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, 2006. 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. YesxNoo  Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.  Yes
        x
        Noo  State the number of shares outstanding of each of the issuer's classes of common equity, as of August 14, 2006: 33,238,000 shares of
common stock.               BTX HOLDINGS, INC.

(Formerly known as King Capital Holdings, Inc.)

FINANCIAL STATEMENTS



INDEX



PART I-- FINANCIAL INFORMATION




Item 1.
        Financial Statements


Item 2.
        Managements Discussion and Analysis of Financial Condition


Item 3.
        Control and Procedures

PART II-- OTHER INFORMATION




Item 1.
        Legal Proceedings


Item 2.
        Changes in Securities


Item 3.
        Defaults Upon Senior Securities


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


Item 5.
        Other Information


Item 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, 2006 are not necessarily indicative of results that may be expected for the year ending December 31, 2006. The financial statements are presented on the accrual basis.

























BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)





CONTENTS






PAGE
        1
        CONSOLIDATEDBALANCE SHEET AS OF JUNE 30, 2006 (UNAUDITED)PAGE
        2
        CONSOLIDATEDSTATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS  ENDED JUNE 30, 2006  AND 2005(RESTATED) AND FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION)  TO JUNE 30,  2006 (UNAUDITED)PAGE
        3
        CONSOLIDATEDSTATEMENTS OF STOCKHOLDERS DEFECIT FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION) TO JUNE 30, 2006 (UNAUDITED)PAGE
        4
        CONSOLIDATEDSTATEMENTS OF CASH FLOWS FOR THE SIX  MONTHS ENDED JUNE 30, 2006 AND 2005(RESTATED) AND FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION) TO JUNE 30, 2006 (UNAUDITED)PAGES
        5
        NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS (UNAUDITED)











BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2006

(UNAUDITED)




ASSETSCURRENT ASSETSCash
        $
        -Prepaid expenses
        
        2,557TOTAL CURRENT ASSETS
        
        2,557Property and Equipment, net
        
        9,515TOTAL ASSETS
        $
        12,072LIABILITIES AND STOCKHOLDERS DEFICIENCYCURRENT LIABILITIESCash overdraft
        $
        5,050Accounts payable
        
        54,604Accrued payroll
        
        90,567Accrued interest
        
        18,387Notes payable- related party, net of discount of $35,798
        
        199,952Notes payable, net of discount of $11,271
        
        23,729TOTAL CURRENT LIABILITIES
        
        392,289COMMITMENTS AND CONTINGENCIES
        
        -STOCKHOLDERS DEFICIENCYPreferred  stock, $.001 par value, 10,000,000 shares authorized,  none issued and outstanding
        
        -Common stock, $0.001 par value, 100,000,000 shares authorized,  33,233,000 shares issued and outstanding
        
        33,233Additional paid in capital
        
        1,420,647Deferred compensation
        
        (140,425)Accumulated deficit during development stage
        
        (1,693,672)Total Stockholders Deficiency
        
        (380,217)TOTAL LIABILITIES AND STOCKHOLDERS DEFICIENCY
        $
        12,072





See accompanying notes to financial statements.

1







BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)






Three Months Ended June 30,
        
        
        Six Months Ended June 30,
        
        For The Period From January  8, 2003 (Inception) to       June 30, 20062006
        
        2005
        
        
        2006
        
        2005(Restated)
        
        
        
        
        (Restated)OPERATING EXPENSESConsulting fees
        $
        14,203
        $
        -
        
        $
        14,203
        $
        
        $
        212,863Management fees - related party
        
        -
        
        84,000
        
        
        -
        
        84,000
        
        84,000Professional fees
        
        16,020
        
        26,921
        
        
        42,381
        
        26,921
        
        171,620Research and development
        
        20,000
        
        479
        
        
        30,000
        
        20,479
        
        126,925Stock compensation expense
        
        27,575
        
        -
        
        
        27,575
        
        -
        
        57,575Impairment of technology
        
        -
        
        -
        
        
        -
        
        -
        
        500,000General and administrative
        
        87,149
        
        62,893
        
        
        184,591
        
        157,865
        
        405,866Total Operating Expenses
        
        164,947
        
        174,293
        
        
        298,750
        
        289,265
        
        1,558,849LOSS FROM OPERATIONS
        
        (164,947)
        
        (174,293)
        
        
        (298,750)
        
        (289,265)
        
        (1,558,849)OTHER EXPENSES:Interest Expense
        
        27,932
        
        1,658
        
        
        41,460
        
        3,335
        
        49,823Financing fees
        
        -
        
        20,726
        
        
        -
        
        41,685
        
        85,000Total Other Expenses
        
        27,932
        
        22,384
        
        
        41,460
        
        45,020
        
        134,823LOSS BEFORE PROVISION FOR INCOME TAXES
        
        (192,879)
        
        (196,677)
        
        
        (340,210)
        
        (334,285)
        
        (1,693,672)Provision for Income Taxes
        
        -
        
        -
        
        
        -
        
        -
        
        -NET LOSS
        $
        (192,879)
        $
        (196,677)
        
        $
        (340,210)
        $
        (334,285)
        $
        (1,693,672)Net loss per share - basic and diluted
        $
        (0.01)
        $
        (0.01)
        
        $
        (0.01)
        $
        (0.02)
        $
        (0.09)Weighted average number of shares outstanding during the period - basic and diluted
        
        33,114,758
        
        18,723,088
        
        
        32,820,514
        
        17,242,768
        
        19,625,310

See accompanying notes to financial statements.

2








BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER EQUITY

FOR THE PERIOD FROM JANUARY 8, 2003 (INCEPTION) TO JUNE 30, 2006

(UNAUDITED)












Preferred Stock
        
        Common Stock
        
        Additional Paid-In
        
        Deferred
        
        Accumulated Deficit During DevelopmentShares
        
        Amount
        
        Shares
        
        Amount
        
        Capital
        
        Compensation
        
        Stage
        
        TotalBALANCE, JANUARY 8, 2003 (Inception)
        
        -
        $
        -
        
        -
        $
        -
        $
        -
        
        -
        $
        -
        $
        -Issuance of founders stock
        
        -
        
        -
        
        15,746,000
        
        15,746
        
        (13,746)
        
        -
        
        -
        
        2,000Net loss, 2003
        
        -
        
        -
        
        
        
        
        
        
        
        -
        
        -
        
        -BALANCE, DECEMBER 31, 2004
        
        -
        
        -
        
        15,746,000
        
        15,746
        
        (13,746)
        
        -
        
        -
        
        2,000Beneficial conversion on convertible debt
        
        -
        
        -
        
        
        
        
        
        85,000
        
        -
        
        -
        
        85,000Net loss, 2004
        
        -
        
        -
        
        
        
        
        
        
        
        
        
        (102,668)
        
        (102,668)-BALANCE, December 31, 2004
        
        -
        
        -
        
        15,746,000
        
        15,746
        
        71,254
        
        -
        
        (102,668)
        
        (15,668)Sale of common stock
        
        -
        
        -
        
        3,115,000
        
        3,115
        
        619,885
        
        -
        
        -
        
        623,000Stock issued to acquire technology
        
        -
        
        -
        
        2,500,000
        
        2,500
        
        497,500
        
        -
        
        -
        
        500,000Common stock issued for reverse merger
        
        -
        
        -
        
        2,825,000
        
        2,825
        
        (2,825)
        
        -
        
        -
        
        -Common stock issued for reverse merger
        
        -
        
        -
        
        165,507,000
        
        165,507
        
        (165,507)
        
        -
        
        
        
        -Repurchase and cancellation of common stock
        
        
        
        
        
        (157,375,000)
        
        (157,375)
        
        107,375
        
        
        
        
        
        (50,000)Common stock issued for financing fees on note payable
        
        -
        
        -
        
        50,000
        
        50
        
        9,950
        
        -
        
        -
        
        10,000In-kind contribution of management services
        
        -
        
        -
        
        
        
        
        
        880
        
        -
        
        -
        
        880Common stock  issued for legal services
        
        -
        
        -
        
        150,000
        
        150
        
        29,850
        
        -
        
        -
        
        30,000Net loss, 2005
        
        -
        
        -
        
        
        
        
        
        
        
        -
        
        (1,250,794)
        
        (1,250,794)BALANCE, December 31, 2005
        
        -
        
        -
        
        32,518,000
        
        32,518
        
        1,168,362
        
        -
        
        (1,353,462)
        
        (152,582)Sale of common stock
        
        
        
        
        
        40,000
        
        40
        
        9,960
        
        -
        
        0
        
        10,000Common stock issued for services
        
        -
        
        -
        
        500,000
        
        500
        
        167,500
        
        (153,000)
        
        -
        
        15,000Common stock issued for financing fees on note payable
        
        -
        
        -
        
        175,000
        
        175
        
        74,825
        
        -
        
        -
        
        75,000Amortization of deferred compensation
        
        -
        
        -
        
        -
        
        -
        
        -
        
        12,575
        
        -
        
        12,575Net Loss, June 30, 2006
        
        -
        
        -
        
        -
        
        -
        
        -
        
        -
        
        (340,210)
        
        (340,210)Balance June 30, 2006
        
        
        $
        
        
        33,233,000
        
        33,233
        
        1,420,647
        
        (140,425)
        $
        (1,693,672)
        $
        (380,217)





See accompanying notes to financial statements.

3




BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








For The Period From January  8, 2003 (Inception) to       June 30, 2006Six Month's Ended June 30,2006
        
        2005           (Restated)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
        $
        (340,210)
        $
        (334,285)
        $
        (1,693,672)Adjustments to reconcile net loss to net cash used in operating activities:Stock issued for services
        
        27,575
        
        -
        
        57,575Depreciation expense
        
        2,347
        
        4,550
        
        5,836Amortization of note payable discount
        
        37,598
        
        41,685
        
        122,931Impairment of technology
        
        -
        
        -
        
        500,000In-kind contribution of services
        
        -
        
        -
        
        880Changes in operating assets and liabilities:(Increase) / Decrease in prepaid expenses
        
        4,484
        
        (4,931)
        
        (2,557)Accounts payable and accrued expenses
        
        124,462
        
        7,100
        
        163,558Net Cash Used In Operating Activities
        
        (143,744)
        
        (285,881)
        
        (845,449)CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
        
        -
        
        (13,734)
        
        (15,351)Net Cash Used In Investing Activities
        
        -
        
        (13,734)
        
        (15,351)CASH FLOWS FROM FINANCING ACTIVITIES:Cash overdraft
        
        5,050
        
        -
        
        5,050Proceeds from notes payable
        
        10,000
        
        -
        
        35,000Repyaments of notes payment
        
        (20,000)
        
        -
        
        (35,000)Proceeds from notes payable related party
        
        43,750
        
        (8,520)
        
        100,750Proceeds allocated to beneficial conversion
        
        -
        
        -
        
        85,000Repurchase and retirement or treasury stock
        
        -
        
        -
        
        (50,000)Proceeds from issuance of common stock
        
        85,000
        
        623,000
        
        720,000Net Cash Provided By Financing Activities
        
        123,800
        
        614,480
        
        860,800NET INCREASE (DECREASE) IN CASH
        
        (19,944)
        
        314,865
        
        -CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
        
        19,944
        
        9,674
        
        -CASH AND CASH EQUIVALENTS AT END OF PERIOD
        $
        -
        $
        324,539
        $
        -Supplemental disclosure of non cash investing & financing activities:Cash paid for income taxes
        $
        -
        $
        -
        $
        -Cash paid for interest expense
        $
        500
        $
        -
        $
        500



See accompanying notes to financial statements.

4







BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)






NOTE 1
        ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Basis of Presentation



The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.



It is managements opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.



(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 64,186,000 then issued and outstanding shares of common stock for 64,186,000 shares or 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. The statements of operations include the results of BioTex Corporation for the three and six months ended June 30,
2006 and 2005 and for the period from January 3, 2003 (inception) to June 30, 2006.



BTX Holdings, Inc. and BioTex Corporation are hereafter referred to as (the Company).



(C) 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.









5





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)





(D) Consolidation



The accompanying June 30, 2006 consolidated financial statements include the accounts of BTX Holdings, Inc (from December 30, 2005) and its 100% owned subsidiary BioTex Corporation. The accompanying June 30, 2005 consolidated financial statements include the accounts of BioTex Corporation. All inter-company accounts have been eliminated in the consolidation.



(E) 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, 2006, the Company did not have any balances that exceeded FDIC insurance limits.



(F) 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) Income Taxes



The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (Statement 109). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.







6





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)




(H) Stock-Based Compensation



In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or SAB 107. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staffs views regarding the valuation of share-based payment
arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS 123R. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123. Effective January 1, 2006, the Company has fully adopted the provisions of SFAS No. 123R and related interpretations as provided by SAB 107. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.



A summary of the status of the Companys stock options as of June 30, 2006 and the changes during the year ended is presented below:




Fixed Options
        
        Shares
        
        Weighted Average
Exercise PriceOutstanding at beginning of year
        
        5,000,000
        $
        1.15Granted
        
        -
        
        -Outstanding at June 30,  2006
        
        5,000,000
        $
        1.15Options exercisable at June 30, 2006
        
        5,000,000Weighted average exercise price of options granted to employeesduring period ended June 30, 2006
        $
        -



7









BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)





(I) 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, 2006 and 2005, common
share equivalents of 5,000,000 and 5,000,000 stock options, respectively were
anti-dilutive and not used in the calculation of diluted net loss per
share.



(J) Business Segments



The Company operates in one segment and therefore segment information is not presented.



(K) 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.



(L) 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.






M) Recent Accounting Pronouncements



SFAS 155. Accounting for Certain Hybrid Financial Instruments and SFAS 156. Accounting for Servicing of Financial Assets were recently issued. SFAS 155 and 156 have no current applicability to the Company and have no effect on the financial statements.






NOTE 2
        RESTATEMENT

The company has restated its June 30, 2005 financial statements to give effect to the beneficial conversion feature on its convertible debt and interest expense. Accordingly financing fees have been restated to give effect to the amortization of the debt discount of  $41,685 and interest expense of $3,335, net loss and earning per share have been restated to give effect to the recording of the beneficial conversion feature.



The following table summarizes the effects of the restatement on the Companys consolidated financial statements as of June 30, 2005:



8





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)




As Reported
        
        As RestatedIncome Statement:Interest Expense
        $
        --
        $
        3,335Financing costs
        
        --
        
        41,685Net loss
        $
        (289,265)
        $
        (334,285)


NOTE 3
        PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2006 were as follows:




Computer
        $
        15,351Less accumulated depreciation
        
        (5,836)$
        9,515

During the three and six months ended June 30, 2006 and 2005 and the period January 8, 2003 (Inception) to June 30, 2006 the Company recorded depreciation expense of $1,173, $2,347, $518, $747  and  $5,836, respectively.




NOTE 4
        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 1,500,000 shares of common stock
valued at $1,500,000 the fair market value on the agreement date and an option
to purchase 300,000 additional shares of common stock, which will be exercisable
at a price of $5.00 per share. As of June 30, 2006 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
2,500,000 shares of common stock valued at $500,000, the fair market value on
the agreement date and an option for the purchase of 1,500,000 additional shares
of YB common stock, exercisable at a price of $1.00 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.





9







BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)



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 5,800,000 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. As of June 30, 2006 the Company has not completed testing.




NOTE 5
        NOTES PAYABLE




Notes payable
        $
        35,000Discount
        
        (11,271)Balance
        $
        23,729



In March, 2006 the Company borrowed $5,000 from an investor. 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 5,000 shares of common stock in
consideration for the extension (see Note 12).



In April, 2006 The Company borrowed $25,000 from an investor. 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 50,000 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 June 30, 2006 the Company recorded a discount on the notes of $11,271 and amortization of $13,729.



In May, 2005 the Company borrowed $5,000 from an investor. 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.




NOTE 6
        NOTES PAYABLE  RELATED PARTIES






Notes payable
        $
        235,750Discount
        
        (35,798)Balance
        $
        199,952





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 $0.25 per share. During the three and six months ended June 30, 2006 and 2005 and the period January 8, 2003 (Inception) to June 30, 2006 the Company recorded financing fees for the beneficial conversion of $0, $0, $20,959 $41,685  and  $85,000, respectively.



10





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)



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%.



On December 28, 2005, the officer, director and shareholder loaned the company $40,000 at a rate of 10% per annum. The principle and interest are due on December 31, 2006. The note is unsecured.



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 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. At June  30, 2006 the Company recorded a discount on the notes of $35,798 and amortization of $14,202 as of June 30, 2006.



During the six months ended June 30, 2006, officer, director and shareholder loaned the company an additional $23,250. The balance accrued interest at a rate of 10% per annum, is unsecured, and is due on December 31, 2006.






NOTE 7
        JOINT VENTURE

On August 15, 2005, the Company entered 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, 2006 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 8
        STOCKHOLDERS EQUITY

(A) Common Stock Issued to Founders



During January 2003 the Company issued 15,746,000 shares of common stock to founders for a capital contribution of $2,000.



(B) Common Stock Issued for Cash



In 2005, the Company sold a total of 3,115,000 shares of common stock to 22 individuals for cash of $623,000 ($.20 per share).



11





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)





In 2006, the Company sold a total of 40,000 shares of common stock to a individual for cash of $10,000 ($.25 per share).



C) Common Stock Issued for Services



In December 2005 the Company issued 150,000 shares of common stock with a fair market value of $30,000 for legal services.



In March 2006 the company issued 450,000 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.



In June 2006 the Company issued 50,000 shares of common stock with a fair market value of $15,000 for consulting services.





(D) Common Stock Issued for Financing Fees



In December 2005 the Company issued 50,000 shares of common stock with a fair market value of $10,000 for financing fees in relation to a note payable(See Note 4).



In April 2006  the Company issued 50,000 shares of common stock with a fair market value of $25,000 for financing fees in relation to a note payable(See Note 5).



In April 2006, the Company issued a related party  125,000 shares of common stock with a fair market value of $50,000 for financing fees in relation to a note payable(See Note 6).



(E) Common Stock Issued for Technology



The Company issued 2,500,000 shares of common stock with a fair value of $500,000 and 1,500,000 warrants during 2005, at an exercise price of $5.00 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.



(F) 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



(G) Reverse Mergers



On June 9, 2005, pursuant to the Stock Purchase Agreement and Share Exchange, the Company issued a total of 2,825,000 shares of the Companys common stock to the shareholders of Capital Ventures I.



12





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(Unaudited)





On December 30, 2005 pursuant to the Stock Purchase Agreement and Share Exchange, the Company issued a total of 165,507,000 shares of the Companys common stock to the shareholders of BTX Holdings, Inc. simultaneous with the Stock Purchase Agreement and Share Exchange, the Company purchased and retired a total of 157,375,000 shares of its common stock for $50,000 from a former shareholder of King Capital.



(H) Shares in Escrow



During 2005, 5,800,000 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. As at August
8, 2006 the Company has not completed the transaction with Dexion and the shares
remain in escrow.



During 2005, 1,500,000 shares of common stock and 500,000 warrants with an
exercise price of $5.00 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 August 14, 2006 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 500,000 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. As at August 8, 2006 the Company has not completed the transaction with Dexion International Ltd. and the shares remain in escrow.



(I) 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.




NOTE 9
        RELATED PARTY TRANSACTIONS

During 2004, the Company issued a one-year 10% 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 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. The Company recorded financing fees for the beneficial conversion feature for the year ended December 31, 2005, 2004 and the period January 8, 2003 (Inception) to December 31, 2005 of $70,795, $14,205 and $85,000 respectively. Principle and accrued interest is due December 31, 2006.



On December 28, 2005, the officer, director and shareholder loaned the company $40,000 at a rate of 10% per annum. The principle and interest are due on December 31, 2006.



13



BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006
(Unaudited)



On December 27, 2005, the Company borrowed $15,000 from a related party. The
note is due twelve months from the date of issuance and bears interest at a rate
of 10%.



In March, 2006 a related party repaid an existing note of the Company in the amount of $20,000 and $500 of accrued interest. The related party entered into a new note agreement in the amount of $20,500 bearing interest at a rate of  15% per annum and is due December 31, 2006.



In April 2006, a related party loaned the company $50,000 at a rate of 15% per annum and due December 31, 2006. Upon execution of the promissory note, the company issued 25,000 shares of common stock.



During the six months ended June 30, 2006, the officer, director and shareholder loaned the company an additional $23,250. The balance accrued interest at a rate of 10% per annum and is due on December 31, 2006.




NOTE 10
        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 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 1,000,000 shares of the Companys common stock at an exercise price of $.50 expiring in 2015.



Options to purchase 1,000,000 shares of the Companys common stock at an exercise price of $.75 expiring in 2015.



Options to purchase 1,000,000 shares of the Companys common stock at an exercise price of $1.00 expiring in 2015.



Options to purchase 1,000,000 shares of the Companys common stock at an exercise price of $1.50 expiring in 2015.



Options to purchase 1,000,000 shares of the Companys common stock at an exercise price of $2.00 expiring in 2015.



14





BTX HOLDINGS, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006
(Unaudited)



(B) Joint Venture



During August 2005, the Company formed 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).




NOTE 11
        GOING CONCERN

As reflected in the accompanying financial statements, the Company is in the development stage with no operations, a stockholders deficiency of $380,217, a working capital deficiency of $389,732 and used cash in operations from inception of $845,449. 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.






NOTE 12
        SUBSEQUENT EVENTS

On July 7, 2006, the officer, director and shareholder loaned the company $14,000 at a rate of 10% per annum. The principle and interest are due on December 31, 2006.



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.



During July 2006, the Company cancelled 1,500,000 shares held in escrow pending the acceptance of the agreement between the Company
and Bio Reduction Technology, LLC as the agreement does not require shares to be held in escrow. Upon acceptance of the technology by
the Company, we will issue up to 1,500,000 shares of common stock and 300,000 warrants. As of August 8, 2006, the transaction has not
closed.



On August 4, 2006, the Company borrowed $20,000 from a related party. The note
is unsecured and is due six months from the date of issuance and bears interest
at a rate of 15%.



On August 14, 2006, the Company obtained an extension on a note payable due June
30, 2006 to September 30, 2006. The Company agreed to issue the note holder
5,000 shares of common stock in consideration for extending the note.



15









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 fifteen months is focused on the following primary objectives.




1.
        Complete testing and close on contracts for technologies currently under agreements2.
        Raising capital through private debt or equity offerings;


3.
        Find additional customers to purchase or lease machinery from us or enter into joint venture or strategic partner arrangements


4.
        Assemble new facilities to operate and demonstrate our technologies


5.
        Implement Sales & Marketing of value added products derived from our technology


6.
        Further develop and enhance our technology; and continue research and development for new applications of existing technologies and seek out new technologies

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



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 facilities in Belize and California. Although we do not have any agreements in place for facilities in Florida or California, we are in negotiations with several juicing operations, and it is our intention to open our demonstration facility in Florida in the third quarter of 2006. 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 $18.5 million to become fully operational. We intend to secure the funding necessary and to begin construction of the Belize facility during the 4th Quarter of 2006. Pending successful negotiation with juicing plants in Florida and California to build CST facilities, we intend to secure funding and begin construction under the following cost and time projections; 1st Quarter 2007, California $5 Million and build the Florida operation, $2.5 million, 3rd Quarter 2007, expand Belize facilities at an estimate of $6 Million. 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 three internal employees: We are in preliminary talks with several customers, although no contracts have been consummated for the leasing of our machines. Sales and marketing expenditures are budgeted at $75,000 for the next twelve months. 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) and of the Hypercritical Separation Technology (HST) for the processing of biomass waste streams, pending completion of our due diligence and acquisition, as well as leasing individual BioReduction Technology (BRT) machines:



1.Joint ventures utilizing our CST and HST technologies.In August, 2005, we entered into an agreement with Citrus Products of Belize, Ltd. to form a joint venture company which will use our CST technology for the processing of citrus peel waste in Belize. We will continue to market our technologies through this model to citrus juice producers, pineapple, rice, grain, corn and sugar cane grower cooperatives, as well as continue to develop new markets that may use our technologies. Through these joint ventures, value-added products will be generated, and as a result, we will also focus our marketing efforts on the sale of these products. We have identified several markets for these products, such as the chemical and perfume industries, paper producers, animal and
human consumable manufacturers, nutraceutical and pharmaceutical companies and ethanol producers. We will focus our efforts on marketing our value-added products to these industries.



On August 16, 2005, we entered into an agreement to form a Joint Venture Company, BTX Citrus Belize, Ltd., along with Citrus Products of Belize, Ltd (CPBL). BTX Citrus Belize will be formed with the purpose of constructing a citrus peel processing facility utilizing BioTexs CST technology. CPBL will contribute land, building and citrus peel to BTX Citrus, and BioTex will arrange for funding, provide the technology, oversee construction of the plant, operate the plant, and sell the products the plant generates. CPBL will own 35% of the joint venture and BioTex will own 65%. The plant is expected to cost approximately $11 million.



On December 29, 2005, we terminated our agreement with Mastercraft Ltd. dated May 31, 2005. The agreement contemplated the acquisition of the rights, title and interest to its MST technology at a cost of $3 million and 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 are 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 have agreed to acquire Dexions HST machine for $500,000 and to establish a research and development facility for the technology. The technology has not yet been demonstrated to our satisfaction and we have not closed on the transaction. We intend to continue testing and intend to close on this transaction in the 3rdQuarter of 2006.



We are also currently in negotiations with a juicing facilities located in Southern California and Florida to construct CST processing plants at their respective facilities. BioTex will form joint venture companies which will own and operate the plants. The joint venture partners will contribute citrus peel and possibly land and/or buildings to the joint ventures, and we will arrange for the funding, will provide the technology, oversee construction of the plants, operate the plants and sell the value added products that are produced. It is anticipated that the plants will cost approximately $5 million and $2.5 million respectively.





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.



2BRT 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.
        Cellulose can either be sold to the paper industry, or can be used to create ethanol, a renewable energy sourceb.
        Hemicellulose can be converted into xylose, which is the basis for a new sweetener, and can also be used in the manufacture of paperc.
        Lignin is an industrial fuel, usually used to provide energy to industrial plants


d.
        Starch can also be used in ethanol production and well as in food productione.
        Fiber is used in the nutraceutical industry, as well as in the food industryf.
        Pectin is used in the food, pharmaceutical and nutraceutical industriesg.
        Protein is used in the food, nutraceutical and pharmaceutical industries

Research & Development



We intend to devote time and financial resources to research and development activities to develop additional products and services. Research and development expenditures are budgeted at $120,000 for the next twelve months. 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.



As part of our agreement with Dexion International, Ltd., pending successful testing, we will purchase the existing HST machine at a cost of $500,000 and establish a research and development center during the third quarter of 2006, where the machine will be used for testing the marketing applications specific to the HST machines processing of organic and inorganic waste streams. Additional uses for the machine will also be developed through the continual testing of newly contemplated feed stocks. 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. We anticipate employee recruiting and training to cost $24,000 over the next twelve months. (Salaries are included below as part of the office salaries)



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.



We anticipate that our operational as well as general and administrative expenses for the next 12 months will total $24,189,000. The breakdown is as follows:











The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and status of our business plan. In the event we are not successful in reaching our initial revenue targets, additional funds will be required and we may then not be able to proceed with our business plan for the development and marketing of our core products and services. Should this occur, we would likely seek additional financing to support the continued operation of our business. Additionally, should we not successfully close on the acquisitions of technologies that we are currently under agreements to acquire, we may not be able to meet our revenue targets. We presently do not have the funds available to finance these
activities, however management believes that actions presently being taken to obtain additional funding will be successful and will allow us to undertake our plan of operations. We intend to raise the funds through equity sales and debt, though no definitive agreements have been signed yet.



We anticipate that depending on market conditions and our plan of operations, we will incur operating losses in the foreseeable future.



Going Concern Consideration



As reflected in the accompanying financial statements, we are in the development
stage with no operations, a stockholders deficiency of $380,217, and a
working capital deficiency of $389,732 and cash used in operations from
inception of $845,449. 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, 2006, we have assets of $12,072 consisting of cash of $0, prepaid expenses of $2,557 and property and equipment of $9,515 and total liabilities of $392,289 consisting of accounts payable of $54,604; cash over draft of $5,050; accrued expenses of $108,954, an amount of $199,952 due to related parties, and notes payable of $23,729.



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, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use 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.



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, 2006. 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 2006 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 April 18, 2006, the Company approved the issuance of 125,000 shares of restricted common stock to Amy Silverman pursuant to a
promissory note dated April 18, 2006. Such shares were issued pursuant to an exemption from registration at Section 4(2) of the
Securities Act of 1933 and are restricted in accordance with Rule 144 of the Securities Act of 1933.



On April 24, 2006, the Company approved the issuance of 50,000 shares of
restricted common stock to Kimberly Gonzales pursuant to a promissory note dated
April 24, 2006. Such shares were issued pursuant to an exemption from
registration at Section 4(2) of the Securities Act of 1933 and are restricted in
accordance with Rule 144 of the Securities Act of 1933.



On June 8, 2006, the Company approved the issuance of 40,000 shares of restricted
common stock to Morly Cohen for consideration paid to the Company. Such shares
were issued pursuant to an exemption from registration at Section 4(2) of the
Securities Act of 1933 and are restricted in accordance with Rule 144 of the
Securities Act of 1933.



On June 30, 2006, the Company approved the issuance of 50,000 shares of
restricted common stock to Marty Scott for services to be rendered to the
Company. Such shares were issued pursuant to an exemption from registration at
Section 4(2) of the Securities Act of 1933 and are restricted in accordance with
Rule 144 of the Securities Act of 1933.



Item 3. Defaults Upon Senior Securities.



None



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



No matter was submitted during the quarter ending June 30, 2006, covered by this report to a vote of the Companys shareholders, through the solicitation of proxies or otherwise.



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.Registrant


Date: August 14, 2006
        By:/s/ Scott J. SilvermanScott J. SilvermanPresident, Chief Executive Officer,Chairman of Board of Directors