**UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **FORM
        10-QSB**
 **(Mark
        One)**
  **x**
              **Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934.**
  **For
        the quarterly period ended September 30, 2007.**
  **o**
              **Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934.**
  **For
        the transition period from ______to______.**
  **Commission
        File number 333-110324**
  **BTX
        HOLDINGS, INC.**
 (Name
        of
        small business issuer in its charter)
  **FLORIDA**
              **16-1682307**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              (IRS
                  Employer Identification No.)**1400
                  Cypress Creek Road, Fort Lauderdale, Florida**
              **33309**(Address
                  of principal executive offices)
              (Zip
                  Code)
  **(954)
        776-6600**
 (Registrant’s
        telephone number, including area code)
  (Former
        name, former address and former fiscal year, if changed since last
        report)
  Check
        whether the issuer (1) has filed all reports required to be filed by Section
        13
        or 15(d) of the Exchange Act during the preceding 12 months (or for such
        shorter
        period that the issuer was required to file such reports), and (2) has been
        subject to such filing requirements for the past 90 days. Yes x No o
  Indicate
        by check mark whether the registrant is a shell company as defined in Rule
        12b-2
        of the Exchange Act.
 Yes x
        No o
 
 State
        the
        number of shares outstanding of each of the issuer's classes of common equity,
        as of November 12, 2007: 5,318,069 shares of common stock.
   
  
 
 
  **BTX
        HOLDINGS, INC.**
 **(Formerly
        known as King Capital Holdings, Inc.)**
 **FINANCIAL
        STATEMENTS**
  **INDEX**
  
 **PART
        I-- FINANCIAL INFORMATION**
  Item
                  1.
              Financial
                  StatementsItem
                  2.
              Management’s
                  Discussion and Analysis of Financial ConditionItem
                  3.
              Control
                  and Procedures
  **PART
        II-- OTHER INFORMATION**
  Item
                  1.
              Legal
                  ProceedingsItem
                  2.
              Changes
                  in SecuritiesItem
                  3.
              Defaults
                  Upon Senior SecuritiesItem
                  4.
              Submission
                  of Matters to a Vote of Security HoldersItem
                  5.
              Other
                  InformationItem
                  6.
              Exhibits
                  and Reports on Form 8-K
  **SIGNATURE**
  **Item
        1. Financial Information**
  BASIS
        OF
        PRESENTATION
  The
        accompanying reviewed financial statements are presented in accordance with
        generally accepted accounting principles for interim financial information
        and
        the instructions to Form 10-QSB and item 310 under subpart A of Regulation
        S-B.
        Accordingly, they do not include all of the information and footnotes required
        by generally accepted accounting principles for complete financial statements.
        In the opinion of management, all adjustments (consisting only of normal
        occurring accruals) considered necessary in order to make the financial
        statements not misleading, have been included. Operating results for
        the nine months ended September 30, 2007 are not necessarily indicative of
        results that may be expected for the year ending December 31, 2007. The
        financial statements are presented on the accrual basis.
    
  **BTX
                        HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
                        DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
                        BALANCE SHEET**
 
 **AS
                        OF SEPTEMBER 30, 2007**
 **(UNAUDITED)**
 **ASSETS****CURRENT
                      ASSETS**Cash
                  
                  $
                  391Prepaid
                      expenses
                  
                  
                  140**TOTAL
                      CURRENT ASSETS**
                  
                  
                  531Property
                      and Equipment, net
                  
                  
                  3,648**TOTAL
                      ASSETS**
                  
                  $
                  4,179**LIABILITIES
                      AND STOCKHOLDERS’ DEFICIENCY****CURRENT
                      LIABILITIES**Accounts
                      payable
                  
                  $
                  119,018Accrued
                      payroll
                  
                  
                  96,630Accrued
                      interest
                  
                  
                  5,224Notes
                      payable- related party
                  
                  
                  20,200Notes
                      payable
                  
                  
                  30,000**TOTAL
                      CURRENT LIABILITIES**
                  
                  
                  271,072**COMMITMENTS
                      AND CONTINGENCIES**
                  
                  
                  -**STOCKHOLDERS’
                      DEFICIENCY**Preferred  stock,
                      $.001 par value, 10,000,000 shares authorized,  none issued and
                      outstanding
                  
                  
                  -Common
                      stock, $0.001 par value, 100,000,000 shares
                      authorized,  5,318,069 shares issued and
                      outstanding
                  
                  
                  5,318Additional
                      paid in capital
                  
                  
                  2,405,826Accumulated
                      deficit during development stage
                  
                  
                  (2,678,037
                  )Total
                      Stockholders’ Deficiency
                  
                  
                  (266,893
                  )**TOTAL
                      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**
                  
                  $
                  4,179
  See
            accompanying notes to financial statements.
   F-1
    **BTX
            HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
            DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
            STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
   Three
                      Months Ended September 30,
                  
                  
                  Nine Months
                      Ended September 30,
                  
                  
                  For
                      The Period From January 8, 2003 (Inception) to September 30,
                      20072007
                  
                  
                  2006
                  
                  
                  2007
                  
                  
                  2006**OPERATING
                      EXPENSES**Consulting
                      fees
                  
                  $
                  -
                  
                  
                  $
                  41,605
                  
                  
                  $
                  152,500
                  
                  
                  $
                  68,383
                  
                  
                  $
                  365,363Management
                      fees - related party
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  84,000Professional
                      fees
                  
                  
                  8,705
                  
                  
                  
                  57,319
                  
                  
                  
                  101,076
                  
                  
                  
                  99,700
                  
                  
                  
                  368,891Research
                      and development
                  
                  
                  -
                  
                  
                  
                  11,193
                  
                  
                  
                  12,500
                  
                  
                  
                  41,193
                  
                  
                  
                  168,618Impairment
                      of technology
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  500,000General
                      and administrative
                  
                  
                  45,917
                  
                  
                  
                  75,729
                  
                  
                  
                  198,791
                  
                  
                  
                  260,320
                  
                  
                  
                  736,875Total
                      Operating Expenses
                  
                  
                  54,622
                  
                  
                  
                  185,846
                  
                  
                  
                  464,867
                  
                  
                  
                  469,596
                  
                  
                  
                  2,223,747**LOSS
                      FROM OPERATIONS**
                  
                  
                  (54,622
                  )
                  
                  
                  (185,846
                  )
                  
                  
                  (464,867
                  )
                  
                  
                  (469,596
                  )
                  
                  
                  (2,223,747
                  )**OTHER
                      EXPENSES:**Interest
                      Expense
                  
                  
                  (1,469
                  )
                  
                  
                  (83,677
                  )
                  
                  
                  (22,199
                  )
                  
                  
                  (125,137
                  )
                  
                  
                  (55,464
                  )Loss
                      on conversion of note payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (96,332
                  )
                  
                  
                  
                  
                  
                  
                  (96,332
                  )Financing
                      fees
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (302,494
                  )Total
                      Other Expenses
                  
                  
                  (1,469
                  )
                  
                  
                  (83,677
                  )
                  
                  
                  (118,531
                  )
                  
                  
                  (125,137
                  )
                  
                  
                  (454,290
                  )**LOSS
                      BEFORE PROVISION FOR INCOME TAXES**
                  
                  
                  (56,091
                  )
                  
                  
                  (269,523
                  )
                  
                  
                  (583,398
                  )
                  
                  
                  (594,733
                  )
                  
                  
                  (2,678,037
                  )Provision
                      for Income Taxes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -**NET
                      LOSS**
                  
                  $
                  (56,091
                  )
                  
                  $
                  (269,523
                  )
                  
                  $
                  (583,398
                  )
                  
                  $
                  (594,733
                  )
                  
                  $
                  (2,678,037
                  )Net
                      loss per share - basic and diluted
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.08
                  )
                  
                  $
                  (0.13
                  )
                  
                  $
                  (0.18
                  )Weighted
                      average number of shares outstanding during the period - basic
                      and
                      diluted
                  
                  
                  5,318,069
                  
                  
                  
                  3,447,029
                  
                  
                  
                  4,436,397
                  
                  
                  
                  3,303,985
  See
          accompanying notes to financial
          statements.
   F-2
   **BTX
          HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
          DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
          STATEMENT OF CHANGES IN STOCKHOLDER' DEFICIENCY**
 
 **FOR
          THE PERIOD FROM JANUARY 8, 2003 (INCEPTION) TO SEPTEMBER 30,
          2007**
 **(UNAUDITED)**
   Preferred
                      Stock
                  
                  
                  Common
                      Stock
                  
                  
                  Additional
                      Paid-In
                  
                  
                  Deferred
                  
                  
                  Accumulated
                      Deficit During DevelopmentShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Compensation
                  
                  
                  Stage
                  
                  
                  Total**BALANCE,
                      JANUARY 8, 2003 (Inception)**
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Issuance
                      of founders stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,574,600
                  
                  
                  
                  1,575
                  
                  
                  
                  425
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,000Net
                      loss, 2003
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -**BALANCE,
                      DECEMBER 31, 2004**
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,574,600
                  
                  
                  
                  1,575
                  
                  
                  
                  425
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,000Beneficial
                      conversion on convertible debt
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  85,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  85,000Net
                      loss, 2004
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (102,668
                  )
                  
                  
                  (102,668
                  )**BALANCE,
                      December 31, 2004**
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,574,600
                  
                  
                  
                  1,575
                  
                  
                  
                  85,425
                  
                  
                  
                  -
                  
                  
                  
                  (102,668
                  )
                  
                  
                  (15,668
                  )Sale
                      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  311,500
                  
                  
                  
                  312
                  
                  
                  
                  622,689
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  623,000Stock
                      issued to acquire technology
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  250,000
                  
                  
                  
                  250
                  
                  
                  
                  499,750
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  500,000Common
                      stock issued for reverse merger
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  282,500
                  
                  
                  
                  283
                  
                  
                  
                  (283
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Common
                      stock issued for reverse merger
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,550,700
                  
                  
                  
                  16,551
                  
                  
                  
                  (16,551
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Repurchase
                      and cancellation of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,737,500
                  )
                  
                  
                  (15,738
                  )
                  
                  
                  (34,263
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (50,000
                  )Common
                      stock issued for financing fees on note payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,000
                  
                  
                  
                  5
                  
                  
                  
                  9,995
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000In-kind
                      contribution of management services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  880
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  880Common
                      stock  issued for legal services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  15,000
                  
                  
                  
                  15
                  
                  
                  
                  29,985
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  30,000Net
                      loss, 2005
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,250,794
                  )
                  
                  
                  (1,250,794
                  )**BALANCE,
                      December 31, 2005**
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,251,800
                  
                  
                  
                  3,252
                  
                  
                  
                  1,197,628
                  
                  
                  
                  -
                  
                  
                  
                  (1,353,462
                  )
                  
                  
                  (152,582
                  )Sale
                      of common stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,000
                  
                  
                  
                  4
                  
                  
                  
                  9,996
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000Common
                      stock issued for services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  50,000
                  
                  
                  
                  50
                  
                  
                  
                  167,950
                  
                  
                  
                  (153,000
                  )
                  
                  
                  -
                  
                  
                  
                  15,000Common
                      stock issued for financing fees on note payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  18,000
                  
                  
                  
                  18
                  
                  
                  
                  78,482
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  78,500Conversion
                      on notes payable and accrued interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  85,502
                  
                  
                  
                  86
                  
                  
                  
                  78,429
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  78,514Retirement
                      of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (5,000
                  )
                  
                  
                  (5
                  )
                  
                  
                  5
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Amortization
                      of deferred compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  89,704
                  
                  
                  
                  -
                  
                  
                  
                  89,704Net
                      Loss, 2006
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (741,177
                  )
                  
                  
                  (741,177
                  )**Balance
                      December 31, 2006**
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  3,404,302
                  
                  
                  
                  3,404
                  
                  
                  
                  1,532,490
                  
                  
                  
                  (63,296
                  )
                  
                  $
                  (2,094,639
                  )
                  
                  $
                  (622,041
                  )Common
                      stock issued for services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  100,000
                  
                  
                  
                  100
                  
                  
                  
                  149,900
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  150,000Conversion
                      on notes payable and accrued interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,204,148
                  
                  
                  
                  1,204
                  
                  
                  
                  481,400
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  482,604Conversion
                      of accrued payroll
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  599,619
                  
                  
                  
                  600
                  
                  
                  
                  238,046
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  238,646Common
                      stock issued for financing fees
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  10
                  
                  
                  
                  3,990
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,000Amortization
                      of deferred compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  63,296
                  
                  
                  
                  -
                  
                  
                  
                  63,296Net
                      Loss, September  30, 2007
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (583,398
                  )
                  
                  
                  (583,398
                  )Balance
                      June 30, 2007
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  5,318,069
                  
                  
                  
                  5,318
                  
                  
                  
                  2,405,826
                  
                  
                  
                  -
                  
                  
                  $
                  (2,678,037
                  )
                  
                  $
                  (266,893
                  )
  See
            accompanying notes to financial
            statements.
    F-3
  **BTX
          HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
          DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 Nine
                      Months ended September 30,
                  
                  
                  For
                    The Period From January
                    8,
                        2003 (Inception)2007
                  
                  
                  2006
                  
                  
                  to September
                    30, 2007**CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net
                      loss
                  
                  $
                  (583,398
                  )
                  
                  $
                  (594,733
                  )
                  
                  $
                  (2,678,037
                  )Adjustments
                      to reconcile net loss to net cash used in operating
                      activities:Common
                      stock issued for services
                  
                  
                  251,194
                  
                  
                  
                  132,907
                  
                  
                  
                  555,898Common
                      stock issued for financing fees
                  
                  
                  4,000
                  
                  
                  
                  3,500
                  
                  
                  
                  7,500Beneficial
                      conversion expenses
                  
                  
                  -
                  
                  
                  
                  35,763
                  
                  
                  
                  35,763Loss
                      on conversion of notes payable - related party
                  
                  
                  96,322
                  
                  
                  
                  -
                  
                  
                  
                  96,322Depreciation
                      expense
                  
                  
                  3,520
                  
                  
                  
                  3,521
                  
                  
                  
                  11,703Impairment
                      of technology
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  500,000In-kind
                      contribution of services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  880Changes
                      in operating assets and liabilities:Increase
                      in prepaid expenses
                  
                  
                  2,143
                  
                  
                  
                  6,541
                  
                  
                  
                  (140
                  )Accrued
                      payroll
                  
                  
                  108,500
                  
                  
                  
                  -
                  
                  
                  
                  297,378Accrued
                      interest
                  
                  
                  18,227
                  
                  
                  
                  -
                  
                  
                  
                  53,807Accounts
                      payable
                  
                  
                  28,411
                  
                  
                  
                  229,246
                  
                  
                  
                  119,018Net
                      Cash Used In Operating Activities
                  
                  
                  (71,081
                  )
                  
                  
                  (183,255
                  )
                  
                  
                  (999,908
                  )**CASH
                      FLOWS FROM INVESTING ACTIVITIES:**Purchase
                      of property and equipment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,351
                  )Net
                      Cash Used In Investing Activities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,351
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Cash
                      overdraft
                  
                  
                  (728
                  )
                  
                  
                  -
                  
                  
                  
                  -Proceeds
                      from notes payable
                  
                  
                  -
                  
                  
                  
                  35,000
                  
                  
                  
                  70,000Repyaments
                      of notes payable
                  
                  
                  (5,000
                  )
                  
                  
                  (20,000
                  )
                  
                  
                  (40,000
                  )Proceeds
                      from notes payable related party
                  
                  
                  77,200
                  
                  
                  
                  142,750
                  
                  
                  
                  400,650Repurchase
                      and retirement or treasury stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (50,000
                  )Proceeds
                      from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  635,000Net
                      Cash Provided By Financing Activities
                  
                  
                  71,472
                  
                  
                  
                  167,750
                  
                  
                  
                  1,015,650NET
                      INCREASE (DECREASE) IN CASH
                  
                  
                  391
                  
                  
                  
                  (15,505
                  )
                  
                  
                  391CASH
                      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                  
                  
                  -
                  
                  
                  
                  19,944
                  
                  
                  
                  -CASH
                      AND CASH EQUIVALENTS AT END OF PERIOD
                  
                  $
                  391
                  
                  
                  $
                  4,439
                  
                  
                  $
                  391Supplemental
                      disclosure of non cash investing & financing
                      activities:Cash
                      paid for income taxes
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Cash
                    paid for interest expense
                  
                  $
                  
                  
                  
                  $
                  500
                  
                  
                  $
                  500Conversion
                      of convrtible debt and accrued interest to common stock
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  42,751
  See
            accompanying notes to financial
            statements.
   F-4
  **BTX
          HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
          DEVELOPMENT STAGE COMPANY)**
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **SEPTEMBER
          30, 2007**
 **(UNAUDITED)**
 
 **NOTE
            1**            
**ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES**
  ***(A)
          Basis of Presentation***
  The
          accompanying reviewed financial statements are presented in accordance
          with
          generally accepted accounting principles for interim financial information
          and
          the instructions to Form 10-QSB and item 310 under subpart A of Regulation
          S-B.
          Accordingly, they do not include all of the information and footnotes required
          by generally accepted accounting principles for complete financial statements.
          In the opinion of management, all adjustments (consisting only of normal
          occurring accruals) considered necessary in order to make the financial
          statements not misleading, have been included. Operating results for the
          three
          and nine months ended September 30, 2007 are not necessarily indicative
          of
          results that may be expected for the year ending December 31, 2007. The
          financial statements are presented on the accrual basis.
  ***(B)
          Organization***
  BTX
          Holdings, Inc. f/k/a King Capital Holdings, Inc. was incorporated under
          the laws
          of the State of Florida on April 24, 2003.
  BioTex
          Corporation (f/k/a YB Holdings, Inc.) (a development stage company), established
          in 2003 to develop and employ technologies from around the world to process
          biomass (plant derived) waste, extract the usable fractions, and then utilize
          or
          sell those extractions for varied applications or in further
          processes.
  Activities
          during the development stage include developing the business plan, acquiring
          technology and raising capital.
  Pursuant
          to a share purchase agreement, dated December 30, 2005, BioTex Corporation,
          consummated an agreement with BTX Holdings, Inc., pursuant to which BioTex
          Corporation, exchanged all of its then issued and outstanding shares of
          common
          stock for approximately 89% of the common stock of BTX Holdings, Inc. This
          transaction has been accounted for as a reverse acquisition. Accounting
          principles applicable to reverse acquisitions have been applied to record
          the
          acquisition. Under this basis of accounting, BioTex Corporation is the
          acquirer
          and, accordingly, the consolidated entity is considered to be a continuation
          of
          BioTex Corporation, with the net assets of BTX Holdings, Inc. deemed to
          have
          been acquired and recorded at its historical cost.
  BTX
          Holdings, Inc. and BioTex Corporation are hereafter referred to as (the
          “Company”).
  ***(B)
          Use of Estimates***
  In
          preparing financial statements in conformity with generally accepted accounting
          principles, management is required to make estimates and assumptions that
          affect
          the reported amounts of assets and liabilities and the disclosure of contingent
          assets and liabilities at the date of the financial statements and revenues
          and
          expenses during the reported period. Actual results could differ from those
          estimates.
  ***(C)
          Consolidation***
  The
          accompanying consolidated financial statements include the accounts of
          BTX
          Holdings, Inc and its 100% owned subsidiary BioTex Corporation.
 
 All
          inter-company transactions have been eliminated in consolidation.
  ***(D)
          Cash and Cash Equivalents***
  For
          purposes of the cash flow statements, the Company considers all highly
          liquid
          investments with original maturities of three months or less at the time
          of
          purchase to be cash equivalents. The Company at times has cash in excess
          of FDIC
          insurance limits and places its temporary cash investments with high credit
          quality financial institutions. At September 30, 2007, the Company did
          not have
          any balances that exceeded FDIC insurance limits.
    F-5
    ***(E)
          Property and Equipment***
  Property
          and equipment are stated at cost, less accumulated depreciation. Expenditures
          for maintenance and repairs are charged to expense as incurred. Depreciation
          is
          provided using the straight-line method over the estimated useful life
          of five
          years.
  ***(G)
          Stock-Based Compensation***
  Effective
          January 1, 2006 The Company adopted SFAS No. 123R “Share-Based Payment”
(“SFAS 123R”), a revision to SFAS No. 123 “Accounting for Stock-Based
          Compensation” (“SFAS 123”). Prior to the adoption of SFAS 123R the Company
          accounted for stock options in accordance with APB Opinion No. 25
“Accounting for Stock Issued to Employees”(the intrinsic value method), and
          accordingly, recognized no compensation expense for stock option
          grants.
  During
          the year ended December 31, 2005, the Company granted 500,000 options to
          its
          President with the following terms; 100,000 shares at $5.00, 100,000 at
          $7.50,
          100,000 at $10.00, 100,000 at $15.00 and 100,000 at $20.00. All options
          expire
          December 31, 2015.
  The
          fair
          value of each option grant is estimated on the date of grant using the
          Black-Scholes option pricing model with the following weighted average
          assumptions used for grants in 2005: dividend yield of zero; expected volatility
          of 1%, risk-free interest rate of 3.5%; expected life of 5 years dividend
          yield
          of zero; expected volatility of .001%, risk-free interest rate of 3.5%;
          expected
          life of 5 years. The Company determined the value to be immaterial.
  A
          summary of the status of the Company's stock options as of September 30,
          2007 and the changes during the period ended is presented below:
  Fixed
                    Options
                
                Shares
                
                
                WeightedAverage
                    Exercise
                      PriceOutstanding
                    at beginning of year
                
                
                500,000
                
                
                $
                11.50Granted
                
                
                -
                
                
                
                -Outstanding
                    at September 30, 2007
                
                
                500,000
                
                
                $
                11.50Options exercisable at September 30, 2007
                
                
                500,000Weighted
                    average exercise price of options granted to employeesduring
                    period ended September 30, 2007
                
                $
                11.50
  ***(H)
          Loss Per Share***
  Basic
          and
          diluted net loss per common share is computed based upon the weighted average
          common shares outstanding as defined by Financial Accounting Standards
          No. 128,
“Earnings Per Share.” As of September 30, 2007 common share equivalents of
          650,000 stock options were anti-dilutive and not used in the calculation
          of
          diluted net loss per share. As of September 30, 2006 common share
          equivalents of 650,000 stock options and 1,740,000 shares upon the conversion
          of
          a convertible note payable were anti-dilutive and not used in the calculation
          of
          diluted net loss per share.
  ***(I)
          Business Segments***
 
 The
          Company operates in one segment and therefore segment information is not
          presented.
  ***(J)
          Long-Lived Assets***
  The
          Company accounts for long-lived assets under the Statements of Financial
          Accounting Standards Nos. 142 and144 “Accounting for Goodwill and Other
          Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived
          Assets” (“SFAS No. 142 and 144”). In accordance with SFAS No. 142and 144,
          long-lived assets, goodwill and certain identifiable intangible assets
          held and
          used by the Company are reviewed for impairment whenever events or changes
          in
          circumstances indicate that the carrying amount of an asset may not be
          recoverable. For purposes of evaluating the recoverability of long-lived
          assets,
          goodwill and intangible assets, the recoverability test is performed using
          undiscounted net cash flows related to the long-lived assets. A100% or
          $500,000
          impairment charge was recorded in 2005 for the Citrus Separation Technology
          acquired during the year as it was determined by management that the future
          value was impaired.
  
 F-6
   ***K)
          Fair Value of Financial Instruments***
 
 The
          carrying amounts of the Company's accounts payable, accrued expenses, notes
          payable related party, notes payable and deferred compensation approximate
          fair value due to the relatively short period to maturity for these
          instruments.
  ***(L)
          Recent Accounting Pronouncements***
 
 In
          September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
          objective of SFAS 157 is to increase consistency and comparability in fair
          value
          measurements and to expand disclosures about fair value measurements. SFAS
          157
          defines fair value, establishes a framework for measuring fair value in
          generally accepted accounting principles, and expands disclosures about fair
          value measurements. SFAS 157 applies under other accounting pronouncements
          that
          require or permit fair value measurements and does not require any new
          fair
          value measurements. The provisions of SFAS No. 157 are effective for fair
          value
          measurements made in fiscal years beginning after November 15, 2007. The
          adoption of this statement is not expected to have a material effect on
          the
          Company's future reported financial position or results of
          operations.
  In
          February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
          No.
          159, “The Fair Value Option for Financial Assets and Financial Liabilities -
          Including an Amendment of FASB Statement No.115”. This statement permits
          entities to choose to measure many financial instruments and certain other
          items
          at fair value. Most of the provisions of SFAS No. 159 apply only to entities
          that elect the fair value option. However, the amendment to SFAS No. 115
          “Accounting for Certain Investments in Debt and Equity Securities” applies to
          all entities with available-for-sale and trading securities. SFAS No. 159
          is
          effective as of the beginning of an entity's first fiscal year that begins
          after
          November 15, 2007. Early adoption is permitted as of the beginning of a
          fiscal
          year that begins on or before November 15, 2007, provided the entity also
          elects
          to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption
          of this statement is not expected to have a material effect on the Company's
          financial statements.
  **NOTE 2****PROPERTY AND EQUIPMENT**
  Property
          and equipment at September 30, 2007 were as follows:
  Computer
                
                $
                15,351Less
                    accumulated depreciation
                
                
                (11,703
                )$
                3,648
  During
          the three and nine  months ended September  30, 2007 and
          2006, and the period January 8, 2003 (Inception) to September 30, 2007
          the
          Company recorded depreciation expense of $1,173, $3,520, $1,173, $3,520
          and
          $11,703, respectively.
  **NOTE 3             PURCHASE
            OF INTELLECTUAL PROPERTY**
 During
          January 2005, the Company entered into an agreement with Bio Reduction
          Technology, LLC, pending the Company's acceptance of a working prototype.
          Whereby the Company has the right to acquire an exclusive license to make
          and
          have made and to use, offer to sell, sell, license, rent, and distribute
          products embodying the bio reduction technology and any improvements to
          such
          technology throughout the entire world. In exchange for the afore mentioned
          license, the Company has agreed to issue up to 150,000 shares of common
          stock
          valued at $1,500,000 the fair market value on the agreement date and an
          option
          to purchase 30,000 additional shares of common stock, which will be exercisable
          at a price of $50.00 per share. As of September 30, 2007, the Company has
          not
          received a working prototype and has not closed on the agreement.
  During
          May 2005, the Company entered into an agreement with an individual who
          is the
          sole inventor of and holds all the rights, title, and interest in a pending
          patent for citrus separation technology, whereby the Company has been assigned
          the pending patent and the right to make and have made and to use, offer
          to
          sell, sell, license, rent, and distribute products embodying the citrus
          separation technology and improvements to such technology throughout the
          entire
          world. In exchange for the aforementioned pending patent, the Company issued
          250,000 shares of common stock valued at $500,000, the fair market value
          on the
          agreement date and an option for the purchase of 150,000 additional shares
          of YB
          common stock, exercisable at a price of $10.00 per share. The options were
          valued based on the Black-Scholes model with the following assumptions
          as
          required under SFAS 123 with the following weighted average assumptions:
          expected dividend yield 0%, volatility 0%, risk-free interest rate of 4.25%,
          and
          expected warrant life of one year. The Company also agreed to share a certain
          percentage of profits derived from sales. As the Company has yet to determine
          the commercial feasibility of this technology, it has elected to fully
          impair
          the value of it.
   F-7
   On
          December 29, 2005, the Company entered into an agreement with Dexion
          International, Ltd to acquire all rights and interest in its patent application
          number 5425221.8 for Hypercritical Separation Technology that was filed
          with the
          European Patent Office on April 15, 2005. Upon successful testing, the
          rights,
          title and interest to the technology are being acquired by us at a cost
          of $2.5
          million and 580,000 shares of common stock. Additionally, pending successful
          testing of the technology, the Company has agreed to acquire Dexion's HST
          machine for $500,000 and to establish a research and development facility
          for
          the technology. On March 29, 2007, the Company and Dexion International,
          Ltd,
          mutually terminated the Agreement.
  **NOTE 4            
            NOTES PAYABLE - RELATED PARTIES**
 During
          2004, the Company issued a one-year 8% Convertible Debenture (“Debenture”) in
          the principal amount of $87,000, to an officer, director and shareholder
          in
          settlement of the note payable to such related party, which was issued
          for the
          sole purpose of funding ongoing operations. The note was extended until
          December
          31, 2006. The principal and accrued interest of the Debenture is convertible
          upon issuance into shares of common stock, par value $0.001 per share,
          at a
          conversion price of $0.05 per share. During the years ended December 31,
          2006
          and 2005 and the period January 8, 2003 (Inception) to December 31, 2006
          the
          Company recorded financing fees for the beneficial conversion of $0, $70,795,
          and $85,000, respectively. In March 2007 the officer, director and shareholder
          extended the maturity date to March 31, 2007. In May 2007 the officer
          director and shareholder agreed to convert the principal of $87,000 and
          accrued
          interest of $17,337 into common stock at a discount of 20% from the current
          market value of $.40 on date of conversion. The Company issued a total
          of
          326,055 shares of common stock valued at $130,422 ($.40 per share). The
          Company
          recorded a loss on conversion of notes payable of $26,085 (See Note
          8).
  On
          December 27, 2005, the Company borrowed $15,000 from a related party. The
          note
          is unsecured and is due twelve months from the date of issuance and bears
          interest at a rate of 10%. In December 2006 the term of the note was extended
          to
          February 28, 2007. In March 2007, the loan was further extended until March
          31,
          2007.  In May 2007 the related party agreed to convert the principal of
          $15,000 and accrued interest of $2,026 into common stock at a discount
          of 20%
          from the current market value of $.40 on date of conversion. The Company
          issued
          a total of 53,206 shares of common stock valued at $21,283 ($.40 per share).
          The
          Company recorded a loss on conversion of notes payable of $4,257 (See Note
          8).
  On
          December 28, 2005, a related party loaned the Company $40,000 at a rate
          of 10%
          per annum. The principle and interest were due on December 31, 2006 and
          was
          unsecured. On September 1, 2006 the related party converted $40,000 of
          principal
          and $2,751 of accrued interest into 855,020 shares of common stock. The
          Company
          recorded interest expense of $35,763 associated with the beneficial conversion
          of the accrued interest (See Note 8).
 
 In
          March
          2006 a related party repaid an existing unsecured note of the Company in
          the
          amount of $20,000 and $500 of accrued interest. The related party entered
          into a
          new unsecured note agreement in the amount of $20,500 bearing interest
          at a rate
          of 15% per annum and is due December 31, 2006. In December 2006 the term
          of the
          note was extended to February 28, 2007. In March 2007, the loan was further
          extended until March 31, 2007.  In May 2007 the related party agreed to
          convert the principal of $20,500 and accrued interest of $3,631 into common
          stock at a discount of 20% from the current market value of $.40 on date
          of
          conversion. The Company issued a total of 75,409 shares of common stock
          valued
          at $30,164 ($.40 per share). The Company recorded a loss on conversion
          of notes
          payable of $6,033 (See Note 8).
 
 In
          April
          2006 the Company borrowed $50,000 from a related party. The note is unsecured
          and is due December 31, 2006 and bears interest at a rate of 15%. The Company
          issued the note holder 125,000 shares of common stock. The fair market
          value on
          the date of issuance based on recent cash offering price was $50,000. The
          value
          is being amortized over the term of the note. In December 2006 the term
          of the
          loan was extended to February 28, 2007. In March 2007, the loan was further
          extended until March 31, 2007. At December 31, 2006 the Company recorded
          amortization of $50,000.  In May 2007 the related party agreed to convert
          the principal of $50,000 and accrued interest of $8,260 into common stock
          at a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 182,063 shares of common stock valued at $72,825
          ($.40
          per share). The Company recorded a loss on conversion of notes payable
          of
          $14,565 (See Note 8).
 
 During
          the year ended December 31, 2006, officer, director and shareholder loaned
          the
          Company an additional $37,250. The balance accrued interest at a rate of
          10% per
          annum, is unsecured, and is due on December 31, 2006. In January 2007 the
          officer, director and shareholder extended the maturity date to March 31,
          2007.
          In May 2007 the officer, director and shareholder agreed to convert the
          principal of $37,250 and accrued interest of $3,746 into common stock at
          a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 128,113 shares of common stock valued at $51,245
          ($.40
          per share). The Company recorded a loss on conversion of notes payable
          of
          $10,249 (See Note 8).
   F-8
    During
          2006, the Company borrowed $73,700 from a related party. The note is unsecured
          and is due six months from the dates of issuance and bear interest at a
          rate of
          15%. In December 2006 the term of the note was extended to February 28,
          2007. In
          March 2007, the loan was further extended until March 31, 2007. During
          the three
          months ended March 31, 2007 the Company borrowed an additional $42,000
          from the
          related party, note is unsecured and is due March 31, 2007 and bear interest
          at
          a rate of 15%. In April 2007, the Company borrowed $15,000 from a related
          party. The note is unsecured and is due June 30, 2007 and bears interest
          at a
          rate of 15%. In May 2007 the officer, director and shareholder agreed to
          convert
          the principal of $130,700 and accrued interest of $9,876 into common stock
          at a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 439,302 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,145 (See Note 8).
  On
          May
          18, 2007, the Company borrowed $6,000 from a related party. The note is
          unsecured and is due July 31, 2007 and bears interest at a rate of 15%.
          In
          November 2007, the term of loan was extended to November 30, 2007. As of
          September 30, 2007 the Company recorded accrued interest of $333 (See note
          8).
  On
          June
          5, 2007 the Company borrowed $6,500 from an officer, director and shareholder
          of
          the Company. The note is unsecured and is due July 31, 2007 and bears interest
          at a rate of 17%. In November 2007, the term of loan was extended to November
          30, 2007. As of September 30, 2007 the Company recorded accrued interest
          of $354
          (See note 8).
 
 During
          the three months ended September 30, 2007 the Company borrowed a total
          of $7,700
          from an officer, director and shareholder of the Company. The notes are
          unsecured and are due October 30, 2007 and bears interest at a rate of
          17%. In
          November 2007, the term of loan was extended to November 30, 2007. As of
          September 30, 2007 the Company recorded accrued interest of $205 (See note
          8).
 
 **NOTE 5            
            NOTES PAYABLE**
  In
          March,
          2006 the Company borrowed $5,000 from an individual. The note is unsecured,
          is
          due June 1, 2006, and bears interest at a rate of 15%. In August, the note
          was
          extended to September 30, 2006 and the Company agreed to issue 500 shares
          of
          common stock in consideration for the extension.  In June 2007 the
          Company repaid the principal of $5,000 and accrued interest of $916. In
          addition
          the Company agreed to issue 10,000 share of common stock valued at $4,000
          ($.40
          per share) the fair value on the date of issuance as additional fees to
          cover
          the default on note.
  In
          April,
          2006 the Company borrowed $25,000 from an individual. The note is unsecured,
          is
          due four months from the date of issuance and bears interest at a rate
          of 10%.
          The Company issued the note holder 5,000 shares of common stock. The fair
          market
          value on the date of issuance based on recent cash offering price was $25,000.
          The value is being amortized over the term of the note. At December 31,
          2006 the
          Company recorded a discount on the notes of $0 and amortization of $25,000.
          The
          note is currently in default. As of September 30, 2007 the Company has
          recorded
          accrued interest of $3,589.
  In
          May,
          2006 the Company borrowed $5,000 from an individual. The note is unsecured,
          is
          due June 1, 2006, and bears interest at a rate of 7%. In June, 2006 the
          note was
          extended to October 15, 2006. The note is currently in default. As of September
          30, 2007 the Company has recorded accrued interest of $495.
  **NOTE 6            
            JOINT VENTURE**
 On
          August
          15, 2005, the Company agreed to enter into an agreement with the Citrus
          Products of Belize Limited (“CPBL”). Pursuant to the Agreement, the Company and
          CPBL formed a joint venture named BTX Citrus Belize, Ltd. (“BTXC”) for the
          purpose of building a plant in Belize for waste peel processing. Pursuant
          to the
          terms of the Agreement, the Company will own 65% and CPBL will own 35%
          of the
          joint venture company. As of September 30, 2007 the joint venture has not
          been
          formed.
  The
          parties have agreed that the Net Profits generated by BTXC, minus a working
          capital reserve to be determined by the BTXC board of directors, shall
          be
          distributed on a quarterly basis on the same percentage basis as each party's
          equity ownership. For the purpose of this Agreement, Net Profits has been
          defined as Gross Revenues from the sale of finished products less all associated
          costs of operation, including, but not limited to, salaries and wages,
          utilities, commissions, SG&A, royalties and debt service. An additional 20%
          of the Net Profits will be retained to establish a sinking fund in order
          to
          retire the debt incurred in building the plant until such time that the
          debt is
          retired.
 F-9
    **NOTE 7            
            STOCKHOLDERS' EQUITY**
  ***(A)
          Common Stock Issued to Founders***
  During
          January 2003 the Company issued 1,574,600 shares of common stock to founders
          for
          a capital contribution of $2,000 ($.0012 per share).
 
 In
          August
          2006 one of the founders returned 5,000 shares of common stock with a par
          value
          of $5.00. The Company retired the share of common stock in August
          2006.
  ***(B)
          Common Stock Issued for Cash***
  In
          2005,
          the Company sold a total of 311,500 shares of common stock to 22 individuals
          for
          cash of $623,000 ($2.00 per share).
  In
          2006,
          the Company sold a total of 4,000 shares of common stock to an individual
          for
          cash of $10,000 ($2.50 per share).
  ***(C)
          Common Stock Issued for Services***
  In
          December 2005 the Company issued 15,000 shares of common stock with a fair
          market value of $30,000 for legal services ($2.00 per share).
  In
          March
          2006 the Company issued 45,000 shares of common stock valued at $153,000
          for
          investor relations. The term of the agreement is from June 1, 2006 to June
          1,
          2007. As of March 31, 2006 the Company has recorded the value of these
          shares as
          deferred compensation and will amortize them over the term of the agreement
          ($3.40 per share).
 
 In
          June
          2006 the Company issued 5,000 shares of common stock with a fair market
          value of
          $15,000 for consulting services ($3.00 per share).
  In
          March
          2007 the Company issued 100,000 shares of common stock with a fair market
          value
          of $150,000 for consulting services ($1.50 per share).
 
 ***(D)
          Common Stock Issued for Financing Fees***
  In
          December 2005 the Company issued 5,000 shares of common stock with a fair
          market
          value of $10,000 ($2.00 per share) for financing fees in relation to a
          note
          payable (See Note 4).
  In
          April
          2006 the Company issued 5,000 shares of common stock with a fair market
          value of
          $25,000 ($5.00 per share) for financing fees in relation to a note payable
          (See
          Note 5).
  In
          April
          2006, the Company issued a related party 12,500 shares of common stock
          with a
          fair market value of $50,000 ($4.00 per share) for financing fees in relation
          to
          a note payable (See Note 4).
 
 In
          September 2006, the Company issued 500 shares of common stock with a fair
          market
          value of $3,500 ($7.00 per share) for financing fees in relation to a note
          payable (See Note 5).
  ***(E)
          Common Stock Issued for Notes Payable***
  During
          2004, the Company issued a one-year 8% Convertible Debenture (“Debenture”) in
          the principal amount of $87,000, to an officer, director and shareholder
          in
          settlement of the note payable to such related party, which was issued
          for the
          sole purpose of funding ongoing operations. The note was extended until
          December
          31, 2006. The principal and accrued interest of the Debenture is convertible
          upon issuance into shares of common stock, par value $0.001 per share,
          at a
          conversion price of $0.05 per share. During the years ended December 31,
          2006
          and 2005 and the period January 8, 2003 (Inception) to December 31, 2006
          the
          Company recorded financing fees for the beneficial conversion of $0, $70,795,
          and $85,000, respectively. In March 2007 the officer, director and shareholder
          extended the maturity date to March 31, 2007. In May 2007 the officer
          director and shareholder agreed to convert the principal of $87,000 and
          accrued
          interest of $17,337 into common stock at a discount of 20% from the current
          market value of $.40 on date of conversion. The Company issued a total
          of
          326,055 shares of common stock valued at $130,422 ($.40 per share). The
          Company
          recorded a loss on conversion of notes payable of $26,085 (See Note
          8).
  On
          December 27, 2005, the Company borrowed $15,000 from a related party. The
          note
          is unsecured and is due twelve months from the date of issuance and bears
          interest at a rate of 10%. In December 2006 the term of the note was
          extended to February 28, 2007. In March 2007, the loan was further extended
          until March 31, 2007.  In May 2007 the related party agreed to convert the
          principal of $15,000 and accrued interest of $2,026 into common stock at
          a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 53,206 shares of common stock valued at $21,283
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $4,257 (See Note 8).
   F-10
    On
          December 28, 2005, a related party loaned the Company $40,000 at a rate
          of 10%
          per annum. The principle and interest were due on December 31, 2006 and
          was
          unsecured. On September 1, 2006 the related party converted $40,000 of
          principal
          and $2,751 of accrued interest into 855,020 shares of common stock. The
          Company
          recorded interest expense of $35,763 associated with the beneficial conversion
          of the accrued interest (See Note 8)
  In
          March
          2006 a related party repaid an existing unsecured note of the Company in
          the
          amount of $20,000 and $500 of accrued interest. The related party entered
          into a
          new unsecured note agreement in the amount of $20,500 bearing interest
          at a rate
          of 15% per annum and is due December 31, 2006. In December 2006 the term
          of the
          note was extended to February 28, 2007. In March 2007, the loan was further
          extended until March 31, 2007.  In May 2007 the related party agreed to
          convert the principal of $20,500 and accrued interest of $3,631 into common
          stock at a discount of 20% from the current market value of $.40 on date
          of
          conversion. The Company issued a total of 75,409 shares of common stock
          valued at $30,164 ($.40 per share). The Company recorded a loss on conversion
          of
          notes payable of $6,033 (See Note 8).
 
 In
          April
          2006 the Company borrowed $50,000 from a related party. The note is unsecured
          and is due December 31, 2006 and bears interest at a rate of 15%. The Company
          issued the note holder 125,000 shares of common stock. The fair market
          value on
          the date of issuance based on recent cash offering price was $50,000. The
          value
          is being amortized over the term of the note. In December 2006 the term
          of loan
          was extended to February 28, 2007. In March 2007, the loan was further
          extended
          until March 31, 2007. At December 31, 2006 the Company recorded amortization
          of
          $50,000.  In May 2007 the related party agreed to convert the principal of
          $50,000 and accrued interest of $8,260 into common stock at a discount
          of 20%
          from the current market value of $.40 on date of conversion. The Company
          issued
          a total of 182,063 shares of common stock valued at $72,825 ($.40 per share).
          The Company recorded a loss on conversion of notes payable of $14,565 (See
          Note
          8).
  During
          the year ended December 31, 2006, officer, director and shareholder loaned
          the
          Company an additional $37,250. The balance accrued interest at a rate of
          10% per
          annum, is unsecured, and is due on December 31, 2006. In January 2007 the
          officer, director and shareholder extended the maturity date to March 31,
          2007.
          In May 2007 the officer, director and shareholder agreed to convert the
          principal of $37,250 and accrued interest of $3,746 into common stock at
          a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 128,113 shares of common stock valued at $51,245
          ($.40
          per share). The Company recorded a loss on conversion of notes payable
          of
          $10,249 (See Note 8).
  During
          2006, the Company borrowed $73,700 from a related party. The note is unsecured
          and is due six months from the dates of issuance and bear interest at a
          rate of
          15%. In December 2006 the term of note was extended to February 28, 2007.
          In
          March 2007, the loan was further extended until March 31, 2007. During
          the three
          months ended March 31, 2007 the Company borrowed an additional $42,000
          from the
          related party, note is unsecured and is due March 31, 2007 and bear interest
          at
          a rate of 15%. In April 2007, the Company borrowed $15,000 from a related
          party. The note is unsecured and is due June 30, 2007 and bears interest
          at a
          rate of 15%. In May 2007 the officer, director and shareholder agreed to
          convert
          the principal of $130,700 and accrued interest of $9,876 into common stock
          at a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 439,306 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,145 (See Note 8).
 
 In
          March,
          2006 the Company borrowed $5,000 from an individual. The note is unsecured,
          is
          due June 1, 2006, and bears interest at a rate of 15%. In August, the note
          was
          extended to September 30, 2006 and the Company agreed to issue 500 shares
          of
          common stock in consideration for the extension.  In June 2007 the
          Company repaid the principal of $5,000 and accrued interest of $916. In
          addition
          the Company agreed to issue 10,000 share of common stock valued at $4,000
          ($.40
          per share) the fair value on the date of issuance as additional fees to
          cover
          the default on note.
  ***(F)
          Common Stock Issued for Technology***
  The
          Company issued 250,000 shares of common stock with a fair value of $500,000
          ($2.00 per share) and 150,000 warrants during 2005, at an exercise price
          of
          $10.00 per share for the purchase of intellectual technology. The fair
          market
          value of the warrants was estimated on the grant date using the Black-Scholes
          option pricing model as required under SFAS 123 with the following weighted
          average assumptions: expected dividend yield 0%, volatility1%, risk-free
          interest rate of 4.25%, and expected warrant life of one year. The value
          was
          immaterial at the grant date.
  ***(G)
          Capital Contribution***
  In
          December, 2005 the Company's CEO elected to forgo $880 of amounts owed
          to him
          for management fees. This amount has been recorded as in-kind contribution
          of
          services at December 31, 2005.
  ***(H)
          Reverse Mergers***
  On
          June
          9, 2005, pursuant to the Stock Purchase Agreement and Share Exchange, the
          Company issued a total of 282,500 shares of the Company's common stock
          to the
          shareholders of Capital Ventures I.
 
  F-11
 
 On
          December 30, 2005 pursuant to the Stock Purchase Agreement and Share Exchange,
          the Company issued a total of 16,550,700 shares of the Company's common
          stock to
          the shareholders of BioTex Holdings, Inc. simultaneous with the Stock Purchase
          Agreement and Share Exchange, the Company purchased and retired a total
          of
          15,737,500 shares of its common stock for $50,000 from a former shareholder
          of
          King Capital.
  ***(I)
          Shares in Escrow***
  During
          2005, 580,000 shares of common stock were issued into escrow pending the
          acceptance of the Agreement between the Company and Dexion International
          Ltd. to
          acquire the right to Hypercritical Separation Technology. On March 29,
          2007 the
          Company and Dexion mutually terminated the Agreement and the shares being
          held
          in escrow were cancelled.
  During
          2005, 150,000 shares of common stock and 50,000 warrants with an exercise
          price
          of $50.00 were issued into escrow pending the acceptance of the Agreement
          between the Company and Bio Reduction Technology, LLC to acquire the license
          to
          their Bio Reduction Technology. As of February 22, 2007 the Company has
          not
          completed the transaction with Bio Reduction Technology, LLC and the shares
          in
          escrow were cancelled pending delivery of a working prototype.
  During
          2005 the Company issued 50,000 shares of common stock for  a finder's
          fee which were put into escrow pending the acceptance of the Agreement
          between
          the Company and Dexion International Ltd. to acquire the   their
          Hyper Critical Separation Technology. On March 29, 2006, the Company and
          Dexion
          mutually terminated the Agreement and the shares being held in escrow were
          cancelled.
  ***(J)
          Stock Split***
  On
          July
          14, 2006, the Company's stockholders approved a 5 for 1 stock split for
          its
          common stock. As a result, stockholders of record at the close of business
          on
          July 28, 2006, received five shares of common stock for every one shares
          held.
          Common stock, additional paid-in capital and share and per share data for
          prior
          periods have been restated to reflect the stock split as if it had occurred
          at
          the beginning of the earliest period presented.
  ***(K)
          Reverse Stock Split***
  On
          June
          5, 2007, the Company's stockholders approved a 1 for 10 reverse stock split
          for
          its common stock. As a result, stockholders of record at the close of business
          on July 9, 2007, received one shares of common stock for every ten shares
          held.
          Common stock, additional paid-in capital,  share and per share data for
          prior periods have been restated to reflect the stock split as if it had
          occurred at the beginning of the earliest period presented.
 **NOTE 8            
            RELATED PARTY TRANSACTIONS**
  During
          2004, the Company issued a one-year 8% Convertible Debenture (“Debenture”) in
          the principal amount of $87,000, to an officer, director and shareholder
          in
          settlement of the note payable to such related party, which was issued
          for the
          sole purpose of funding ongoing operations. The note was extended until
          December
          31, 2006. The principal and accrued interest of the Debenture is convertible
          upon issuance into shares of common stock, par value $0.001 per share,
          at a
          conversion price of $0.05 per share. During the years ended December 31,
          2006
          and 2005 and the period January 8, 2003 (Inception) to December 31, 2006
          the
          Company recorded financing fees for the beneficial conversion of $0, $70,795,
          and $85,000, respectively. In March 2007 the officer, director and shareholder
          extended the maturity date to March 31, 2007. In May 2007 the officer
          director and shareholder agreed to convert the principal of $87,000 and
          accrued
          interest of $17,337 into common stock at a discount of 20% from the current
          market value of $.40 on date of conversion. The Company issued a total
          of
          326,055 shares of common stock valued at $130,422 ($.40 per share). The
          Company
          recorded a loss on conversion of notes payable of $26,085.
  On
          December 27, 2005, the Company borrowed $15,000 from a related party. The
          note
          is unsecured and is due twelve months from the date of issuance and bears
          interest at a rate of 10%. In December 2006 the term of the note was extended
          to
          February 28, 2007. In March 2007, the loan was further extended until March
          31,
          2007.  In May2007 the related party agreed to convert the principal of
          $15,000 and accrued interest of $2,026 into common stock at a discount
          of 20%
          from the current market value of $.40 on date of conversion. The Company
          issued
          a total of 53,206 shares of common stock valued at $21,283 ($.40 per share).
          The
          Company recorded a loss on conversion of notes payable of $4,257.
    F-12
    On
          December 28, 2005, a related party loaned the Company $40,000 at a rate
          of 10%
          per annum. The principle and interest were due on December 31, 2006 and
          was
          unsecured. On September 1, 2006 the related party converted $40,000 of
          principal
          and $2,751 of accrued interest into 855,020 shares of common stock. The
          Company
          recorded interest expense of $35,763 associated with the beneficial conversion
          of the accrued interest.
  In
          March
          2006 a related party repaid an existing unsecured note of the Company in
          the
          amount of $20,000 and $500 of accrued interest. The related party entered
          into a
          new unsecured note agreement in the amount of $20,500 bearing interest
          at a rate
          of 15% per annum and is due December 31, 2006. In December 2006 the term
          of the
          note was extended to February 28, 2007. In March 2007, the loan was further
          extended until March 31, 2007.  In May 2007 the related party agreed to
          convert the principal of $20,500 and accrued interest of $3,631 into common
          stock at a discount of 20% from the current market value of $.40 on date
          of
          conversion. The Company issued a total of 75,409 shares of common stock
          valued at $30,164 ($.40 per share). The Company recorded a loss on conversion
          of
          notes payable of $6,033.
 
 In
          April
          2006 the Company borrowed $50,000 from a related party. The note is unsecured
          and is due December 31, 2006 and bears interest at a rate of 15%. The Company
          issued the note holder 125,000 shares of common stock. The fair market
          value on
          the date of issuance based on recent cash offering price was $50,000. The
          value
          is being amortized over the term of the note. In December 2006 the term
          of loan
          was extended to February 28, 2007. In March 2007, the loan was further
          extended
          until March 31, 2007. At December 31, 2006 the Company recorded amortization
          of
          $50,000.  In May 2007 the related party agreed to convert the principal of
          $50,000 and accrued interest of $8,260 into common stock at a discount
          of 20%
          from the current market value of $.40 on date of conversion. The Company
          issued
          a total of 182,063 shares of common stock valued at $72,825 ($.40 per share).
          The Company recorded a loss on conversion of notes payable of
          $14,565.
 
 During
          the year ended December 31, 2006, officer, director and shareholder loaned
          the
          Company an additional $37,250. The balance accrued interest at a rate of
          10% per
          annum, is unsecured, and is due on December 31, 2006. In January 2007 the
          officer, director and shareholder extended the maturity date to March 31,
          2007.
          In May 2007 the officer, director and shareholder agreed to convert the
          principal of $37,250 and accrued interest of $3,746 into common stock at
          a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 128,113 shares of common stock valued at $51,245
          ($.40
          per share). The Company recorded a loss on conversion of notes payable
          of
          $10,249.
  During
          2006, the Company borrowed $73,700 from a related party. The note is unsecured
          and is due six months from the dates of issuance and bear interest at a
          rate of
          15%. In December 2006 the term of the note was extended to February 28,
          2007. In
          March 2007, the loan was further extended until March 31, 2007. During
          the three
          months ended March 31, 2007 the Company borrowed an additional $42,000
          from the
          related party, note is unsecured and is due March 31, 2007 and bear interest
          at
          a rate of 15%. In April 2007, the Company borrowed $15,000 from a related
          party. The note is unsecured and is due June 30, 2007 and bears interest
          at a
          rate of 15%. In May 2007 the officer, director and shareholder agreed to
          convert
          the principal of $130,700 and accrued interest of $9,876 into common stock
          at a
          discount of 20% from the current market value of $.40 on date of conversion.
          The
          Company issued a total of 439,306 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,145.
  On
          May
          18, 2007, the Company borrowed $6,000 from a related party. The note is
          unsecured and is due July 31, 2007 and bears interest at a rate of 15%.
          In
          November 2007, the term of loan was extended to November 30, 2007. As of
          September 30, 2007 the Company recorded accrued interest of $333.
  On
          June
          5, 2007 the Company borrowed $6,500 from an officer, director and shareholder
          of
          the Company. The note is unsecured and is due July 31, 2007 and bears interest
          at a rate of 17%. In November 2007, the term of loan was extended to November
          30, 2007. As of September 30, 2007 the Company recorded accrued interest
          of
          $354.
 
 During
          the three months ended September 30, 2007 the Company borrowed a total
          of $7,700
          from an officer, director and shareholder of the Company. The notes are
          unsecured and are due October 30, 2007 and bears interest at a rate of
          17%. In
          November 2007, the term of loan was extended to November 30, 2007. As of
          September 30, 2007 the Company recorded accrued interest of $205.
 **NOTE 9            
            COMMITMENTS AND CONTINGENCIES**
  ***(A)
          Employment Agreement***
  During
          December 2005, the Company entered into an employment agreement with the
          President and Chief Executive Officer of the Company for a term of five
          years at
          an annual minimum salary of $150,000. In May 2007 the President and Chief
          Executive Officer of the Company agreed to convert the principal of $190,917
          into common stock at a discount of 20% from the current market value of
          $.40 on
          date of conversion. The Company issued a total of 599,615 shares of common
          stock
          valued at $238,646 ($.40 per share). The Company recorded additional
          compensation expense on the conversion of the accrued salary of $47,729.
          As of
          September 30, 2007, the President and Chief Executive Officer of the Company
          is
          owed accrued salary of $47,169.
   F-13
     In
          the
          event that the net profits of the Company is less than $2,500,000 per annum
          than
          the Executive shall receive a salary of $150,000; If net profits of the
          Company
          are more than $2,500,000 per annum and less than $5,000,000 than the Executive
          shall receive a salary of $250,000; if net profits of the Company are more
          than
          $5,000,000 per annum but less than $7,500,000 than the Executive shall
          receive a
          salary of $375,000; if the net profits of the Company are greater than
          $7,500,000 per annum than the Executive shall receive a salary of $500,000
          and
          4% of the Annual Net Profits of the Companies, from all sources, before
          Depreciation, Amortization and Taxes, in excess of $10,000,000. In addition
          the
          Company has agreed to a monthly car allowance of up $1,500 per month. Net
          Profits is based upon the net corporate profits, from all sources, before
          Depreciation, Amortization and Taxes as collectively defined by the United
          States Generally Accepted Accounting Principles (“GAAP”).
 
 The Company has agreed to issue the following common stock options:
  Options
          to purchase 100,000 shares of the Company's common stock at an exercise
          price of
          $5.00 expiring in 2015.
  Options
          to purchase 100,000 shares of the Company's common stock at an exercise
          price of
          $7.50 expiring in 2015.
  Options
          to purchase 100,000 shares of the Company's common stock at an exercise
          price of
          $10.00 expiring in 2015.
  Options
          to purchase 100,000 shares of the Company's common stock at an exercise
          price of
          $15.00 expiring in 2015.
  Options
          to purchase 100,000 shares of the Company's common stock at an exercise
          price of
          $20.00 expiring in 2015.
  ***(B)
          Joint Venture***
  During
          August 2005, the Company agreed to form a majority-owned venture, BTX Citrus
          Belize, Ltd. (herein after known as “BTXC”), with Citrus Products Of Belize Ltd.
          (“CPBL”), comprised of the Company's capital funding and citrus peel processing
          equipment. CPBL is providing the land free citrus peels for 10 years
          and is placing $700,000 in an escrow account for a period of no longer
          than four
          months. As a result of this transaction, BioTex Corp. (“BIOTEX”) will have a 65%
          ownership interest. The remaining 35% shall be owned by Citrus Products Of
          Belize Ltd. (“CPBL”).  (See Note 6)
  **NOTE
            10**          
**GOING CONCERN**
  As
          reflected in the accompanying financial statements, the Company is in the
          development stage with no operations, a net loss of $2,678,037 from inception,
          a
          stockholders' deficiency of $266,893, a working capital deficiency of $270,541
          and used cash in operations from inception of $999,908. In addition, the
          Company
          has $30,000 in notes payable that are currently in default. This raises
          substantial doubt about its ability to continue as a going concern. The
          ability
          of the Company to continue as a going concern is dependent on the Company's
          ability to raise additional capital and implement its business plan. The
          financial statements do not include any adjustments that might be necessary
          if
          the Company is unable to continue as a going concern.
  Management
          believes that actions presently being taken to obtain additional funding
          and
          implement its strategic plans provide the opportunity for the Company to
          continue as a going concern.
 
 **NOTE
          11**           **SUBSEQUENT
          EVENTS**
  In
          October 2007, the Company borrowed $2,000 from a related party. The note
          is
          unsecured and is due November 15, 2007 and bears interest at a rate of
          15%.
  
  F-14
 **Item
            2. Management’s Discussion and
            Analysis or Plan of Operation**
  GENERAL
  The
            information contained in Item 2 contains forward-looking statements within
            the
            meaning of Section 27A of the Securities Act of 1933, as amended, and
            Section
            21E of the Securities Exchange Act of 1934, as amended. Actual results
            may
            materially differ from those projected in the forward-looking statements
            as a
            result of certain risks and uncertainties set forth in this report. Although
            management believes that the assumptions made and expectations reflected
            in the
            forward-looking statements are reasonable, there is no assurance that
            the
            underlying assumptions will, in fact, prove to be correct or that actual
            results
            will not be different from expectations expressed in this report.
  **Plan
            of Operations**
  Our
            plan
            of operations for the next twelve months is focused on the following
            primary
            objectives.
  1.
                  Identifying
                      potential candidates for merger or acquisition
                      opportunities.2.
                  Raising
                      capital through private debt or equity
                      offerings.
  3.
                  Find
                      customers to purchase or lease machinery from us or enter into
                      joint
                      venture or strategic partner
                      arrangements.
  4.
                  Assemble
                      new facilities to operate and demonstrate our
                      technologies.
  5.
                  Implement
                      Sales & Marketing of value added products derived from our
                      technology.
  6.
                  Further
                      develop and enhance our technology; and continue research and
                      development
                      for new applications of existing technologies and seek out
                      new
                      technologies.
  Subject
            to the requisite financing, we believe that we can complete the following
            objectives within the time period specified.
  Acquisition
            or Merger Candidates
 
 While
            the
            company continues to develop its technologies, Management believes that
            in order
            to sustain the company through the development and implementation of
            its
            technologies, we must identify a revenue generating target company with
            which to
            merge or acquire.  We will begin to seek out such a company, though no
            guarantee can be made that such a merger or acquisition can be
            found.
 
 New
            Facilities
  We
            intend
            to finance the development of several new facilities and have such facilities
            in
            operation during 2008. These will be on-site locations owned, leased
            and/or
            operated by BioTex, where we will joint venture with existing operations
            to
            process wet citrus peel into specific products. We intend to build a
            demonstration facility in Florida, and additionally we intend to build
            a
            facility in Belize.  Although we do not have any agreements in place
            for additional facilities, it is our intention to open our demonstration
            facility in Florida in the Second quarter of 2008. This will be a pilot
            operation and we estimate the cost of equipment to be $150,000 which
            will be
            financed internally. Assuming we receive financing on a timely basis,
            we believe
            this can be accomplished in this time period since the facility would
            only take
            a month to build.
  We
            estimate that the additional planned facilities will cost $11 million
            to become
            fully operational. We presently do not have the funds available to finance
            these
            activities, however management believes that actions presently being
            taken to
            obtain additional funding will be successful and will allow us to construct
            the
            aforementioned facilities in a timely manner. We intend to raise the
            funds
            through equity sales and debt, though no definitive agreements have been
            signed
            yet.
  Sales
            Marketing
  All
            sales
            will initially be generated through direct sales with internal employees
            and
            through sales by external equipment sales and marketing companies: We
            are in
            preliminary talks with several customers, although no contracts have
            been
            consummated for the leasing of our machines. We are also in discussions
            with a
            waste management, sales and logisitics company that would sell, lease
            and
            maintain products embodying our technology to their customer
            base.  Our sales success depends on the following fundamental
            points:
  1.
                  Demonstrating
                      proof of our technology and its applications for producing
                      value added
                      products
  2.
                  Providing
                      increased cost savings and profit
  3.
                  Introducing
                      and educating customers on our technology and our
                      processes
    
    We
            will
            initially focus our marketing efforts on establishing joint ventures
            that will
            utilize our Citrus Separation Technology (CST) for the processing of
            biomass
            waste streams, as well as leasing or selling individual BioReduction
            Technology
            (BRT) machines:
  **Joint
            ventures utilizing our CST  technology.** In August, 2005,
            we entered into an agreement with Citrus Products of Belize, Ltd. to
            form a
            joint venture company which will use our CST technology for the processing
            of
            citrus peel waste in Belize. We will continue to market our technologies
            through
            this model to citrus juice producers as well as continue to develop new
            markets
            that may use our technologies. Through these joint ventures, value-added
            products will be generated, and as a result, we will also focus our marketing
            efforts on the sale of these products. We have identified several markets
            for
            these products, such as the chemical and perfume industries, paper producers,
            animal and human consumable manufacturers, nutraceutical and pharmaceutical
            companies and ethanol producers. We will focus our efforts on marketing
            our
            value-added products to these industries.
  On
            August
            16, 2005, we entered into an agreement to form a Joint Venture Company,
            BTX
            Citrus Belize, Ltd., along with Citrus Products of Belize, Ltd (CPBL).
            BTX
            Citrus Belize will be formed with the purpose of constructing a citrus
            peel
            processing facility utilizing BioTex's CST technology. CPBL will contribute
            land, building and citrus peel to BTX Citrus, and BioTex will arrange
            for
            funding, provide the technology, oversee construction of the plant, operate
            the
            plant, and sell the products the plant generates. CPBL will own 35% of
            the joint
            venture and BioTex will own 65%. The plant is expected to cost approximately
            $11
            million.
  On
              December 29, 2005, we terminated our agreement with Mastercraft Ltd.
              dated May
              31, 2005. The agreement contemplated the acquisition of the rights,
              title and
              interest to its MST technology at a cost of $3 million and 650,000
              shares, post
              reverse-split, of common stock of BioTex. The agreement was terminated
              when
              Mastercraft defaulted on the terms of the agreement and both Mastercraft
              and
              BioTex signed mutual releases of liability. Upon termination, the 650,000
              shares, post reverse-split, being held in escrow were returned to the
              treasury.
  On
              December 29, 2005, we entered into an agreement with Dexion International,
              Ltd
              to acquire all rights and interest in its patent application number
              5425221.8
              for Hypercritical Separation Technology that was filed with the European
              Patent
              Office on April 15, 2005. Upon successful testing, the rights, title
              and
              interest to the technology were being acquired by us at a cost of $2.5
              million
              and 580,000 shares, post reverse-split, of common stock. Additionally,
              pending
              successful testing of the technology, we had agreed to acquire Dexion’s HST
              machine for $500,000 and to establish a research and development facility
              for
              the technology. In March, 2007, BioTex terminated the Agreement when
              both
              parties were found to be in default of provisions of the Agreement,
              and such
              defaults were not curable.  Upon termination, the 580,000 shares, post
              reverse-split being held in escrow were returned to the
              treasury
  We
            presently do not have the funds available to finance these activities,
            however
            management believes that actions presently being taken to obtain additional
            funding will be successful and will allow us to construct the aforementioned
            facilities. We intend to raise the funds through equity sales and debt,
            though
            no definitive agreements have been signed yet.
 
 We
            account for long-lived assets under the Statements of Financial Accounting
            Standards Nos. 142 and 144 "Accounting for Goodwill and Other Intangible
            Assets"
            and "Accounting for Impairment or Disposal of Long-Lived Assets" ("SFAS
            No. 142
            and 144"). In accordance with SFAS No. 142 and 144, long-lived assets,
            goodwill
            and certain identifiable intangible assets held and used by the Company
            are
            reviewed for impairment whenever events or changes in circumstances indicate
            that the carrying amount of an asset may not be recoverable. For purposes
            of
            evaluating the recoverability of long-lived assets, goodwill and intangible
            assets, the recoverability test is performed using undiscounted net cash
            flows
            related to the long-lived assets. A 100% or $500,000 impairment charge
            was
            recorded for the Citrus Separation Technology acquired during the year
            ended
            December 31, 2005 as it was determined by management that the future
            value was
            impaired.
  **BRT
            machines in the large urban areas of the United States.** Upon BioTex
            Corporation’s acceptance of the technology, we will market the BRT machines to
            supermarkets, produce distributors, waste transfer stations and commercial
            bakeries in urban areas which have waste disposal problems. Future business
            will
            be derived by marketing to farms and other large-scale commercial generators
            of
            organic waste. The BRT machine will initially be built in three sizes.
            It is our
            intention to build these machines and then lease them to our customers.
            We
            intend to focus only on a niche market of the waste industry, not unlike
            the
            current recycling industry. It is our intent to become the premier supplier
            of
            equipment for the collection and disposal of biomass (plant-derived material)
            streams from commercial and industrial sources. To that end, we will
            market our
            three sizes of machines to commercial industries as appropriate. Initially,
            we
            will focus on companies that generate medium sized biomass streams. Examples
            include waste transfer stations and institutional re-packagers of vegetable
            products, such as suppliers to the airline and hospitality industries,
            large
            produce markets, terminal markets and produce distributors.
  We
            intend
            to implement a sales & marketing plan for value added products derived from
            our technology. In addition to direct sales, we have currently secured
            a domain
            name, BioTexcorp.com, and during the first quarter of 2006, launched
            a web-site
            for Sales and Marketing purposes and explaining our processes and the
            various
            aspects of our business. The value added products we intend to derive
            for sale
            from our technology for sale are represented below:
  a.
                  Fermentable
                      Citrus Sugar Syrup, or FCSS can be used to produce ethanol
                      or can be used
                      as an all natural sweetener for beverages.b.
                  d-Limonene
                      which can be used in the perfume, food, chemical and essences
                      industries.c.
                  CitraSorb
                      and CitraFiber which can be used for multiple uses, including
                      pet beding
                      and pet food filler, industrial absorbants, pectin production,
                      citrus
                      flour among others.
  Research
            & Development
  We
            intend
            to devote time and financial resources to research and development activities
            to
            develop additional products and services. There is no assurance that
            we will
            successfully develop these products or services, or that competitors
            will not
            develop products or services sooner or products or services that are
            superior to
            our product or service offerings.
  Our
            research and development will be focused on the following
            initiatives:
  
  
  1.
                  Seeking
                      out new technologies2.
                  Develop
                      new applications for existing technologies3.
                  Develop
                      other uses for output from our machines4.
                  Develop
                      new ways to market our products
  Administrative
            Costs
  We
            do
            expect to hire several employees for sales, engineering, administrative
            and
            finance support staff as necessary.
  Completion
            of our plan of operations is subject to attaining adequate revenue. We
            cannot
            assure investors that adequate revenues will be generated. In the absence
            of our
            projected revenues, we may be unable to proceed with our plan of operations.
            Even without significant revenues within the next twelve months, we still
            anticipate being able to continue with our present activities, but we
            may
            require financing to potentially achieve our goal of profit, revenue
            and
            growth.
  The
            foregoing represents our best estimate of our cash needs based on current
            planning and business conditions. The exact allocation, purposes and
            timing of
            any monies raised in subsequent private financings may vary significantly
            depending upon the exact amount of funds raised and status of our business
            plan.
            In the event we are not successful in reaching our initial revenue targets,
            additional funds will be required and we may then not be able to proceed
            with
            our business plan for the development and marketing of our core products
            and
            services. Should this occur, we would likely seek additional financing
            to
            support the continued operation of our business. Additionally, should
            we not
            successfully close on the acquisitions of technologies that we are currently
            under agreements to acquire, we may not be able to meet our revenue targets.
            We
            presently do not have the funds available to finance these activities,
            however
            management believes that actions presently being taken to obtain additional
            funding will be successful and will allow us to undertake our plan of
            operations. We intend to raise the funds through equity sales and debt,
            though
            no definitive agreements have been signed yet.
  
  
   We
            anticipate that depending on market conditions and our plan of operations,
            we
            will incur operating losses in the foreseeable future.
  **Going
            Concern Consideration**
  As
              reflected in the accompanying financial statements, we are in the development
              stage with no operations, a stockholders' deficiency of $266,893, and
              a working
              capital deficiency of $270,541 and used cash in operations from inception
              of
              $999,908. In addition, the Company has $30,000 in notes payable that
              are
              currently in default. This raises substantial doubt about our ability
              to
              continue as a going concern, as we also currently have notes in default.
              Our
              ability to continue as a going concern is dependent on our ability
              to raise
              additional capital and implement our business plan. The financial statements
              do
              not include any adjustments that might be necessary if the Company
              is unable to
              continue as a going concern.
  We
            believe that actions presently being taken to obtain additional funding
            and
            implement our strategic plans provide the opportunity for us to continue
            as a
            going concern.
  **Liquidity
            and Capital Resources**
  As
              of
              September 30, 2007, we have assets of $4,179 consisting of cash of
              $391, prepaid
              expenses of $140 and property and equipment of $3,648 and total liabilities
              of
              $271,072 consisting of accounts payable of $119,018; and accrued expenses
              of
              $101,854, an amount of $20,200 due to related parties, and notes payable
              of
              $30,000, that are currently in default.  We plan to make payments to
              our notes payable within 6 months of customers purchasing or leasing
              machinery
              from us.
  Cash
            and
            cash equivalents from inception to date have been sufficient to cover
            expenses
            involved in starting our business. Current cash on hand is insufficient
            to
            support our operations for the next twelve months. Therefore, we will
            require
            additional funds to continue to implement and expand our business plan
            during
            the next twelve months.
  **Recent
              Accounting Pronouncements**
  In
              September 2006, the FASB issued SFAS No. 157, “*Fair Value
              Measurements*”. The objective of SFAS 157 is to increase consistency and
              comparability in fair value measurements and to expand disclosures
              about fair
              value measurements. SFAS 157 defines fair value, establishes a framework
              for
              measuring fair value in generally accepted accounting principles, and
              expands
              disclosures about fair value measurements. SFAS 157 applies under other
              accounting pronouncements that require or permit fair value measurements
              and
              does not require any new fair value measurements. The provisions of
              SFAS No. 157
              are effective for fair value measurements made in fiscal years beginning
              after
              November 15, 2007. The adoption of this statement is not expected to
              have a
              material effect on the Company's future reported financial position
              or results
              of operations.
 
 In
              February 2007, the Financial Accounting Standards Board (FASB) issued
              SFAS No.
              159, “*The Fair Value Option for Financial Assets and Financial Liabilities
              -
              Including an Amendment of FASB Statement No. 115*”. This statement permits
              entities to choose to measure many financial instruments and certain
              other items
              at fair value. Most of the provisions of SFAS No. 159 apply only to
              entities
              that elect the fair value option.
  However,
              the amendment to SFAS No. 115 “*Accounting for Certain Investments in Debt
              and Equity Securities*” applies to all entities with available-for-sale and
              trading securities. SFAS No. 159 is effective as of the beginning of
              an entity’s
              first fiscal year that begins after November 15, 2007. Early adoption
              is
              permitted as of the beginning of a fiscal year that begins on or before
              November
              15, 2007, provided the entity also elects to apply the provision of
              SFAS No.
              157, “*Fair Value Measurements”.* The adoption of this statement is not
              expected to have a material effect on the Company's financial
              statements.
   
   **Critical
              Accounting Policies**
  Our
              financial statements and related public financial information are based
              on the
              application of accounting principles generally accepted in the United
              States
              (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
              subjective interpretations of accounting principles that have an impact
              on the
              assets, liabilities, revenue and expense amounts reported. These estimates
              can
              also affect supplemental information contained in our external disclosures
              including information regarding contingencies, risk and financial condition.
              We
              believe our use of estimates and underlying accounting assumptions
              adhere to
              GAAP and are consistently and conservatively applied. We base our estimates
              on
              historical experience and on various other assumptions that we believe
              to be
              reasonable under the circumstances. Actual results may differ materially
              from
              these estimates under different assumptions or conditions. We continue
              to
              monitor significant estimates made during the preparation of our financial
              statements.
  Our
              significant accounting policies are summarized in Note 1 of our financial
              statements. While all these significant accounting policies impact
              our financial
              condition and results of operations, we view certain of these policies
              as
              critical. Policies determined to be critical are those policies that
              have the
              most significant impact on our financial statements and require management
              to
              use a greater degree of judgment and estimates. Actual results may
              differ from
              those estimates. Our management believes that given current facts and
              circumstances, it is unlikely that applying any other reasonable judgments
              or
              estimate methodologies would cause effect on our consolidated results
              of
              operations, financial position or liquidity for the periods presented
              in this
              report.
  **Off
              Balance Sheet Arrangements**
  We
              have
              no off-balance sheet arrangements.
  **Item
            3. Controls and Procedures**
  Under
            the
            supervision and with the participation of our management, including our
            principal executive officer and principal financial officer, we conducted
            an
            evaluation of our disclosure controls and procedures, as such term is
            defined
            under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
            Exchange Act of 1934, as amended (Exchange Act), as of September 30,
            2007. Based
            on this evaluation, our principal executive officer and principal financial
            officer have concluded that our disclosure controls and procedures are
            effective
            to ensure that information required to be disclosed by us in the reports
            we file
            or submit under the Exchange Act is recorded, processed, summarized,
            and
            reported within the time periods specified in the Securities and Exchange
            Commission’s rules and forms and that our disclosure and controls are designed
            to ensure that information required to be disclosed by us in the reports
            that we
            file or submit under the Exchange Act is accumulated and communicated
            to our
            management, including our principal executive officer and principal financial
            officer, or persons performing similar functions, as appropriate to allow
            timely
            decisions regarding required disclosure.
  There
            were no changes (including corrective actions with regard to significant
            deficiencies or material weaknesses) in our internal controls over financial
            reporting that occurred during the third quarter of fiscal 2007 that has
            materially affected, or is reasonably likely to materially affect, our
            internal
            control over financial reporting.
 
 
  **PART
            II - OTHER INFORMATION**
  **Item
            1. Legal
            Proceedings.**
  The
            Company is currently not a party to any pending legal proceedings and
            no such
            action by, or to the best of its knowledge, against the Company has been
            threatened.
  **Item
            2. Changes in
            Securities.**
  None.
  **Item
            3. Defaults
            Upon Senior Securities.**
  In
              April,
              2006 the Company borrowed $25,000 from an individual. The note is unsecured,
              is
              due four months from the date of issuance and bears interest at a rate
              of 10%.
              The note is currently in default. As of September 30, 2007 the Company
              has
              recorded accrued interest of $3,589.
 
 In
              May,
              2006 the Company borrowed $5,000 from an individual. The note is unsecured,
              is
              due June 1, 2006, and bears interest at a rate of 7%. In June, 2006
              the note was
              extended to October 15, 2006. The note is currently in default. As
              of September
              30, 2007 the Company has recorded accrued interest of
              $495.
  **Item
            4. Submission
            of Matters to a Vote of Security Holders.**
  None.
  **Item
            5. Other
            Information.**
  None
  **Item
            6. Exhibits
            and Reports of Form 8-K.**
 
 (a)               Exhibits
 
 31.1
            Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
 
 32.1
            Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002
  (b)               Reports
            of Form 8-K
 
 None
   
   **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, there unto
            duly
            authorized.
   **BTX
                      HOLDINGS, INC.**RegistrantDate:
                      November 13, 2007
                  By:
                      */s/ Scott J.
                      Silverman*Scott
                      J. SilvermanPresident,
                      Chief Executive Officer,Chairman
                      of Board of Directors