FORM 10-KSB/A

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

                   For the Fiscal Year Ended December 31, 2005

                          Commission File No. 000-27237

                                 GeneThera, Inc.
                                   ----------
             (Exact name of registrant as specified in its charter)

                 Florida                                 65-0622463
     (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)

3930 Youngfield Street, Wheat Ridge, CO                    80033
(Address of principal executive offices)                 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

   Securities registered pursuant to Section 12(g) of the Exchange 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 $190,982.

The aggregate market value of the issuer's voting stock held by non-affiliates
of the issuer as of December 31, 2005 was $1,125,020

The number of shares outstanding as of the issuer's common stock as of December
31, 2005 was 22,295,069. The number of warrants outstanding as of December 31,
2005 was 597,826.

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                                EXPLANATORY NOTE

GeneThera, Inc. ("the Company") is filing this amendment to its Annual Report on
Form 10-KSB/A for the year ended December 31, 2005 ("this Amendment") to reflect
the restatement of its Consolidated Financial Statements for the year ended
December 31, 2004 and the interim periods ended March 31, June 30, and September
30, for 2004 to reflect adjustments in the accounting for the March 23, 2003
concerning the discrepancy of outstanding shares never issued on the
Stockholders Equity. We also failed to recognize issued shares to a board
member. The consolidated financial statement of 2004 restated, due to the
rescinding of our subsidiary VDx. This restatement is limited to adjustments in
accumulated deficit and paid-in-capital in connection with the March 23, 2003
recapitalization. For more detailed description of the restatement please see
Note 14 - 15 to the accompanying consolidated financial statements. The Annual
Report on Form 10-KSB for the year ended December 31, 2005 was initially filed
with the Securities and Exchange Commission ("SEC") on April 17, 2006 (the
"Originally Filed 10-KSB").

We have not amended and do not intend to amend our other previously filed annual
reports on Form 10-KSB or our quarterly reports on Form 10-QSB for the periods
affected by the restatement or adjustments. For this reason, the consolidated
financial statements and related financial information contained in such
previously filed reports should no longer be relied upon. All the information in
this Form 10-KSB/A is as of December 31, 2005 and does not reflect any
subsequent information or events other than as discussed above.

This Form 10-KSB/A only amends and restates Items 6, 7, 9, 11 and 13 of the
Originally Filed 10-KSB in each case, solely as a result of, and to reflect, the
corrections discussed above and, expect to for such items and Exhibits 23.1,
31.1, 31.2, and 32.2, no other information in the Originally Filed 10-KSB is
amended hereby. The foregoing items have not been updated to reflect other
events occurring after the Originally Filed 10-KSB or to modify or update those
disclosures affected by subsequent events. There have been no changes to any
other items in the Originally Filed 10-KSB, but such previous disclosure is
included herein for the reader's convenience.

In addition, pursuant to rules of the SEC, Item 13 of Part IV of the Originally
Filed 10-KSB has been amended to contain currently-dated certificates from the
Company's Chief Executive Officer and Chief Financial Officer, as required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications of
the Company's Chief Executive Officer and Chief Financial Officer are attached
to this Form 10-KSB/A as Exhibits 31.1, 31.2, 32.1 and 32.2.

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, as amended (the "Securities Act"),
Section 21E of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and the Private Securities Litigation Reform Act of 1995, as
amended. 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,

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*     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.

<PAGE>

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 2005 the Company had one subsidiary, GeneThera, Inc., a
Colorado corporation, ("GeneThera") for the whole year 2005, and VDx,
Inc.("VDX"), a Wisconsin Corporation for the first quarter of 2005. Subject to a
mutual agreement effective April 1, 2005, the previous purchase of VDX was
rescinded.

GeneThera's business is based on its Integrated Technology Platform (ITP) that
combines a proprietary diagnostic solution called Gene Expression Assay
(GEA(TM)) 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 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.

<PAGE>

VDx, Inc.

In September 2004, the Company acquired VDx, Inc., a manufacturer and
distributor of veterinary diagnostic equipment and tests; VDx currently markets
and sells specialized tests for bovine IgG, NEFA for the dairy industry, and
Equine IgG. The NEFA test offers farmers the ability to test the health and
nutrition of their cattle before giving birth and also test the health of the
new calves once born. Future milk output from dairy cattle is directly affected
by the nutrition just prior to calving. Effective April 1, 2005, the acquisition
of VDx was rescinded and the parties were put back in the same position as if
the acquisition never occurred. The Company received back all securities issued
for the acquisition of VDx.

Employees

As of December 31, 2005, the Company had a total of four (4) full-time employees
who devote substantial effort on the Company's behalf. None of the employees 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 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.

<PAGE>

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 expires in January 2007 and the
rent is $5,235.26 per month. 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 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. The Company has appealed this judgment and is in
process of filing the appeal.

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. has retained other trial counsel. A new trial date has been set
for May 16-19, 2006.

New Trends Holdings, Inc. from British Columbia sued the Regency Group and
GeneThera, Inc. in U.S. District Court for the District of Colorado on or about
August 4, 2005 based upon a breach of contract claim arising from Regency
Group's acting on behalf of GeneThera, Inc. to engage New Trends for the
performance of services. GeneThera filed a Motion to Dismiss it from the action
on the grounds that the contract was between Regency and New Trends. Regency and
New Trends settled the case and reimbursed GeneThera for all costs incurred in
defending the action.

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.
The parties settled the matter without further litigation and OR Surgical was
issued 40,000 shares in March 2006.

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

None

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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 AlphaTrade. Such quotations
reflect prices between dealers, without retail mark-up, markdown or commission,
and may not represent actual transactions.

Year   Quarter    High    Low
----   -------   -----   -----
2005   Fourth    $0.49   $0.10
       Third      1.00    0.40
       Second     1.05    0.54
       First      1.25    0.92

2004   Fourth    $1.94   $0.88
       Third      1.60    0.70
       Second     2.85    0.90
       First      4.39    2.05

2003   Fourth     3.42    1.55
       Third      2.40    0.89
       Second     1.70    0.35
       First      1.55    0.60

*Source AlphaTrade

There are no restrictions on the payment of dividends. We have paid no dividends
to date and none are anticipated. There were approximately 1250 record holders
of common stock as of December 31, 2005.

DIVIDENDS

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

<PAGE>

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 (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,
2005 we had incurred a cumulative net loss from inception of $14,085,392. 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 substantial 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, 2005. For the years ended
December 31, 2005 and 2004, our operating losses were $3,625,483 and $5,742,037
respectively. Our current liabilities exceeded current assets by $832,246 and
$793,573 for the years ended December 31, 2005 and 2004, 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 $3,000,000 in additional funding. We will attempt to raise these funds by
means of one or more private offerings of debt or equity securities or both. At
this time, we have no commitments for additional capital funds. Moreover,
depending on the development and activities of our business, and unforeseen and
unanticipated events in our business, we may require additional funding over the
next twelve to eighteen months to develop our business. 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 inability to raise capital could impair our ability to implement our
business plan and may ultimately force us to cease operations.

Over the next 12 months, we do not expect any significant purchases or sales of
plant or equipment or any significant changes in the number of our employees or
any off-balance sheet arrangements that will have any current or future effect
on our financial condition.

<PAGE>

Over the next 12 months, we expect to spend a significant amount of our capital
on research and development activities relating to 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 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 not be successful in
developing or validating any new assays or, if we are successful in developing
and validating any such assays, we may be unable to successfully commercialize
them or earn profits from sales of those assays. Furthermore, we may not be able
to design, develop, or successfully commercialize any 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.

RESULTS OF OPERATIONS

Fiscal Year Ending December 31, 2005 Compared to Fiscal Year Ending December 31,
2004

Personnel and professional expenses (consulting and professional fees and
salaries) increased to $2,421,904 for the fiscal year ending December 31, 2005
from $1,654,650 for the year ending December 31, 2004. Consulting in return for
equity made up the majority of this expense. Comparing the year ended December
31, 2005 to the year ended December 31, 2004, expenses decreased to $3,547,016
from $4,465,056.

We recorded a net loss of $3,625,483 for the year ended December 31, 2005
compared to $5,742,037 for the year ended December 31, 2004.

LIQUIDITY AND CAPITAL RESOURCES

We had a cash balance of $1,669 as of December 31, 2005 and a cash balance of $0
as of December 31, 2004. 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.

<PAGE>

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

The Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business
Combinations, which establishes revised standards for accounting for business
combinations, eliminating the pooling method, and providing new guidance for
recognizing intangible assets arising in a business combination. Additionally,
SFAS No. 141 requires more prominent and more frequent disclosures in financial
statements about a business combination. This statement is effective for
business combinations initiated on or after July 1, 2001. The adoption of this
pronouncement on July 1, 2001 did not have a material effect on our financial
position, results of operations or liquidity.

SFAS 142, Goodwill and Other Intangible Assets provides guidance on accounting
for the acquisition of intangibles, except those acquired in a business
combination, which is subject to SFAS 141, and the manner in which intangibles
and goodwill should be accounted for subsequent to their initial recognition.
This statement is effective for all fiscal years beginning after December 15,
2001. The adoption of SFAS 142 on April 1, 2002 did not have a material effect
on our financial position, results of operations, or liquidity.

<PAGE>

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
provides implementation guidance regarding when and how to measure an impairment
loss, and expands the presentation to include a component of an entity, rather
than strictly a business segment. SFAS 144 also eliminates the current exemption
to consolidation when control over a subsidiary is likely to be temporary. This
statement is effective for all fiscal years beginning after December 15, 2001.
The adoption of SFAS 144 on April 1, 2002 did not have a material effect on our
financial position, results of operations or liquidity.

SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity" ("SFAS No. 150") was issued in May 2003. This
statement establishes standards for how certain financial instruments with
characteristics of both liabilities and equity are classified and measured. It
requires that many financial instruments previously classified as equity now be
classified as a liability (or an asset in some circumstances). These financial
instruments are as follows: a financial instrument issued in the form of shares
that is mandatory redeemable -- that embodies an unconditional obligation
requiring the issuer to redeem it by transferring its assets at a specified or
determinable date (or dates) or upon an event that is certain to occur; a
financial instrument, other than an outstanding share, that, at inception,
embodies an obligation to repurchase the issuer's equity shares, or is indexed
to such an obligation, and that requires or may require the issuer to settle the
obligation by transferring assets; a financial instrument that embodies an
unconditional obligation, or a financial instrument other than an outstanding
share that embodies a conditional obligation, that the issuer must or may settle
by issuing a variable number of its equity shares, if, at inception, the
monetary value of the obligation is based solely or predominantly on any of the
following: a) a fixed monetary amount known at inception, for example, a payable
settle able with a variable number of equity shares; b) variations in something
other than the fair value of equity shares, for example, a financial instrument
indexed to the S&P 500 and settle able with a variable number of equity shares;
c) variations inversely related to changes in the fair value of equity shares,
for example, a written put option that could be net share settled. SFAS No. 150
was effective for financial instruments entered into or modified after May 31,
2003, and otherwise effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an
effect on our operating results, financial position, or liquidity.

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.

<PAGE>

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.

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. The
Company acquired Family Health News as a wholly owned subsidiary as an asset and
no liabilities. Family Health News was subsequently disposed of in October 2003.
In September 2004, the Company acquired Vdx, Inc., a manufacturer and
distributor of veterinary diagnostic equipment and tests, VDx currently markets
and sells specialized tests for bovine IgG, NEFA for the dairy industry, and
Equine IgG. The NEFA test offers farmers the ability to test the health and
nutrition of their cattle before giving birth and also test the health of the
new calves once born. Future milk output from dairy cattle is directly affected
by the nutrition just prior to calving. The acquisition of VDx was rescinded
effective April 1, 2005.

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 (TM)) 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.

<PAGE>

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(TM)) 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.

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 developing 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.

<PAGE>

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 (TM) 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
(TM) 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(TM) 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(TM) SYSTEM

GEA(TM) is a proprietary assay development system. GEA(TM) was developed in
2001. To date the system has been used to develop our TSE molecular assay.
GEA(TM) is a gene expression system to be used solely in our laboratory and will
not be marketed for commercial sale. The core of GEA(TM) 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.

<PAGE>

To perform GEA(TM), 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(TM). 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; 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.

<PAGE>

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.

<PAGE>

Molecular Biology services consisting of:

Synthetic cDNA Construction

Prokaryotic Expression Vector Construction & Development
4. 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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

EMPLOYEES

As of December 31, 2005, we had a total of four (4) 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, 2007. 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, 2007. Ms Irizarry's base salary
is $90,000 per annum. 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 expires in January 2007 and the
rent is $5,235.26 per month. 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.

<PAGE>

LEGAL MATTERS

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. The Company has appealed this judgment and is in
process of filing the appeal.

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. has retained other trial counsel. A new trial date was set for
May 16-19, 2006. The settlement was done on May 12, 2006.

New Trends Holdings, Inc. from British Columbia sued the Regency Group and
GeneThera, Inc. in U.S. District Court for the District of Colorado on or about
August 4, 2005 based upon a breach of contract claim arising from Regency
Group's acting on behalf of GeneThera, Inc. to engage New Trends for the
performance of services. GeneThera has filed and was granted a Motion to Dismiss
it from the action on the grounds that the contract was between Regency and New
Trends. Regency and New Trends settled the case and reimbursed GeneThera for all
costs incurred in defending the action.

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

Item 7. Financial Statements

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
certified by Jaspers & Hall.

<PAGE>

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

Jose R. Sandoval      31    Controller

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. Ms.
Irizarry has over eighteen 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.

<PAGE>

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.

<PAGE>

Item 10. Executive Compensation

The following table sets forth certain summary information for the fiscal year
ended December 31, 2005 concerning the compensation awarded to, earned by, or
paid to those persons serving as executive officers during fiscal year 2005.

                           SUMMARY COMPENSATION TABLE

The following table sets forth certain summary information for the fiscal year
ended December 31, 2005 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., Tannya L. Irizarry, and Steven M. Grubner were the
only executive officers during the fiscal year ended December 31, 2005.

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

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

(1)   Of this amount, $54,000 was paid to Dr. Milici in 2004 and $90,000 has
      been deferred.

(2)   All of this amount has been deferred.

(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, 2005, 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.

<PAGE>

The following table shows for the fiscal year ended December 31, 2005, certain
information regarding options granted to the Named Executive Officers:

Option Grants in Fiscal 2005

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

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

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

(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, 2005.

(2)   Value is based on the fair market value of the Company's common stock at
      December 31, 2005 ($.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, 2007. 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.

<PAGE>

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

The following table shows, as of December 31, 2005, 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.

<TABLE>
<CAPTION>

                                               Number of Shares
Name of Beneficial Owner                    Beneficially Owned (1)   Percent of Class (1)
------------------------                    ----------------------   --------------------
<S>                                             <C>                          <C>
Five Percent Shareholders:

0711005 BC Ltd. Marketing Group
  565 Stevens Dr.
  West Vancouver, BC, Canada V7S 1E1             1,375,000(2)                 6.2%

Directors and Executive Officers:

Dr. Antonio Milici (3)                          11,043,339                   49.5%

Tannya L Irizarry                                  660,000                    3.0%

All Directors and Executive Officers as a
  Group (2 persons) :                           11,703,339                   58.7%
</TABLE>

(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 22,295,069 shares of common stock
      outstanding on December 31, 2005, 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, 2005

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.

<PAGE>

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.

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.

<PAGE>

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)

<PAGE>

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 Act

31.2      Certification of Chief Financial Officer required by Rule 13a-14(a) or
          Rule 15d-14(a) of the Exchange Act

32.1      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.

<PAGE>

(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:

2004   $93,585
2005   $67,500

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.

<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on this 31st day of March, 2006.

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           July 31, 2006
---------------------------   Director
Antonio Milici, M.D., Ph.D.


/s/ Tannya L Irizarry         Chief Financial     July 31, 2006
---------------------------   Officer (Interim)
Tannya L Irizarry


/s/ Dr. Thomas Slaga          Director            July 31, 2006
---------------------------
Dr. Thomas Slaga

<PAGE>

                                 GENETHERA, INC.

                                 AND SUBSIDIARY

                          (A Development Stage Company)
                              FINANCIAL STATEMENTS
                               FOR THE PERIOD FROM
                OCTOBER 5, 1998 (INCEPTION) TO DECEMBER 31, 2005

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE PERIOD FROM
                OCTOBER 5, 1998 (INCEPTION) TO DECEMBER 31, 2005

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        -------
Independent Registered Public Accounting Firm's Report                      2

Consolidated Balance Sheets - December 31, 2005 and 2004                    4

Consolidated Statements of Operations for the Period from
  October 5, 1998 (Inception) to December 31, 2005                          6

Consolidated Statements of Changes in Stockholders' Equity (Deficit)
  for the Period from October 5, 1998 (Inception) to
  December 31, 2005                                                         7

Consolidated Statements of Cash Flows for the Period from
  October 5, 1998 (Inception) to December 31, 2005                         10

Notes to Consolidated Financial Statements                                 11


                                        1

<PAGE>

             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 sheet of GeneThera, Inc.
(a development stage company) and Subsidiary as of December 31, 2005, and the
related consolidated statements of operations, changes in stockholders' deficit,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. 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 audit provides 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, 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 financial statements for the year ended December 31, 2004 and for the period
October 5, 1998 (inception) to December 31, 2004, were audited by other
accountants, whose report dated February 28, 2005, expressed an unqualified
opinion on those statements. They have not performed any auditing procedures
since that date.

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
May 22, 2006
Denver, CO.


                                        2

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 2005 AND 2004

                                     Assets

                                                                     2004
                                                      2005        (Restated)
                                                  ------------   ------------
Current assets
  Cash                                            $      1,669             --
  Accounts Receivable                                    5,810            229
  Prepaid expenses                                      10,551         48,778
                                                  ------------   ------------
Total current assets                                    18,030         49,007
Property and equipment                                 727,428        773,477
Less Accumulated Depreciation                         (287,399)      (204,653)
                                                  ------------   ------------
  Property and equipment, net                          440,029        568,824
Other assets                                            15,014          5,278
                                                  ------------   ------------
  Total Assets                                    $    473,073   $    623,109
                                                  ============   ============

   The accompanying notes are an integral part of these financial statements.


                                        3

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 2005 AND 2004

                      Liabilities and Stockholders' Deficit

                                                                     2004
                                                      2005        (Restated)
                                                  ------------   ------------
Current liabilities
  Bank Overdraft                                  $         --   $        338
  Accounts payable                                     190,229         77,882
  Accrued expenses                                     589,921        656,701
  Leases payable                                         9,450         30,506
  Notes payable                                         55,775         58,153
  Convertible Notes                                         --         19,000
                                                  ------------   ------------
  Total Current Liabilities                            845,375        842,580
Long Term Liabilities                                    4,901        128,430
                                                  ------------   ------------
Total Liabilities                                      850,276        971,010
                                                  ------------   ------------
Stockholders' deficit
  Preferred stock, $0.001 par value, 20,000,000
    shares authorized; 4,600 and no shares
    issued and outstanding                                   5             --
  Common stock $.001 par value, authorized
    100,000,000 shares; 22,295,069 and
    18,732,534 issued and outstanding
    at December 31, 2005 and 2004 respectively          22,296         18,733
  Additional paid in capital                        13,685,888     10,146,977
  Subscription receivable                                   --       (100,040)
  Deficit accumulated during development stage     (14,085,392)   (10,413,571)
                                                  ------------   ------------
  Total Stockholders' Deficit                         (377,203)      (347,901)
                                                  ------------   ------------
Total Liabilities &  Stockholders' Deficit        $    473,073   $    623,109
                                                  ============   ============

   The accompanying notes are an integral part of these financial statements.


                                        4

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
      FOR THE PERIOD FROM OCTOBER 5, 1998 (INCEPTION) TO DECEMBER 31, 2005

<TABLE>
<CAPTION>
                                       Year Ended December 31,     For the period from
                                      -------------------------      October 5, 1998
                                                         2004         (inception) to
                                          2005        (Restated)    December 31, 2005
                                      ------------   -----------   -------------------
<S>                                   <C>            <C>              <C>
Income
  Contract revenues                   $   190,982    $       155      $    268,749
  Research fees                                --             --           188,382
                                      -----------    -----------      ------------
Total income                              190,982            155           457,131
Cost of sales                                  --             --           (30,352)
                                      -----------    -----------      ------------
Gross profit                              190,982            155           426,779
                                      -----------    -----------      ------------
Expenses
  Other compensation                           --      2,119,009         3,283,009
  Consulting                            1,952,040      1,471,160         4,139,417
  General and admin expenses              973,376        466,082         2,768,091
  Payroll expenses                        469,864        254,316         1,562,379
  Depreciation                             98,118         73,751           326,102
  Settlement expense                           --         57,493            57,493
  Impairment of long-lived asset               --             --            55,714
  Lab expenses                             53,618         23,245           254,925
                                      -----------    -----------      ------------
Total expenses                          3,547,016      4,465,056        12,447,130
                                      -----------    -----------      ------------
Loss from operations                   (3,356,034)    (4,464,901)      (12,020,350)
Other income (expenses)
  Beneficial conversion expense          (367,397)    (1,301,373)       (1,987,991)
  Interest expense                         (2,324)        (3,828)          (46,758)
  Gain on settlements                      58,203             --            58,203
  Other income (expenses), net             42,069         28,065            33,569
                                      -----------    -----------      ------------
Net loss from continuing operations    (3,625,483)    (5,742,037)      (13,963,327)
Loss from discontinued operations              --             --          (122,065)
                                      -----------    -----------      ------------
Net loss                              $(3,625,483)   $(5,742,037)     $(14,085,392)
                                      ===========    ===========      ============
Loss per common share                 $     (0.17)   $     (0.45)               (1)
Diluted Weight Average                $        --    $        --                --
Weight Average                         20,978,467     12,634,142                --
Diluted Per Share                     $     (0.16)   $     (0.32)               --
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                        5

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                             Preferred Stock      Common Stock
                                             ---------------  -------------------
                                             Shares   Amount    Shares     Amount
                                             ------  -------  ----------  -------
<S>                                          <C>       <C>    <C>         <C>
Balance December 31, 2003                        --    $--     4,743,502  $ 4,743
  Shares issued in exchange for convertible
    notes payable                                --     --     1,434,409    1,434
  Shares issued for consulting and legal
    services                                     --     --       698,805      699
  Beneficial conversion feature                  --     --            --       --
  Shares issued to founder for completion
    of reverse merger                            --     --     7,725,000    7,725
  Shares issued to founder for compensation      --     --     1,473,339    1,474
  Warrants exercised                             --     --     2,382,979    2,383
  Shares issued to officer                       --     --       100,000      100
  Shares issued for cash and subscription
    agreement                                    --     --       175,000      175
  Net loss for the year 2004                     --     --            --       --
                                             ------    ---    ----------  -------
Balance December 31, 2004                        --     --    18,732,534   18,733
  Shares issued in exchange for convertible
    notes payable                                --     --        19,000       19
  Shares issued for consulting services          --     --     2,050,000    2,050
  Shares issued to officers                      --     --        90,000       90
  Cancillation of Previously issued
    consulting shares                            --     --       (15,204)     (15)
  Beneficial conversion feature                  --     --            --       --
  Preferred stock issued                     11,000     11            --       --
  Preferred dividends paid                       --     --            --       --
  Repurchase of Common stock                     --     --        (1,400)      (1)
  Shares issued upon conversion of
    Preferred Shares                         (1,400)    (1)      318,182      318
  Additional Paid in capital- related party
    - note payment                               --     --            --       --
  Shares issued to employees                     --     --        15,000       15
  Shares issued upon conversion of
    Preferred Shares                         (5,000)    (5)    1,086,957    1,087
  Satisfaction of Subscription Receivable        --     --            --       --
    Net loss for the year 2005                   --     --            --       --
                                             ------    ---    ----------  -------
Balance December 31, 2005                     4,600    $ 5    22,295,069  $22,296
                                             ======    ===    ==========  =======

<CAPTION>
                                                                         Development
                                                                            Stage
                                               Paid in    Subscription   Accumulated
                                               Capital     Agreement       Deficit       Total
                                             -----------  ------------  ------------  -----------
<S>                                          <C>            <C>         <C>           <C>
Balance December 31, 2003                    $ 3,890,812    $      --   $ (4,671,534) $  (775,979)
  Shares issued in exchange for convertible
    notes payable                              1,103,179           --             --    1,104,613
  Shares issued for consulting and legal
    services                                   1,126,164           --             --    1,126,863
  Beneficial conversion feature                1,301,373           --             --    1,301,373
  Shares issued to founder for completion
    of reverse merger                             (7,725)          --             --           --
  Shares issued to founder for compensation    2,117,535           --             --    2,119,009
  Warrants exercised                             235,915           --             --      238,298
  Shares issued to officer                       129,900           --             --      130,000
  Shares issued for cash and subscription
    agreement                                    249,825     (100,040)            --      149,960
  Net loss for the year 2004                          --           --     (5,742,037)  (5,742,037)
                                             -----------    ---------   ------------  -----------
Balance December 31, 2004                     10,146,977     (100,040)   (10,413,571)    (347,901)
  Shares issued in exchange for convertible
    notes payable                                 18,981           --             --       19,000
  Shares issued for consulting services        1,965,952           --             --    1,968,002
  Shares issued to officers                       73,260           --             --       73,350
  Cancillation of Previously issued
    consulting shares                            (15,945)          --             --      (15,960)
  Beneficial conversion feature                  367,397           --             --      367,397
  Preferred stock issued                       1,099,989           --             --    1,100,000
  Preferred dividends paid                            --           --        (46,338)     (46,338)
  Repurchase of Common stock                      (1,609)          --             --       (1,610)
  Shares issued upon conversion of
    Preferred Shares                                (317)          --             --           --
  Additional Paid in capital- related party
    - note payment                                20,000           --             --       20,000
  Shares issued to employees                      12,285           --             --       12,300
  Shares issued upon conversion of
    Preferred Shares                              (1,082)          --             --           --
  Satisfaction of Subscription Receivable             --      100,040             --      100,040
    Net loss for the year 2005                        --           --     (3,625,483)  (3,625,483)
                                             -----------    ---------   ------------  -----------
Balance December 31, 2005                    $13,685,888    $      --   $(14,085,392) $  (377,203)
                                             ===========    =========   ============  ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                        6

<PAGE>

                        GENETHERA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                        Year ended December 31,    For the period from
                                                       -------------------------     October 5, 1998
                                                                       Restated      (inception) to
                                                          2005          2004        December 31, 2005
                                                       -----------   -----------   -------------------
<S>                                                    <C>           <C>               <C>
Cash flows from operating activities:
  Net loss                                             $(3,625,483)  $(5,742,037)      $(14,085,392)
                                                       -----------   -----------       ------------
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                         98,118        73,751             17,643
      Compensation in exchange for common stock          2,037,692     3,614,172          7,890,614
      Beneficial conversion feature                        367,397     1,301,372          1,987,990
    Changes in operating assets and liabilities
      (Increase) Decrease in:

      Accounts receivable                                   (5,581)         (229)            (5,810)
      Inventory                                                 --            --                 --
      Prepaid expenses                                      38,227       (48,778)           (10,551)
      Other assets                                          (9,736)        1,000             (2,458)
      Increase in account payable and accrued
        liabilites                                          45,567       (34,926)           710,295
                                                       -----------   -----------       ------------
    Total adjustments                                    2,571,684     4,906,362         10,587,723
                                                       -----------   -----------       ------------
  Net cash used in operating activities                 (1,053,799)     (835,675)        (3,497,669)
                                                       -----------   -----------       ------------
Cash flows from investing activities:
  Cash payments for the purchase of property              (107,674)     (156,329)          (299,072)
                                                       -----------   -----------       ------------
Cash flows from financing activities:
  Bank overdraft                                              (338)          338             35,486
  Capital contributed as equipment                                                          272,376
  Principal payments on notes & leases payable                            (6,822)          (240,119)
  Stock Issued for Conversion of NP                             --       836,737
  Payment of lease payable                                 (16,155)       11,791            145,636
  Proceeds from issuance of stock                        1,100,000       149,960          1,843,882
  Proceeds from loans payable                                7,543            --          1,498,593
  Proceeds from Subscription Recievable                    100,040            --            100,040
  Repurchase of Common Stock                                (1,610)           --             (1,610)
  Reciept of APIC                                           20,000            --             20,000
  Payment of Perfered Dividends                            (46,338)           --            (46,338)
                                                       -----------   -----------       ------------
  Net cash provided by financing activities              1,163,142       992,004          3,627,946
                                                       -----------   -----------       ------------
Net increase (decrease) in cash and cash equivalents         1,669            --           (168,795)
Cash, beginning of year                                         --            --                 --
                                                       -----------   -----------       ------------
Cash, end of year                                      $     1,669   $        --       $      1,669
                                                       ===========   ===========       ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest expense       $     2,324   $     3,828       $     46,758
                                                       ===========   ===========       ============
Cash paid during the period for Taxes                  $        --   $        --       $         --
                                                       ===========   ===========       ============
Non-Cash Items for the period                          $        --   $        --       $         --
                                                       ===========   ===========       ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                        7

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

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). On September 20, 2004, the Company acquired 100% of the outstanding
shares of VDx, Inc. A total of 375,000 shares of common stock were issued for
the transaction. Effective April 1, 2005, the acquisition of VDx, Inc. was
rescinded with the parties returning to their original positions.

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.


                                        8

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

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

Our Research and Development contracts are on a pre-paid basis in order to
reflect our milestones during the research investigation. 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, 2005 and 2004 all common stock
equivalents were antidilutive and therefore diluted loss per share equaled basic
loss per share. The total outstanding warrants of 597,826 would be added into
the weighted average common shares if not antidilutive in calculating diluted
loss per share.

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.


                                        9

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
Assets, an amendment to Accounting Principles Board Opinion No. 29, Accounting
for Non-monetary Transactions is based on the principle that exchanges of
non-monetary assets should be measured based on the fair value of the assets
exchanged. The guidance in that Opinion, however, included certain exceptions to
that principle. This Statement amends Opinion 29 to eliminate the exception for
non-monetary exchanges of similar productive assets and replaces it with a
general exception for exchanges in which the future cash flows of the entity are
not expected to changes significantly as a result of the exchange. The
provisions of SFAS No. 153 will become effective for non-monetary asset
exchanges in fiscal periods beginning after June 15, 2005. The Company has not
yet determined the impact of adopting this standard.

In December 2004, the FASB issued SFAS 123 (revised 2004), Share-Based Payment,
("SFAS No. 123(R)"). SFAS No. 123(R) requires companies to recognize the
compensation cost relating to share-based payment transactions in the financial
statements. This Statement eliminates the ability to account for share-based
compensation transactions using the Accounting Principles Board Opinion No. 25,
and requires instead that such transactions be accounted for using a fair-value
method. SFAS No. 123(R) will be effective for the Company's annual report for
the period ending December 31, 2005.

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.


                                       10

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Recent Accounting Pronouncements - continued

NOTE 2 PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 and 2004 consisted of the following:

                                    2005        2004
                                 ---------   ---------
Office equipment                 $  84,344   $  45,002
Laboratory equipment               643,084     728,475
                                 ---------   ---------
                                   727,428     773,477
Less: Accumulated depreciation    (287,399)   (204,653)
                                 ---------   ---------
                                 $ 440,029   $ 568,824
                                 =========   =========

Depreciation expense for the years ended December 31, 2005 and 2004 was $98,118
and $73,756, respectively.

NOTE 3 LEASE OBLIGATIONS

Operating Leases

The Company leases its office, warehouse, laboratory space and vehicle under
non-cancelable operating leases, which have initial terms in excess of one year.

Total lease expense for the years ended December 31, 2005 and 2004 was $71,344,
and $84,388, respectively.

Capital Leases

The Company's property under capital leases is included in property and
equipment (See Note 2) and is summarized as follows:


                                       11

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 3 LEASE OBLIGATIONS - continued

Capital Lease - continued

                                    2005       2004
                                  --------   --------
Laboratory Equipment              $ 31,574   $183,212
Computer                             2,672      2,672
                                  --------   --------
                                    34,246    185,884
Less: Accumulated depreciation     (19,895)   (11,396)
                                  --------   --------
Net assets under capital leases   $ 14,351   $174,488
                                  ========   ========

Future annual minimum lease payments under these non-cancelable operating and
capital leases at December 31, 2005 were as follows:

                                             Operating   Capital
                                              Leases      Leases
                                             ---------   -------
2006                                            63,217     9,450
2007                                            63,217     4,901
2008                                            63,217         0
2009                                                 0         0
2010 and thereafter                                  0         0
                                              --------    ------
                                              $189,651         0
                                              ========
Less amount representing interest                              0
                                                          ------
Present value of minimum lease payments                    9,450
Less current portion                                          (0)
                                                          ------
Long-term portion of capital lease payable                $4,901
                                                          ======

Total interest expense, including late fees, under capital leases was $2,324 and
$3,828 for the years ended December 31, 2005 and 2004, respectively.


                                       12

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELPOMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 4 LOAN PAYABLE - continued

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

                                                           2005     2004
                                                           ----   --------
Loan payable with no interest, due on demand, unsecured.    $ 0   $ 20,000
Less current portion                                         (0)   (20,000)
                                                            ---   --------
Total long-term loan payable - related party                $ 0   $      0
                                                            ===   ========

There was no interest expense related to this obligation for the years ended
December 31, 2005 and 2004. The loan was contributed to additional paid in
capital in 2005.

NOTE 5 NOTES PAYABLE

The Company has outstanding notes payable at December 31, 2005 and 2004 as
follows:

                                                          2005       2004
                                                        --------   --------
Various notes payable with interest rates ranging
from 0% to 14%; various terms; secured by equipment
and personal guarantees.                                $ 55,775   $186,582
Less current portion:                                    (55,775)   (68,153)
                                                        --------   --------
Total long-term notes payable                           $      0   $118,429
                                                        ========   ========

Total interest expense for these obligations for the year ended December 31,
2005 and 2004 was $0 and $5,136, respectively.

NOTE 6 CONVERTIBLE NOTES PAYABLE

The Company has outstanding convertible notes payable at December 31, 2005 and
2004 as follows:

                                                           2005     2004
                                                           ----   --------
Convertible note payable to an individual, with
interest at 12%; due July 8, 2004; convertible into
shares of common stock at a price of $1.00 per share.         0     17,000

A convertible note payable to an individual, with
interest at 8%; due February 15, 2005; convertible into
shares of common stock at a price of $1.00 per share.         0      2,000
                                                            ---   --------
                                                              0     19,000
Less: current portion                                        (0)   (19,000)
                                                            ---   --------
Total long-term convertible notes payable                   $ 0   $      0
                                                            ===   ========


                                       13

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 6 CONVERTIBLE NOTES PAYABLE - continued

Interest expense for these obligations for the years ended December 31, 2005 and
2004 was $0 and $1,614, respectively.

NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT)

Common Stock Transactions

On December 31, 2005, the Company authorized 100,000,000 shares of $.001 par
value common stock; 22,295,069 is outstanding at December 31,2005.

On March 5, 1999, the Company issued 420,000 shares of common stock valued at
$36,000 according to an employment agreement, approved by the board of
directors, to the founder for services rendered during 1999. Accordingly,
consultant expense of $36,000 was charged to operations.

On March 5, 1999, 100,000 shares of common stock were issued in exchange for
used equipment with a fair market value of $34,586, supplies, and other items
totaling $25,414, and $40,000 in cash from an unrelated party. Accordingly, lab
equipment was recorded at $34,586, supplies at $21,414, and glassware at $4,000
- the market value for these items.

On April 1, 1999, according to a contract agreement to provide computer
services, the Company issued 60,000 shares of common stock valued at $60,000, in
exchange for computer & consulting services in the amount of $55,000, and $5,000
in cash. Accordingly, consultant expense of $55,000 was charged to operations.

On April 1, 1999, 5,000 shares of common stock valued at $5,000 were issued to
an unrelated party for $5,000 in cash.

On January 1, 2000, 25,000 shares of common stock valued at $25,000 were issued
to a consultant in exchange for services rendered. Accordingly, consultant
expense of $25,000 was charged to operations.


                                       14

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT) - continued

Common Stock - continued

On April 10, 2000, according to a contract agreement to provide management
services, the Company issued 40,000 shares of common stock valued at $40,000, in
exchange for management services. Accordingly, consultant expense of $40,000 was
charged to operations.

On May 15, 2000, according to a contract agreement to provide consulting
services, the Company issued 10,000 shares of common stock valued at $12,000.
Accordingly, consultant expense of $12,000 was charged to operations.

On February 15, 2001, the Company issued 1,125,000 shares of common stock valued
at $240,000 according to an employment agreement, approved by the board of
directors, to an officer in lieu of salary for services rendered during 2000 &
2001. Accordingly, salary expense of $120,000 was charged to operations at
December 31, 2001 and $120,000 in 2000.

On February 15, 2001, the board of directors of the Company approved the
issuance of 60,000 shares of common stock valued at $60,000 to an officer in
lieu of salary for services rendered. Accordingly, salary expense of $60,000 was
charged to operations.

On February 15, 2001, the board of directors of the Company approved the
issuance of 15,000 shares of common stock valued at $15,000 to an officer in
lieu of salary for services rendered. Accordingly, salary expense of $15,000 was
charged to operations.

On October 1, 2001, according to a contract agreement to provide consulting
services, the Company issued 100,000 shares of common stock valued at $100,000.
Accordingly, consultant expense of $100,000 was charged to operations.

As a result of the recapitalization on February 25, 2002, the Company is deemed
to have issued 697,176 common shares to the stockholders of GeneThera, Inc.
(f/k/a Hand Brand Distribution, Inc.).

During November 2002, certain holders exercised their option to convert $40,500
in convertible notes payable per various agreements dated in 2002. As a result,
81,000 shares of common stock were issued.

In June 2003, the Company issued 715,000 shares of common stock valued at
$607,750 in exchange for consulting services. Accordingly, consultant expense of
$607,750 was charged to operations.

On November 15, 2003, the Company issued 600,000 shares of common stock valued
at $1,164,000 as "officer incentive" to an officer of the Company following a
resolution of the board of directors. Accordingly, salary expense of $1,164,000
was charged to operations.


                                       15

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT) - continued

Common Stock - continued

During 2003, certain holders exercised their option to convert $331,652 in
convertible notes payable per various agreements dated in 2002 and 2003. As a
result, 663,302 shares of common stock were issued.

On October 1, 2004, the Company issued 80,000 shares of common stock to the
President of Family Health News, Inc. (FHNI) to satisfy all outstanding
convertible notes and accrued interest for funds loaned to the Company.
Additionally, the Company released and conveyed all interest in the FHNI to its
president. Although signed on August 1, 2004, the agreement was effective as of
October 1, 2003.

During 2004, certain holders exercised their option to convert $1,048,989 in
convertible notes payable per various agreements dated in 2003 and 2004. As a
result, 1,434,409 shares of common stock were issued.

In January 2004, the Company issued 30,000 shares valued at $88,710 pursuant to
a one-year agreement with a consultant. Accordingly, $88,710 for consulting
expense was charged to operations.

In January 2004, the Company issued 211,000 shares valued at $437,481 to
consultants for services rendered. Accordingly, $437,481 for consulting expense
was charged to operations.

In June 2004, the Company issued 7,725,000 shares to the founder by resolution
of the board of directors in conjunction with the completion of the reverse
acquisition.

In June 2004, the Company issued 1,473,339 shares valued at $2,117,535 to the
founder by resolution of the board of directors for compensation.

In June 2004, a consultant exercised its option to purchase 2,382,979 shares
under warrants issued for consulting services valued at $238,298. Accordingly,
$238,298 for consulting expense was charged to operations. All warrants related
to this consulting agreement have been exercised.

In August and September 2004, the Company issued 97,250 shares valued at $94,671
to several consultants and an attorney for services rendered. Accordingly,
$23,421 for consulting expense and $71,250 for professional fees was charged to
operations.

In October 2004, the Company issued 35,555 shares valued at $34,750 to attorney
for services rendered. Accordingly, $34,750 for professional fess was charged to
operations.

In October 2004, the Company issued 100,000 shares valued at $130,000 to a Board
member. Accordingly, $130,000 for professional fees was charged to operations.

In November 2004, the Company issued 325,000 shares valued at $471,250 to a
consultant for marketing. Accordingly, $471,250 for consulting expense was
charged to operations.

In November 2004, the Company issued 175,000 shares valued at $250,000 to a
subscriber for a total of $149,960 in cash and a subscription receivable of
$100,040.


                                       16

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT) - continued

Common Stock - continued

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.

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.

Preferred Stock

On December 31, 2005, the Company authorized 20,000,000 shares of $0.001 par
value preferred stock; 4,600 is outstanding at December 31, 2005.

Preferred Stock 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.


                                       17

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT) - continued

Common Stock - continued

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, 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.

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, 2005.

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.

NOTE 8 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, 2005
and 2004 of approximately $14,085,392 and $10,413,571, 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.

NOTE 9 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, 2005 in the amount of $55,081.


                                       18

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 10 GOING-CONCERN UNCERTAINTY

These financial statements are presented assuming the Company will continue as a
going concern. For the years ended December 31, 2005 and 2004, the Company
showed operating losses of $3,625,483 and $5,742,037, respectively. The
accompanying financial statements indicate that current liabilities exceed
current assets by $827,345 and $793,573 at December 31 2005 and 2004,
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.

NOTE 11 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.

                  2005       2004
                --------   --------
Consulting      $240,000   $240,000
Salaries         143,714    164,714
Lease expense     63,217     50,703
Depreciation      11,751     66,551
Lab expenses      53,618     58,600
                --------   --------
Totals          $512,300   $541,299
                ========   ========

NOTE 12 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 $367,397 and $1,301,373 for the periods ended
December 31, 2005 and 2004, respectively.


                                       19

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 13 ACQUISITION OF VDx, INC.

On September 20, 2004 the Company acquired 100% of the equity interests of VDx,
Inc. (VDx). The income and expenses for VDx from the period September 20, 2004
through December 31, 2004 are included in the consolidated statements of
operations. VDx is a corporation organized under the laws of the state of
Wisconsin and is a manufacturer and distributor of veterinary diagnostic
equipment and tests. VDx currently markets and sells specialized tests for
bovine IgG, NEFA for the dairy industry, and Equine IgG. VDx has already made a
significant impact within the dairy cattle industry with their NEFA test and
nutritional supplement program to maximize output for the dairy farmer. The NEFA
test offers farmers the ability to test the health and nutrition of their cattle
before giving birth and also test the health of the new calves once born. Future
milk output from dairy cattle is directly affected by the nutrition just prior
to calving. By acquiring VDx, the Company was granted an exclusive license for
the above named tests, which will enable the Company to generate revenues and
increase its penetration into the dairy cattle industry in order to market its
future Johnne's test and vaccine.

NOTE 13 ACQUISITION OF VDx, INC. - continued

The purchase price of VDx was $338,282 for which the Company issued 375,000
shares of common stock valued at $326,250 based on the closing price of the
shares on the date of acquisition.

Effective April 1, 2005, the acquisition of VDx was rescinded by mutual
agreement between the Board and the previous owners of VDx. The 375,000 shares
issued for the acquisition of VDx were returned to the company and all control
was passed back to the original ownership. Both parties were put back in the
same position. The Company restated 2004 financial statements due to this
adjustment.

NOTE 14 RESTATEMENT

The consolidated financial statements of the Company included in the 10-KSB for
December 31, 2003 were inaccurately depicted in the financials as of March 23,
2003. The 60,000 shares issued for computer services were never authorized by
the Board; the 40,000 shares issued for management and financing services was
never completed. The above cancelled shares accrued interest in the amount of
3,134 was also annulled due to lack of issuance.

The adjustment to shareholder equity was due to the reclassification in February
25, 2002 in the amount of 49,658. Consequently, the shareholder equity was
restated with the above adjustment.

During the fiscal year of 2004, shares were issued to a board member in the
amount of 100,000 shares, which were not recognized in the consolidated
financial statement. Consequently, the consolidated financial statements for
December 31, 2003 and December 31, 2004 are restated as follows:


                                       20

<PAGE>

                         GENETHERA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 14 RESTATEMENT - continued

<TABLE>
<CAPTION>
                                         Shares of        Additional     Accumulated
                                        Common Stock   Paid-in-Capital     Deficit
                                        ------------   ---------------   -----------
<S>                                      <C>              <C>            <C>
As reported December 31, 2003 - After
restated                                  4,796,478        3,998,810     (4,785,076)
Adjustments
  Cancelled Shares                         (100,000)         (99,900)       100,000
  Cancelled Shares                           (3,134)          (3,131)         3,134
  Adjustment to Shareholder Equity           49,658           (4,966)         4,916
                                         ----------       ----------     ----------
As restated December 31, 2003             4,743,002        3,890,813     (4,677,026)
                                         ==========       ==========     ==========
As reported December 31, 2004            19,007,534       10,330,920     10,658,980
Adjustments
  Cancelled Shares of VDX                  (375,000)        (313,843)      (314,218)
  Share issued to Board member              100,000          129,900        130,000
                                         ----------       ----------     ----------
As restated December 31, 2004            18,732,534       10,146,977     10,474,762
                                         ==========       ==========     ==========
</TABLE>

                                 Net Income
                                 ----------
Restated December 31, 2004       (5,755,754)
Adjustments
  VDx Adjustment                    143,717
  Bonus for Board member
Stock                              (130,000)
New restated December 31, 2004   (5,742,037)

NOTE 15 STOCK OPTION PLAN

In December 2005, the board of disrectors approved a stock option plan for the
issuance of 2,000,000 shares to employees. No shares were issued as of December
31, 2005.


                                       21