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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB



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|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



| ̈ | 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: 000-51610



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AVICENA GROUP, INC.

(Exact Name of Small Business as Specified in its Charter)



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|                         |  |                                        
|------------------------ |  | ---------------------------------------
|Delaware                 |  | 04-3195737                             
|(State of Incorporation) |  | (I.R.S. Employer Identification Number)

228 Hamilton Avenue, 3rdFloor Palo Alto CA 94301

(Address
of Principal Executive Offices)

(415) 397-2880

(Issuers Telephone Number, including Area Code)



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Check whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x

Number of shares outstanding of the registrants Common Stock as of July 31, 2006:

Common Stock, par value $0.001
                                       
 51,082,616 shares outstanding

Transitional small business disclosure
format:    YES ̈NO  x



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##### Table of Contents

Avicena Group, Inc.

Quarter Ended June 30, 2006

Table of Contents



|                                                                                                                                                                        |  |     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                        |  | Page
|                                                                                                                                                                        | 
|PART I  FINANCIAL INFORMATION                                                                                                                                          |  | 3   
|                                                                                                                                                                        | 
|Item 1. Unaudited Financial Statements                                                                                                                                  |  | 3   
|                                                                                                                                                                        | 
|Balance Sheet  June 30, 2006 (unaudited) and December 31, 2005                                                                                                         |  | 4   
|                                                                                                                                                                        | 
|Condensed Statements of Operations  Quarters ending June 30, 2006 and June 30, 2005 (unaudited) andsix-month periods ended June 20, 3006 and June 30, 2005 (unaudited) |  | 5   
|                                                                                                                                                                        | 
|Condensed Statement of Cash Flows  Quarters ending June 30, 2006 and June 30, 2005 (unaudited) andsix-month periods ended June 20, 3006 and June 30, 2005 (unaudited)  |  | 6   
|                                                                                                                                                                        | 
|Condensed Statement of Changes in Stockholders Deficits  Six-month period ending June 30, 2006 and December 31, 2005 (unaudited)                                      |  | 7   
|                                                                                                                                                                        | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                           |  | 14  
|                                                                                                                                                                        | 
|Item 3. Controls and Procedures                                                                                                                                         |  | 17  
|                                                                                                                                                                        | 
|PART II  OTHER INFORMATION                                                                                                                                             |  | 18  
|                                                                                                                                                                        | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                     |  | 18  
|                                                                                                                                                                        | 
|Item 6. Exhibits                                                                                                                                                        |  | 18  
|                                                                                                                                                                        | 
|Signatures                                                                                                                                                              |  | 19  



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------



3



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##### Table of Contents

AVICENA GROUP, INC.

Condensed Balance Sheets



|                                                                                                        |  |               |             |   |                  |   |            |  
|------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ---------- | -
|                                                                                                        |  | June 30, 2006 |             |   | December 31,2005 |  
|                                                                                                        |  | (unaudited)   |             |   |                  |  
|ASSETS                                                                                                  |  |               |             |   |                  |   |            |  
|Current assets:                                                                                         |  |               |             |   |                  |   |            |  
|Cash and cash equivalents                                                                               |  | $             | 223,265     |   |                  | $ | 619,042    |  
|Accounts receivable                                                                                     |  |               | 20,948      |   |                  |   | 59,036     |  
|Inventory                                                                                               |  |               | 2,467       |   |                  |   | 2,766      |  
|Prepaid expenses                                                                                        |  |               | 79,138      |   |                  |   | 101,357    |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total current assets                                                                                    |  |               | 325,818     |   |                  |   | 782,201    |  
|Equipment, net                                                                                          |  |               | 4,574       |   |                  |   | 6,129      |  
|Deferred financing costs                                                                                |  |               | 2,134,092   |   |                  |   |           |  
|Deposits                                                                                                |  |               | 9,335       |   |                  |   | 9,335      |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total assets                                                                                            |  |               | 2,473,819   |   |                  |   | 797,665    |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                          |  |               |             |   |                  |   |            |  
|Current liabilities:                                                                                    |  |               |             |   |                  |   |            |  
|Accounts payable                                                                                        |  |               | 1,519,068   |   |                  |   | 619,948    |  
|Accrued expenses                                                                                        |  |               | 103,919     |   |                  |   | 161,499    |  
|Note payable to a shareholder                                                                           |  |               | 75,000      |   |                  |   | 75,000     |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total current liabilities                                                                               |  |               | 1,697,987   |   |                  |   | 856,447    |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Long term liabilities:                                                                                  |  |               |             |   |                  |   |            |  
|Note payable                                                                                            |  |               | 400,000     |   |                  |   |           |  
|Warrants                                                                                                |  |               | 2,558,938   |   |                  |   |           |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total long term liabilities                                                                             |  |               | 2,958,938   |   |                  |   |           |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total liabilities                                                                                       |  |               | 4,656,925   |   |                  |   | 856,447    |  
|                                                                                                        |  |               |             |   |                  |   |            |  
|Commitments                                                                                             |  |               |             |   |                  |   |            |  
|Stockholders equity (deficit):                                                                         |  |               |             |   |                  |   |            |  
|Preferred stock; $0.001 par value, 5,000,000 shares authorized; no shares issued or outstanding         |  |               |            |   |                  |   |           |  
|Common stock; $0.001 par value, 100,000,000 shares authorized; 51,082,616 shares issued and outstanding |  |               | 51,083      |   |                  |   | 51,083     |  
|Additional paid-in capital                                                                              |  |               | 8,620,858   |   |                  |   | 8,435,559  |  
|Stock subscription                                                                                      |  |               | 20,000      |   |                  |   |           |  
|Deferred compensation                                                                                   |  |               |            |   |                  |   | (141,622   | )
|Accumulated deficit                                                                                     |  |               | (10,875,047 | ) |                  |   | (8,403,802 | )
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total stockholders deficit                                                                             |  |               | (2,183,106  | ) |                  |   | (58,782    | )
|                                                                                                        |  |               |             |   |                  |   |            |  
|Total liabilities and stockholders deficit                                                             |  | $             | 2,473,819   |   |                  | $ | 797,665    |  
|                                                                                                        |  |               |             |   |                  |   |            |  

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



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##### Table of Contents

AVICENA GROUP, INC.

Condensed Statements of Operations

(unaudited)



|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|-------------------------------------------------------------- |  | ------------------- | ---------- | - | ----------------- | - | ---------- | ------------- |  | - | ------------- | - |  | - | ---------- | -
|                                                               |  | Three months ending |            |   | Six months ending |  
|                                                               |  | June 30, 2006       |            |   | June 30, 2005     |   |            | June 30, 2006 |  |   | June 30, 2005 |  
|Revenue                                                        |  | $                   | 89,319     |   |                   | $ | 111,807    |               |  | $ | 180,747       |   |  | $ | 303,247    |  
|Cost of revenue                                                |  |                     | 15,281     |   |                   |   | 11,609     |               |  |   | 27,409        |   |  |   | 31,677     |  
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|Gross margin                                                   |  |                     | 74,038     |   |                   |   | 100,198    |               |  |   | 153,338       |   |  |   | 271,570    |  
|Research and development                                       |  |                     | 175,191    |   |                   |   | 110,044    |               |  |   | 396,482       |   |  |   | 228,600    |  
|Selling and marketing expenses                                 |  |                     | 271,246    |   |                   |   | 158,493    |               |  |   | 449,331       |   |  |   | 282,543    |  
|General and administrative expenses                            |  |                     | 628,366    |   |                   |   | 395,963    |               |  |   | 1,094,881     |   |  |   | 1,119,468  |  
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|                                                               |  |                     | 1,074,803  |   |                   |   | 664,500    |               |  |   | 1,940,694     |   |  |   | 1,630,611  |  
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|Loss from operations                                           |  |                     | (1,000,765 | ) |                   |   | (564,302   | )             |  |   | (1,787,356    | ) |  |   | (1,359,041 | )
|Loss on change in fair value of warrants                       |  |                     | (267,512   | ) |                   |   |           |               |  |   | (267,512      | ) |  |   |           |  
|Interest expense                                               |  |                     | (417,887   | ) |                   |   | (16,285    | )             |  |   | (416,377      | ) |  |   | (16,972    | )
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|Net loss                                                       |  | $                   | (1,686,164 | ) |                   | $ | (580,587   | )             |  | $ | (2,471,245    | ) |  | $ | (1,376,013 | )
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|Net loss per common share  basic and diluted                  |  | $                   | (0.03      | ) |                   | $ | (0.03      | )             |  | $ | (0.05         | ) |  | $ | (0.08      | )
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  
|Weighted average common shares outstanding  basic and diluted |  |                     | 51,082,616 |   |                   |   | 21,174,333 |               |  |   | 51,082,616    |   |  |   | 17,473,559 |  
|                                                               |  |                     |            |   |                   |   |            |               |  |   |               |   |  |   |            |  

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



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AVICENA GROUP, INC.

Condensed Statements of Cash Flows

(unaudited)



|                                                                            |  |                   |            |   |               |   |            |  
|--------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ------------- | - | ---------- | -
|                                                                            |  | Six months ending |           
|                                                                            |  | June 30, 2006     |            |   | June 30, 2005 |  
|Cash flows from operating activities:                                       |  |                   |            |   |               |   |            |  
|Net loss                                                                    |  | $                 | (2,471,245 | ) |               | $ | (1,376,013 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                   |            |   |               |   |            |  
|Depreciation expense                                                        |  |                   | 1,555      |   |               |   | 1,943      |  
|Stock compensation expense                                                  |  |                   | 63,585     |   |               |   | 591,019    |  
|Amortization of commitment fee                                              |  |                   | 148,643    |   |               |   |           |  
|Loss on change in fair value of warrants                                    |  |                   | 267,512    |   |               |   |           |  
|Amortization of beneficial conversion feature                               |  |                   | 263,336    |   |               |   |           |  
|Investment banking fee to be paid in stock                                  |  |                   | 20,000     |   |               |   |           |  
|Investment banking fee to be paid in warrants                               |  |                   | 8,691      |   |               |   |           |  
|Changes in assets and liabilities                                           |  |                   |            |   |               |   |            |  
|Accounts receivable                                                         |  |                   | 38,088     |   |               |   | (29,925    | )
|Inventory                                                                   |  |                   | 299        |   |               |   | 131        |  
|Other current assets                                                        |  |                   | 22,219     |   |               |   | (7,836     | )
|Accounts payable                                                            |  |                   | 899,120    |   |               |   | 563,009    |  
|Accrued expenses                                                            |  |                   | (57,580    | ) |               |   | (8,587     | )
|                                                                            |  |                   |            |   |               |   |            |  
|Net cash used in operating activities                                       |  |                   | (795,777   | ) |               |   | (266,259   | )
|                                                                            |  |                   |            |   |               |   |            |  
|Cash flows from investing activities                                        |  |                   |            |   |               |   |            |  
|Purchases of equipment                                                      |  |                   |           |   |               |   | (8,667     | )
|Deposits                                                                    |  |                   |           |   |               |   | (4,000     | )
|                                                                            |  |                   |            |   |               |   |            |  
|Net cash used in investing activities                                       |  |                   |           |   |               |   | (12,667    | )
|                                                                            |  |                   |            |   |               |   |            |  
|Cash flows from financing activities                                        |  |                   |            |   |               |   |            |  
|Proceeds from issuances of common and preferred stock                       |  |                   |           |   |               |   | 129,650    |  
|Costs related to a planned issuance of securities                           |  |                   |           |   |               |   | (480,409   | )
|Exercise of stock options                                                   |  |                   |           |   |               |   | 10,000     |  
|Advances from stockholder                                                   |  |                   |           |   |               |   | 20,000     |  
|Increase in notes payable                                                   |  |                   | 400,000    |   |               |   | 500,000    |  
|                                                                            |  |                   |            |   |               |   |            |  
|Net cash provided by financing activities                                   |  |                   | 400,000    |   |               |   | 179,241    |  
|                                                                            |  |                   |            |   |               |   |            |  
|Net decrease in cash and cash equivalents                                   |  |                   | (395,777   | ) |               |   | (99,685    | )
|Cash and cash equivalents, beginning of period                              |  |                   | 619,042    |   |               |   | 102,423    |  
|                                                                            |  |                   |            |   |               |   |            |  
|Cash and cash equivalents, end of period                                    |  | $                 | 223,265    |   |               | $ | 2,738      |  
|                                                                            |  |                   |            |   |               |   |            |  
|Supplemental disclosure of cash flow information                            |  |                   |            |   |               |   |            |  
|Cash paid during the period for:                                            |  |                   |            |   |               |   |            |  
|Interest                                                                    |  | $                 | 3,965      |   |               | $ | 3,575      |  
|                                                                            |  |                   |            |   |               |   |            |  
|Income Taxes                                                                |  | $                 |           |   |               | $ |           |  
|                                                                            |  |                   |            |   |               |   |            |  
|Supplemental disclosure of noncash financing activities                     |  |                   |            |   |               |   |            |  
|Issuance of Common Stock for financial advisor fees                         |  | $                 |           |   |               | $ | 300,000    |  
|                                                                            |  |                   |            |   |               |   |            |  
|Commitment fee paid with warrants                                           |  | $                 | 2,282,735  |   |               | $ |           |  
|                                                                            |  |                   |            |   |               |   |            |  

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





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AVICENA GROUP, INC.

Condensed Statement of Changes in Stockholders Deficit

(Unaudited)



|                                                                                   |  |            |  |                          |        |  |                   |           |                      |  |   |                    |  |   |                           |   |  |   |             |   |  |   |            |  
|---------------------------------------------------------------------------------- |  | ---------- |  | ------------------------ | ------ |  | ----------------- | --------- | -------------------- |  | - | ------------------ |  | - | ------------------------- | - |  | - | ----------- | - |  | - | ---------- | -
|                                                                                   |  | Common     |  | AdditionalPaid InCapital |        |  | StockSubscription |           | DeferredCompensation |  |   | AccumulatedDeficit |  |   | TotalStockholders'Deficit |  
|                                                                                   |  | Shares     |  | Amount                   |        |  |                   |           |                     
|Balance at December 31, 2005                                                       |  | 51,082,616 |  | $                        | 51,083 |  | $                 | 8,435,559 |                      |  | $ |                   |  | $ | (141,622                  | ) |  | $ | (8,403,802  | ) |  | $ | (58,782    | )
|                                                                                   |  |            |  |                          |        |  |                   |           |                      |  |   |                    |  |   |                           |   |  |   |             |   |  |   |            |  
|Compensation expense associated with vesting of restricted stock and stock options |  |           |  |                          |       |  |                   | 63,585    |                      |  |   |                   |  |   |                          |   |  |   |            |   |  |   | 63,585     |  
|Reclassification of deferred compensation upon adoption of FAS 123 (R)             |  |           |  |                          |       |  |                   | (141,622  | )                    |  |   |                   |  |   | 141,622                   |   |  |   |            |   |  |   |           |  
|Beneficial conversion feature of convertible note payable                          |  |           |  |                          |       |  |                   | 263,336   |                      |  |   |                   |  |   |                          |   |  |   |            |   |  |   | 263,336    |  
|Stock to be issued to investment banker                                            |  |           |  |                          |       |  |                   |          |                      |  |   | 20,000             |  |   |                          |   |  |   |            |   |  |   | 20,000     |  
|Net Loss                                                                           |  |           |  |                          |       |  |                   |          |                      |  |   |                    |  |   |                          |   |  |   | (2,471,245  | ) |  |   | (2,471,245 | )
|                                                                                   |  |            |  |                          |        |  |                   |           |                      |  |   |                    |  |   |                           |   |  |   |             |   |  |   |            |  
|Balance at June 30, 2006                                                           |  | 51,082,616 |  | $                        | 51,083 |  | $                 | 8,620,858 |                      |  | $ | 20,000             |  | $ |                          |   |  | $ | (10,875,047 | ) |  | $ | (2,183,106 | )
|                                                                                   |  |            |  |                          |        |  |                   |           |                      |  |   |                    |  |   |                           |   |  |   |             |   |  |   |            |  

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





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AVICENA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying condensed financial statements of Avicena Group, Inc. (the Company) are prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to these rules
and regulations. These condensed financial statements should be read in conjunction with the audited financial statements and footnotes related thereto for the year ended December 31, 2005. The unaudited financial statements, in our opinion,
include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2006 and the results of the operations and cash flows for the three and six months ended
June 30, 2006, and 2005. The results of the operations for such interim periods are not necessarily indicative of the results to be achieved for the full year.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the December 31, 2005 financial statements, the Companys significant
operating losses and working capital deficit raise substantial doubt about its ability to continue as a going concern without additional equity. The funding negotiations described in Note 1 to the December 31, 2005 financial statements were
consummated are discussed more fully in Note 7, Convertible Promissory Note, below.

Certain prior period accounts have been reclassified
to conform with current presentation.

2. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123(R) (FAS 123(R)),
Share-Based Payment. FAS 123(R) revises FASB Statement No. 123 (FAS 123), Accounting for Stock-Based Compensation. Also, FAS 123(R) supersedes Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows.

FAS 123(R)
requires companies to expense the fair value of employee stock options and other forms of stock-based compensation. Specifically, FAS 123(R) requires companies to (i) use fair value to measure stock-based compensation awards and (ii) cease
using the intrinsic value method of accounting under APB 25 that resulted in no expense for many awards of stock options for which the exercise price of the option equaled the price of the underlying stock at the grant date. In addition, FAS 123(R)
retains the modified grant date model from FAS 123 in that compensation cost is measured at the grant date fair value of the award and adjusted to reflect actual forfeitures and the outcome of certain conditions. The fair value of an award is not
re-measured after its initial estimation on the grant date, except in certain cases. FAS 123(R)s transition provisions provide a number of alternatives to address implementation issues and to increase the comparability of compensation cost.

The Company adopted the Modified Prospective Application (MPA) method, without restatement of prior interim
periods, on January 1, 2006. Under the MPA method without restatement approach, the Company recognizes compensation cost for (1) awards that were granted or modified after the fiscal year beginning after December 15, 1994,
(2) any portion of awards that have not vested by January 1, 2006, and (3) any outstanding liability awards.

Compensation
cost for the portion of awards for which the requisite service has not been rendered that are outstanding at January 1, 2006 will be recognized using the measurement data and attribution method used in the Companys FAS 123 pro forma
disclosures as those services are received after January 1, 2006.

FAS 123(R) also requires that the benefits associated with the tax
deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required



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under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date.
These future amounts cannot be estimated because they depend on when the employees exercise stock options, among other things.

3. Stock-Based
Compensation

The Company has a stock-based employee compensation plan. In February 2005, the Companys Board of Directors approved
a resolution offering all holders of the Companys 10,750,908 outstanding stock options at December 31, 2004, plus holders of 309,653 options issued in January 2005, the opportunity to exercise their options on a cashless basis (that is,
without the payment of the previously applicable exercise price), with 0.9 fully paid shares of common stock to be issued for each share subject to the outstanding options. Holders of 10,560,682 of the stock options chose to exercise their options
on a cashless basis in the twelve month period ended December 31, 2005. As a result of the modification made to the options, the Company recorded a non-cash charge of $313,400 related to the employee options and a non-cash charge of $156,100
related to non-employee options during the twelve months ended December 31, 2005.

As discussed in Note 2 above, the Company adopted
FAS 123(R) on January 1, 2006. Prior to the Companys adoption of FAS 123(R), the Company accounted for equity based compensation under the provisions and related interpretations of APB Opinion No. 25.

Stock Incentive Plan

The 1999 Stock
Incentive Plan was adopted by the Companys Board of Directors and approved by the Company in September 1999. The purpose of the 1999 Plan is to advance the interests and enhance the value of the Company by:



| |  |  | Aligning the economic interests of the Companys employees, consultants, non-employee directors and advisors with those of the Companys stockholders;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | inducing individuals of outstanding ability and potential to join and/or remain with the Company; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | providing employees, consultants, non-employee directors and advisors with an additional incentive to contribute to the Companys success.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

The Companys 1999 Plan permits grants of incentive stock options, as defined by Section 422 of the Code, and non-qualified stock options. The
Companys 1999 Plan also permits grant of shares of common stock, subject to the Companys right to repurchase all or some of the shares at their issue price or other stated or formula price in the event that conditions specified by the
Board in the award are not satisfied prior to the end of the restriction period established by the Board. As of June 30, 2006 and December 31, 2005, 3,434,067 shares remain available for future grants under the 1999 Plan.

The 1999 Plan is administered by the Board or a committee designated by the Board. The Board has discretion as to which employees, consultants,
non-employee directors and advisors will receive awards. The Board also establishes the terms, conditions and limitations of each award, including the number of shares of common stock underlying each option, the exercise price and the date or dates
upon which the option vests and becomes exercisable. The Board determines the effect of a participants disability, death, retirement, authorized leave of absence or other change in the employment or other status on an award and the extent to
which the participant, the participants legal representative, conservator, guardian or designated beneficiary may exercise rights under the award. Except as otherwise determined by the committee, all awards are nontransferable. The Board also
has full power to construe and interpret the 1999 Plan and the awards granted under the 1999 Plan, to establish rules and regulations necessary or advisable for its administration, and to determine the terms of and amend the award agreements
evidencing the grants.

The Board may amend the 1999 Plan in any respect.

The Board may terminate the 1999 Plan at any time. However, no termination or amendment will affect the rights of participants under options previously
granted without the participants consent. Unless



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previously terminated, the 1999 Plan will terminate on September 7, 2009 and no options will be granted after that date.

As discussed in Note 2 to the financial statements above, the Company adopted the Modified Prospective Application (MPA) method
of FAS 123(R), without restatement of prior interim periods, on January 1, 2006.

As a result of adopting FAS 123(R), the Company
recorded stock based compensation of $0 and $1,513 for the three and six month periods ended June 30, 2006 for stock based awards to employees and directors. This represents an incremental charge of $0.00 per basic and diluted share for the
three and six months ended June 30, 2006 as compared to the Companys previous method of accounting under APB 25, with no impact on cash flows. The calculated value of employee and director stock options was determined using the
Black-Scholes option pricing model with the following assumptions: an assumed risk-free interest rate of 4  4.23%, a volatility of 50%, an expected life of 5  10 years, and a dividend yield of 0% for the six months ended June 30,
2005. The Companys stock was approved for quotation on the Over-the-Counter Bulletin Board and began trading on March 24, 2006. Based on this short trading history, the Company determined the expected volatility based on public small
company capitalization stocks with significant risk (scientific or otherwise), which tend to have a relatively high volatility. The Company will re-evaluate this method as additional historical price data is obtained. No cash dividends have been
declared on the Companys common stock since the Companys inception and the Company does not anticipate paying cash dividends over the expected term of the option. The expected term represents the weighted average period the option is
expect to be outstanding and is based on the historical exercise behavior of employees. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with maturity dates equivalent to the expected
term of the option.

The weighted average fair value of options granted during the six months ended June 30, 2005 was$0.07. No
additional options were granted during the six months ending June 30, 2006. All options outstanding at June 30, 2006 are fully vested.

The adoption of FAS 123(R) had no effect upon cash flow from operations.

Had compensation cost for the Companys
equity-based compensation plans been determined based on the fair value at the grant dates for awards under those plans in accordance with the provisions of FAS 123, the Companys net loss and net loss per share for the six-month period ended
June 30, 2005, would have been as follows:



|                                                            |  |                     |          |   |            |            |  
|----------------------------------------------------------- |  | ------------------- | -------- | - | ---------- | ---------- | -
|                                                            |  | Three Months        |          |   | Six Months |           
|                                                            |  | Ended June 30, 2005 |         
|Net loss, as reported                                       |  | $                   | (580,587 | ) |            | (1,376,013 | )
|Equity-based compensation included in net loss, as reported |  |                     | 70,962   |   |            | 591,019    |  
|Equity-based compensation under FAS 123                     |  |                     | (71,034  | ) |            | (451,439   | )
|                                                            |  |                     |          |   |            |            |  
|Pro forma net loss                                          |  | $                   | (580,659 | ) |            | (1,236,433 | )
|                                                            |  |                     |          |   |            |            |  
|Reported net loss per share:                                |  |                     |          |   |            |            |  
|Basic                                                       |  | $                   | (0.02    | ) |            | (0.08      | )
|Diluted                                                     |  | $                   | (0.02    | ) |            | (0.08      | )
|Pro forma net loss per share:                               |  |                     |          |   |            |            |  
|Basic                                                       |  | $                   | (0.02    | ) |            | (0.07      | )
|Diluted                                                     |  | $                   | (0.02    | ) |            | (0.07      | )

No options were exercised during the six month period ending June 30, 2006 or in the
comparable period in 2005.



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##### Table of Contents

The effects of applying FAS 123(R) in this proforma disclosure are not indicative of future amounts. FAS
123(R) does not apply to awards before 1996 and additional awards in future years are anticipated.

Stock Options

A summary of the changes in stock options outstanding under the Companys equity-based compensation plans during the six month period ended
June 30, 2006 is presented below:



|                                         |  |                 |  |                              |     |                                              |      |                         |   |          
|---------------------------------------- |  | --------------- |  | ---------------------------- | --- | -------------------------------------------- | ---- | ----------------------- | - | ---------
|                                         |  | NumberofOptions |  | WeighedAverageExercise Price |     | WeighedAverageRemainingContract Term (Years) |      | AggregateIntrinsicValue
|Options outstanding at December 31, 2005 |  | 246,926         |  | $                            | .03 |                                              | 4.75 |                         | $ | 8,283    
|Granted                                  |  | 0               |  |                              |     |                                              |      |                         |   |          
|Exercised                                |  | 0               |  |                              |     |                                              |      |                         |   |          
|Canceled                                 |  | 0               |  |                              |     |                                              |      |                         |   |          
|                                         |  |                 |  |                              |     |                                              |      |                         |   |          
|Options outstanding at June 30, 2006     |  | 246,926         |  | $                            | .03 |                                              | 4.26 |                         | $ | 1,290,377
|                                         |  |                 |  |                              |     |                                              |      |                         |   |          
|Options exercisable at June 30, 2006     |  | 246,926         |  | $                            | .03 |                                              | 4.26 |                         | $ | 1,290,377

There is no unrecognized compensation cost related to non-vested options, as all outstanding
options have vested.

4. Restricted Stock

In 2005, the Companys Board of Directors authorized 3,957,855 additional shares of restricted stock to be issued. These shares were issued both inside and outside the 1999 Plan. The shares were valued between $.10 and $.14 per share.



|                                                |  |                
|----------------------------------------------- |  | ---------------
|                                                |  | Numberof Shares
|Restricted Stock nonvested at December 31, 2005 |  | 3,957,855      
|Granted                                         |  | 0              
|Vested                                          |  | 1,916,428      
|Canceled                                        |  | 0              
|                                                |  |                
|Restricted Stock nonvested at June 30, 2006     |  | 2,041,427      
|                                                |  |                
|Restricted Stock vested at June 30, 2006        |  | 2,014,428      

The amount of stock compensation expense related to restricted stock amortized during the six
month period ended June 30, 2006 was $62,072. The unamortized portion, that is, the difference between the original deferred expense of $400,785 and the amortized portion recorded as an expense is now reflected on the equity section of the
balance sheet as a reduction to additional paid-in capital. It is no longer classified as unearned compensation as a result of the adoption of FAS 123(R).

During the six months ended June 30, 2006, the Company did not issue any additional shares of restricted stock to employees, directors or consultants of the Company.

5. Net Loss Per Share



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The computation of basic and diluted loss per common share are based upon weighted average number of
common shares outstanding and potentially dilutive securities. Potentially dilutive securities include stock options, convertible debt and warrants.

Common stock equivalents (which during the three and six months ended June 30, 2006 consisted of options to purchase 246,926 common shares, debt convertible into 133,333 common shares, warrants to purchase
666,667 common shares) were not considered in the computation of dilutive net loss per share because inclusion of such shares would have an anti-dilutive effect on net loss per share.

6. Market for Registrants Common Equity And Related Stockholder Matters

The shares of common
stock of The Avicena Group Inc. commenced trading on the Over the Counter Bulletin Board (symbol AVGO) on March 24, 2006. No cash dividends were paid on common shares during 2005 or the six months ending June 30, 2006.

7. Convertible Promissory Note

On April 21,
2006, the Company entered into a convertible promissory note in the amount of up to two million dollars and a registration rights agreement with The Biotechnology Ventures (III) Capital Trust, an accredited investor (the Investor). The
Company received proceeds of $400,000 from the note as of June 30, 2006. As long as no default has occurred, the Company, upon providing the Investor seventy two hours notice, can draw down funds in multiples of $200,000 dollars. Draw downs may
only be made if the Companys cash balance is less than $300,000. However, the Investor also has the right to advance the full remaining available balance of the facility at any time, upon its sole discretion.

The note bears interest at 8% and matures on March 31, 2009. The Investor may, at its option, elect to convert all or any portion of outstanding
principal balance into shares of common stock of the Company at a conversion rate of $3.00 per share, subject to adjustment in case of stock dividend, stock split, any recapitalization, reorganization, reclassification, consolidation or merger.
Interest on the note which is due and payable quarterly, commencing on July 1, 2006, is also convertible into common stock at the election of the Investor.

Pursuant to the note, on the date of the first advance under the note, the Company issued a warrant to the Investor to purchase up to 666,667 shares of common stock at an exercise price of $3.00 per share (the
Warrant), subject to adjustment as described below, at any time prior to the close of business on April 20, 2009. The exercise price and/or the number of shares of common stock issuable upon the exercise of the Warrant is subject to
adjustments in case of a stock dividend, stock split, any recapitalization, reorganization, reclassification, consolidation or merger, to which the Company is a party, or sale of all or substantially all of the Companys assets to another
person or other transaction that is effected in such a way that holders of common stock are entitled to receive stock, securities or assets with respect to or in exchange for common stock. The Company may at any time during the term of the Warrant
reduce the then current exercise price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

Under the registration rights agreement, within 120 days after Investors conversion of an aggregate of at least $1,500,000 in unpaid accrued interest and principal pursuant to the note, the Company is obligated to file with the SEC a
shelf registration statement covering the resale of the common stock and common stock issued upon exercise of the Warrant. The Company will use its commercially reasonable efforts to cause the registration statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but in any event not later than the earlier of (a) the 180th calendar day following the closing date and (b) the fifth trading day following the date on which the Company
is notified by the SEC that the registration statement will not be reviewed or is no longer subject to further review and comments. The Company is also obligated to use its commercially reasonable efforts to keep such registration statement
continuously effective under the Securities Act of 1933, as amended, until the date which is two years after the closing date or such later date when all registrable securities covered by the registration statement have been sold pursuant to the
registration statement or an exemption from the registration requirements of the Securities Act or may be sold pursuant to Rule 144(k) under the Securities Act.



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The Company accounted for the convertible notes in accordance with the provisions of Emerging Issues Task
Force Issue (EITF) 98-5 Accounting for Convertible Securities with Beneficial Conversion Features, (EITF 98-5), EITF 00-27 Application of EITF 98-5 to Certain Convertible Instruments, Accordingly, the
Company recorded, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date and the effective conversion price embedded
in the note, equal to $263,336. Debt discounts under these arrangements are recognized as interest expense though the date of earliest conversion. As the debt is immediately convertible, the Company recorded an interest charge of $263,336 during the
six months ended June 30, 2006.

The Company accounted for the features of the Warrant under EITF 00-19 Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock. Because the registration rights agreement does not specify a settlement alternative if the Company is unable to register the underlying
shares, the Company classified the Warrant as a liability. The Warrant was initially valued, using the Black-Scholes model, at $2,282,735. In accordance with EITF 00-19, the Warrant has been marked-to-market each reporting report. This
mark-to-market resulted in recognition of unrealized gain of $267,512 during the six months ended June 30, 2006.

The Warrant was
issued to the Investor to secure a firm commitment to advance proceeds under the note. As a result, the fees paid were recorded as a commitment fee and are being amortized over the life of the note. The company recorded additional interest expense
of $148,643 during the six months ended June 30, 2006 to amortize the commitment fee.

During the six months ended June 30, 2006,
the Company also recorded a $20,000 investment banking fee to be paid in stock and an $8,691 investment banking fee to be paid in warrants.

8.
Subsequent Event

On July 6, 2006, upon direction of the Investor described in Note 7, the Company cancelled the warrant it issued
to the Investor and reissued a warrant containing the same terms to the Investors designee, Doane, Phillips, Young LLP (in trust).



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
|------- | --------------------------------------------------------------------------------------------

You should read the following discussion and analysis in conjunction with (1) our financial statements, including the notes thereto, included in
this Report, and (2) the Risk Factors section of our Form 10-KSB and our Registration Statement on Form SB-2 filed on November 14, 2005. Some of the information contained in this Report may contain forward-looking statements
within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended (the Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). This information may involve
known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by the use of the words may, will, should,
expect, anticipate, estimate, believe, intend or project or the negative of these words or other variations on these words or comparable terminology. These forward-looking
statements are based on assumptions that may be incorrect, and there can be no assurance that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied
by the forward-looking statements as a result of various factors. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Overview

We have incurred net
losses since our inception and expect to incur substantial and increasing losses for the next several years as we expand our research and development activities and move our product candidates into later stages of development. As of June 30,
2006, we had an accumulated deficit of $10,875,047. We have funded our losses to date through the sale of equity securities, the issuance of notes payable, and advances from stockholders.

Results of OperationsThree and Six months ended June 30, 2006 and 2005

Our revenues decreased to $89,319 and $180,747 in the three and six month periods, respectively, ending June 30, 2006 from $111,807 and $303,247 in the corresponding 2005 periods. The three and six month
decreases were $22,488 and $122,500, or 20% and 40% decreases, respectively, over the same 2005 periods. Decreases in both periods were primarily due to lower demand by Estée Lauder (EL).

Our cost of revenues increased to $15,281 in the three month period ending June 30, 2006 from $11,609 in the corresponding 2005 period. This $3,672
or 32% increase occurred because many of our costs of revenue such as warehousing are semi-fixed. For the six month period ending June 30, 2006, our cost of revenue decreased to $27,409. This represents a decrease of $4,268 or 13% from the
corresponding 2005 period figure of $31,677. Although these changes are large on a percentage basis, we believe they are immaterial on an absolute basis.

As a result of the lower revenues, our gross margin decreased to 83% and 85% in the three and six month periods, respectively, ending June 30, 2006 from 90% and 90% versus the comparable periods in 2005.

Our research and development expenses consist of costs incurred for drug development and clinical activities. These costs include in-kind
support, such as providing drugs or placebos for trials and financial support, as well as legal expenses for patents. Research and development expenses increased to $175,191 and $396,482 in the three and six month periods, respectively, ending
June 30, 2006 from $110,044 and $228,600 in the corresponding 2005 periods. The three and six month increases were $65,147 and $167,882, or 59% and 73% increases, respectively, over the same 2005 periods. These increases were primarily due to
increased spending on clinical trials and increased legal expenses related to keeping existing U.S. and foreign patents in force and reviewing new products for patent protection.

Selling and marketing expenses increased to $271,246 and $449,331 in the three and six month periods, respectively, ending June 30, 2006 from
$158,493 and $282,543 in the corresponding 2005 periods. The three and six month increases were $112,753 and $166,788, or 71% and 59% increases,



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respectively, over the same 2005 periods. The increases resulted mainly from increased salaries and employee benefits, as well as incremental operating
costs, related to the hiring of two new marketing employees. Additional marketing costs are also attributable to engagement of a public relations firm, and the expenses related to the development of a new product, Nurigene, a proprietary skin
care line utilizing creatine that we seek to distribute on our website and through television home shopping channels. We anticipate that we will begin to market Nurigene during the first quarter of 2007.

General and administrative expenses consist mainly of salaries and benefits, consulting fees, legal and accounting fees, insurance, facilities and
utilities. Total general and administrative expenses increased to $628,366 in the three months ending June 30, 2006 from $395,963 in 2005. This represents an increase of $232,403 or 59% versus the corresponding 2005 period. The primary reason
for the increase in 2006 compared to 2005 was an increase in legal and accounting fees associated with the Company being publicly held.

Total general and administrative expenses decreased to $1,094,881 in the six months ending June 30, 2006 from $1,119,468 in the corresponding 2005 period. This represents a decrease of $24,587 versus the corresponding 2005 period. The
primary reason for the decrease in 2006 compared to 2005 was a decrease in non-cash stock compensation expense during 2006 vs the comparable six month period in 2005.

Interest expense increased to $417,887 and $416,377 in the three and six month periods, respectively, ending June 30, 2006 from $16,285 and $16,972 in the corresponding 2005 periods. The three and six month
increases were $401,602 and $399,405, respectively, over the same 2005 periods. The Company accounted for the features of the warrant under EITF 00-19 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock. The company recorded Non-cash interest expense of $148,643 during the six months ended June 30, 2006 to amortize the value of the commitment fee; an additional Non-cash interest expense charge of $263,336 to expense
the beneficial conversion feature of the Biotechnology Ventures note

The Company also recorded a $267,512 charge during the three months
ended June 30, 2006 to mark the warrant liability associated with the convertible promissory note to market at June 30, 2006.

Liquidity and
Capital ResourcesSix months ended June 30, 2006 and 2005

At June 30, 2006, we had available cash of $223,265 compared
to $ 619,042 at December 31, 2005 and $2,738 at June 30, 2005. As further described in Note 7 to the financial statements, the Company entered into a convertible promissory note in the amount of up to $2,000,000 (two million dollars) with
The Biotechnology Ventures (III) Capital Trust on April 21, 2006. As of June 30, 2006, we have received proceeds of $400,000 from this note.

Cash used in operations was $795,777 for the six months ended June 30, 2006, compared with $266,259 for the same period in 2005. This increase in negative cash flow of $529,518 was primarily caused by a
significant increase in cash operating expenses, as described above. For the six months ended June 30, 2006 versus the same period in 2005, research and development expenses increased by $167,882 and sales and marketing expenses increased by
$166,788. Although general and administrative expenses in total decreased by $24,587 in the six months ended June 30, 2006 compared to the same period in 2005, $527,434 of that decrease was attributable to reduced non-cash stock compensation
expense in 2006. All other general and administrative expenses increased by $502,847 in the six months ended June 30, 2006 versus the same period in 2005.

Cash provided by financing activities for the six months ended June 30, 2006 was $400,000 compared with $179,241 for the same period in 2005.

Working Capital.Negative working capital increased by $1,297,923 to $1,372,169 at June 30, 2006, from $74,246 at December 31, 2005. The increase in negative working capital was primarily due to our
increased cash operating expenses as described above.

Our actual cash needs might vary materially from those now planned because of a
number of factors, including:



| |  |  | The scope, rate of progress and costs of our product development activities;
| | - |  | ----------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Changes in our research and development plans;
| | - |  | ----------------------------------------------



| |  |  | Future clinical trial results;
| | - |  | ------------------------------



| |  |  | The terms and timing of any collaborative, licensing and other arrangements that we have or may establish;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | The cost and timing of regulatory approvals;
| | - |  | --------------------------------------------



| |  |  | The costs of commercializing any of other product candidates;
| | - |  | -------------------------------------------------------------



| |  |  | Costs to license-in or otherwise acquire any technology; and
| | - |  | ------------------------------------------------------------



| |  |  | The cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
| | - |  | ------------------------------------------------------------------------------------------------------------------

In any event, we are currently seeking to raise substantial additional capital to fund research and development and operations. We expect to finance
future cash needs through the sale of equity securities and possibly strategic collaborations or debt financing or through other sources that may be dilutive to existing stockholders or require us to relinquish rights to some of our technologies,
product candidates or products under development that we would otherwise seek to develop or commercialize ourselves.

As we seek to raise
additional money to fund operations, funding may not be available on acceptable terms, or at all. If we are unable to raise additional funds when needed, we may not be able to market products as planned or continue development and regulatory
approval of products, or could be required to delay, scale back or eliminate some or all of our research and development programs. If we raise additional funds through equity sales, these sales may be highly dilutive to existing investors.

Failure to consummate additional financing such as additional draws on the Companys convertible promissory note or raise additional
capital would likely force the Company to curtail operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Material Off-Balance Sheet Arrangements

The Company has no material commitments for capital
expenditures and no off-balance sheet arrangements.



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##### Table of Contents

|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------

EVALUATION OF DISCLOSURE CONTROLS AND
PROCEDURES

Under the supervision and with the participation of the Companys Chief Executive Officer and Acting Chief Financial
Officer (its principal executive officer and principal accounting and financial officer), the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Based on that evaluation, the Chief
Executive Officer and Acting Chief Financial Officer have concluded that these disclosure controls and procedures as of June 30, 2006 are effective in controlling and reporting the financial results of the Companys operations, except as
discussed below. However, the closing process for the quarter ended June 30, 2006 and the limited review performed by our independent registered public accounting firm, did identify several material adjustments primarily related to the
companys recent financing completed during the quarter involving the complex accounting treatment associated with the implementation of EITF 00-19 for warrant accounting. The Company believes the adjustments stem from the complexity of the
EITF 00-19 accounting, the Companys recent status as a public company and ongoing capital constraints. The Company intends to engage additional independent professional accounting support to augment its existing part time financial staff and
improve internal controls.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There were no changes in the Companys internal controls and procedures over financial reporting during the quarter ended June 30, 2006 that
have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.



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##### Table of Contents

PART IIOTHER INFORMATION



|ITEM 2. | UNREGISTERED SALES OF EQUITY
|------- | ----------------------------

On April 21,
2006, the Company issued a convertible promissory note in the amount of up to two million dollars to The Biotechnology Ventures (III) Capital Trust (the Investor). Pursuant to the note, the Company can draw down funds in multiples of
$200,000 dollars. The Investor may, at its option, elect to convert all or any portion of outstanding principal balance into shares of common stock of the Company at a conversion rate of $3.00 per share, subject to adjustment. The note bears
interest at a rate of 8% and matures on March 31, 2009.

Pursuant to the note, the Company issued a warrant to the Investor on
May 10, 2006 to purchase up to 666,667 shares of Common Stock at an exercise price of $3.00 per share, subject to adjustment, at any time prior to the close of business on April 20, 2009. The exercise price and the number of shares of
common stock issuable upon the exercise of the warrant is subject to adjustments in case of a stock dividend, stock split, recapitalization, merger or other similar transaction to which the Company is a party.

Upon director from the Investor, on July 6, 2006, the Company cancelled the warrant it issued to the Investor and issued a warrant with the same
terms to the Investors designee, Doane, Phillips, Young LLP (in trust).

The issuance of unregistered securities to the Investor, and
later to the Investors designee, were exempt from registration under Section 4(2) of the Securities Act. The investors had access to sufficient information regarding the Company so as to make an informed investment decision. Based upon
representations made by the investors, the Company had a reasonable basis to believe that each investor was an accredited investor as defined in Regulation D of the 1933 Act and otherwise had the requisite sophistication to make an
investment in the Companys securities. The Company did not engage in any advertising or general solicitation in connection with this sale.



|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Rule 13a-14(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                   
|     | 
|31.2 |  | Rule 13a-14(a) Certification of Acting Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            
|     | 
|32   |  | Rule 13a-14(b) Certification of Chief Executive Officer and Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|                      |  |  |  |                                                                                          
|--------------------- |  |  |  | -----------------------------------------------------------------------------------------
|                      |  |  |  | Avicena Group, Inc.                                                                      
|                      |  | 
|Date: August 21, 2006 |  |  |  | /s/ Mike Sullivan                                                                        
|                      |  |  |  | Mike Sullivan Acting Chief Financial Officer (Principal Financial and Accounting Officer)
|                      |  | 
|Date: August 21, 2006 |  |  |  | /s/ Belinda Tsao Nivaggioli                                                              
|                      |  |  |  | Belinda Tsao Nivaggioli Chief Executive Officer (Principal Executive Officer)            



19