**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 June 30, 2007.**


**or**




**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 August 7, 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 six
      months ended June 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)**
 
  
  
 **CONTENTS**
 
  
  PAGE
              F-1
              CONSOLIDATEDBALANCE
                  SHEET AS OF JUNE 30, 2007 (UNAUDITED)PAGE
              F-2
              CONSOLIDATEDSTATEMENTS
                  OF OPERATIONS FOR THE THEE MONTHS AND SIX MONTHS  ENDED JUNE
                  30,, 2007 AND 2006 AND FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION)
                  TO
                  JUNE 30, 2007 (UNAUDITED)PAGE
              F-3
              CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' DEFICIENCY FOR THE PERIOD FROM JANUARY
                  8, 2003
                  (INCEPTION) TO JUNE 30, 2007 (UNAUDITED)PAGE
              F-4
              CONSOLIDATED
                  STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE  30, 2007
                  AND 2006 AND FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION) TO
                  JUNE 30,
                  2007 (UNAUDITED)PAGES
              F-5
                  - F-14
              NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS
                  (UNAUDITED)






**BTX
        HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
        DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
        BALANCE SHEET**
 
 **AS
        OF JUNE 30, 2007**
 **(UNAUDITED)**




**ASSETS****CURRENT
                  ASSETS**Cash
              
              $
              1,674Prepaid
                  expenses
              
              
              1,989**TOTAL
                  CURRENT ASSETS**
              
              
              3,663Property
                  and Equipment, net
              
              
              4,822**TOTAL
                  ASSETS**
              
              $
              8,485**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              113,862Accrued
                  payroll
              
              
              59,130Accrued
                  interest
              
              
              3,795Notes
                  payable- related party
              
              
              12,500Notes
                  payable
              
              
              30,000**TOTAL
                  CURRENT LIABILITIES**
              
              
              219,287**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,  5,318,065 shares issued and
                  outstanding
              
              
              5,318Additional
                  paid in capital
              
              
              2,405,826Accumulated
                  deficit during development stage
              
              
              (2,621,946
              )Total
                  Stockholders’ Deficiency
              
              
              (210,802
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**
              
              $
              8,485


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 June 30,
              
              
              Six
                  Months Ended June 30,
              
              
              For
                  The Period From January 8, 2003 (Inception) to
                June
                  30,2007
              
              
              2006
              
              
              2007
              
              
              2006
              
              
              2007**OPERATING
                  EXPENSES**Consulting
                  fees
              
              $
              -
              
              
              $
              14,203
              
              
              $
              152,500
              
              
              $
              14,203
              
              
              $
              365,363Management
                  fees - related party
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              84,000Professional
                  fees
              
              
              35,624
              
              
              
              16,020
              
              
              
              92,371
              
              
              
              42,381
              
              
              
              360,186Research
                  and development
              
              
              -
              
              
              
              20,000
              
              
              
              12,500
              
              
              
              -
              
              
              
              168,618Impairment
                  of technology
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              27,575
              
              
              
              500,000General
                  and administrative
              
              
              103,401
              
              
              
              114,724
              
              
              
              152,874
              
              
              
              214,591
              
              
              
              690,958Total
                  Operating Expenses
              
              
              139,025
              
              
              
              164,947
              
              
              
              410,245
              
              
              
              298,750
              
              
              
              2,169,125**LOSS
                  FROM OPERATIONS**
              
              
              (139,025
              )
              
              
              (164,947
              )
              
              
              (410,245
              )
              
              
              (298,750
              )
              
              
              (2,169,125
              )**OTHER
                  EXPENSES:**Interest
                  Expense
              
              
              (10,680
              )
              
              
              (27,932
              )
              
              
              (20,730
              )
              
              
              (41,460
              )
              
              
              (53,995
              )Loss
                  on conversion of note payable
              
              
              (96,332
              )
              
              
              -
              
              
              
              (96,332
              )
              
              
              -
              
              
              
              (96,332
              )Financing
                  fees
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (302,494
              )Total
                  Other Expenses
              
              
              (107,012
              )
              
              
              (27,932
              )
              
              
              (117,062
              )
              
              
              (41,460
              )
              
              
              (452,821
              )**LOSS
                  BEFORE PROVISION FOR INCOME TAXES**
              
              
              (246,037
              )
              
              
              (192,879
              )
              
              
              (527,307
              )
              
              
              (340,210
              )
              
              
              (2,621,946
              )Provision
                  for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -**NET
                  LOSS**
              
              $
              (246,037
              )
              
              $
              (192,879
              )
              
              $
              (527,307
              )
              
              $
              (340,210
              )
              
              $
              (2,621,946
              )Net
                  loss per share - basic and diluted
              
              $
              (0.05
              )
              
              $
              (0.06
              )
              
              $
              (0.14
              )
              
              $
              (0.10
              )Weighted
                  average number of shares outstanding during the period - basic
                  and
                  diluted
              
              
              4,537,221
              
              
              
              3,311,476
              
              
              
              3,765,305
              
              
              
              3,282,051






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 JUNE 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
              
              
              
              -
              
              
              
              0
              
              
              
              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
              
              
              -
              
              
              
              -
              
              
              
              599,615
              
              
              
              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, June 30, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (527,307
              )
              
              
              (527,307
              )Balance
                  June 30, 2007
              
              
              -
              
              
              $
              -
              
              
              
              5,318,065
              
              
              
              5,318
              
              
              
              2,405,826
              
              
              
              -
              
              
              $
              (2,621,946
              )
              
              $
              (210,802
              )


See
        accompanying notes to financial statements.
  F-3
  **BTX
          HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
          DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 Six
                    Months ended June 30,
                
                
                For
                    The Period From January 8, 2003 (Inception) to June
                    30,2007
                
                
                2006
                
                
                2007**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    loss
                
                $
                (527,307
                )
                
                $
                (340,210
                )
                
                $
                (2,621,946
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Common
                    stock issued for services
                
                
                252,139
                
                
                
                27,575
                
                
                
                555,898Common
                    stock issued for financing fees
                
                
                4,000
                
                
                
                -
                
                
                
                7,500Beneficial
                    conversion expenses
                
                
                -
                
                
                
                -
                
                
                
                35,763Loss
                    on conversion of notes payable related party
                
                
                96,332
                
                
                
                
                
                
                
                96,332Depreciation
                    expense
                
                
                2,347
                
                
                
                2,347
                
                
                
                10,529Impairment
                    of technology
                
                
                -
                
                
                
                37,598
                
                
                
                500,000In-kind
                    contribution of services
                
                
                -
                
                
                
                
                
                
                
                880Changes
                    in operating assets and liabilities:Increase
                    in prepaid expenses
                
                
                293
                
                
                
                4,484
                
                
                
                (1,989
                )Accrued
                    payroll
                
                
                71,000
                
                
                
                87,150
                
                
                
                259,878Accrued
                    interest
                
                
                15,843
                
                
                
                10,357
                
                
                
                52,368Accounts
                    payable
                
                
                23,255
                
                
                
                26,955
                
                
                
                113,862Net
                    Cash Used In Operating Activities
                
                
                (62,098
                )
                
                
                (143,744
                )
                
                
                (990,925
                )**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
                )
                
                
                5,050
                
                
                
                -Proceeds
                    from notes payable
                
                
                -
                
                
                
                10,000
                
                
                
                70,000Repayments
                    of notes payable
                
                
                (5,000
                )
                
                
                (20,000
                )
                
                
                (40,000
                )Proceeds
                    from notes payable related party
                
                
                69,500
                
                
                
                43,750
                
                
                
                392,950Repurchase
                    and retirement or treasury stock
                
                
                -
                
                
                
                -
                
                
                
                (50,000
                )Proceeds
                    from issuance of common stock
                
                
                -
                
                
                
                85,000
                
                
                
                635,000Net
                    Cash Provided By Financing Activities
                
                
                63,772
                
                
                
                123,800
                
                
                
                1,007,950NET
                    INCREASE (DECREASE) IN CASH
                
                
                1,674
                
                
                
                (19,944
                )
                
                
                1,674CASH
                    AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                
                
                -
                
                
                
                19,944
                
                
                
                -CASH
                    AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                1,674
                
                
                $
                -
                
                
                $
                1,674Supplemental
                    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
                
                $
                386,182
                
                
                $
                -
                
                
                $
                428,933Conversion
                    of accrued salary to common stock
                
                $
                200,748
                
                
                $
                -
                
                
                $
                200,748
   See
        accompanying notes to financial statements.
   F-4
  **BTX
          HOLDINGS, INC. AND SUBSIDIARY**
 
 **(A
          DEVELOPMENT STAGE COMPANY)**
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **JUNE
          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 six months ended June 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 June 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
          it's
          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 June 30, 2007
          and the
          changes during the period ended is presented below:
  Fixed
                    Options
                
                Shares
                
                
                Weighted
                    Average
                  Exercise
                    PriceOutstanding
                    at beginning of year
                
                
                500,000
                
                
                $
                11.50Granted
                
                
                -
                
                
                
                -Outstanding
                    at June 30, 2007
                
                
                500,000
                
                
                $
                11.50Options exercisable at June 30, 2007
                
                
                500,000Weighted
                    average exercise price of options granted to employeesduring
                    period ended June 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 June 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 June 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 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 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 June 30, 2007 were as follows:
  Computer
                
                $
                15,351Less
                    accumulated depreciation
                
                
                (10,529
                )$
                4,822
  During
          the three and six  months ended June 30, 2007 and 2006, and the period
          January 8, 2003 (Inception) to June 30, 2007 the Company recorded depreciation
          expense of $1,173, $2,347,$1,173, $2,347 and $10,529, respectively.
  **NOTE 3**
                **PURCHASE
                    OF INTELLECTUAL
                    PROPERTY**
  During
          January 2005, the Company entered into an agreement with BioReduction
          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 aforementioned
          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 June  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.
  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.
   F-7
  
 **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 $26,084 (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 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 $37,500 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 439,302 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,144 (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%.
          As of
          June 30, 2007 the Company recorded accrued interest of $106 (See note
          8).
  F-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%. As of June 30, 2007 the Company recorded accrued interest
          of
          $76 (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 to
          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 for 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 June 30, 2007 the Company has recorded
          accrued interest of $2,959.
  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 June
          30,
          2007 the Company has recorded accrued interest of $407.
  **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 June 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.
  **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).
   F-9
  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***
 
 In
          September 2006 the officer, director and shareholder converted $40,000
          of a
          convertible note payable 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.
 
 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 $26,084 (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 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).
   F-10
 
 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 $37,500 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 439,302 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,144 (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 to
          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 for 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%, volatility 1%, 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.
 
 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 for the 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 license to their HyperCritical
          Separation Technology. On March 29, 2006, the Company and Dexion mutually
          terminated the Agreement and the shares being held in escrow were
          cancelled.
  F-11
   ***(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 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.
  **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 $26,084.
  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.
  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 $37,500 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.
   F-12
  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 439,302 shares of common stock valued at $175,721
          ($.40 per share). The Company recorded a loss on conversion of notes payable
          of
          $35,144.
  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%.
          As of
          June 30, 2007 the Company recorded accrued interest of $106.
 
 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%. As of June 30, 2007 the Company recorded accrued interest
          of
          $76.
 
 **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
          June 30, 2007, the President and Chief Executive Officer of the Company
          is owed
          accrued salary of $19,500.
  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. (hereinafter 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)
   F-13
 
 **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 $2,621,946 from inception,
          a
          stockholders' deficiency of $210,802, a working capital deficiency of $215,624
          and used cash in operations from inception of $990,925. 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
          EVENT**
  In
          July
          2007, the Company borrowed $5,000 from a related party. The note is unsecured
          and is due August 30, 2007 and bears interest at a rate of 15%.
  In
            August
            2007, the Company borrowed $1,200 from a related party.  The note is
            unsecured and is due August 30, 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.
              Raising
                  capital through private debt or equity offerings;2.
              Find
                  customers to purchase or lease machinery from us or enter into
                  joint
                  venture or strategic partner arrangements3.
              Assemble
                  new facilities to operate and demonstrate our
                  technologies4.
              Implement
                  Sales & Marketing of value added products derived from our
                  technology5.
              Further
                  develop and enhance our technology; and continue research and development
                  for new applications of existing technologies and seek out new
                  technologies6.
              Identifying
                  potential candidates for merger or acquisition
                  opportunities,


Subject
      to the requisite financing, we believe that we can complete the following
      objectives within the time period specified:




New
      Facilities




We
      intend
      to finance the development of several new facilities and have such facilities
      in
      operation during 2007. 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 Fourth quarter of 2007. 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 producersas 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 6,500,000 shares
      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 6,500,000 shares 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 5,800,000 shares 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 5,800,000 shares 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 beveragesb.
            d-Limonene
                which can be used in the perfume, food, chemical and essences
                industriesc.
            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, although
      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.




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.




**Going
      Concern Consideration**




As
        reflected in the accompanying financial statements, we are in the development
        stage with no operations, a net loss of $2,621,946, a stockholders' deficiency
        of $210,802, and a working capital deficiency of $215,624 and used cash in
        operations from inception of $990,925. This raises substantial doubt about
        our
        ability to continue as a going concern. 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
      June 30, 2007, we have assets of $8,485 consisting of cash of $1,674, prepaid
      expenses of $1,989 and property and equipment of $4,822 and total liabilities
      of
      $219,287 consisting of accounts payable of $113,862; accrued expenses of
      $62,925, an amount of $12,500 due to related parties, and notes payable of
      $30,000.




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.









**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, revenues 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 if 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.




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.




**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.





**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 June 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 second 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.**




On
        May 9,
        2007, we issued 599,667 shares to Scott Silverman, 454,167 shares to Alicanto
        Group, Ltd., 182,063 shares to Amy Silverman, 250,000 shares to Mark Silverman
        and Linda Silverman, joint tenants and 317,918 shares to Mark Silverman as
        conversions of debt held by these shareholders with the Company. The shares
        were
        issued pursuant to an exemption from registration at Section 4(2) of the
        Securities Act of 1933. These shares reflect the 10-1 reverse split undertaken
        by the Company in June 2007.





On
      June
      10, 2007, we issued 10,000 shares to Richard Weiner as a settlement on a note
      owed by the Company. The shares were issued pursuant to an exemption from
      registration at Section 4(2) of the Securities Act of 1933.




**Item
      3. Defaults Upon Senior Securities.**




None




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




On
      June
      5, 2007, the Company received written consents in lieu of a meeting of
      Stockholders from holders of 30,077,862 shares representing approximately 56.67%
      of the 53,080,647 shares of the total issued and outstanding shares of voting
      stock of the Company authorizing the Company's Board of Directors, to effect
      a
      reverse split of the Company’s outstanding common stock of 1:10.




**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:
                August 7, 2007
            By:
                */s/ Scott J. Silverman*Scott
                J. SilvermanPresident,
                Chief Executive Officer,Chairman
                of Board of Directors