is managed by Anthony J. Milici. Mr. Milici
      is loaning the company funds for their operational expense until pending
      contracts are finalized.





**NOTE
      6 CONTINGENCY LIABILITY**





The
      Company has an outstanding Contingency Liability as follows:





2006   2005





Contingency
      Liability $101,000 $0


Less
      current
      portion (0 ) (0 )





Total
      Contingency
      Liability $101,000 $0





This
          liability is currently being disputed by the company. Imperial Holdings
          is
          claiming that it is currently owed $101,000 from the Company. Genethera
          believes
          it has paid this debt in full by issue shares to a related party . However,
          the
          company believes it should disclose this possible liability even though
          it is
          confident that the amount is currently not owed.
  **NOTE
      7**  **NOTES
      PAYABLE**





The
      Company has outstanding notes payable at December 31, 2006 and 2005 as
      follows:




2006                 2005


Less
      current
      portion:                                               
(0)(55,775)




Various
      notes payable with interest rates ranging from 0% to 14%; various terms; secured
      by equipment and personal guarantees.




2006                 
2005


$0$55,775




Total
      long-term notes payable


2006                 
2005


$0$0




Total
      interest expense for these obligations for the year ended December 31, 2006
      and
      2005 was $0 and $5,136, respectively.









**NOTE
      8**  **STOCKHOLDERS’
      EQUITY (DEFICIT)**





***Common
      Stock Transactions***





On
      December 31, 2006, the Company authorized 100,000,000 shares of $.001 par value
      common stock; 35,099,736 are outstanding at December 31, 2006.





In
      January 2005, the Company issued 2,000 shares of common stock valued at $2,200
      pursuant to conversion rights exercised by a holder.





In
      January 2005, the Company cancelled 15,204 shares of common stock valued at
      $15,960 from a consultant. Accordingly, $15,960 for consultant expense was
      charged to operations.





In
      January 2005, the Company cancelled 1,400 shares of common stock valued at
      $1,610 from a consultant. Accordingly, $1,610 for consultant expense was charged
      to operations.





F-13








**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**








**NOTE
      8**  **STOCKHOLDERS’
      EQUITY (DEFICIT) - continued**





***Common
      Stock - continued***





In
      March
      2005, the Company issued 1,475,000 shares valued at $1,489,999 to a marketing
      consultant and resulted in an immediate charge to operations.





In
      March
      2005, the Company issued 175,000 shares valued at $182,000 to two consultants
      assisting the Company in the development of operations in Mexico and resulted
      in
      immediate charges to operations.





In
      March
      2005, the Company issued 45,000 shares valued at $46,350 to an officer in lieu
      of salary and resulted in an immediate charge to operations.





In
      May
      2005, the Company issued 45,000 shares valued at $27,000 to an officer in lieu
      of salary and resulted in an immediate charge to operations.





In
      May
      2005, the Company issued 17,000 shares of common stock valued at $12,580
      pursuant to conversion rights exercised by a holder. In June 2005, the Company
      issued 318,182 shares of common stock in exchange for 1,400 of its Series
      A
      Preferred Stock.





In
      July
      2005, the Company issued 15,000 shares of common stock valued at $12,300 to
      employees and resulted in an immediate charge to operations.





In
      July
      2005, the Company issued 400,000 shares valued at $296,000 to a marketing
      consultant and resulted in an immediate charge to operations.





In
      March
      2006, the Company issued 40,000 shares valued at $7,200 in settlement of a
      lawsuit previously filed by OR Surgical and resulted in an immediate charge
      to
      operations.





In
      March
      2006, the Company issued 90,000 shares valued at $12,600 to two officers in
      lieu
      of salary and resulted in an immediate charge to operations.





In
      May
      2006, the Company issued 500,000 shares valued at $65,000 to a marketing
      consulting group and resulted in an immediate charge to operations.





In
      May
      2006, the Company issued 50,000 shares valued at $6,500 to consulting services
      for lab work and resulted in an immediate charge to operations.





In
      June
      2006, the Company issued 750,000 shares valued at $82,500 to consulting services
      of operations and resulted in an immediate charge to operations.





In
      August
      2006, the Company issued 2,130,000 shares valued at $131,800 to consulting
      services of operations and resulted in an immediate charge to operations.





In
      August
      2006, the Company issued 625,000 shares valued at $37,500 to the line of credit
      fees of operations and resulted in an immediate charge to
      operations.








F-14








**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**








**NOTE
      8**  **STOCKHOLDERS’
      EQUITY (DEFICIT) - continued**





***Common
      Stock - continued***





In
      September 2006, the Company issued 3,041,667 shares valued at $162,500 to
      consulting services of operations and resulted in an immediate charge to
      operations.





In
      September 2006, the Company issued 600,000 shares valued at $36,000 to a
      settlement and resulted in an immediate charge to operations.





In
      September 2006, the Company issued 1,000,000 shares valued at $50,000 to lieu
      of
      salary and resulted in an immediate charge to operations.





In
      October 2006, the Company issued 2,400,000 shares valued at $96,750 to
      consulting services of operations and resulted in an immediate charge to
      operations.





In
      November 2006, the Company issued 678,000 shares valued at $29,870 to consulting
      services of operations and resulted in an immediate charge to
      operations.





In
      November 2006, the Company cancelled 200,000 shares valued at $10,000 to
      consulting services.





In
      December 2006, the Company issued 1,100,000 shares valued at $34,000 to
      consulting services of operations and resulted in an immediate charge to
      operations.





Preferred
      Stock





On
      December 31, 2006, the Company authorized 20,000,000 shares of $0.001 par value
      preferred stock; 4,600 shares of Series A, Convertible Preferred Stock (“Series
      A”) and 2,250,000 Shares of Series B, Convertible Preferred Stock (“Series B”)
      were issued and outstanding at December 31, 2005.





Preferred
      Stock (“Series A”) shall be convertible into Common Stock any time at the
      holder’s sole discretion in part or in whole by dividing the Purchase Price per
      Share by a price (the “Conversion Price”) equal to 110% of the Market Value on
      the Closing Date. “Market Value” on any given date shall be defined as the
      average of the lowest three intra-day trading prices of the Company’s common
      stock during the 15 immediately preceding trading days.





Pursuant
      to the Registrant's Certificate of Designation establishing the Series B
      Preferred Stock, each share of the currently issued and outstanding Series
      B
      Preferred Stock may be converted into ten (10) fully paid and non-assessable
      shares of the Registrant's common stock. On all matters submitted to a vote
      of
      the holders of the common stock, including, without limitation, the election
      of
      directors, a holder of shares of the Series B Preferred Stock is entitled to
      the
      number of votes on such matters equal to the number of shares of the Series
      B
      Preferred Stock held by such holder multiplied by twenty (20).





On
      January 18, 2005, the Company issued 11,000 shares of its Series A Preferred
      Stock to Mercator Momentum Fund, LP, Mercator Momentum Fund III, LP and Monarch
      Pointe Fund, Ltd. (the “Purchasers”), for $100 per share, or an aggregate of
      $1,100,000. The Company also issued warrants to purchase an aggregate of 597,826
      shares of common stock at an exercise price of $0.92 per share, in consideration
      for the aggregate proceeds of $1,100,000 to the Purchasers and Mercator Advisory
      Group,




**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**








**NOTE
      8**  **STOCKHOLDERS’
      EQUITY (DEFICIT) - continued**





***Common
      Stock - continued***





LLC,
      an
      affiliate of the Purchasers. In connection with the sale of the shares, the
      Company paid a due diligence fee of $88,000 and legal expenses of $10,000 to
      Mercator Advisory Group, LLC. All warrants expire on January 18,
      2008.





In
      June
      2005, 1,400 shares of Series A Preferred Stock were cancelled and converted
      into
      318,182 common shares of the company





In
      July
      2005, 5,000 shares of Series A Preferred Stock were cancelled and converted
      into
      1,086,957 common shares of the company.


The
      adjustment to shareholder equity was due to the reclassification in common
      stock
      in the amount of 49,658. Please see Note 14 for detail information.





On
      May 5,
      2006, GeneThera, Inc. (the "Registrant") entered into a subscription agreement
      and issued 1,500,000 shares of the Registrant's Series B convertible, preferred
      stock, par value $0.001 per share (the "Series B Preferred Stock"), to Antonio
      Milici, Registrant's Chief Executive Officer and Chairman of the Board of
      Directors. The Series B Preferred Stock was issued to Dr. Milici for cash
      consideration of $.04, per share, or an aggregate of Sixty Thousand ($60,000)
      Dollars.





On
      September 1, 2006, GeneThera, Inc. (the "Registrant") entered into a
      subscription agreement and issued 750,000 shares of the Registrant's Series
      B
      convertible, preferred stock, par value $0.001 per share (the "Series B
      Preferred Stock"), to Tannya L. Irizarry, Registrant's Chief Administrative
      Officer. The Series B Preferred Stock was issued to Ms. Irizarry for cash
      consideration of $.04, per share, or an aggregate of Thirty Thousand ($30,000)
      Dollars.





Warrants





The
      Company has warrants to purchase an aggregate of 597,826 shares of common stock
      at an exercise price of $0.92 per share outstanding at December 31, 2006.
      Warrants expire on January 18 th 2008.


Stock
        Option
 
 The
        Company has option to purchase an aggregate of 300,000 shares of common stock
        at
        an exercise price of $0.25 per share outstanding at December 31, 2006. Option
        expire in December 2010.


**NOTE
      9**  **INCOME
      TAXES**





The
      Company has no current or deferred income tax due to its operating
      losses.





The
          Company has a federal net operating loss carry forward at December 31,
          2006 and
          2005 of approximately $15,585,353 and $14,085,392, respectively, subject
          to
          annual limitations prescribed by the Internal Revenue Code, that are available
          to offset future taxable income through 2025. A 100% valuation allowance
          has
          been recorded to offset the net deferred taxes due to uncertainty of the
          Company’s ability to generate future taxable income


F-15











**GENETHERA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006**








**NOTE
      10**  **CONTINGENCIES**





The
      Company is involved in claims arising during the ordinary course of business
      resulting from disputes with vendors and shareholders over various contracts
      and
      agreements. While the ultimate outcome of these matters has yet to be
      determined, management has included a provision for these claims based on known
      facts and circumstances as of December 31, 2006 in the amount of $55,000.





**NOTE
      11**  **GOING-CONCERN
      UNCERTAINTY**





These
          financial statements are presented assuming the Company will continue as
          a going
          concern. For the years ended December 31, 2006 and 2005, the Company showed
          operating losses of $1,482,571 and $3,625,482, respectively. The accompanying
          financial statements indicate that current liabilities exceed current assets
          by
          $1,392,097 and $827,345 at December 31 2006 and 2005, respectively.
  These
          factors raise substantial doubt about its ability to continue as a going
          concern. Management’s plan with regard to these matters includes raising working
          capital and significant assets and resources to assure the Company’s viability,
          through private or public equity offering, and/or debt financing, and/or
          through
          the acquisition of new business or private ventures. The Company will bring
          in
          contract work and start the operation in Mexico to bring in
          revenue.








**NOTE
      12 RESEARCH AND DEVELOPMENT COSTS**





All
      research and development costs are charged to expense when incurred. The
      following table illustrates the types of expenses imbedded in the financial
      statements as costs related to laboratory research, formulation, design and
      testing of products and processes as related to the business plan.







2006     2005


Consulting   $  0                          
$ 240,000


Salaries 144,000 143,714


Lease
      expense 63,217                           
      63,217


Depreciation 11,751 11,751


Lab
      expenses 39,592 53,618





Totals $ 258,560 $ 512,300








**NOTE
      13 BENEFICIAL CONVERSION EXPENSE**





The
      Company’s accounting policy with respect to instruments with beneficial
      conversion features is as follows:





Convertible
      notes issued to investors in response to public and private placement offerings
      made in 2002, 2003, and 2004 were convertible at inception with fixed dollar
      conversion terms. The beneficial conversion feature is calculated at its
      intrinsic value (that is, the difference between the conversion price and the
      fair value of the common stock at the time of issuance of the debt into which
      the
      debt is convertible) at the commitment date. A portion of the proceeds from
      issuance of the convertible debt, equal to the intrinsic value, is then
      allocated to additional paid-in capital. 
 Beneficial
        conversion expense was $0 and $367,397 for the periods ended December 31,
        2006
        and 2005, respectively.
 **NOTE
          14 STOCK OPTION PLAN**
 
 In
          December 2005, the Board of Directors approved a stock option plan for
          the
          issuance of 2,000,000 shares to employees. No shares were issued as of
          December
          31, 2006.





F-17











**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure**





On
      March
      4, 2006, our auditors, Kantor, Geisler & Oppenheimer, P.A., notified the
      Company that they resigned as auditors. The attached financials have been
      audited by Jaspers + Hall, PC.





**Item
      8A. Controls and Procedures**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange
      Act”), we carried out an evaluation of the effectiveness of the design and
      operation of our disclosure controls and procedures within the 90 days prior
      to
      the filing date of this report. This evaluation was carried out under the
      supervision and with the participation of our Chief Executive Officer and
      Consulting Chief Financial Officer.





There
      have been no significant changes in our internal controls or in other factors
      that could significantly affect internal controls subsequent to the date we
      carried out our evaluation.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed in our reports filed under the Exchange Act is
      accumulated and communicated to management, including our Chief Executive
      Officer and Chief Financial Officer, to allow timely decisions regarding
      required disclosure.





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





**Directors
      and Executive Officers**





The
      following persons are currently serving as the Company’s executive officers and
      directors.





Name    Age   Positions




Dr.
      Antonio
      Milici 51 Chairman
      of the Board, Chief Executive Officer and
      Chief
      Scientific Officer


Tannya
      L
      Irizarry 47 Chief
      Financial Officer (Interim)


Dr.
      Thomas G.
      Slaga 61 Director


Steven
      M.
      Grubner 47 Director





Dr.
      Antonio Milici founded GeneThera Inc. in 1999 and has served as its chairman
      and
      CEO since inception. Prior to founding GeneThera, Dr. Milici served as CEO
      and
      President of Genetrans, Inc., a genetic diagnostic company from 1993 to 1998.
      Dr. Milici was also an assistant professor in the department of Molecular
      Pathology at the University of Texas M.D. Anderson Cancer Center.





Tannya
      L.
      Irizarry has served as Chief Administrative Officer since 1999. She is now
      serving as Chief Financial Officer (Interim). Ms. Irizarry has over nineteen
      years of experience in medical technology and biotechnology industries. Ms.
      Irizarry worked at University of Texas M.D. Anderson Cancer Center in the
      department of Neuro-Oncology with Dr. William S. Fields and the Office of
      Education with Dr. James Bowen; St. Joseph Hospital in the biotechnology
      division. Ms. Irizarry was the Vice President of Genetrans, Inc. from 1994
      to
      1998. Ms. Irizarry relocated to Colorado in order to manage GeneThera, Inc.
      at
      the request of Dr. Milici.





Steven
      M.
      Grubner joined GeneThera’s Board of Directors in May 2004 and served as our
      Consulting Chief Financial Officer since June 2004. Mr. Grubner has over twenty
      years of experience in the technology industry. Mr. Grubner served as the
      president, finance and administration and chief financial officer at HH
      Communications, Inc. from 1986 until the completion of its merger with Datatec
      Systems, Inc. (DATC) in mid-1996. Until late 1999, he served as Datatec’s vice
      president and General Counsel, a position that put him in charge of Datatec’s
      public SEC filings, vendor contract negotiations, and internal employee
      agreements. Mr. Grubner resigned on May 19, 2006.





Dr.
      Thomas Slaga has served on GeneThera’s Board of Directors since 2003. Dr. Slaga
      has investigated cancer causation and prevention for more than thirty-five
      years. He held a position as Scientific Director of the AMC Cancer Research
      Center in Denver, Colorado since 1999 until 2005. He chairs the Center for
      Cancer Causation and Prevention at AMC and also serves as Deputy Director of
      the
      University of Colorado Cancer Center. Previously, from 1983 to 1997, he served
      as Director of the Science Park - Research Division of The University of Texas
      M. D. Anderson Cancer Center. Dr. Slaga was co-founder of Molecular
      Carcinogenesis in 1987 and served as editor-in-chief until early 2003. Since
      June 2005, Dr. Slaga was appointed Director of The Cancer Institute at the
      University of Texas in San Antonio.





Each
      Director is elected at the Company's annual meeting of shareholders and holds
      office until the next annual meeting of shareholders, or until the successors
      are elected and qualified. At present, the Company's bylaws provide for not
      less
      than three or more than seven Directors. Currently, we have three director
      positions. The bylaws permit the Board of Directors to fill any vacancy and
      such
      director may serve until the next Annual Meeting of Shareholders or until his
      successor is elected and qualified. Officers are elected by the Board of
      Directors and their terms of office are, except to the extent governed by
      employment contracts, at the discretion of the Board. The officers of the
      Company devote full time to the business of the Company.





Section
      16(a) Beneficial Ownership Reporting Compliance





Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our Executive
      Officers, Directors and 10% Shareholders to file reports regarding initial
      ownership and changes in ownership with the SEC. Executive Officers, Directors,
      and 10% shareholders are required by SEC regulations to furnish us with copies
      of all Section 16(a) forms they file. Our information regarding compliance
      with
      Section 16(a) is based solely on a review of the copies of such reports
      furnished to us by our Executive Officers, Directors and 10% shareholders.
      These
      forms include (i) Form 3, which is the Initial Statement of Beneficial Ownership
      of Securities, (ii) Form 4, which is a Statement of Changes in Beneficial
      Ownership, and (iii) Form 5, which is an Annual Statement of Changes in
      Beneficial Ownership.





The
      Company has recently adopted a Code of Ethics applicable to its principal
      executive officer, principal financial officer, and principal accounting
      officer. Our Code of Ethics can be obtained by calling the company at
      303-463-6371.





**Item
      10. Executive Compensation**





The
      following table sets forth certain summary information for the fiscal year
      ended
      December 31, 2006 concerning the compensation awarded to, earned by, or paid
      to
      those persons serving as executive officers during fiscal year
      2006.








**SUMMARY
      COMPENSATION TABLE**





The
      following table sets forth certain summary information for the fiscal year
      ended
      December 31, 2006 concerning the compensation awarded to, earned by, or paid
      to
      those persons serving as executive officers during fiscal year 2004 that served
      as our Chief Executive Officer or earned compensation in excess of $100,000
      (the
“Named Executive Officers”). No other executive officer of the company had a
      total annual salary and bonus for 2005 that exceeded $100,000. Antonio Milici,
      M.D., Ph.D., and Tannya L. Irizarry were the only executive officers during
      the
      fiscal year ended December 31, 2006.





The
      following table summarizes compensation earned in each of the last three fiscal
      years by the named officers.





**Annual
                Compensation**
            **Long-Term
                Compensation**Name
                and Principal Position
            Year
            Salary
            Bonus
            All
                Other Annual Compensation (3)
            Restricted
                Stock Awards
              ($)
            Securities
                Underlying Options/ SARS (#)
            All
                Other Compensation ($)Antonio
                Milici M.D. PhD., Chief Executive Officer
            2006
              2005
              2004
              2003
            $144,000
              $144,000
              $144,000(1)
              $144,000
                (2)
            --
              --
              --
            --
              --
              --
            --
              --
              --
            300,000
                (4)
              --
              --
            --
              --
              --





(1)Dr.
      Milici’s salary in 2006 $144,000 has been deferred, which will be paid in common
      stock shares of the Company.


(2)Dr.
      Milici’s salary has been deferred. It will be paid in common stock shares of the
      Company.


(3)The
      Company provides Dr. Milici with a company car and reimburses him for fuel
      costs.


(4)These
      options were granted on 6/29/04 at an exercise price of $.90 and subsequently
      recast at $.25.





**Option
      Grants in Last Fiscal Year**





The
      Company grants options to its executive officers under the GeneThera 2004 Senior
      Executive Officer Plan. As of December 31, 2006, options to purchase a total
      of
      1,450,000 shares were outstanding under the 2004 Senior Executive Officer Plan
      and options to purchase 550,000 shares remained available for grant thereunder.




The
      following table shows for the fiscal year ended December 31, 2006, certain
      information regarding options granted to the Named Executive
      Officers:





**Option
      Grants in Last Fiscal Year**


**Individual
                Grants****Name**
            **Number
                of Securities Underlying Options Granted (#)**
            **Percentage
                of Total Options Granted to Employees in Fiscal
                2004(1)**
            **Exercise
                Price**
              **($/Sh)**
            **Expiration
                Date**Antonio
                Milici
            0
            0
            0
            0





**Aggregated
      Option Exercises in Last Fiscal Year and Fiscal Year End Option
      Values**





**Name**
            **Shares
                Acquired on Exercise (#)**
            **Value
                Realized ($)**
            **Number
                of Securities****Underlying
                Unexercised****Options
                at FY-End (#)(1)**
            
            **Value
                of Unexercised**
              **In-the-Money
                Options**
              **at
                December 31, 2004 ($)(2)****Exercisable**
            **Unexercisable**
            **Exercisable**
            **Unexercisable**Antonio
                Milici
            —
            —
            300,000
            
            $0





(1)
      Includes both “in-the-money” and “out-of-the-money” options. “In-the-money”
options are options with exercise prices below the market price of the Company’s
      common stock at December 30, 2006 .





(2) Value
      is
      based on the fair market value of the Company’s common stock at December 31,
      2006 ($.10) with respect to in-the-money options, minus the exercise price
      of
      the options.





**Compensation
      of Directors and Executive Officers**





On
      January 23, 2002, the Company entered into an employment agreement with Antonio
      Milici, M.D., Ph.D, to serve as the Chief Executive Officer and Chief Scientific
      Officer of the Company through January 7, 2012. Unless either party gives notice
      to terminate the agreement at least thirty days prior to expiration of the
      agreement, the agreement will automatically be extended for an additional two
      year period. In consideration for his services, Dr. Milici receives a base
      salary of $144,000 per annum throughout the term of the agreement plus bonuses
      as may be determined by the Compensation Committee of the Board of Directors
      in
      its discretion or if the Company achieves net income in excess of $2,000,000
      per
      year. As part of his employment agreement, Dr. Milici has agreed not to compete
      with the Company, solicit any of its customers or solicit any of its employees
      for a period of two years after the term of the agreement. Dr. Milici is also
      subject to confidentiality obligations in favor of the Company and has agreed
      to
      transfer to the Company of all his interests in any idea, concept, technique,
      invention or written work developed by him during the term of his employment
      agreement.




No
      director received compensation for his services to the Company.








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








The
      following table shows, as of December 31, 2006, the common stock owned
      beneficially by (i) each person known by us to be the beneficial owner of more
      than five percent of our Common Stock, (ii) each of our directors, (iii) each
      of
      our executive officers and (iv) all of our directors and executive officers
      as a
      group. Unless otherwise indicated, the address of each person or entity named
      below is c/o GeneThera, Inc., 3930 Youngfield Street, Wheat Ridge, CO 80033.





Name
                of Beneficial Owner
            Number
                of Shares Beneficially Owned (1)
            Percent
                of Class (1)Five
                Percent Shareholders:Directors
                and Executive Officers:Dr.
                Antonio Milici (3)
            10,068,339
            41.4%Tannya
                L Irizarry
            750,000
            3.1%All
                Directors and Executive Officers as a Group (2 persons) :
            11,793,339
            44.5%





(1)
      This
      table is based upon information supplied by officers, directors and principal
      shareholders and Schedules 13D and 13G filed with the SEC. Unless otherwise
      indicated in the footnotes to this table and subject to community property
      laws
      where applicable, the Company believes that each of the shareholders named
      in
      this table has sole voting and investment power with respect to the shares
      indicated as beneficially owned. Applicable percentages are based on 35,475,236
      shares of common stock outstanding on December 31, 2006, adjusted as required
      by
      rules promulgated by the SEC.




(2)
      Subsequently returned to the Company in March 2006




(3)
      Includes 300,000 shares subject to options exercisable within 60 days of
      December 31, 2006





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








**Series
      A Preferred Stock Financing**





On
      January 18, 2005, we issued 11,000 shares of our Series A Preferred Stock to
      Mercator Momentum Fund, LP, Mercator Momentum Fund III, LP and Monarch Pointe
      Fund, Ltd. (the “Purchasers”), for $100 per share, or an aggregate of
      $1,100,000. We also issued warrants to purchase an aggregate of 597,826 shares
      of common stock at an exercise price of $0.92 per share, in consideration for
      the aggregate proceeds of $1,100,000 to the Purchasers and Mercator Advisory
      Group, LLC, an affiliate of the Purchasers. The warrants became exercisable
      on
      January 18, 2005 and are exercisable for three years from their date of
      issuance. We paid a due diligence fee of $88,000 and legal expenses of $10,000
      to Mercator Advisory Group, LLC.





The
      Series A Preferred Stock is convertible into the Company’s common stock at an
      initial conversion price of $1.01, subject to adjustment. If, at any time after
      March 14, 2005, the market price (i.e., the average of the lowest three
      intra-day trading prices of the Company’s common stock during the 15 trading
      days immediately preceding the conversion date) is less than $1.11, then the
      conversion price of the Series A Preferred Stock is 80% of the market price
      on
      the date of such conversion. If an “Event of Default” as defined in the
      subscription agreement under which the Purchasers bought the Series A Preferred
      Stock, occurs (e.g., bankruptcy, failure to timely file the registration
      statement, failure of such registration statement to be timely declared
      effective), the conversion price of the Series A Preferred Stock is reduced
      by
      10%. The Series A Preferred Stock pays a per share monthly dividend equal to
      $100 multiplied by the prime rate (as reported in the Wall Street Journal)
      plus
      2.5% to the extent that funds are lawfully available. The Series A Preferred
      Stock is not entitled to vote, except to the extent required under Florida
      law.
      The Series A Preferred Stock has sole preference of priority at par in
      liquidation over our common stock and any subsequent series of preferred
      stock.





In
      connection with the issuance of the Series A Preferred Stock and warrants,
      we
      agreed to file a registration statement with the U.S. Securities and Exchange
      Commission ("SEC") registering the shares of common stock issuable upon
      conversion of the preferred stock and exercise of the warrants, and to use
      diligent efforts to have the registration statement declared effective within
      120 days after the initial filing of the registration statement. Under the
      terms
      of the agreements with the Purchasers, the ownership of our common stock by
      the
      Purchasers will not exceed 9.99% of the total outstanding shares at any one
      time. In addition, the Purchasers agreed not to sell, in any trading day, shares
      of our common stock in excess of 20% of the total shares traded on such trading
      day.





**SERIES
      B PREFERRED STOCK FINANCING**








**Common
      Stock** **Voting
      Preferred**


**Beneficially** **Stock
      Beneficially**


**Owned
      (2)** **Owned
      (2)**





**Name
      of Beneficial Owner (1)**  **Number**  **Percent**  **Number** **%**





**Antonio
      Milici (3)** **10,068,339**  **41.4**   **1,500,000**  **100.0**


**Tannya
      L. Irizarry (4)** **750,000**  **3.1**


**All
      directors & officers**


**As
      a group (2 persons)** **11,793,339**  **44.5**   **1,500,000**  **100.0**







(1)
      This
      table is based upon information supplied by officers, directors and principal
      shareholders and documents filed with the SEC. Unless otherwise indicated,
      and
      subject to community property laws if applicable, the Company believes that
      each
      of the shareholders named in this table has sole voting and investment power
      with respect to the shares indicated as beneficially owned.





(2)
      Applicable percentages are based on 24,325,069 shares of common stock
      outstanding and on 1,500,000 shares of Series B Preferred Stock outstanding
      on
      June 30, 2006, adjusted as required by rules promulgated by the SEC. Although
      the Series A Preferred Stock is convertible into approximately 7.2 million
      shares of our common stock (assuming all shares were converted as of the date
      of
      this prospectus), this table does not give effect to the Series A Preferred
      Stock because these shares have no voting rights and their convertibility by
      the
      holder is currently being contested by the Company.





(3)
      On
      June 15, 2006, Dr. Milici owns 1,500,000 shares of our Series B Preferred Stock.
      Dr. Milici is our Chief Executive Officer and Chairman of The Board. He owns
      10,068,339 shares of our common stock. Pursuant to our Certificate of
      Designation establishing the Series B Preferred Stock, each share of our
      currently issued and outstanding Series B Preferred Stock may be converted
      into
      10 fully paid and non-assessable shares of our common stock. On all matters
      submitted to a vote of the holders of the common stock, including, without
      limitation, the election of directors, a holder of shares of the Series B
      Preferred Stock shall be entitled to the number of votes on such matters equal
      to the number of shares of the Series B Preferred Stock held by such holder
      multiplied by twenty (20). Therefore, Dr. Milici will have the power to vote
      25,068,339 shares, effectively giving him absolute voting control of the
      Company.





(4)
      Ms.
      Irizarry is married to Dr. Antonio Milici. Therefore, she has a beneficial
      interest in his shares.





**Marketing
      Consultant**




In
      March
      2005, we entered into a consulting agreement with 0711005 B.C. Ltd (the
“Marketing Consultant”) pursuant to which the Marketing Consultant agreed to
      provide us with certain marketing and public relations services in exchange
      for
      the issuance of 1,375,000 shares of our common stock. These shares had a market
      value of approximately $1,430,000 on the date of issuance, which our board
      determined to be a reasonable amount for the marketing and public relations
      services to be provided by the Marketing Consultant. This consultant was
      terminated in March 2006 and replaced with another company. The 1,375,000 shares
      issued to 0711005 B.C. Ltd were returned to the company and 1,000,000 shares
      were issued to CLX and Associates.




These
      shares had a market value of approximately $180,000 on the date of issuance,
      which our board determined to be a reasonable amount for the marketing and
      public relations services to be provided by CLX.





In
      March
      2007, we entered into a consulting agreement with The Mézey Howarth Group (the
“Marketing Consultant”) pursuant to which the Marketing Consultant agreed to
      provide us with Investor Relations.











**Item
      13. Exhibits and Reports on Form 8-K**





EXHIBITS





The
      following documents are filed herewith or have been included as exhibits to
      previous filings with the SEC and are incorporated herein by this reference:





**Exhibit**
            **Description
                of Document**3.1
            Articles
                of Incorporation of GeneThera, Inc., as amended. (6)3.2
            Bylaws,
                as amended. (2)10.1
            Form
                of Common Stock Purchase Agreement among GeneThera, Inc. and various
                original holders of the common stock of GeneThera, Inc.
                (1)10.2
            Form
                of Letter Agreement between GeneThera, Inc. and various original
                holders
                of the Common Stock of GeneThera, Inc. (2)10.3
            Employment
                Agreement, dated as of January 23, 2002, between Antonio Milici,
                M.D.,
                Ph.D. and GeneThera, Inc. (2)10.4
            Letter
                of Intent, dated November 6, 2003, between Oncology Sciences Corporation
                and GeneThera, Inc. (3)10.5
            Placement
                Agent Agreement, dated as of May 31, 2004, between Invest Linc Securities,
                LLC and GeneThera, Inc. (4)10.6
            Letter
                Agreement, dated November 22, 2003, between NVO Solutions, Inc. and
                GeneThera, Inc. (4)10.7
            Resolution
                Agreement, dated August 2004, by and among, John Taggart, Family
                Health
                News, Inc. and GeneThera, Inc. (4)10.8
            GeneThera,
                Inc. 2004 Employee, Director and Consultant Stock Option Plan.
                (6)10.9
            GeneThera,
                Inc. 2004 Senior Executive Officer Option Plan. (6)10.10
            Subscription
                Agreement, dated as of January 18, 2005, by and between GeneThera,
                Inc.,
                Mercator Advisory Group, LLC, Mercator Momentum Fund, LP, Mercator
                Momentum Fund III, LP and Monarch Pointe Fund, Ltd. (5)10.11
            Registration
                Rights Agreement, dated as of January 18, 2005, by and between GeneThera,
                Inc., Mercator Advisory Group, LLC, Mercator Momentum Fund, LP, Mercator
                Momentum Fund III, LP and Monarch Pointe Fund, Ltd. (5)10.12
            Warrant
                to Purchase Common Stock issued to Mercator Advisory Group, LLC.
                (5)10.13
            Warrant
                to Purchase Common Stock issued to Mercator Momentum Fund, LP.
                (5)10.14
            Warrant
                to Purchase Common Stock issued to Mercator Momentum Fund III, LP.
                (5)10.15
            Warrant
                to Purchase Common Stock issued to Monarch Pointe Fund, Ltd.
                (5)10.16
            Industrial
                Multi-Tenant Lease, dated December 4, 2001, between Youngfield Plaza
                LLC
                and GeneThera, Inc. (4)10.17
            Amendment
                to Industrial Multi-Tenant Lease, dated December 12, 2004, between
                Youngfield Plaza LLC and GeneThera, Inc. (6)10.18
            Strategic
                Alliance Agreement, dated November 1, 2004, between G. Gekko Enterprises
                and GeneThera, Inc. (6)10.19
            Securities
                Purchase Agreement, dated November 8, 2004, between G. Gekko Enterprises
                and GeneThera, Inc. (6)10.20
            Letter
                Agreement, dated March 1, 2005, between 0711005 B.C. Ltd and GeneThera,
                Inc. (6)10.21
            Mutual
                Release and Settlement Agreement, dated March 1, 2005, between J.P.
                Turner
                & Company, L.L.C. and GeneThera, Inc. (6)21.1
            List
                of Subsidiaries. (6)31.1
            Certification
                of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
                of
                the Exchange Act31.2
            Certification
                of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
                of
                the Exchange Act32.1
            Certificate
                of Chief Executive Officer furnished pursuant to Rule 13a-14(b) of
                the
                Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United
                States Code (18 U.S.C. 1350)32.2
            Certificate
                of Chief Financial Officer furnished pursuant to Rule 13a-14(b) of
                the
                Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United
                States Code (18 U.S.C. 1350)99.1
            Curriculum
                Vitae. (4)





(1)
      Incorporated by reference to our Current Report on Form 8-K, as filed with
      the
      Commission on March 5, 2002.





(2)
      Incorporated by reference to our Annual Report on Form 10KSB, as filed with
      the
      Commission on June 4, 2002.




(3)
      Incorporated by reference to our Annual Report on Form 10-KSB, as filed with
      the
      Commission on April 14, 2004.





(4)
      Incorporated by reference to our Registration Statement on Form SB-2 (File
      No.
      333-118937) and amendments thereto, declared effective December 1,
      2004.





(5)
      Incorporated by reference to our Current Report on Form 8-K, as filed with
      the
      Commission on January 19, 2005.





(6)
      Incorporated by reference to our Registration Statement on Form SB-2 (File
      No.
      333-123138) filed on March 4, 2005.





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





Audit
      Fees





The
      aggregate fees billed for each of the last 2 fiscal years for professional services
      rendered by our principal accountant for the audit of the Company's annual
      financial statements and review of financial statements included in the registrant's
      Form 10-KSB was as follows:





2005
      $67,500


2006  $15,000





Audit-Related
      Fees





The
      aggregate fees billed in each of the last 2 fiscal years for assurance and
      related services by our principal accountant that are reasonably related to
      the
      performance of the audit and not reported in Audit Fees was $-0-.





Tax
      Fees





The
      aggregate fees billed in each of the last 2 fiscal years for services rendered
      by our principal accountant for tax compliance, tax advice, and tax planning
      was
      $-0-.





All
      Other
      Fees





The
      aggregate fees billed in each of the last 2 fiscal years for products and
      services provided by our principal accountant other than those described above
      was $-0-.





The
      Company's audit committee, which consists of all directors, approved the
      services described above.










**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized on this 2nd day of May, 2007.





GeneThera,
      Inc.





By:
      /s/
      Antonio Milici


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


Antonio
      Milici, M.D., Ph.D.


President





By:
      /s/
      Tannya L Irizarry


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


Tannya
      L.
      Irizarry


Chief
      Financial Officer (Interim)





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/
      Antonio Milici  President
      May 2, 2007


Antonio
      Milici, M.D., Ph.D.  Director





/s/
      Tannya L Irizarry  Chief
      Financial May 2, 2007


Tannya
      L
      Irizarry  Officer
      (Interim)





/s/
      Dr.
      Thomas Slaga  Director
      May 2, 2007


Dr.
      Thomas Slaga