UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-QSB**




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 333-110240




**Modigene
                  Inc.**(Exact
                  name of registrant as specified in its
                  charter)


Nevada
              20-0854033(State
                  or other jurisdiction of
                incorporation
                  or organization)
              (I.R.S.
                  Employer
                Identification
                  No.)




8000
                  Towers Crescent Drive, Suite 1300,
                  Vienna, VA 22182(Address
                  of principal executive
                  offices)(Zip
                  Code)




(866)
                  644-7811(Registrant's
                  telephone number, including
                  area code)




(Former
                  name, former address and former
                  fiscal year, if changed since last
                  report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





Yes 
      x No o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes 
      oNo x




APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS:





Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
      Act
      of 1934 subsequent to the distribution of securities under a plan confirmed
      by a
      court.





Yes 
      N/A       No o




APPLICABLE
      ONLY TO CORPORATE ISSUERS:





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date. As of August 10, 2007, there were
      35,253,777 shares of common stock issued and outstanding.





Transitional
      Small Business Disclosure Format (check one):




Yes  oNo x







**MODIGENE
      INC.**


INDEX
      TO
      FORM 10-QSB FILING


FOR
      THE
      QUARTER ENDED JUNE 30, 2007





Table
      of Contents





PagePart
                IItem
                1.
            Financial
                Statements
            1Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            9Item
                3.
            Controls
                and Procedures
            17Part
                IIItem
                1.
            Legal
                Proceedings
            18Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            18Item
                3.
            Defaults
                upon Senior Securities
            18Item
                4.
            Submission
                of Matter to a Vote of Security Holders
            18Item
                5.
            Other
                Information
            18Item
                6.
            Exhibits
            18Signatures
            
            19Certifications
            
            20







**PART
      I –
      FINANCIAL INFORMATION**





**ITEM
      1.**  **Financial
      Statements.**





The
      interim financial statements included herein are unaudited but reflect, in
      management's opinion, all adjustments, consisting only of normal recurring
      adjustments, that are necessary for a fair presentation of our financial
      position and the results of our operations for the interim periods presented.
      The results of operations for the quarterly period ended June 30, 2007 are
      not
      necessarily indicative of the results that may be expected for the full fiscal
      year.




1


**MODIGENE
        INC. AND SUBSIDIARY**
 **(A
        development stage company)**
  CONDENSED
      CONSOLIDATED BALANCE SHEET


**(Unaudited)**




June
                30,2007**ASSETS****Current
                Assets:**Cash
                and cash equivalents
            
            $
            13,013,666Accounts
                receivable and prepaid expenses
            
            
            255,602Restricted
                cash
            
            
            25,000**Total
                current assets**
            
            
            13,294,268**Property
                and equipment, net**
            
            
            137,490**Severance
                pay fund**
            
            
            17,772**Total
                assets**
            
            $
            13,449,530**LIABILITIES
                AND SHAREHOLDERS' EQUITY****Current
                Liabilities:**Short-term
                bank credit
            
            $
            11,501Trade
                payables
            
            
            69,867Accrued
                expenses and other liabilities
            
            
            238,646**Total
                current liabilities**
            
            
            320,014**Accrued
                severance pay**
            
            
            26,091**Commitments
                and contingent liabilities****Shareholders'
                equity:**Stock
                capital -Preferred
                stock of $ 0.00001 par value -
              10,000,000
                shares of preferred stock authorized, none issued or
                outstanding
            
            
            -Common
                shares of $ 0.00001 par value -300,000,000
                shares of common stock authorized35,253,777
                shares issued and outstanding
            
            
            353Additional
                paid-in capital
            
            
            34,699,899(Deficit)
                accumulated during the development stage
            
            
            (21,596,827
            )**Total
                shareholders' equity**
            
            
            13,103,425**Total
                liabilities and shareholders' equity**
            
            $
            13,449,530




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements.




2


**MODIGENE
        INC. AND SUBSIDIARY**
 **(A
        development stage company)**
  CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


**(Unaudited)**




For
                the six months ended
              June
                30
            
            
            For
                the three months ended
              June
                30
            
            
            Period from
              May 31, 2005
              (date of inception)
              to
                June 302007
            
            
            2006
            
            
            2007
            
            
            2006
            
            
            2007**Revenues**
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**Operating
                expenses:**In-process
                research and development write-off
            
            
            11,000,009
            
            
            -
            
            
            11,000,009
            
            
            -
            
            
            14,218,785Research
                and development,
                net
            
            
            640,787
            
            
            291,629
            
            
            412,392
            
            
            169,876
            
            
            1,436,398General
                and administrative
            
            
            822,320
            
            
            667,404
            
            
            588,059
            
            
            376,690
            
            
            6,035,86912,463,116
            
            
            959,033
            
            
            12,000,460
            
            
            546,566
            
            
            21,691,052Operating
                (loss)
            
            
            (12,463,116
            )
            
            (959,033
            )
            
            (12,000,460
            )
            
            (546,566
            )
            
            (21,691,052
            )Financial
                income
            
            
            86,146
            
            
            7,956
            
            
            83,480
            
            
            7,956
            
            
            124,146Financial
                (expenses)
            
            
            (
                26,492
            )
            
            (
                8,506
            )
            
            (
                -
            )
            
            (
                6,949
            )
            
            (
                29,921
            )(Loss)
                for the period
            
            $
            (12,403,462
            )
            $
            (959,583
            )
            $
            (11,916,980
            )
            $
            (545,559
            )
            $
            (21,596,827
            )(Loss)
                per share(basic & diluted)
            
            $
            (
                0.63
            )
            $
            (
                0.07
            )
            $
            (
                0.46
            )
            $
            (
                0.04
            )
            $
            (
                1.43
            )Weighted
                average number of shares outstanding
            
            
            19,812,817
            
            
            13,588,555
            
            
            25,968,680
            
            
            13,588,555
            
            
            15,070,912




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements.





3





**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**




CONDENSED CONSOLIDATED
      STATEMENTS OF CASH FLOWS


**(Unaudited)**


For
                    the six months ended
                  June
                    30,
                
                Period
                    from
                  May
                    31, 2005
                  (date
                    of inception)
                  to
                    June 30,2007
                
                2006
                
                2007**Cash
                    flows from operating activities**Net
                    cash (used in) operating activities
                
                $
                (
                    1,195,829
                )
                $
                (
                    670,527
                )
                $
                (
                    2,649,588
                )**Cash
                    flows from investing activities**Purchase
                    of property and equipment
                
                
                (14,820
                )
                
                (132,530
                )
                
                (161,802
                )Payment
                    for the acquisition ofModigeneTech
                    Ltd.
                
                
                -
                
                
                -
                
                
                (356,979
                )Loan
                    granted by the Company to ModigeneTech Ltd.
                
                
                -
                
                
                -
                
                
                (
                    497,575
                )Cash
                    received in acquisition ofModigeneTech
                    Ltd.
                
                
                -
                
                
                -
                
                
                379,717Long
                    term deposit
                
                
                1,740
                
                
                -
                
                
                -Restricted
                    deposit
                
                
                27,071
                
                
                -
                
                
                (
                    26,740
                )Net
                    cash (used in) investing activities
                
                
                13,991
                
                
                (
                    132,530
                )
                
                (
                    663,379
                )**Cash
                    flows from financing activities**Short
                    term bank credit
                
                
                (
                    4,773
                )
                
                14,629
                
                
                9,006Proceeds
                    from loans
                
                
                -
                
                
                -
                
                
                173,000Principal
                    payment of loans
                
                
                -
                
                
                (
                    2,496
                )
                
                (
                    173,000
                )Proceeds
                    from issuance of redeemable convertible preferred shares,
                    net
                
                
                -
                
                
                -
                
                
                2,896,605Proceeds
                    from issuance of shares and option exercise
                
                
                13,415,114
                
                
                -
                
                
                13,421,022Net
                    cash provided by financing activities
                
                
                13,410,340
                
                
                12,133
                
                
                16,326,633**(Decrease)
                    increase in cash and cash equivalents**
                
                
                12,228,501
                
                
                (
                    790,924
                )
                
                13,013,666**Cash
                    and cash equivalents at the beginning of the
                    period**
                
                
                785,165
                
                
                2,368,024
                
                
                -**Cash
                    and cash equivalents at the end of the period**
                
                $
                13,013,666
                
                $
                1,577,100
                
                $
                13,013,666Cash
                    paid for income taxes
                
                $
                -
                
                $
                -
                
                $
                -Cash
                    paid for interest expenses
                
                $
                26,492
                
                $
                -
                
                $
                29,921


The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements.





3


**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2007**


**(Unaudited)**





**NOTE
      1:-**  **GENERAL**




**a.** **General:**




Modigene
      Inc. ("the Company") was formed on August 22, 2003 under the laws of the state
      of Nevada. The Company is engaged in the development of therapeutic proteins
      with extended half-lifes, through its subsidiary, ModigeneTech Ltd.
      (“ModigeneTech”).




The
      Company is devoting substantially all of its efforts toward conducting research
      and development activities. The Company’s activities also include raising
      capital, recruiting personnel and building infrastructure. In the course of
      such
      activities, the Company has sustained operating losses and expects such losses
      to continue for the foreseeable future. The Company has not generated any
      revenues or product sales and has not achieved profitable operations or positive
      cash flow from operations. The Company’s deficit accumulated during the
      development stage aggregated $21,596,827 through June 30, 2007. There is no
      assurance that profitable operations, if ever achieved, could be sustained
      on a
      continuing basis. The Company raised approximately $11.6 million in a private
      placement, as described in note C. below. According to the Company's forecasted
      cash flows, the funds raised enables the continuance of the Company's activities
      for the next two years with no need of additional fund raising,




**b.**  **Reverse
      Acquisition of Modigene Inc., a Delaware corporation:**




On
      May 9,
      2007, Modigene Inc., a Delaware corporation (“Modigene Delaware”), Modigene
      Acquisition Corp., a wholly-owned subsidiary of the Company (the “Acquisition
      Subsidiary”) and the Company (Modigene Inc., formerly called LDG, Inc.), entered
      into an Agreement and Plan of Merger and Reorganization (the “Merger
      Agreement”). Pursuant to the Merger Agreement, the Acquisition Subsidiary merged
      (the “Merger”) with and into Modigene Delaware, with Modigene Delaware remaining
      as the surviving entity and a wholly-owned subsidiary of the Company. The
      Company acquired the business of Modigene Delaware pursuant to the Merger and
      will continue the existing business operations of Modigene Delaware as a
      publicly-traded company under the name Modigene Inc. In the Merger, the
      stockholders of Modigene Delaware received common stock of the Company in
      exchange for their shares of common stock of Modigene Delaware. Pursuant to
      the
      Merger Agreement the Company became the holding company of Modigene Delaware
      and
      ModigeneTech.




Contemporaneously
      with the closing of the Merger and the private placement described in note
      C.
      below, the Company split off (the “Split-Off”) its wholly-owned subsidiary,
      Liaison Design Group, LLC (“LDG LLC”), through the sale of all of the membership
      interests of LDG LLC, upon the terms and conditions of a split-off
      agreement.




The
      Merger was treated as a recapitalization of the Company for accounting purposes.
      The historical financial statements of the Company before the Merger are
      replaced with the historical financial statements of Modigene Delaware before
      the Merger. The Merger is being accounted for as a reverse acquisition. Modigene
      Delaware is the acquirer for accounting purposes. No goodwill or other
      intangible assets were recorded.




Effective
      May 9, 2007, the Company issued 13,588,552 shares of its common stock to the
      shareholders of Modigene Delaware, in exchange for all of the issued and
      outstanding common stock and Series A preferred stock of Modigene Delaware
      pursuant to the Merger Agreement. The fair value of the common stock issued
      for
      the acquisition was $11,000,009. The know-how purchased in the amount of
      $11,000,009 has not yet reached technological feasibility and has no alternative
      future use other than the technological indications for which it was in
      development. Accordingly, the entire amount representing the know-how was
      recorded as in-process research and development and accordingly was immediately
      expensed in the consolidated statement of operations on the acquisition
      date.




**c.**  **P** **rivate
      Placement**




Simultaneously
      with the closing of the Merger, the Company completed the first phase of a
      private placement (the “Offering”) of 6,418,814 units of its securities
      (“Units”) at a purchase price of $1.50 per Unit, with each Unit consisting of
      one share of the Company's common stock and a five year warrant to purchase
      one-quarter of one share of the Company’s common stock for an exercise price of
      $2.50 per whole share. The Company raised total cash consideration of $9,628,212
      before expenses. Upon the completion of the first phase of the Offering, the
      Company issued warrants to purchase up to an aggregate of 242,324 shares of
      the
      Company’s common stock to broker/dealers who assisted in the
      Offering.




4


**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2007**


**(Unaudited)**





**NOTE
      1:-**  **GENERAL** (continued)




**c.**  **P** **rivate
      Placement** (continued)




Contemporaneously
      with the closing of the Merger and the first phase of the Offering, the Company
      completed a sale (the “Private Sale”) of 5,377,660 shares of its common stock,
      and warrants to purchase 333,333 shares of common stock, to strategic investors,
      for total consideration of $2,000,000. The strategic investors were entitled
      to
      additional shares on a pro rata basis if additional Units were sold in
      connection with the Offering.




On
      May
      21, 2007, the Company completed a second phase of the Offering and closed on
      the
      sale of an additional 2,247,858 Units, for total cash proceeds of $3,371,766
      (before expenses). Upon the completion of the second closing of the offering,
      the Company issued warrants to purchase up to an aggregate of 51,885 shares
      of
      common stock to the broker/dealers who had assisted in the Offering and
      additional 155,673 shares of common stock (for no additional consideration)
      to
      the strategic investors.




**d.**  **Acquisition
      of ModigeneTech Ltd.**




In
      December 2005, Modigene Delaware acquired all of the outstanding shares of
      ModigeneTech in consideration for shares of common stock of Modigene Delaware
      (the “Share Exchange”). In the Share Exchange, all of the options of
      ModigeneTech were exchanged for options to purchase shares of Modigene
      Delaware's common stock. The fair value of the common stock issued and the
      options granted for the Share Exchange was $2,625,587.




In
      conjunction with Share Exchange, Modigene Delaware also issued shares of common
      stock, valued at $3,514,426, to the Company’s founders for their services as the
      agents in the transaction (finders’ fee).




Issuance
      expenses paid in cash in the amount of $356,979 were also recorded as
      acquisition costs in connection with the Share Exchange.




ModigeneTech
      was formed in April 2001 under the laws of Israel and ceased its operations
      during year 2004 due to lack of financing resources. The acquisition was
      accounted for as acquisition of group of assets that does not constitute a
      business and no goodwill was recognized.




The
      know-how purchased in the amount of $3,218,776 has not yet reached technological
      feasibility and has no alternative future use other than the technological
      indications for which it was in development. Accordingly, the entire amount
      representing the know-how was recorded as in-process research and development
      and accordingly was immediately expensed in the consolidated statement of
      operations on the acquisition date.




Following
      the Share Exchange, ModigeneTech became a wholly-owned subsidiary of Modigene
      Delaware. The financial statements of ModigeneTech were consolidated with the
      financial statements of Modigene Delaware commencing December 14,
      2005.




NOTE
      2:-  **SIGNIFICANT
      ACCOUNTING POLICIES**




**a.**  **Basis
      of presentation:**




The
      interim consolidated financial statements included herein have been prepared
      by
      the Company, without audit, pursuant to the rules and regulations of the
      Securities and Exchange Commission ("SEC") pursuant to Item 310 of Regulation
      S-B. Certain information and footnote disclosures normally included in financial
      statements prepared in accordance with accounting principles generally accepted
      in the United States of America ("US GAAP') have been condensed or omitted
      pursuant to such SEC rules and regulations. In the opinion of management, all
      adjustments (consisting of normal recurring adjustments) considered necessary
      for a fair presentation have been made. The results for these interim periods
      are not necessarily indicative of the results for the entire year. The
      accompanying financial statements should be read in conjunction with the
      December 31, 2006 financial statements and the notes thereto included in the
      Company's Current Report on Form 8-K filed May 14, 2007.






5




**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2007**


**(Unaudited)**





**NOTE
      2:-**  **SIGNIFICANT
      ACCOUNTING POLICIES** (continued)




**b.**  **Principles
      of consolidation:**




The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Modigene Delaware and ModigeneTech. Intercompany
      transactions and balances, have been eliminated upon consolidation.




**c.**  **Loss
      per share:**




Basic
      and
      diluted losses per share are presented in accordance with FASB issued SFAS
      no.
      128 "Earnings per share" ("SFAS 128"). Outstanding share options and warrants
      have been excluded from the calculation of the diluted loss per share because
      all such securities are antidilutive.




**NOTE
      3:-**  **SHAREHOLDERS'
      EQUITY**




**a.**  **Rights
      of common stock:**




The
      holders of common stock are entitled to one vote per share on all matters
      submitted to a vote of the stockholders, including the election of directors.
      Subject to any preferential rights of any outstanding series of preferred stock
      that may be created by the Company’s Board of Directors (the “Board”) from time
      to time, the common stockholders will be entitled to such cash dividends as
      may
      be declared from time to time by the Board from funds available. Subject to
      any
      preferential rights of any outstanding series of preferred stock, upon
      liquidation, dissolution or winding up of the Company, the common stockholders
      will be entitled to receive pro rata all assets available for distribution
      to
      such holders.




**b.**  **Rights
      of preferred stock:**




As
      of the
      date of the financial statements, no shares of preferred stock of the Company
      are designated or outstanding. The Board is vested with authority to designate
      shares of preferred stock into one or more series and to fix and determine
      the
      relative rights and preferences of the shares of any such series. Once
      authorized, the dividend or interest rates, conversion rates, voting rights,
      redemption prices, maturity dates and similar characteristics of preferred
      stock
      will be determined by the Board of Directors, without the necessity of obtaining
      approval of the Company’s stockholders.




**c.**  **Option
      plan:**




The
      Company has issued stock options to purchase 2,864,923 shares of common stock,
      of which options to purchase 2,244,923 shares have been granted under Modigene
      Delaware’s 2005 Stock Incentive Plan, which was assumed by the Company in the
      Merger, and options to purchase 620,000 shares have been granted under the
      Company’s 2007 Equity Incentive Plan. The Company accounts for stock based
      compensation using the fair value recognition provisions of SFAS No. 123R
      (revised 2004), “Share Based Payment”.




The
      fair
      value of each stock option is estimated based upon grant date fair value using
      the Black-Scholes option-pricing model with the following weighted average
      assumptions used: (i) annual dividends of $0.00, (ii) expected volatility of
      85%, (iii) risk-free interest rate of 4.67%, and (iv) expected average option
      lives of 6.36 years.




6




**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2007**


**(Unaudited)**


**NOTE
      3:-**  **SHAREHOLDERS'
      EQUITY** (continued)




**c.**  **Option
      Plan:** (continued)




A
      summary
      of the stock options granted under the 2005 and 2007 Plans is as
      follows:




June
                30, 2007Numberof
              Options
            
            
            Weighted
                average Exercise PriceOutstanding
                at the beginning of the period
            451,604
            
            $
            1.16Issued
                upon the acquisition of Modigene Delaware
            1,925,200
            
            $
            1.16Exercised
            (
                131,881)
            
            $
            0.001Issued
                in the private placement
            500,000
            
            $
            2.00Granted
            120,000
            
            $
            2.50Outstanding
                at the end of the period
            2,864,923
            
            $
            1.35Options
                exercisable
            2,294,923
            
            $
            1.25




The
                options outstanding as of June 30, 2007, have been separated into
                exercise
                prices, as follows:Remaining Weighted
              average contractuallifeExercise
                Price
            
            Options
                Outstanding
            
            (years)
            
            Options Exercisable$ -
            
            
            113,762
            
            
            8.46
            
            
            113,762$
                0.001
            
            
            281,308
            
            
            0.46
            
            
            281,308$
                0.004
            
            
            60,497
            
            
            0.46
            
            
            60,497$
                0.879
            
            
            375,418
            
            
            9.42
            
            
            375,418$
                1.50
            
            
            1,021,453
            
            
            6.50
            
            
            1,021,453$
                2.00
            
            
            500,000
            
            
            9.87
            
            
            -$
                2.25
            
            
            392,485
            
            
            5.35
            
            
            392,485$
                2.50
            
            
            120,000
            
            
            5.70
            
            
            50,0002,864,923
            
            
            6.64
            
            
            2,294,923





Weighted
      average fair values and average exercise prices of options at date of grant
      are
      as follows:




Weighted
                average****exercise
                price
            1.25Weighted
                average fair value on date of grant
            1.81





Stock
      based compensation expenses for the six months period ended June 30, 2007 and
      2006 were $548,000 and $454,361, respectively. Expenses for the three months
      period ended June 30, 2007 and 2006 were $294,642 and $145,613, respectively.
      Expenses for the period from May 31, 2005 (date of inception) to June 30, 2007
      were $4,760,594.


7




**MODIGENE
      INC. AND SUBSIDIARY**


**(A
      development stage company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JUNE
      30, 2007**


**(Unaudited)**




**NOTE
      3:-**  **SHAREHOLDERS'
      EQUITY** (continued)




**d.**  **Warrants:**




The
      Company issued warrants to purchase up to an aggregate of 2,166,667 shares
      of
      common stock to investors who purchased Units in the Offering.




The
      Company issued strategic investors options to purchase up to an aggregate of
      333,333 shares of common stock as a part of the Private Sale.




In
      addition, the Company issued warrants to purchase up to an aggregate of
      1,066,526 shares of common stock to broker/dealers who assisted with the
      Offering and the Private Sale.




Of
      these
      warrants, warrants to purchase up to an aggregate of 701,204 shares (the
“Replacement Warrants”) were issued in the Merger in exchange for a warrant to
      purchase up to 410,973 shares of Series A preferred stock of Modigene Delaware,
      which were originally issued by Modigene Delaware to broker/dealers who assisted
      Modigene Delaware with a private placement of its Series A preferred stock
      in
      2005. These Replacement Warrants have an exercise price of $0.88 per whole
      share, and are exerciseable in whole or in part, until the earlier of (i)
      December 14, 2015, and (ii) the third anniversary of the closing of a public
      offering of equity securities of the Company under the Securities Act of 1933,
      as amended (or any similar or successor act) at a per share price of at least
      $4.40 and in which the Company receives gross proceeds of at least
      $20,000,000.




The
      terms
      of the warrants, other than the Replacement Warrants, provide for the purchase
      of shares of common stock for five years at an exercise price of $2.50 per
      whole
      share.




All
      of
      the warrants, at the option of the holder, may be exercised by cash payment
      of
      the exercise price or by “cashless exercise.” A “cashless exercise” means that
      in lieu of paying the aggregate purchase price for the shares being purchased
      upon exercise of the warrants in cash, the holder will forfeit a number of
      shares underlying the warrants with a “fair market value” equal to such
      aggregate exercise price. The Company will not receive additional proceeds
      to
      the extent that warrants are exercised by cashless exercise.




8
  **ITEM
        2.**  **Management’s
        Discussion and Analysis or Plan of Operation.**





The
      management's discussion and analysis contains forward-looking statements that
      involve risks and uncertainties, such as statements of our plans, objectives,
      expectations and intentions. Any statements that are not statements of
      historical fact are forward-looking statements. When used, the words “believe,”
“plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like,
      and/or future tense or conditional constructions (“will,” “may,” “could,”
“should,” etc.), or similar expressions, identify certain of these
      forward-looking statements. These forward-looking statements are subject to
      risks and uncertainties that could cause actual results or events to differ
      materially from those expressed or implied by the forward-looking statements
      in
      this Quarterly Report. The Company's actual results and the timing of events
      could differ materially from those anticipated in these forward-looking
      statements as a result of several factors. The Company does not undertake any
      obligation to update forward-looking statements to reflect events or
      circumstances occurring after the date of this Quarterly Report.




As
      the
      result of the Merger, the Offering, the Private Sale and the Split-Off
      (collectively, the “Transactions”) and the change in business and operations of
      the Company from a design company to a biotechnology company, a discussion
      of
      the past financial results of the Company prior to the Merger is not pertinent,
      and the financial results of Modigene Delaware, the accounting acquirer, are
      considered the financial results of the Company on a going-forward
      basis.




**Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations**





The
      discussion and analysis of the Company’s financial condition and results of
      operations are based on the Company’s financial statements, which the Company
      has prepared in accordance with U.S. generally accepted accounting principles.
      The preparation of these financial statements requires the Company 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, as well as the reported revenues and expenses
      during the reporting periods. On an ongoing basis, the Company evaluates such
      estimates and judgments, including those described in greater detail below.
      The
      Company bases its estimates on historical experience and on various other
      factors that the Company believes are reasonable under the circumstances, the
      results of which form the basis for making judgments about the carrying value
      of
      assets and liabilities that are not readily apparent from other sources. Actual
      results may differ from these estimates under different assumptions or
      conditions.




**Results
      of Operation**




***Critical
      Accounting Policies***




The
      historical financial statements of the Company included with this Quarterly
      Report have been prepared in accordance with accounting principles generally
      accepted in the United States. The significant accounting policies followed
      in
      the preparation of the financial statements, on a consistent basis, are
      described below.




*Use
      of Estimates:* The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the amounts reported in the financial statements and accompanying notes.
      Actual results could differ from those estimates.




*Financial
      Statements in United States Dollars:*  **** The
      functional currency of the Company is, and of Modigene Delaware prior to the
      Merger has been, the U.S. dollar, as the U.S. dollar is the primary currency
      of
      the economic environment in which Modigene Delaware has operated and in which
      the Company expects to continue to operate in the foreseeable future. The
      majority of ModigeneTech's operations are currently conducted in Israel, and
      most of the Israeli expenses are paid in new Israeli schekels; however, most
      of
      the expenses are denominated and determined in U.S. dollars. Financing and
      investing activities, including loans and equity transactions, are made in
      U.S.
      dollars.




Accordingly,
      monetary accounts maintained in currencies other than the U.S. dollar are
      remeasured into U.S. dollars in accordance with Statement No. 52 of the
      Financial Accounting Standards Board (“FASB”), “Foreign Currency Translation.”
All transaction gains and losses from the remeasurement of monetary balance
      sheet items are reflected in the statements of operations as financial income
      or
      expenses, as appropriate.




9


*Principles
      of Consolidation:* The
      consolidated financial statements include the accounts of Modigene Delaware
      and
      its wholly-owned subsidiary, ModigeneTech. Intercompany transactions and
      balances have been eliminated upon consolidation.




*Cash
      Equivalents:* Cash
      equivalents include short-tem liquid investments that are readily convertible
      to
      cash with original maturities of three months or less.




*Property
      and Equipment:* Property
      and equipment are stated at cost, net of accumulated depreciation. Depreciation
      is calculated by the straight-line method over the estimated useful lives of
      the
      assets. The annual depreciation rates are as follows:




%Office
                furniture and equipment
            6Laboratory
                equipment
            15Computers
                and electronic equipment
            33Leasehold
                improvements
            25




The
      Company’s long-lived assets have been reviewed for impairment in accordance with
      Statement of Financial Accounting Standard No. 144, “Accounting for the
      Impairment or Disposal of Long-Lived Assets,” whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Recoverability of assets to be held and used is measured by a
      comparison of the carrying amount of an asset to the future undiscounted cash
      flows expected to be generated by the assets. If such assets are considered
      to
      be impaired, the impairment to be recognized is measured by the amount by which
      the carrying amount of the assets exceeds the fair value of the
      assets. **** Goodwill
      in the purchase of Modigene Delaware in the amount of $11,000,009 was impaired
      in the second quarter of 2007.




*Research
      and Development Costs and Participation:* Research
      and development (“R&D”) costs are expensed as they are incurred and consist
      of salaries, benefits and other personnel related costs, fees paid to
      consultants, clinical trials and related clinical manufacturing costs, license
      and milestone fees, and facilities and overhead costs. R&D expenses consist
      of independent R&D costs and costs associated with collaborative R&D and
      in-licensing arrangements. Participation from government for development of
      approved projects are recognized as a reduction of expenses as the related
      costs
      are incurred.




*Severance
      Pay:* The
      liability of ModigeneTech for severance pay is calculated pursuant to the
      Severance Pay Law in Israel, based on the most recent salary of the employees
      multiplied by the number of years of employment as of the balance sheet date
      and
      is presented on an undiscounted bases. ModigeneTech's employees are entitled
      to
      on month's salary for each year of employment or portion thereof. Severance
      expenses for the six month periods ending June 30, 2007 and the six month
      periods ending June 30, 2006 amounted to $ 6,364 and $0,
      respectively.




*Income
      Taxes:* The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standard No. 109, “Accounting for Income Taxes.” This statement
      prescribes the use of the liability method, whereby deferred tax assets and
      liability account balances are determined based on differences between financial
      reporting and tax bases of assets and liabilities and are measured using the
      enacted tax rates and laws that will be in effect when the differences are
      expected to reverse. The Company has provided a valuation allowance, if
      necessary, to reduce deferred tax assets to their estimated realizable
      value.





*Concentrations
      of Credit Risk:* Financial instruments that potentially subjected the Company, Modigene Delaware
      and ModigeneTech to concentrations of credit risk consist principally of cash
      and cash equivalents.




10


Cash
      and
      cash equivalents are invested in major banks in Israel and the United States.
      Such deposits in the United States are not insured. Management believes that
      the
      financial institutions that hold the Company’s investments are financially sound
      and, accordingly, minimal credit risk exists with respect to these
      investments.




The
      Company has no off-balance sheet concentration of credit risk such as foreign
      exchange contracts or other foreign hedging arrangements.




*Fair
      Value of Financial Instruments:* The
      following methods and assumptions were used by the Company in estimating its
      fair value disclosures for financial instruments: The carrying amounts of cash
      and cash equivalents, other receivables, trade payables and liabilities
      approximate their fair value due to the short-term maturity of such
      instruments.




*Royalty-bearing
      Grants:* Royalty-bearing grants from the Government of Israel for participation in
      development of approved projects are recognized as a reduction of expenses
      as
      the related costs are incurred. Funding is recognized at the time ModigeneTech
      is entitled to such grants, on the basis of the costs incurred.




Research
      and development grants received by ModigeneTech during the six month periods
      ending June 30, 2007 and the six month periods ending June 30, 2006 amounted
      to
      $92,964 and $0, respectively.




*Loss
      per Share:* Basic
      and diluted losses per share are presented in accordance with Statement of
      Financial Accounting Standard No. 128 “Earning per Share.” Outstanding share
      options and warrants have been excluded from the calculation of the diluted
      loss
      per share because all such securities are antidilutive. The total weighted
      average number of ordinary shares related to outstanding options and warrants
      excluded from the calculations of diluted loss per share were 4,115,588 and
      2,952,108 for the six month periods ending June 30, 2007 and the six month
      periods ending June 30, 2006, respectively.




***Revenue***




The
      Company has not generated any substantial revenue since its inception. To date,
      the Company has funded its operations primarily through grants from the Israeli
      Office of the Chief Scientist (the “OCS”), and the sale of equity securities. If
      the Company’s development efforts result in clinical success, regulatory
      approval and successful commercialization of the Company’s products, the Company
      could generate revenue from sales of its products.





***Research
      and Development Expense***




The
      Company expects its research and development expense to increase as it continues
      to develop its product candidates. Research and development expense consists
      of:





**·**
            internal
                costs associated with research and development
                activities;**·**
            payments
                made to third party contract research organizations, contract
                manufacturers, investigative sites, and consultants;**·**
            manufacturing
                development costs;**·**
            personnel-related
                expenses, including salaries, benefits, travel, and related costs
                for the
                personnel involved in the research and development;**·**
            activities
                relating to the advancement of product candidates through preclinical
                studies and clinical trials; and**·**
            facilities
                and other expenses, which include expenses for rent and maintenance
                of
                facilities, as well as laboratory and other
                supplies.





These
      costs and expenses are partially funded by grants received by the Company from
      the OCS. There can be no assurance that the Company will continue to receive
      grants from the OCS in amounts sufficient for its operations, if at
      all.




The
      Company expects its research and development expenditures to increase most
      significantly in the near future in connection with the ongoing production
      of
      its protein drug candidates. The Company intends to continue to hire new
      employees, in research and development, in order to meet its operation
      plans.




11




The
      Company has multiple research and development projects ongoing at any one time.
      The Company utilizes its internal resources, employees, and infrastructure
      across multiple projects and tracks time spent by employees on specific
      projects. The Company believes that significant investment in product
      development is a competitive necessity and plans to continue these investments
      in order to realize the potential of its product candidates. In the six month
      periods ending June 30, 2006 and June 30, 2007, the Company incurred a gross
      research and development expense in the aggregate of $291,629, and $640,787,
      respectively. In the three month periods ending June 30, 2006 and June 30,
      2007,
      the Company incurred a gross research and development expense in the aggregate
      of $169,876, and $412,392, respectively. The successful development of the
      Company’s product candidates is subject to numerous risks, uncertainties, and
      other factors. Beyond the next twelve months, the Company cannot reasonably
      estimate or know the nature, timing and costs of the efforts that will be
      necessary to complete the remainder of the development of, or the period, if
      any, in which material net cash inflows may commence from the Company’s product
      candidates or any of the Company’s other development efforts. This is due to the
      numerous risks and uncertainties associated with the duration and cost of
      clinical trials which vary significantly over the life of a project as a result
      of differences arising during clinical development, including:




**·**
              completion
                  of such preclinical and clinical trials;**·**
              receipt
                  of necessary regulatory approvals;**·**
              the
                  number of clinical sites included in the trials;**·**
              the
                  length of time required to enroll suitable patients;**·**
              the
                  number of patients that ultimately participate in the
                  trials;**·**
              adverse
                  medical events or side effects in treated patients;**·**
              lack
                  of comparability with complementary technologies;**·**
              obtaining
                  capital necessary to fund operations, including the research and
                  development efforts; and**·**
              the
                  results of clinical trials.




The
      Company’s expenditures are subject to additional uncertainties, including the
      terms and timing of regulatory approvals, and the expense of filing,
      prosecuting, defending and enforcing any patent claims or other intellectual
      property rights. The Company may obtain unexpected results from its clinical
      trials. The Company may elect to discontinue, delay or modify clinical trials
      of
      some product candidates or focus on others. A change in the outcome of any
      of
      the foregoing variables with respect to the development of a product candidate
      could mean a significant change in the costs and timing associated with the
      development of that product candidate. For example, if the United States Food
      and Drug Administration (“FDA”) or other regulatory authorities were to require
      the Company to conduct clinical trials beyond those which it currently
      anticipates will be required for the completion of the clinical development
      of a
      product candidate, or if the Company experiences significant delays in
      enrollment in any of its clinical trials, the Company could be required to
      expend significant additional financial resources and time on the completion
      of
      clinical development. Drug development may take several years and millions
      of
      dollars in development costs. If the Company does not obtain or maintain
      regulatory approval for its products, its financial condition and results of
      operations will be substantially harmed.




***General
      and Administrative Expense***




General
      and administrative expense consists primarily of salaries and other related
      costs, including stock-based compensation expense, for persons serving in the
      Company’s executive and administration functions. Other general and
      administrative expense includes facility-related costs not otherwise included
      in
      research and development expense, and professional fees for legal and accounting
      services. The Company expects that its general and administrative expenses
      will
      increase as it adds additional personnel and becomes subject to the reporting
      obligations applicable to public companies in the United States. In the six
      month periods ending June 30, 2006 and June 30, 2007, the Company incurred
      a
      gross general and administrative expense in the aggregate of $667,404, and
      $822,320, respectively. In the three month periods ending June 30, 2006 and
      June
      30, 2007, the Company incurred a gross general and administrative expense in
      the
      aggregate of $376,690, and $588,059, respectively.





***Financial
      Expense and Income***




Financial
      expense and income consists of the following:




**·**
              interest
                  earned on the Company’s cash and cash
                  equivalents;**·**
              interest
                  expense on short term bank credit and loan; and**·**
              expense
                  or income resulting from fluctuations of the New Israeli Shekel,
                  which a
                  portion of the Company’s assets and liabilities are denominated in,
                  against the United States Dollar and other foreign
                  currencies.




In
      the six month periods ending June 30, 2006 and June 30, 2007, the Company
      incurred a gross financial expense (income) in the aggregate of $550, and
      ($59,654), respectively. In the three month periods ending June 30, 2006 and
      June 30, 2007, the Company incurred a gross financial income in the aggregate
      of
      $1,007, and $83,480, respectively.





***Stock-based
      Compensation***




On
      January 1, 2006, the Company adopted Statement of Financial Accounting Standard
      No. 123 (revised 2004), “Stock-Based Payment” (“SFAS 123(R)”), which requires
      the measurement and recognition of compensation expense for all stock-based
      payment awards made to employees and directors, including employee stock options
      under the Company’s stock plan, based on estimated fair values. SFAS(R)
      superseded the Company’s previous accounting under Accounting Principles Board
      Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) for
      periods beginning in fiscal 2006.




SFAS
      123(R) requires companies to estimate the fair value of equity-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service periods in the Company’s consolidated
      statement of operations. Prior to the adoption of SFAS 123(R), the Company
      accounted for equity-based awards to employees and directors using the intrinsic
      value method, in accordance with APB 25, as allowed under Statement of Financial
      Accounting Standard No. 123, “Accounting for Stock-Based Compensation (“SFAS
      123”).




The
      Company adopted SFAS 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006.
      Under this transition method, compensation cost recognized in the year ended
      December 31, 2006 includes: (a) compensation cost for all stock-based payments
      granted prior to, but not yet vested as of January 1, 2006, based on the grant
      date fair value estimated in accordance with the original provisions of SFAS
      123, and (b) compensation cost for all stock-based payments granted subsequent
      to January 1, 2006, based on the grant date fair value estimated in accordance
      with the provisions of SFAS 123(R). As required by the modified prospective
      method, results for prior periods have not been restated.





The
      Company recognized compensation expenses for the value of these awards, based
      on
      the straight line method over the requisite service period of each
      award.




12




The
      Company estimates the fair value of stock options granted using the
      Black-Scholes-Merton option-pricing model. For the six a month period ending
      June 30, 2007 and June 30, 2006, the Company’s stock-based compensation expenses
      were $78,775 and $70,590, respectively.





The
      Company applies SFAS 123 and EITF 96-18, “Accounting for Equity Instruments that
      are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling, Goods or Services” (“EITF 96-18”) with respect to options and warrants
      issued to non-employees.





SFAS
      123
      and EITF 96-18 require the use of an option valuation model to measure the
      fair
      value of the options at the grant date.





For
      the
      six a month period ending June 30, 2007 and June 30, 2006, the Company’s
      stock-based compensation expenses were $469,225 and $224,410,
      respectively.




***Revenues***




There
      were no revenues for the six and three month periods ending June 30, 2007 and
      June 30, 2006.





***Research
      and Development Expenses***




In
      the
      six month periods ending June 30, 2006 and June 30, 2007, the Company incurred
      a
      gross research and development expense in the aggregate of $291,629, and
      $640,787, respectively. In the three month periods ending June 30, 2006 and
      June
      30, 2007, the Company incurred a gross research and development expense in
      the
      aggregate of $169,876, and $412,392, respectively. The increase
      resulted primarily from significant development expenses related to salaries
      and
      related consulting and materials associated with the development of EPO-CTP,
      hGH-CTP and IFN-Beta-CTP. The increase was partially offset by $92,964 in grant
      funds received by the Company from the OCS.




***General
      and Administrative Expenses***




** In
      the
      six month periods ending June 30, 2006 and June 30, 2007, the Company incurred
      a
      gross general and administrative expense in the aggregate of $667,404, and
      $822,320, respectively. In the three month periods ending June 30, 2006 and
      June
      30, 2007, the Company incurred a gross general and administrative expense in
      the
      aggregate of $376,690, and $588,059, respectively. The difference resulted
      primarily from public-company associated expenses that were added to the normal
      course of general and administrative (“G&A”) expenses.




***Financial
      Expenses and Income***




In
      the
      six month periods ending June 30, 2006 and June 30, 2007, the Company incurred
      a
      gross financial expense (income) in the aggregate of $550, and ($59,654),
      respectively. In the three month periods ending June 30, 2006 and June 30,
      2007,
      the Company incurred a gross financial income in the aggregate of $1,007, and
      $83,480, respectively. The increase resulted primarily from the higher balance
      of cash and cash equivalents held by the Company during the second quarter
      of
      2007.




**Cash
      Flows**




In
      the
      six month periods ending June 30, 2006 and June 30, 2007, net cash used in
      operations was approximately $1,195,829, and $670,527, respectively. The
      difference resulted primarily from increase in R&D expenses and G&A
      expenses.




In
      the
      six month periods ending June 30, 2006 and June 30, 2007, net cash used in
      investing activities was approximately $132,530, and ($13,991), respectively.
      The difference resulted primarily from a decrease in equipment
      purchases.




13




In
      the
      six month periods ending June 30, 2006 and June 30, 2007, net cash provided
      by
      financing activities was approximately $12,133, and $13,410,340, respectively.
      The difference resulted primarily from proceeds from issuance of common shares
      to investors.




**Funding
      Requirements**




The
      Company expects to incur losses from operations for the foreseeable future.
      The
      Company expects to incur increasing research and development expenses, including
      expenses related to the hiring of personnel and additional clinical trials.
      The
      Company expects that general and administrative expenses will also increase
      as
      The Company expands its finance and administrative staff, adds infrastructure,
      and incurs additional costs related to being a public company in the United
      States upon the consummation of the Merger, including the costs of directors'
      and officers' insurance, investor relations programs, and increased professional
      fees. Our future capital requirements will depend on a number of factors,
      including the continued progress of its research and development of product
      candidates, the timing and outcome of clinical trials and regulatory approvals,
      the costs involved in preparing, filing, prosecuting, maintaining, defending,
      and enforcing patent claims and other intellectual property rights, the status
      of competitive products, the availability of financing, and our success in
      developing markets for our product candidates.




We
      believe that our existing cash and cash equivalents and short-term investments
      will be sufficient to enable us to fund our operating expenses and capital
      expenditure requirements at least for the next twenty four months. We have
      based
      this estimate on assumptions that may prove to be wrong or subject to change,
      and we may be required to use our available capital resources sooner than we
      currently expect. Because of the numerous risks and uncertainties associated
      with the development and commercialization of its product candidates, we are unable to estimate the amounts of increased capital outlays
      and operating expenditures associated with our current and anticipated clinical
      trials. Our future capital requirements will depend on many factors, including
      the progress and results of our clinical trials, the duration and cost of
      discovery and preclinical development, and laboratory testing and clinical
      trials for our product candidates, the timing and outcome of regulatory review
      of our product candidates, the number and development requirements of other
      product candidates that we pursue, and the costs of commercialization
      activities, including product marketing, sales, and distribution. We do not
      anticipate that we will generate product revenues for at least the next several
      years. In the absence of additional funding, we expect continuing operating
      losses to result in increases in our cash used in operations over the next
      several years. To the extent that our capital resources are insufficient to
      meet
      our future capital requirements, we will need to finance our future cash needs
      through public or private equity offerings, debt financings, or corporate
      collaboration and licensing arrangements. We currently do not have any
      commitments for future external funding. We may need to raise additional funds
      more quickly if one or more of our assumptions proves to be incorrect or if
      we
      choose to expand our product development efforts more rapidly than we presently
      anticipate, and we may decide to raise additional funds even before we need
      them
      if the conditions for raising capital are favorable. We may seek to sell
      additional equity or debt securities or obtain a bank credit facility. The
      sale
      of additional equity or debt securities may result in dilution to our
      shareholders. The incurrence of indebtedness would result in increased fixed
      obligations and could also result in covenants that would restrict our
      operations. Additional equity or debt financing, grants, or corporate
      collaboration and licensing arrangements may not be available on acceptable
      terms, if at all. If adequate funds are not available, we may be required to
      delay, reduce the scope of or eliminate our research and development programs,
      reduce our planned commercialization efforts or obtain funds through
      arrangements with collaborators or others that may require us to relinquish
      rights to certain product candidates that we might otherwise seek to develop
      or
      commercialize independently.





**Effects
      of Inflation and Currency Fluctuations**




Inflation
      generally affects the Company by increasing its cost of labor and clinical
      trial
      costs. The Company does not believe that inflation has had a material effect
      on
      its results of operations during the six month periods ending June 30, 2006
      and
      June 30, 2007.




Currency
      fluctuations could affect the Company by increased or decreased costs mainly
      for
      goods and services acquired outside of Israel. The Company does not believe
      currency fluctuations have had a material effect on its results of operations
      during the six month periods ending June 30, 2006 and June 30,
      2007.





14




**Arrangements**
  The
        Company had no off-balance sheet arrangements as of June 30, 2006 or June
        30,
        2007. See Note 7 of the financial statements of this Quarterly Report for
        a full
        description of certain contingent royalty payments.
  **Recently
        Issued Accounting Pronouncements**
  On
        December 16, 2004, the FASB issued SFAS(R). Generally, the approach in SFAS
        123(R) is similar to the approach described in SFAS 123. However, SFAS 123
        permitted, but did not require, share-based payments to employees to be
        recognized based on their fair values while SFAS 123(R) requires all share-based
        payments to employees to be recognized based on their fair values.
        SFAS 123(R) also revises, clarifies and expands guidance in several areas,
        including measuring fair value, classifying an award as equity or as a liability
        and attributing compensation cost to reporting periods.
 
 SFAS
        123(R) requires nonpublic companies that used the minimum value method of
        measuring equity share options and similar instruments for either recognition
        or
        pro forma disclosure purposes under SFAS 123 to adopt its requirements
        prospectively to new awards and to awards modified, repurchased, or cancelled
        after the required effective date. Those entities shall continue to account
        for
        any portion of awards outstanding at the date of initial application using
        the
        accounting principles originally applied to those awards (either the minimum
        value method under SFAS 123 or the provisions of APB 25 and its related
        interpretive guidance).
 
 The
        impact of adoption of SFAS 123(R) cannot be predicted at this time because
        it
        will depend on levels of share-based payments granted in the future. However,
        because outstanding awards are to be accounted for based on principles
        originally applied to them (unless modified, repurchased, or cancelled after
        the
        required effective date) no resulting accounting effect is expected to such
        awards.
 
 The
        new
        standard set forth in SFAS 123(R) became effective for the Company in the
        first
        fiscal year beginning after December 15, 2005.
  In
        July
        2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
        clarifies the accounting for income taxes by prescribing the minimum recognition
        threshold a tax position is required to meet before being recognized in the
        financial statements. FIN 48 utilizes a two-step approach for evaluating
        tax
        positions. Recognition (step one) occurs when an enterprise concludes that
        a tax
        position, based solely on its technical merits, is more-likely-than-not to
        be
        sustained upon examination. Measurement (step two) is only addressed if step
        one
        has been satisfied (i.e., the position is more-likely-than-not to be sustained).
        Under step two, the tax benefit is measured as the largest amount of benefit,
        determined on a cumulative probability basis that is more-likely-than-not
        to be
        realized upon ultimate settlement.
 
 FIN
        48
        applies to all tax positions related to income taxes subject to the Financial
        Accounting Standard Board Statement No. 109, “Accounting for Income Taxes.” This
        includes tax positions considered to be “routine” as well as those with a high
        degree of uncertainty.
 
 FIN
        48
        has expanded disclosure requirements, which include a tabular roll forward
        of
        the beginning and ending aggregate unrecognized tax benefits as well as specific
        details related to tax uncertainties for which it is reasonably possible
        the
        amount of unrecognized tax benefit will significantly increase or decrease
        within 12 months. These disclosures are required at each annual reporting
        period
        unless a significant change occurs in an interim period.
 
 FIN
        48 is
        effective for fiscal years beginning after December 15, 2006. The cumulative
        effect of applying FIN 48 will be reported as an adjustment to the opening
        balance of retained earnings.
 
 The
        Company is currently evaluating the effect of the adoption of FIN 48 on its
        financial statements.
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standard
        No.
        159, “The Fair Value Option for Financial Assets and Financial Liabilities”
(“SFAS 159”). SFAS 159 permits entities to choose to measure many financial
        assets and financial liabilities at fair value. Unrealized gains and losses
        on
        items for which the fair value option has been elected are reported in earnings.
        As applicable to the Company, this statement will be effective as of the
        year
        beginning January 1, 2008. The Company is currently evaluating the impact
        that
        the adoption of SFAS 159 would have on its financial statements and
        disclosures.
 
 15
  **ITEM
        3.**  **Controls
        and Procedures.**
 
 Evaluation
        of Disclosure Controls and Procedures
  Disclosure
        controls and procedures are designed to ensure that information required
        to be
        disclosed in the reports filed or submitted under the Exchange Act is recorded,
        processed, summarized and reported, within the time period specified in the
        SEC's rules and forms. Disclosure controls and procedures include, without
        limitation, controls and procedures designed to ensure that information required
        to be disclosed in the reports filed under the Exchange Act is accumulated
        and
        communicated to management, including our Chief Executive Officer and Principal
        Financial Officer, to allow timely decisions regarding required disclosure.
        As
        of the end of the period covered by this report, we carried out an evaluation,
        under the supervision and with the participation of our Chief Executive Officer
        and Principal Financial Officer, of the effectiveness of the design and
        operation of our disclosure controls and procedures. Based upon and as of
        the
        date of that evaluation, our Chief Executive Officer and Principal Financial
        Officer concluded that our disclosure controls and procedures are effective
        to
        ensure that information required to be disclosed in the reports our files
        and
        submits under the Exchange Act is recorded, processed, summarized and reported
        as and when required.
  Changes
        in Internal Control over Financial Reporting
  There
        were no changes in our internal control over financial reporting identified
        in
        connection with our evaluation of these controls as of the end of the period
        covered by this report that could have affected those controls subsequent
        to the
        date of the evaluation referred to in the previous paragraph, including any
        correction action with regard to deficiencies and material
        weakness.
  16
  **PART
        II - OTHER INFORMATION**
 
 **ITEM
        1.**  **Legal
        Proceedings.**
 
 Not
        Applicable
 
 **ITEM
        2.**  **Unregistered
        Sales of Equity Securities and Use of Proceeds.**
 
 Not
        Applicable.
 
 **ITEM
        3.**  **Defaults
        Upon Senior Securities.**
 
 Not
        Applicable
 
 **ITEM
        4.**  **Submission
        of Matters to a Vote of Security Holders.**
 
 Not
        Applicable
 
 **ITEM
        5.**  **Other
        Information.**
 
 Effective
        August 7, 2007 the Company entered into an at will employment agreement with
        Robert Mauer as the Company’s Principal Financial Officer. The contract provides
        for a monthly salary of $3,666.67. This arrangement is further described
        on the
        Company’s Current Report on Form 8-K filed August 8, 2007.
 
 **ITEM
        6.**  **Exhibits.**
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation
                  S-B
                  (Filed herewith).
 31.2
              Certification
                  of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation
                  S-B
                  (Filed herewith). 32.1
              Certification of Chief Executive Officer pursuant
                to Item
                601(b)(32) of Regulation S-B. (Filed herewith). 32.2
              Certification of Principal Financial Officer pursuant
                to
                Item 601(b)(32) of Regulation S-B. (Filed
                herewith).
 
 17
 
 **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
 
 MODIGENE
                  INC.Date August 14, 2007
              /s/ Abraham HavronAbraham
                  HavronChief
                  Executive Officer
  18