UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
10-Q
  x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934FOR
      THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period
  from___________to____________
  Commission
File Number:0-21092
  OCTuS,
Inc.
 (Exact
name of registrant as specified in its charter)
  Nevada
                  33-0013439(State
      or other jurisdiction ofincorporation
      or organization)
                  (I.R.S.
      EmployerIdentification
      No.)
  803
      Second Street Suite 303, Davis,
  California 95616(Address
      of principal executive offices)
  (530)
564-0200
 (Issuer’s
Telephone Number)
 
 803
Second Street, Suite 303
 Davis,
CA 95616
 (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 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.x  Yes  o  No
  Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
website, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such
files).  Yes oNo
o
 Indicate
by check mark whether the registrant is a large accelerated file, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
                o
                Accelerated
      filer
                oNon-accelerated
      filer
                o
                Smaller
      reporting company
                x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).o
Yes   x  No
  As of November 18,
2009, the registrant had 44,288,072 shares of common stock
outstanding.
   1
 
 TABLE
OF CONTENTS
 
 PART I.
      FINANCIAL INFORMATION
                  PageItem
      1.     Financial StatementsConsolidated
      Balance Sheets as of September 30, 2009 and December 31, 2008
      (Unaudited)
                  3Consolidated
      Statements of Operations for the Three Months and Nine Months Ended
      September 30, 2009 and 2008 (Unaudited)
                  4Consolidated
      Statements of Cash Flows for the Nine Months Ended September 30, 2009 and
      2008 (Unaudited)
                  5Notes
      to Consolidated Financial Statements (Unaudited)
                  6Item
      2.    Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
                  11Item
      3.    Quantitative and Qualitative Disclosures About
      Market Risk
                  13Item
      4.    Controls and Procedures
                  13PART
      II. OTHER INFORMATIONItem
      1.    Legal Proceedings
                  14Item
      1A. Risk Factors
                  14Item
      2.    Unregistered Sales of Equity Securities and Use
      of Proceeds
                  14Item
      3.    Defaults upon Senior Securities
                  15Item
      4.    Submission of Matters to a Vote of Security
      Holders
                  15Item
      5.    Other Information
                  15Item
      6.    Exhibits
                  17SIGNATURES
                  18
  2
  PART
1. FINANCIAL INFORMATION
  Item
1.  Financial Statements
  OCTuS,
INC.
 CONSOLIDATED
BALANCE SHEETS
 (Unaudited)
  September
      30,
                          2009
                        
                        
                        December
      31,
                          2008ASSETSCURRENT
      ASSETSCash
                        
                        $
                        9,203
                        
                        
                        $
                        -Total
      current assets
                        
                        
                        9,203
                        
                        
                        
                        -OTHER
      ASSETSDeposits
                        
                        
                        2,275
                        
                        
                        
                        -TOTAL
      ASSETS
                        
                        $
                        11,478
                        
                        
                        $
                        -LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                        
                        $
                        106,505
                        
                        
                        $
                        32,151Accounts
      payable and accrued liabilities - related parties
                        
                        
                        224,624
                        
                        
                        
                        43,711Notes
      payable
                        
                        
                        5,000
                        
                        
                        
                        -Notes
      payable - related parties
                        
                        
                        10,000
                        
                        
                        
                        -Convertible
      notes, current portion
                        
                        
                        80,000
                        
                        
                        
                        441,853Total
      current liabilities
                        
                        
                        426,129
                        
                        
                        
                        520,715LONG
      TERM LIABILITIESConvertible
      notes, net of unamortized discount of $96,944 and $0,
      respectively
                        
                        
                        403,595
                        
                        
                        
                        -Total
      long-term liabilities
                        
                        
                        403,595
                        
                        
                        
                        -TOTAL
      LIABILITIES
                        
                        
                        829,724
                        
                        
                        
                        520,715Commitments
      and contingencies
                        
                        
                        -
                        
                        
                        
                        -STOCKHOLDERS'
      DEFICITSeries
      A preferred stock, $0.001 par value, 300,000 sharesauthorized,
      no shares issued or outstanding
                        
                        
                        -
                        
                        
                        
                        -Series
      B preferred stock, $0.001 par value, 910,000 sharesauthorized,
      no shares issued or outstanding
                        
                        
                        -
                        
                        
                        
                        -Series
      C 6% cumulative preferred stock, $0.001 par value,250,000
      shares authorized, no shares issued and outstanding
                        
                        
                        -
                        
                        
                        
                        -Undesignated  preferred
      stock, $0.001 par value,540,000
      shares authorized,  no shares issued or
    outstanding
                        
                        
                        -
                        
                        
                        
                        -Common
      stock,  $0.001 par value, 100,000,000 shares
      authorized43,918,072
      and 13,437,072 shares issued and outstanding, respectively
                        
                        
                        43,918
                        
                        
                        
                        13,437Additional
      paid-in capital
                        
                        
                        23,280,973
                        
                        
                        
                        22,857,472Accumulated
      deficit
                        
                        
                        (24,143,137
                        )
                        
                        
                        (23,391,624
                        )Total
      stockholders' deficit
                        
                        
                        (818,246
                        )
                        
                        
                        (520,715
                        )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                        
                        $
                        11,478
                        
                        
                        $
                        -
  The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
  3
  OCTuS,
INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
 (Unaudited)
  THREE
      MONTHS ENDED
                              SEPTEMBER
      30,
                            
                            
                            NINE
      MONTHS ENDED
                              SEPTEMBER
      30,2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Revenues
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -General
      and administrative expenses
                            
                            
                            268,505
                            
                            
                            
                            8,494
                            
                            
                            
                            716,971
                            
                            
                            
                            30,833Loss
      from operations
                            
                            
                            (268,505
                            )
                            
                            
                            (8,494
                            )
                            
                            
                            (716,971
                            )
                            
                            
                            (30,833
                            )Interest
      expense
                            
                            
                            (22,761
                            )
                            
                            
                            (8,821
                            )
                            
                            
                            (34,542
                            )
                            
                            
                            (26,096
                            )Net
      loss
                            
                            $
                            (291,266
                            )
                            
                            $
                            (17,315
                            )
                            
                            $
                            (751,513
                            )
                            
                            $
                            (56,929
                            )Net
      loss per common share - basic and diluted
                            
                            $
                            (0.01
                            )
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.02
                            )
                            
                            $
                            (0.00
                            )Weighted
      average shares outstanding - basic and diluted
                            
                            
                            43,695,803
                            
                            
                            
                            13,437,072
                            
                            
                            
                            37,675,493
                            
                            
                            
                            13,437,072
  The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
  4
  OCTuS,
INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
 (Unaudited)
  2009
                    
                    
                    2008OPERATING
      ACTIVITIESNet
      loss
                    
                    $
                    (751,513
                    )
                    
                    $
                    (56,929
                    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Share-based
      compensation
                    
                    
                    353,983
                    
                    
                    
                    -Note
      discount amortization
                    
                    
                    3,056
                    
                    
                    
                    
                    -Change
      in operating assets and liabilities:Increase
      in accounts payable and accrued liabilities
                    
                    
                    74,353
                    
                    
                    
                    13,806Increase
      in accounts payable and accrued liabilities - related
    parties
                    
                    
                    216,599
                    
                    
                    
                    26,097Net
      cash used in operating activities
                    
                    
                    (103,522
                    )
                    
                    
                    (17,026
                    )INVESTING
      ACTIVITIESDeposits
      paid
                    
                    
                    (2,275)
                    
                    
                    
                    -Net
      cash used by investing activities
                    
                    
                    (2,275)
                    
                    
                    
                    -FINANCING
      ACTIVITIESProceeds
      from convertible notes payable
                    
                    
                    100,000
                    
                    
                    
                    -Proceeds
      from notes payable
                    
                    
                    5,000
                    
                    
                    
                    -Proceeds
      from notes payable - related parties
                    
                    
                    10,000
                    
                    
                    
                    17,026Net
      cash provided by financing activities
                    
                    
                    115,000
                    
                    
                    
                    17,026Net
      change in cash
                    
                    
                    9,203
                    
                    
                    
                    -CASH
      AT BEGINNING OF PERIOD
                    
                    
                    -
                    
                    
                    
                    -CASH
      AT END OF PERIOD
                    
                    $
                    9,203
                    
                    
                    $
                    -SUPPLEMENTAL
      CASH FLOW INFORMATION:Cash
      paid for interest
                    
                    $
                    -
                    
                    
                    $
                    -Cash
      paid for income taxes
                    
                    $
                    -
                    
                    
                    $
                    -NONCASH
      INVESTING AND FINANCING ACTIVITIES:Conversion
      of accrued interest into convertible note payable - related
      party
                    
                    $
                    38,686
                    
                    
                    $
                    -Debt
      discount from warrants issued with convertible debt
                    
                    $
                    100,000
                    
                    
                    $
                    -
  The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
  5
  OCTuS,
Inc.
 Notes
to Consolidated Financial Statements
 (Unaudited)
  Note
1 – Summary of Significant Accounting Policies
 
 Financial
Statement Presentation
 
 The
accompanying unaudited consolidated financial statements of OCTuS, Inc.
(“OCTuS”) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q.  Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.  These financial
statements should be read in conjunction with the audited consolidated financial
statements and footnotes included thereto for the fiscal year ended December 31,
2008 for OCTuS, Inc. on Form 10-K, as filed with the Securities and Exchange
Commission.
 
 The
financial statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for a fair
presentation of the results for the periods shown.
 
 Organization
 
 OCTuS is
a smart energy management company developing, marketing and selling
energy-efficient lighting, cooling and energy management solutions that enable
public sector and private organizations to reduce their energy expenses. OCTuS
has developed OctusSEP (Smart Energy Platform), a turnkey energy savings and
demand response management program for the energy management market in the
United States.
 
 Principles
of Consolidation
 
 All of
our subsidiaries are inactive.  All significant intercompany
transactions and balances, if any, have been eliminated in
consolidation.
 
 Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.
 
 Loss
Per Share
 
 Basic
loss per common share (“EPS”) calculations were determined by dividing net loss
by the weighted average number of shares of common stock outstanding during the
years.  Diluted loss per common share calculations were determined by
dividing the net loss by the weighted average number of common shares and
dilutive common share equivalents outstanding.  During the three and
nine months ending September 30, 2009 common stock equivalents were not included
in the calculation, as their effect would be anti-dilutive.
  Share-Based
Compensation
 
 OCTuS
provides compensation costs for our stock option plans based on estimated fair
values. OCTuS estimates the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model and provides for expense
recognition over the service period, if any, of the stock option.
  6
  OCTuS,
Inc.
 Notes
to Consolidated Financial Statements
 (Unaudited)
  Note
2 – Going Concern
 
 The
accompanying unaudited consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplates continuation of OCTuS as a going
concern.  OCTuS has a working capital deficit of $416,926, a
stockholders’ deficit of $818,246 and an accumulated deficit of $24,143,137 as
of September 30, 2009.  In addition, OCTuS has generated net losses of
$751,513 and $56,929 during the nine months ending September 30, 2009 and 2008,
respectively, and currently has no revenue-generating operations.
 
 We are
actively seeking technologies and business opportunities in the smart energy
sector, which may include the licensing, acquisition or development of smart
energy and energy efficiency products or technologies as part of the OctusSEP
(Smart Energy Platform).  We anticipate the need for additional debt
or equity financing, and if OCTuS raises additional funds through equity
financing transactions, the issuance of additional shares would dilute the
ownership of existing shareholders.  However, OCTuS has no commitment
from any party to provide additional capital, and there is no assurance that
such funding will be available when needed, or if available, that its terms will
be favorable or acceptable to OCTuS.
  The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
OCTuS to continue as a going concern.
 
 Note
3 – Related Party Transactions
 
 On
February 24, 2009, OCTuS entered into employment agreements with Christian J.
Soderquist and George M. Ecker pursuant to which Mr. Soderquist will serve as
Chief Executive Officer of OCTuS and Mr. Ecker will serve as Chief Financial
Officer of OCTuS. Mr. Soderquist and Mr. Ecker were also appointed directors of
OCTuS. Concurrently, OCTuS executed restricted stock purchase agreements dated
February 24, 2009, with each of Mr. Soderquist and Mr. Ecker.
  Both
employment agreements have a term of three years, through February 23, 2012,
with the term extended automatically for successive one-year terms unless either
party notifies the other in writing at least 90 days prior to the expiration of
the then-effective term of such party’s intention not to renew the
agreement.  Pursuant to the employment agreement, OCTuS will pay Mr.
Soderquist and Mr. Ecker a base annual salary of $180,000 each, which will
increase annually by the increase in the consumer price index from the prior
year (the “Base Salary”).
The officers have agreed for an interim period to defer receipt of payment of
some or all of their base salaries based on the outstanding achievements of one
or more of the milestones described below and OCTuS’ ability to pay salaries.
Each officer will be eligible for an annual bonus of up to 50% of his base
annual salary as then in effect, as determined by OCTuS’ Compensation Committee
or Board of Directors.  OCTuS issued to each person 15,000,000 shares
of common stock.  These shares were valued at $270,000 and recorded as
share-based compensation during the nine months ended September 30,
2009.
  Under the
terms of the restricted stock purchase agreements, a portion of the shares is
subject to repurchase by OCTuS if certain milestones are not achieved before the
first anniversary of the date of the purchase agreements.  For each of
the following events that are not achieved before the first anniversary of the
date of the purchase agreements, 25% of the shares are subject to repurchase by
OCTuS at the original purchase price per share.  If all four
milestones are achieved, then all repurchase rights of OCTuS will
lapse.  The milestone events are:  completion of sale of
equity securities of OCTuS with proceeds to OCTuS of $100,000 or more; execution
by OCTuS of a license agreement or purchase contract with at least two
third-party persons or entities to acquire or license technologies and/or
products related to OCTuS’s intended business; receipt of revenues from the sale
by OCTuS of products licensed or owned by OCTuS; and execution by OCTuS of a
renewable energy and/or energy efficiency project contract.  In the
event of a change in control of OCTuS, defined in the agreement to include
events such as a merger or sale of assets transaction which results in more than
a 50% change of ownership of OCTuS, all restrictions lapse and the shares will
become fully vested.
  There
were 43,437,072 shares of common stock outstanding after the issuance of the
shares in accordance with the purchase agreements.  The 30,000,000
shares issued pursuant to the purchase agreements represented approximately 69%
of the then outstanding shares of OCTuS.
  Each
employment agreement provides that if the employment of the officer is
terminated by OCTuS without cause (as defined in the employment agreement) or by
the officer for good reason (as defined in the employment agreement) or upon his
death, the officer (or his estate) is entitled to receive in cash payment an
amount equal to all previously accrued but unpaid compensation (including
accrued but unused vacation leave) as of the date of such termination, and a
lump sum payment equal to the amount of the Base Salary that the officer would
have earned if the officer had remained employed with OCTuS during the remaining
portion of the then-current term.
  7
  OCTuS,
Inc.
 Notes
to Consolidated Financial Statements
 (Unaudited)
  Note
4 – Notes Payable
 
 During
April 2009, a third party loaned OCTuS $5,000 to provide short-term working
capital.  This loan bears interest at 10% and is due upon
demand.
 
 Note
5 – Notes Payable - Related Parties
 
 During
April 2009, two of our officers and directors, Christian J. Soderquist and
George M. Ecker, each loaned OCTuS $5,000 to provide short-term working
capital.  These loans bear interest at 10% and are due upon
demand.
 
 Note
6 – Convertible Notes Payable
 
 Effective
March 31, 2009, a convertible promissory note with a principal balance of
$328,106 and accrued interest of $38,686 held by Grupo Dynastia SA was sold to
another party who already held a promissory note in the amount of
$113,747.  The terms were modified such that the principal and
interest will be paid over 60 months. The convertible promissory note can be
converted into common stock at a rate of $0.10 per share and bears interest at
an annual rate of 8% until converted or paid.  Total interest expense
under borrowings from this party during the nine months ending September 30,
2009 was $21,549.  The current portion of this note is $80,000 at
September 30, 2009.
 
 On June
22, 2009, OCTuS issued a convertible secured promissory note (the “Note”) with a
principal amount of $100,000 to an investor.  The note bears interest
at a rate of 10% per annum and is due on June 21, 2011.  Accrued
interest is paid semi-annually, with the first payment due six months after the
date the Note is issued.  At OCTuS’ option, OCTuS may make any
interest payment either in cash or by delivery of a number of shares of Common
Stock with a value equal to the amount of interest due and payable, calculated
based on the average closing price of the Common Stock on the OTC Bulletin Board
(or whatever exchange, market or quotation system the Common Stock is then
traded), for the ten trading days ending three days before the date that such
payment is due.  OCTuS granted to the holder of the note a security
interest of all assets of OCTuS, ranking before all preferred and common
shareholders and subordinated to the existing senior convertible
debt.  The Note may be converted to common stock at 70% of the price
per share paid for securities in a financing of at least $1,000,000 or at any
time after 90 days after issuance at the greater of $0.15 per share or 70% of
the average closing price of the common stock for the ten trading days ending
five days before the conversion date.  In conjunction with the
issuance of the Note, OCTuS issued a warrant to the note holder to purchase
350,000 shares of OCTuS common stock at an exercise price of $0.01 per
share.  The term of the warrant is 180 days. The relative fair value
of the warrant is $40,643.  The intrinsic value of the conversion
feature totaled $59,357 resulting in a discount of $100,000 to the note payable.
The discount will be amortized over the life of the note. The details are as
follows:
  Face
      value of note payable
                      
                      $
                      100,000Less:
      discount related to warrants
                      
                      
                      (40,643
                      )discount
      related to conversion feature
                      
                      
                      (59,357
                      )Add:
      amortization of debt discount
                      
                      
                      3,056Carrying
      value of note at September 30, 2009
                      
                      $
                      3,056
 
 Note
8 – Equity Transaction
 
 On
February 24, 2009, OCTuS issued the CFO and CEO each 15,000,000 shares of common
stock.  These shares were valued at $270,000 and recorded as
share-based compensation during the nine months ended September 30,
2009.
  8
  OCTuS,
Inc.
 Notes
to Consolidated Financial Statements
 (Unaudited)
  On May 5,
2009, OCTuS entered into an employment agreement with John Argo pursuant to
which Mr. Argo will serve as Director, Energy Projects & Finance of OCTuS.
The employment agreement has a term of three years, through April 30, 2012, with
a base annual salary of $120,000. Concurrently, OCTuS issued 250,000 shares of
common stock, valued at $12,500 to Mr. Argo, and recorded as share-based
compensation.
  Warrant
and option activity during the nine months ended September 30, 2009 is as
follows:
 
 Warrants
                        and
                        Options
                      
                      
                      Weighted
                        Average
                        Exercise
                        Price
                      
                      
                      Weighted
                        Average
                        Remaining
                        Contractual
                        Termin
      Years)Outstanding
      at beginning of year
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -Granted
                      
                      
                      410,000
                      
                      
                      
                      0.01
                      
                      
                      
                      0.5Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Forfeited
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      at end of the period
                      
                      
                      410,000
                      
                      
                      $
                      0.01
                      
                      
                      
                      0.5
 
 On August
17, 2009, OCTuS entered into an employment agreement and granted the employee an
option to purchase 30,000 shares of OCTuS’ common stock at $0.39 per
share.  The option vests ratably over six months and expires on August
17, 2012. The option had a value of $11,091 on the date of grant.
 
 OCTuS estimates
the fair value of each warrant and option at the grant date by using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants during the nine months ended September 30, 2009 as
follows:
 
 September
      30, 2009Dividend
      yield
                          0.00%Expected
      volatility
                          191%
      to 424%Risk
      free interest rate
                          1.54%
      to 2.75%Expected
      lives in years
                          0.5
      to 3
 
 In June
2009, OCTuS entered into a twelve-month consulting agreement which calls for
OCTuS to issue 10,000 shares of common stock each month the contract is in
force.  OCTuS issued 40,000 shares under this agreement during the
nine months ended September 30, 2009, valued at $10,700 and recorded as
share-based compensation.
 
 In July
2009, OCTuS entered into a three-month consulting agreement which calls for
OCTuS to issue 20,000 shares of common stock to an employee upon execution of
the agreement as a signing bonus, 10,000 shares of common stock each month, and
pay a $2,000 stipend each month the contract is in force.  OCTuS
issued 50,000 shares under this agreement during the quarter ended September 30,
2009, valued at $12,000 and recorded as share-based compensation.
 
 In July
2009, OCTuS entered into a three-month consulting agreement which calls for
OCTuS to issue 10,000 shares of common stock each month the contract is in
force.  OCTuS issued 30,000 shares under this agreement during the
quarter ended September 30, 2009, valued at $9,300 and recorded as share-based
compensation.
  9
 OCTuS,
Inc.
 Notes
to Consolidated Financial Statements
 (Unaudited)
 In August
2009, OCTuS entered into a twelve-month consulting agreement which calls for
OCTuS to pay $3,000 and issue 10,000 shares of common stock each month the
contract is in force.  OCTuS issued 20,000 shares under this agreement
during the quarter ended September 30, 2009, valued at $5,700 and recorded as
share-based compensation.
 
 Also in
August 2009, OCTuS entered into two six-month consulting agreements and granted
each consultant options to purchase 30,000 shares of OCTuS’ common stock, for a
total of 60,000 options, at $0.39 and $0.33 per share.  The options
vests ratably over six months and expire on August 17,
2012.  Share-based compensation of $3,782 was recorded during the
period ended September 30, 2009 for the vesting of these options.  The
consultants will also each be paid a monthly stipend of $1,000 per
month.
 
 In
September 2009, OCTuS entered into a software development contract that required
OCTuS to issue 91,000 shares of common stock as part of the developer’s
compensation upon execution of the agreement.  The shares were valued
at $30,000 and recorded as share-based compensation.
  Note
9 – License Agreement
 
 On August
28, 2009, OCTuS entered into an exclusive license agreement with The Regents of
the University of California (the “University”) pursuant to which OCTuS acquired
exclusive rights under a provisional U.S. patent application and related
intellectual property relating to an evaporative cooling technology known as
“Wickool.”  The application relates to the passive evaporative cooling
of rooftop HVAC units, whereby Wickool repurposes the condensate generated by
HVAC equipment to cool incoming air and thereby increase energy efficiency and
reduce peak-demand electricity use.  The Wickool system can be used to
retrofit presently installed HVAC units in addition to integration in new
building construction design and is best suited for large scale, commercial
installations. Wickool was developed by the University of California,
Davis Western Cooling Efficiency Center, and is being
commercially tested by major retailers. The license covers the United States
and, to the extent available, foreign rights, exclusively covers all fields of
use and includes the right to sublicense, subject to standard University terms
applying to sublicenses.
  Under the
agreement, OCTuS will pay the University a nominal annual minimum cash payment
each year until the year following the year of the first sale of a licensed
product.  Upon commencement of commercial sales, OCTuS will pay the
University the greater of a minimal annual fee or royalties based on net sales
of licensed products, licensed services, and other revenue resulting directly
from use of the licensed products.  The agreement also provides that
OCTuS will pay the University a percentage of any consideration received by
OCTuS for the grant of rights under a sublicense from OCTuS.  OCTuS is
responsible for reimbursing the University for prior patent costs incurred,
which are not material, and subsequent legal fees and patent costs incurred in
connection with prosecuting the application and maintaining any patents that may
issue from the application.  The agreement includes a number of
customary milestone conditions related to OCTuS’ progress in funding support of
the product, commencement of manufacturing, and commencement and progress of
commercial sales. The agreement also includes several other customary
provisions, including representations and warranties of the parties, provisions
addressing indemnification of the University by OCTuS, use of names and other
intellectual property, litigation and disputes, and insurance requirements, and
other customary provisions.
 
 Note
10 – Subsequent Events
 
 On
October 1, 2009, OCTuS entered into a one year investment relations contract
that calls for OCTuS to issue 350,000 shares of its common stock to the
contractor upon execution of the contract.  The shares were valued at
$119,000 on the date of execution and recorded as share-based
compensation.
 
 On
October 15, 2009, OCTuS entered into a three-month consulting contract that
calls for OCTuS to issue 20,000 shares of common stock per month as compensation
for each month that the contract is in force.
 
 10




Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 This
following information specifies certain forward-looking statements of management
of the company. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical
fact.  Forward-looking statements may be identified by the use of
forward-looking terminology, such as “may”, “shall”, “could”, “expect”,
“estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”,
“continue”, or similar terms, variations of those terms or the negative of those
terms.  The forward-looking statements specified in the following
information have been compiled by our management on the basis of assumptions
made by management and considered by management to be reasonable. Our future
operating results, however, are impossible to predict and no representation,
guaranty, or warranty is to be inferred from those forward-looking
statements.
 
 The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. We cannot guarantee that
any of the assumptions relating to the forward-looking statements specified in
the following information are accurate, and except as required by law we
assume no obligation to update any such forward-looking statements.
 
 Critical
Accounting Policy and Estimates
 
 Our
Management's Discussion and Analysis of Financial Condition and Results of
Operations section discusses our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. On an on-going
basis, management evaluates its estimates and judgments, including those related
to revenue recognition, accrued expenses, financing operations, and
contingencies and litigation. Management bases its estimates and judgments on
historical experience and on various other factors that are believed to be
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. The most significant
accounting estimates inherent in the preparation of our financial statements
include estimates as to the appropriate carrying value of certain assets and
liabilities which are not readily apparent from other sources. These accounting
policies are described at relevant sections in this discussion and analysis and
in the notes to the consolidated financial statements included in our Annual
Report for the year ended December 31, 2008 filed on Form 10-K.
 
 General
 
 We are
actively seeking technologies and business opportunities in the smart energy
sector, which may include the licensing, acquisition or development of smart
energy and energy efficiency products or technologies as part of the OctusSEP
(Smart Energy Platform).  We intend to recruit management, advisors
and affiliates with sufficient experience needed to review and qualify such
technologies and business opportunities for our involvement.  Although
we are seeking such opportunities, we may not consummate any such transactions
beyond what have been consummated to date, and it is possible such transactions
would not generate sufficient revenue to sustain our operations. We anticipate
the need for additional debt or equity financing, and if the Company raises
additional funds through equity financing transactions, the issuance of
additional shares would dilute the ownership of existing
shareholders.
  On July
9, 2009 we announced the addition of two energy industry executives to our
management team: Tobin J.M. Richardson as Senior Advisor, Energy Markets, and
Siva Gunda as Senior Engineer, Smart Energy Solutions. Richardson is Director of
the ZigBee Smart Energy Initiative, where he drives adoption of energy
efficiency technology in key smart energy markets, and Gunda is the Southern
California Edison International Energy Efficiency Fellow with the UC Davis
Energy Efficiency Center.On August 20, we announced our affiliation with
the California Lighting Technology Center (CLTC) and the Western Cooling
Efficiency Center (WCEC) to further development and deployment the Octus Smart
Energy Platform. CLTC and WCEC are part of the University of California, Davis
Energy Efficiency Center, and are supported by leading companies, utilities and
federal and state energy organizations. On September 1, 2009, we announced an
exclusive worldwide license with the University of California for Wickool, a
passive evaporative cooling technology for commercial rooftop HVAC units.
Wickool has been commercially tested by the WCEC at Target Corp. and Wal-Mart
stores as a retrofit to rooftop HVAC units. On October 4, 2009, we announced a
joint venture with Quantum Energy Solutions to catalyze commercialization of the
Octus Smart Energy Platform and to collaboratively pursue smart energy projects.
Quantum has managed more than $100 million in energy projects for several
hundred clients, including Safeway, Bank of America, Sears, Hewlett-Packard and
Chevron. On October 27, 2009, we announced the addition to two energy industry
executives to our Advisory Group: Mark Henwood, CEO of Henwood Associates, and
Dr. Mark Modera, director of the UC Davis Western Cooling Efficiency Center. On
November 2, 2009, we announced the launch of SmartLightSupply.com, an electronic
commerce marketplace featuring smart, energy-efficient lighting products for the
commercial market.
  11
  Results
of Operations for the Three Months Ended September 30, 2009 Compared to the
Three Months Ended September 30, 2008
 
 We did
not realize any revenues during either the three months ended September 30, 2009
or 2008.
  During
the three months ended September 30, 2009, we reported a net loss of $291,266,
or $0.01 per share, compared to a net loss of $17,315, or $0.00 per share, for
the three months ended September 30, 2008. We expect to incur losses at least
until such time as we begin generating revenue from operations.
  During
the three months ended September 30, 2009, our general and administrative
expenses were $268,505, as compared to $8,494 for the three months ended
September 30, 2008. The increase of $260,011 was primarily due to salaries of
$93,272, professional fees of $61,650, share-based compensation of $71,483,
license fee of $11,520, consulting fees of $10,000, travel of $8,350 and other
expenses of $3,736 recorded during the three months ended September 30, 2009, as
compared to $0 for the three months ended September 30, 2008.  The
other general and administrative expenses consisted primarily of rent and office
supplies.
  Interest
expense for the three months ended September 30, 2009 was $22,761 compared to
$8,821 incurred for the three months ended September 30, 2008. The increase of
$13,940 was primarily due to a higher debt balance during the 2009
period.
  Results
of Operations for the Nine Months Ended September 30, 2009 Compared to the Nine
Months Ended September 30, 2008
 
 We did
not realize any revenues during either the nine months ended September 30, 2009
or 2008.
  During
the nine months ended September 30, 2009, we reported a net loss of $751,513, or
$0.02 per share, compared to a net loss of $56,929, or $0.00 per share, for the
nine months ended September 30, 2008. We expect to incur losses until such time
that we begin generating revenue from operations.
  During
the nine months ended September 30, 2009, our general and administrative
expenses were $716,971, as compared to $30,833 for the nine months ended
September 30, 2008. The increase of $686,138 was primarily due to $353,983 of
share-based compensation recorded during the nine months ended September 30,
2009, as compared to $0 for the nine months ended September 30, 2008, $245,705
relating to the accrual of deferred officers salaries during the nine months
ended September 30, 2009 compared to $0 for the nine months ended September 30,
2008, professional fees of $74,048, license fees of $12,520, consulting fees of
$10,000 and other expenses of $10,118. The other general and administrative
expenses consisted primarily of rent and travel expenses.
  Interest
expense for the nine months ended September 30, 2009 was $34,542 compared to
$26,096 incurred for the nine months ended September 30, 2008. The increase of
$8,446 was primarily due to a higher debt balance during the 2009.
  As of
September 30, 2009, we had significant tax credits and research carry-forwards
for federal tax reporting purposes that expire through 2009. Additionally, we
have federal and state net operating loss carry-forwards, expiring through 2027.
Because of a substantial change in our ownership resulting from the 30,000,000
shares issued in February 2009, an annual limitation has been placed on
utilization of the loss carry forwards generated prior to our change in
ownership.
 
 Liquidity
and Capital Resources
 
 For the
nine months ended September 30, 2009, we incurred a net loss of $751,513 that
included $353,983 of share-based compensation expense and $245,705 of accrued
salary deferrals. Our total assets were $11,478 as of September 30, 2009,
including current assets of $9,203 of cash and $2,175 of other assets. Our
current liabilities were $426,129 as of September 30, 2009, including $106,505
in accounts payable and accrued liabilities, $224,624 in accounts payable and
accrued liabilities due to related parties $80,000 in current portion of
convertible notes, $10,000 of short-term debt to related parties and $5,000 of
short-term notes payable. We also had $403,595 in the long-term portion of
convertible debt.
  At
September 30, 2009, we had cash and equivalents of $9,203.  Although
we have actively been pursuing new investments or other business opportunities,
we cannot give assurance that we will enter into any new investment or business
transaction, or that the terms of any agreements relating to financing or
business activities will be on terms favorable to us.  In April 2009,
our officers, directors, and a third party loaned us a total of $15,000 to
continue operations, and in June 2009 we issued a convertible secured promissory
note with a principal amount of $100,000 to an investor. We cannot give
assurance that we will enter into any new investment, or that the terms of any
such agreements will be on terms favorable to us. There is no assurance that our
officers and directors or others will continue to fund us. Should we be unable
to obtain revenues or raise additional capital, we could be forced to cease
business activities altogether, and the holders of security interests would
likely be entitled to receive all or substantially all of our
assets.
  12
  Our
Plan of Operations for the Next Twelve Months
 
 As of
this date, we are actively seeking technologies and business opportunities in
the smart energy sector, which may include the licensing, acquisition or
development of smart energy and energy efficiency products or technologies as
part of the OctusSEP (Smart Energy Platform), or the acquisition of another
company. Although we are seeking such opportunities, we may not be able to
consummate a transaction that would generate sufficient revenues to sustain our
operations. We anticipate the need for additional debt or equity
financing.  If we raise additional funds through equity financing
transactions, the issuance of additional shares would dilute the ownership of
existing shareholders.
 
 The
Company believes that it has sufficient cash on hand as of September 30, 2009 to
fund operations at its expected level until approximately the end of 2009
assuming no unforeseen expenses. Management believes that without an influx of
significant new funds, we will not be able to sustain our operations beyond
approximately the end of 2009. Although we have actively been pursuing new
investment, we cannot give assurance that we will enter into any new investment,
or that the terms of any such agreements will be on terms favorable to us. There
is no assurance that anyone will continue to fund us. Should we be unable to
obtain additional funds, we could be forced to cease business activities
altogether, and the holders of security interests would likely be entitled to
receive all or substantially all of our assets.
  Off
Balance Sheet Arrangements
 
 There are
no off balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.
 
 Item
3. Quantitative and Qualitative Disclosures about Market Risk
  Not
applicable.
  Item
4. Controls and Procedures
 
 Evaluation
of disclosure controls and procedures
 
 Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of our
disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) as of the end of the period covered by this
report.  Disclosure controls and procedures are defined as those
controls and other procedures of an issuer that are designed to ensure that the
information required to be disclosed by the issuer in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms, and that
such information is accumulated and communicated to our management, including
our principal executive and financial officer, as appropriate, to allow timely
decisions regarding required disclosure.  Based on their evaluation,
our principal executive officer and principal accounting officer concluded that
as of September 30, 2009, our disclosure controls and procedures were not
effective to provide reasonable assurance that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified by the rules and forms of the SEC and
is accumulated and communicated to management, including the chief executive
officer and chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.  Our conclusion was based on (1) our
lack of systematic accounting and disclosure procedures, notwithstanding that
the Company’s financial statements and notes thereto are prepared and reviewed
by management and that the Company’s chief financial officer reviewed each
transaction during the periods covered by the report that had an effect on the
Company’s financial statements included in the Form 10-Q, (2) the absence of
personnel, other than the chief financial officer, with requisite expertise in
the functional areas of finance and accounting, and (3) the absence of a
functioning audit committee or outside directors on the Company’s board of
directors.
 
 Throughout
the period covered by the report, the Company had no or minimal amounts of
cash until the receipt of proceeds from issuance of the convertible Note at
the end of June 2009 and limited active business activities.  To
address the weaknesses identified above, management reviewed and performed an
analysis of every transaction for the period covered by the report that had an
impact on the Company’s financial statements included in the Form
10-Q.  Accordingly, notwithstanding the existence of the material
weaknesses described in this Item, management believes that the financial
statements included in this Quarterly Report on Form 10-Q fairly present, in all
material respects, our financial condition, results of operations and cash flows
for the periods presents in accordance with U.S. generally accepted accounting
principles.  The Company also intends to address the weaknesses
identified above by adding more formalized accounting, control and disclosure
procedures, by hiring additional personnel resources when the Company’s
operations and financial position permit it to do so, by continuing to have the
chief financial officer review all significant transactions affecting the
Company’s financial statements, and by considering the appointment of outside
directors and audit committee members in the future where
appropriate.
  Changes
in internal controls.
 
 There
were no changes in our internal control over financial reporting that occurred
during the fiscal quarter covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
 13




PART
II — OTHER INFORMATION





Item
1. Legal Proceedings.





None.





Item
1A. Risk Factors.





Our
business is subject to various risks, including those described in Item 1A of
our annual report on Form 10-K for the fiscal year ended December 31, 2008, and
strongly encourage you to review the Form 10-K and other reports that we filed
with the SEC after the filing of the Form 10-K.  Except as described
below in Part II, Item 5, “Other Information,” which disclosure is incorporated
herein by this reference, there have been no material changes from the risk
factors disclosed in that section of our Form 10-K.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.





In June
2009, OCTuS entered into a twelve-month consulting agreement which calls for
OCTuS to issue 10,000 shares of common stock each month the contract is in
force.  OCTuS issued 40,000 shares under this agreement during the
nine months ended September 30, 2009, valued at $10,700 and recorded as
share-based compensation.





In July
2009, OCTuS entered into a three-month consulting agreement which calls for
OCTuS to issue 20,000 shares of common stock to an employee upon execution of
the agreement as a signing bonus, 10,000 shares of common stock each month, and
pay a $2.000 stipend each month the contract is in force.  OCTuS
issued 50,000 shares under this agreement during the quarter ended September 30,
2009, valued at $12,000 and recorded as share-based compensation.





In July
2009, OCTuS entered into a three-month consulting agreement which calls for
OCTuS to issue 10,000 shares of common stock each month the contract is in
force.  OCTuS issued 30,000 shares under this agreement during the
quarter ended September 30, 2009, valued at $9,300 and recorded as share-based
compensation.





In August
2009, OCTuS entered into a twelve-month consulting agreement which calls for
OCTuS to pay $3,000 and issue 10,000 shares of common stock each month the
contract is in force.  OCTuS issued 20,000 shares under this agreement
during the quarter ended September 30, 2009, valued at $5,700 and recorded as
share-based compensation.





Also in
August 2009, OCTuS entered into two six-month consulting agreements and granted
each consultant options to purchase 30,000 shares of OCTuS’ common stock, for a
total of 60,000 options, at $0.39 and $0.33 per share.  The options
vests ratably over six months and expire on August 17,
2012.  Share-based compensation of $3,782 was recorded during the
period ended September 30, 2009 for the vesting of these options.  The
consultants will also each be paid a monthly stipend of $1,000 per
month.





In
September 2009, OCTuS entered into a software development contract that required
OCTuS to issue 91,000 shares of common stock as part of the developer’s
compensation upon execution of the agreement.  The shares were valued
at $30,000 and recorded as share-based compensation.





14


On
October 1, 2009, OCTuS entered into a one year investment relations contract
that calls for OCTuS to issue 350,000 shares of its common stock to the
contractor upon execution of the contract.  The shares were valued at
$119,000 on the date of execution and recorded as share-based
compensation.





On
October 15, 2009, OCTuS entered into a three-month consulting contract that
calls for OCTuS to issue 20,000 shares of common stock per month as compensation
for each month that the contract is in force.





All of
the above issuances were made without any public solicitation, to a limited
number of employees, consultants and shareholders and were acquired for
investment purposes only.  The securities were issued in reliance on
the private placement exemption provided by Section 4(2) of the Securities Act
of 1933.




Item
3.  Defaults Upon Senior Securities





None.





Item
4.  Submission of Matters to Vote of Security Holders





None.





Item
5.  Other Information





Certain Matters Relating to the Company’s 2003 Reincorporation
Transaction





In
connection with a review of previous corporate transactions, the Company
recently became aware of administrative errors related to the Company's change
of domicile from California to Nevada at the end of 2003.  At the time
of all of the events described below, the Company was a shell company with no
cash (or nominal cash), no business and a small amount of liabilities consisting
primarily of accrued obligations and notes to a related
party.  Further, the majority shareholder, and the person who was the
president of Octus California at the time of the events described below, have
affirmed in writing to the Company that their vote, support and intention was to
enact the events.





As
reflected in previous filings by the Company with the Securities and Exchange
Commission (the “Commission”), in December 2001, Octus, which was then
incorporated in California (sometimes referred to as “Octus California”),
distributed a proxy statement to its shareholders in connection with its annual
meeting of stockholders to be held on December 29, 2001 (the “2001 Meeting”),
soliciting approval for a proposal to change the
state of incorporation of Octus from California to Nevada.  The proxy statement indicated that the
change of domicile would be accomplished by merging Octus California into a
newly formed subsidiary, Octus Nevada.  At the time, one
shareholder, Grupo Dynastia, S.A., a foreign corporation, held approximately 56%
of the outstanding voting stock as of the record date of the
meeting.  Grupo Dynastia has represented to management of the Company
in writing that it supported the reincorporation and change of
domicile.  In addition, Grupo Dynastia and the person who at the time
was the president of Octus California have represented to management of the
Company in writing that Grupo Dynastia delivered to Octus California in advance
of the 2001 Meeting a signed form of proxy appointing the president of Octus as
proxy for the shareholder to vote the shareholder’s shares in favor of the
reincorporation and the other proposals at the 2001 Meeting.  However,
the Company does not have in its records evidence that an executed proxy was
received by Octus California from Grupo Dynastia or taken into account at the
meeting.





In
December 2003, the Company decided to effect the reincorporation transaction
that it believed had been approved at the 2001 shareholder meeting.  A
new corporation was incorporated in Nevada named Octus, Inc. (“Octus
Nevada”).  Allassets and
liabilities of Octus California, which consisted
of the nominal cash and minimal liabilities described below, were
transferred to Octus Nevada on or before December 31, 2003 as part of the change of corporate
domicile.  However, for reasons of administrative inadvertence,
articles of merger were not filed in either Nevada or California.





15


In
January 2004, dissolution and winding up certificates were filed with the
California Secretary of State for Octus California, reciting that Octus
California had elected to wind up and dissolve; that the election was made by
the vote of at least 5.8 million shares, representing in excess of approximately
90% of the outstanding shares of the Company; that the affairs of Octus
California had been completely wound up; that the known debts and liabilities of the company had been
paid or provided for; and that all known assets of the company had been
distributed to the Octus California shareholders.





The
person who was the president of Octus California at the time at the time of the
events described above has affirmed in writing that these filings were intended
to be part of the process of implementing the reincorporation merger
transaction.  At the time, Grupo Dynastia owned common stock and
preferred stock of Octus California representing in excess of 97.6% of the
voting power of the outstanding shares of Octus California.  Grupo
Dynastia has represented to management of the Company in writing that it
supported and approved of the reincorporation transaction in December 2003,
regardless whether it was effected by means of a merger, transfer of assets and
lisbilities or other mechanism.





On March
23, 2004, the Company filed its Annual Report on Form 10-K with the SEC with
respect to the year ended December 31, 2003 (the “2003 Form 10-K”), indicating
that it was a Nevada corporation and including the following
disclosure:  “On December 29, 2001, a majority of the shareholders
voted to change the Company's state of incorporation from California to
Nevada.  In December 2003, this change was completed and the Company
became a Nevada corporation.”  According to the 2003 Form 10-K, at
December 31, 2003, Octus was not engaged in any business activities, its total
assets consisted of $22 of cash, and its liabilities consisted of accounts
payable and accrued expenses of $1,238, accounts payable and accrued expenses to
related parties of $16,138, and notes payable to a related party, Grupo
Dynastia, of $144,271.  According to the 2003 Form 10-K, the aggregate
market value of shares held by non-affiliates of the Company as of March 18,
2004, was $31,676, and the actual value of those shares may have been even less
in light of, among other factors, the Company’s liabilities and lack of any
business and cash assets.





Implementing
what management of the Company believed was the merger transaction, Octus Nevada
subsequently issued one share of Octus Nevada for
each share of OctusCaliforniaheld by each person who was a former shareholder
of Octus California.  If not part of the merger transaction, the the
Company believes theissuance of shares was part of the distribution by Octus
California of its remaining assets, consisting of the shares issued by Octus
Nevada, to its shareholders as part of the process of winding up Octus
California.Accordingly, there
was no change in ownership of shares of the Company as the result of the
redomicile.  In addition, no shareholder has communicated with the
Company or its officers in any way concerning claims or complaints relating to
the above matters.





The Company
has submitted for filing with the Nevada Secretary of State, articles of merger
reflecting the merger transaction that the Company believed occurred at the end
of 2003.  However, the Company cannot provide any assurances
concerning the legal effect, if any, of belatedly filing such articles of merger
at such time in the circumstances described above.





The
foregoing matters may give rise to liabilities, claims or regulatory actions
under federal or state laws, including without limitation relating to whether
sufficient shareholder approval was obtained for the reincorporation
transaction, whether the issuance of shares of Octus Nevada in the
reincorporation transaction complied with federal and state securities laws,
whether the foregoing matters affect Octus Nevada's status as a successor issuer
under federal securities laws, and other related matters.  The Company
can give no assurance as to whether any such liabilities, claims or regulatory
actions, including actions by the Commission or state regulatory authorities,
may arise in the future or the outcome of any such liabilities, claims or
regulatory actions on the Company's business and previously reported or current
financial statements.  An adverse outcome in any such claim or proceeding
could have a material adverse effect on the Company's business, financial
position and results of operations.





16





Item
6.  Exhibits




Exhibit
      No.
                                  Description10.1
                                  License
      agreement with the University of California31.1
                                  Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer.31.2
                                  Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
      Officer.32.1
                                  Section
      1350 Certification of Chief Executive Officer32.2
                                  Section
      1350 Certification of Chief Financial
Officer




17





SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




OCTuS,
      Inc.,
                a
      Nevada corporationNovember
      23,  2009
              By:
              /s/
      Christian SoderquistChristian
      Soderquist
                Chief
      Executive Officer and a Director