10KSB 1 v018313_10ksb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. FORM 10-KSB [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year ended December 31, 2004 [_] Transitional Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 000-29462 ADVANCED PLANT PHARMACEUTICALS, INC. (Exact name of Registrant as specified in its charter) Delaware 59-2762023 (State of other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) 43 West 33rd Street, New York, New York 10001 Address of principal executive offices Registrant's telephone number, including area code: 212-695-3334 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE 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 registrant was required to filed such reports), and (2) has been subject to such filing requirement for the past 90 days. [X] Yes [ ] No Check if no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this Form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form-KSB. [X] State issuer's revenues for its most recent reporting period (Fiscal year)....$54,964 Aggregate market value of the voting stock held by non-affiliates of the registrant at May 12, 2005, was approximately $2,557,379. As at May 12, 2005 the number of shares issued and outstanding was 777,383,154. The closing price of the common stock at that date was $0.0036. 1 ADVANCED PLANT PHARMACEUTICALS, INC. Form 10-KSB - Index For the Fiscal Year Ended December 31, 2004 PART I Page Item 1. Description of Business 3 Item 2. Description of Properties 3 Item 3. Legal Proceedings 4 Item 4. Submission of Matter to a Vote of Security Holders 4 PART II Item 5. Market for Common Equity and Related Stockholder Matters 4 Item 6. Management's Discussion and Analysis 5 Item 7. Financial Statements 7 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 7 Item 8A. Controls and Procedures 8 Item 8B. Other Information PART III Item 9. Directors and Executive Officers of the Registrant; Compliance With Section 16(a) 8 Item 10. Executive Compensation 9 Item 11. Security Ownership of Certain Beneficial Owners and Management 10 Item 12 Certain Relationships and Related Transactions 11 Part IV Item 13. Exhibits 11 Item 14. Principal Accountant Fees and Services 12 Signatures 14 This Form 10-KSB contains forward looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, regarding future events and the future performance of the Company involve risks and uncertainties which may cause our actual results in future periods to be materially different from any future performance suggested herein. We believe that its business strategy that includes focus on future acquisitions is not unique. There can be no assurance that our strategy will be successful. There can be no assurance that sufficient capital can be obtained to market ourselves and increase our market share and our performance and actual results could differ materially from those projected in the forward looking statements contained herein. 2 PART I ITEM 1. BUSINESS Advanced Plant Pharmaceuticals, Inc. (the "Company" or "APPI") continues to focus on the research and development of plant based dietary supplements. During July 1999, the Company acquired exclusive rights and interests to a thirteen-step process which utilizes virtually the whole of the nutrients found in plants to manufacture all natural herbal dietary supplements. The purchase price for the process was 12,000,000 shares of Common Stock. The shares were issued February 13, 2001. A further 6,000,000 shares will become due when marketing of the product commences. The Company intends to use this process to manufacture products that it hopes to distribute worldwide through various sales distribution contracts. On February 28, 2000, the Company entered into an Asset Purchase Agreement with Dr. Bielory to purchase his various allergy and nasal formulations. This Agreement was approved by the Board of Directors on September 6, 2000. Dr. Bielory was granted a five year option to purchase an aggregate of 18,000,000 shares of the Company's Common Stock, par value $0.0007 per share, at an exercise price of $180.00. Dr. Bielroy exercised an option for 12,000,000 shares in the first quarter of 2001. Sinusol(TM), being one of the formulations purchased from Dr. Bielory, is a generalized base solution for the development of an extensive line of specialty products related to allergy and sinus conditions. The ingredients include a mixture of gently pH-balanced essential mineral oils that combat the various symptoms related to allergies and sinus disorders, including congestions, irritated nasal mucosa and bacterial and fungal infections. Specialized advanced formulations are being reviewed for patent submission. Our products we are currently marketing are: o Lo-Chol - Lo-Chol's patent pending formula is derived from the "whole plant" parts of six selected plants that work in concert to help tip your lipid balance (good and bad cholesterol) towards a more normal level. These six plants are synergistically combined using a proprietary "whole plant technology" (a special pharmaceutical-grade process) that delivers virtually all the natural phyto-chemicals and active ingredients in the plants. Unlike almost all other herbal supplements on the market, Lo-Chol does not contain any extracts. Instead, it utilizes the entire part of a specific plant that is processed and standardized to deliver optimum potency and nutritional benefits. o ACA - ACACaplets contain a carefully selected group of 11 natural plant substances, which work in harmony to help chronic fatigue and boost normal metabolic processes that support immune system function. These 11 plants (including Boswelliacaterii, Impatiens balaminia and Curcuma zedoria) have long and storied histories in ancient herbal medicine and folklore. Many are referred to in the Bible as well as Ayurveda, "India's natural science of life and well-being". Now, incorporated together in ACA, they offer the best of traditional herbal wisdom and modern science. o Sinusol - Developed in concert with a leading board certified Allergy and Sinus specialist, SINUSOL(TM) is a unique nasal and sinus solution that pleasantly cleanses and moisturizes the nasal and sinusmucosa. Sinusol(TM) thins nasal solutions to clear stuffy and blocked allergic nasal passages as well as relieves sneezing and sinus pressure. Sinusol(TM), is the safe and natural alternative to over the counter nasal sprays and saline products that contain irritating preservatives and additives. Recent Developments In January 2004, the Company acquired a 44% interest in Amazing Nutritionals, Inc., a development stage company, whereby APPI sold Amazing all of the rights, title, patents, trademarks, processes and related items of LHM123 which is a natural composition for the treatment of senile dementias in consideration for 3,300,000 shares of Amazing's common stock. In December 2004, the Company acquired a 99% interest in Mazal Plant Pharmaceuticals, Inc., a development stage company, whereby APPI sold Mazal all of its rights relating to or connected with developing, manufacturing and distributing of three of its products, plant based compositions designed to treat elevated cholesterol, leukemia and Alzheimer's disease in consideration for 7,000,000 shares of Mazal's common stock and an amount due from Mazal of $50,000. ITEM 2. DESCRIPTION OF PROPERTY The Company continues to lease space at 43 West 33rd Street, New York, New York 10001. The current amount of space is sufficient for the Company for the foreseeable future. Due to the cash problems of the Company, it is possible that the Company would be forced to vacate the leasehold at some point in the future, although no such action is imminent or contemplated. ITEM 3. LEGAL PROCEEDINGS From time to time, the Company is a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is not involved currently in legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations except as set forth below. We may become involved in material legal proceedings in the future. 3 The Company was sued by Airgate International Corp. ("Airgate") that provided services to the Company. These services involved importing certain items and supplies for the Company. The suit seeks the sum of $7,350.00 in unpaid invoices. This matter was settled in early 2004. ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS On October 1, 2003, in lieu of a special meeting of the stockholders, a majority of the stockholders of the Company voted to amend the Company's Articles of Incorporation to increase the number of authorized shares of Common Stock of the Company from 600,000,000 shares to 880,000,000 shares and authorized the creation of 10,000,000 shares of blank check preferred stock. There were no other matters submitted to a vote of shareholders during the fourth quarter of 2004. 4 PART II ITEM 5. MARKET OF REGISTRANT'S SECURITIES AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION The Company's Common Stock is traded under the symbol "APPI" on the Over the Counter Bulletin Board. The Company, at May 12, 2005, had 777,383,154 shares issued and outstanding. During the fiscal years of 2003 and 2004, the price of the shares of Common Stock of the Company reached the following high and low for each quarter. CALENDAR QUARTER ENDED BID PRICES HIGH LOW FISCAL YEAR 2003 March 31, 2003 $.0240 $.0001 June 30, 2003 $.0500 $.0100 September 30, 2003 $.0400 $.0200 December 31, 2003 $.0500 $.0300 FISCAL YEAR 2004 March 31, 2004 $.0400 $.0200 June 30, 2004 $.0200 $.0100 September 30, 2004 $.0100 $.0100 December 31, 2004 $.0100 $.0050 FISCAL YEAR 2005 March 31, 2005 $.0100 $.0030 THE HOLDERS As of May 12, 2005, there were approximately 320 record holders of our common stock. To the best of our knowledge, such figure does not take into account those stockholders whose certificates are held in the name of broker-dealers or other nominees. We believe that there are more beneficial owners of our common stock, most of whose shares are held in street name. DIVIDENDS It has been the policy of the Company to retain earnings, if any, to finance the development and growth of its business. EQUITY COMPENSATION PLANS

---------------------------------------------------------------------------------------------------------------------- Plan Category Number of shares to be Weighted-average exercise Number of shares remaining issued upon exercise of price of outstanding available for future outstanding options and options and warrants issuance under equity warrants compensation plans ---------------------------------------------------------------------------------------------------------------------- Approved by security holders -0- N/A -0- ---------------------------------------------------------------------------------------------------------------------- Not approved by security -0- N/A -0- holders ---------------------------------------------------------------------------------------------------------------------- Total -0- N/A -0- ----------------------------------------------------------------------------------------------------------------------

SALE OF SECURITIES THAT WERE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 On March 1, 2004, the Company issued 64,050,000 shares of its common stock to consultants at $0.02 per share. The aggregate remuneration of $1,281,000 has been treated as stock based compensation and expensed in the current year. In connection with a private placement, on March 1, 2004 the Company issued 3,000,000 shares of its common stock at $0.02 per share realizing $60,000. 5 On March 1, 2004, the Company issued 25,000,000 shares of its common stock at $0.02 per share as payment of $500,000 against a loan payable. On July 23, 2004, the Company issued 1,500,000 shares of its common stock to consultants at $0.01 per share. The aggregate remuneration of $15,000 has been treated as stock based compensation and expensed in the current year. In connection with a private placement, on July 23, 2004 the Company issued 1,000,000 shares of its common stock at $0.01 per share realizing $10,000. Additionally, the Company issued 1,000,000 common stock warrants at $0.03 per share to the investor in connection with the private placement. Each warrant is entitled to purchase one share of common stock. In connection with a private placement, on August 30, 2004 the Company issued 3,000,000 shares of its common stock at $0.005 per share realizing $15,000. * All of the above offerings and sales were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of the Company or executive officers of the Company, and transfer was restricted by the Company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings. Except as expressly set forth above, the individuals and entities to whom we issued securities as indicated in this section of the registration statement are unaffiliated with the Company. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS From time to time, including herein, we may publish "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward looking statements. The Company undertakes no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise. GENERAL APPI focuses on the research and development of plant based dietary supplements. During July 1999, the Company acquired exclusive rights and interests to a thirteen-step process, which utilizes virtually the whole of the nutrients found in plants to manufacture all natural herbal dietary supplements. The Company intends to use this process to manufacture products that it hopes to distribute worldwide through various sales distribution contracts. Our products we are currently marketing are: o Lo-Chol - Lo-Chol's patent pending formula is derived from the "whole plant" parts of six selected plants that work in concert to help tip your lipid balance (good and bad cholesterol) towards a more normal level. These six plants are synergistically combined using a proprietary "whole plant technology" (a special pharmaceutical-grade process) that delivers virtually all the natural phyto-chemicals and active ingredients in the plants. Unlike almost all other herbal supplements on the market, Lo-Chol does not contain any extracts. Instead, it utilizes the entire part of a specific plant that is processed and standardized to deliver optimum potency and nutritional benefits. o ACA - ACACaplets contain a carefully selected group of 11 natural plant substances, which work in harmony to help chronic fatigue and boost normal metabolic processes that support immune system function. These 11 plants (including Boswelliacaterii, Impatiens balaminia and Curcuma zedoria) have long and storied histories in ancient herbal medicine and folklore. Many are referred to in the Bible as well as Ayurveda, "India's natural science of life and well-being". Now, incorporated together in ACA, they offer the best of traditional herbal wisdom and modern science. o Sinusol - Developed in concert with a leading board certified Allergy and Sinus specialist, SINUSOL(TM) is a unique nasal and sinus solution that pleasantly cleanses and moisturizes the nasal and sinusmucosa. Sinusol(TM) thins nasal solutions to clear stuffy and blocked allergic nasal passages as well as relieves sneezing and sinus pressure. Sinusol(TM), is the safe and natural alternative to over the counter nasal sprays and saline products that contain irritating preservatives and additives. 6 RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003 Revenues for the year ended December 31, 2004 were $54,964 as compared to $69,243 for the year ended December 31, 2003, which represents an decrease of $14,279. This decrease in revenues from the prior year is primarily due to termination of Ed McMahon as spokesperson. We believe the trend in decreased revenues will not continue if we are able to engage a new spokesperson for our products. COSTS AND EXPENSES Cost and expenses for the year ended December 31, 2004 were $3,779,562 as compared to $3,931,627 for the year ended December 31, 2003, a decrease of $152,065. This decrease was primarily due to a decrease in the issuance of stock for services which was off set by an increase in cost of good sold, selling general and administrative expenses and an impairment loss. We expect the decrease in our cost and expenses to continue as we expect to be able to continue to curtail the issuance of stock for services. NET LOSS AND NET LOSS PER SHARE Our net loss and net loss per share was $3,721,598 and $0.01 for the year ended December 31, 2004, as compared to $3,861,984 and $0.01 for the year ended December 31, 2003, a decrease of $140,386. This decrease was due primarily to a decrease in the issuance of stock for services. OTHER MATTERS We do not anticipate any material capital expenditures and believe that any such expenditures will be in the natural course of our business. We do not have any significant elements of income or loss that do not arise from our continuing operations and our business is not seasonal. We believe that the impact of inflation on our operations since our inception has not been material. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2004, we had working capital deficiency of $3,288,393 as compared with $3,081,675 at December 31, 2003, an increase of $206,718. This increase was the result of accrued wages and additional expenses. We have historically sustained our operations and funded our capital requirements with the funds received from the sale of our common stock. If we need to obtain capital, no assurance can be given that we will be able to obtain this capital on acceptable terms, if at all. In such an event, this may have a materially adverse effect on our business, operating results and financial condition. If the need arises, we may attempt to obtain funding through the use of various types of short term funding, loans or working capital financing arrangements from banks or financial institutions. ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by Item 7 appears at Page F-1, which appears after the signature page to this report. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES (a) On March 11, 2003, the Company was officially notified by its Independent Auditor, Michael C. Finklestein, C.P.A., that it had resigned as the Independent Auditor of the Company. The Board of Directors accepted the resignation as of March 11, 2003. During his tenure, Michael C. Finklestein, C.P.A., issued reports on the Company's financial statements up to December 31, 2001, that neither contained an adverse opinion or disclaimer of opinion however, their report was qualified as to the uncertainty of a going concern. During the period of his engagement and for the period of the two most recent fiscal years and any subsequent interim period preceding this action, there was no disagreement between the Company and Michael C. Finklestein, C.P.A. on any matter of accounting principals or practices, financial statement disclosure or audit scope and procedure, which disagreement(s), if not resolved to the satisfaction of Michael C. Finklestein, C.P.A., would have caused them to make reference to the subject matter of the disagreement in connection with its opinion. During the period of his engagement, Michael C. Finkelstein, C.P.A., advised the the Company that the internal controls necessary to develop reliable financial statements did not exist. The disclosure contained herein has been submitted to Michael C. Finklestein, C.P.A. for its review and for it to have an opportunity to comment on the disclosure. (b) Effective March 11, 2003, Livingston, Wachtell & Co., LLP, had been retained as independent auditor of the Company. Prior to the engagement, the Company did not consult with Livingston, Wachtell & Co., LLP regarding the application of accounting principles to a specified transaction, or the type of audit opinion that may be rendered with respect to the Company's financial statements, as well did not consult with Livingston, Wachtell & Co. LLP. As to the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements and either written or oral advice was provided that was an important factor considered by the small business issuer in reaching a decision as to the accounting, auditing or financial reporting issue. 7 (c) On September 15, 2004, the Board of Directors of the Company was notified by Livingston, Wachtell & Co., LLP ("Livingston") that it was resigning as its independent registered public accountants. On November 15, 2004, the Company engaged the firm of Meyler & Company, LLC ("Meyler"), to serve as its independent public accountants for the fiscal year ending December 31, 2004. During the last two fiscal years ended December 31, 2003 and December 31, 2002 and through September 15, 2004, (i) there were no disagreements betweenthe Company and Livingston on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Livingston would have caused Livingston to make reference to the matter in its reports on the Company's financial statements, (ii) Livingston's reports on the Company's financial statements included an explanatory paragraph wherein they expressed substantial doubt about the Company's ability to continue as a going concern, and (iii) Livingston's reports on the Company's financial statements did not contain an adverse opinion or disclaimer of opinion, or was modified as to audit scope or accounting principles. During the two most recent fiscal years ended December 31, 2003, there were no reportable events as the term described in Item 304(a)(1)(v) of Regulation S-K. During the two most recent fiscal years and through November 15, 2004, the Company has not consulted with Meyler regarding either: 1. the application of accounting principles to any specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company nor oral advice was provided that Meyler concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or 2. any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event, as that term is explained in Item 304(a)(1)(v) of Regulation S-K. On December 20, 2004, the Company provided Livingston with a copy of the disclosures it is making in response to Item 4.01 on this Form 8-K, and has requested that Livingston furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. ITEM 8A. CONTROLS AND PROCEDURES As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and principal financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 8B. OTHER INFORMATION None. 8 PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS AND EXECUTIVE OFFICERS OF ADVANCED PLANT PHARMACEUTICALS, INC. Name Age Position ------------- ----- -------- David Lieberman 41 CEO, President and Director David Lieberman has served as President of the Company since July 1, 1996, and as a member of its Board of Directors since June 1996. Since 1991, he has worked in the offices of the Chief Rabbi of Bnai Brak, Israel. He also serves as a consultant for Osem Industries, Inc., an international food conglomerate located in Israel. All directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Directors receive no cash compensation for serving on the Board of Directors other than reimbursement of reasonable expenses incurred in attending meetings. EXECUTIVE OFFICERS Officers are elected annually by the Board of Directors and serve at the direction of the Board of Directors. The Company's sole executive officer David Lieberman is also the sole director of the Company. On March 18, 2003, Dr. Belory resigned as the Chairman of the Board of Directors of the Company. THE COMMITTEES The Board of Directors does not have a Compensation, Audit or Nominating Committee, and the usual functions of such committees are performed by the entire Board of Directors. The board of directors have determined that at present the Company does not have an audit committee financial expert. The Board believes that the members of the Board of Directors are collectively capable of analyzing and evaluating the Company's financial statements and understanding internal controls and procedures for financial reporting. In addition, the Company has been seeking and continues to seek an appropriate individual to serve on the Board of Directors and the Audit Committee who will meet the requirements necessary to be an independent financial expert. CODE OF ETHICS The Company has adopted its Code of Ethics and Business Conduct for Officers, Directors and Employees that applies to all of the officers, directors and employees of the Company. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company's executive officers and directors and persons who own more than 10% of a registered class of the Company's equity securities to file reports of their ownership thereof and changes in that ownership with the Securities and Exchange Commission ("SEC") and the National Association of Securities Dealers, Inc. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all such reports they file. Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished to the Company during fiscal year 2004, the Company is not aware of any director, officer or beneficial owner of more than ten percent of the Company's Common Stock that, during fiscal year 2004, failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934 except that CJ Lieberman and David Lieberman failed to file the required reports. ITEM 10. EXECUTIVE COMPENSATION The following table summarizes all compensation paid by us with respect to the fiscal year ended December 31, 2004 to our President, and all other executive officers whose total cash compensation exceeded $100,000 in the fiscal year ended December 31, 2004 (collectively, the "Named Executive Officers"). 9

OTHER ANNUAL NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION($) OPTIONS(#) -------------------------------- ---- ------------ --------------- ----------- David Lieberman 2004 $135,000 (1) Chief Executive Officer 2003 $ 56,000 (1) 2002 $135,000 (2) $30,000

(1) All has been accrued but not paid. (2) Of the $135,000 owed to Mr. Lieberman as salary for the fiscal year 2002, all has been accrued but not paid. EMPLOYMENT AND OTHER AGREEMENTS The Company entered into an letter agreement with Mr. David Lieberman as the Company's president in January 2003. The employment agreement provided for employment on a full-time basis and contains a provision that Mr. David Lieberman will not compete or engage in a business competitive with our current or anticipated business until the expiration of his agreement. Pursuant to the agreement, we are obligated to pay Mr. David Lieberman a base salary of $56,000 per annum plus expenses for 2003. For 2003, Mr. David Lieberman's base salary returned to $135,000 in January 2004. The Company has a consulting Agreement with C.J. Lieberman, the brother of our sole officer and director. Pursuant to said agreement, he is to receive options to purchase 750,000 shares. These options expired in June 2004. His duties are to consult with the Company on the acquisition of new pharmaceutical products, marketing and general business advice for expansion of marketing and other various needs of the Company in connection with the pharmaceutical industry. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of the filing date concerning the beneficial ownership of the Common Stock, o by each stockholder who is known by the Company to own beneficially in excess of 5% of the outstanding Common Stock; o by each director; o by each executive officer; and o by all executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of Common Stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of Common Stock.

Name and Address Amount and Nature of Beneficial of Beneficial Ownership Percent of Class Owner Common(3) Preferred(2)(3) Common(4) Preferred(5) -------------------------- ------------------- ------------ ------ --------------- David Lieberman (1) 42,000,000 1,250,000 5.40% 50% C.J. Lieberman 25,000,000 1,250,000 3.21% 50% All Executive Officers 42,000,000 5.40% and Directors as a Group (1 person)

1. Officer and/or Directors of the Company. The address of each executive officer and/or director is c/o the Company at 43 West 33rd Street, New York, New York 10001. 2. Series A Preferred Stock shall have one vote per share as it relates to the Series A Preferred Stock and 150 votes as it related to the common stock of the Corporation, giving the preferred shareholders of the Corporation control over any vote of the common stock holders. 3. The securities "beneficially owned" by a person are determined in accordance with the definition of "beneficial ownership" set forth in the rules and regulations promulgated under the Securities Exchange Act of 1934. Beneficially owned securities may include securities owned by and for, among others, the spouse and/or minor children of an individual and any other relative who has the same home as such individual. Beneficially owned securities may also include other securities as to which the individual has or shares voting or investment power or which such person has the right to acquire within 60 days pursuant to the conversion of convertible equity, exercise of options, or otherwise. Beneficial ownership may be disclaimed as to certain of the securities. 4. The foregoing table is based upon 777,383,154 shares of common stock outstanding as of May 12, 2005, assuming no other changes in the beneficial ownership of the our securities. 5. The foregoing table is based upon 2,500,000 shares of preferred stock outstanding as of May 12, 2005, assuming no other changes in the beneficial ownership of the our securities. 10 ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS At various dates throughout 2004, the sole director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 182,466,666 shares of the Company's common stock for consulting services, which is approximately 24% of the outstanding common stock of the Company at December 31, 2004. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2004 and prior years. Of this total, 174,450,000 was issued to related party consultants. The total consulting expense was $2,357,050 to related parties, and included in the accompanying statement of operations for the year ended December 31, 2004, in the caption "Stock issued for services". The value of the consulting services was determined by management to be the market quoted value of the stock as traded on the NASDAQ, Over the Counter Bulletin Board, at the time of each board resolution to issue the stock. At various dates throughout 2003, the sole director, of the Company, Mr. David Lieberman, authorized the issuance of 204,725,682 shares of the Company's common stock for consulting services. The Director issued this stock to various consultants for professional services rendered to the Company during 2003 and prior years. Of this total, 201,034,302 was issued to related party consultants. The total consulting expense was $2,556,654 to related parties. The value of the consulting services was determined by management to be the market value of the stock, at the time of each board resolution to issue the stock. On July 16, 1999, the Company entered into a Technology Purchase Agreement ("Agreement") with the Related Consultant whereby the Company acquired exclusive rights and interests to a thirteen-step manufacturing process, which utilizes virtually all of the nutrients found in certain plants needed to manufacture herbal dietary health supplements. The purchase price to the Related Consultant, for the thirteen-step process was 18 million shares of the Company's common stock, which was to be issued to him in two phases. In 2001, the agreement called for 12 million shares of the Company's stock to be issued at the first phase. As of December 2003 and 2002, none of the stock related to this Agreement had been issued. The Company, therefore, accrued in 2000, $1,440,000, which was managements' determination of the common stock value of the 12 million shares at the time of the agreement, in anticipation of issuing the common stock shares to the Related Consultant. Due to the asset impairment, discussed below, no further liability was recorded on the remaining value of the 6,000,000 shares not issued. In addition, the Company agrees to pay to the Related Consultant a royalty payment of $.01 per bottle plus, 1% of the Company's suggested retail price plus 10% of the Company's net profits from the sale of products manufactured with the process. In the event that the Company enters into an agreement with a third party for the sale of products manufactured with the process, the agreement must unconditionally provide for payment to the Company of not less than $20 million. Upon receipt of the sale proceeds by the Company, the Company shall issue to the Related Consultant 5 million shares for each $20 million paid to the Company, not to exceed 25 million shares. Revenues to date have been insignificant and no payments or stock issuances to the Related Consultant have been made to date. Upon the resignation of C.J. Lieberman (the Related Consultant) as President in 1996, the Company retained him as a consultant. His current consultant's agreement, dated June 10, 1999, provides for monthly consulting fees of $9,000 ($108,000 annually), reimbursement of all direct expenses incurred while providing services to the Company and a five-year option to purchase 750,000 shares of the Company's common stock at an exercise price of $.02 per share. These options expired in June 2004. In addition to the $108,000 consulting expense pursuant to the consulting contract, the Related Consultant received 26,500,000 and 71,500,000 shares of common stock in payment for services rendered valued at $540,500 and $1,835,000 during the years ended December 31, 2004 and 2003, respectively. The balance due the Related Consultant at December 31, 2004 was $73,600. There was no balance due at December 31, 2003. The Director of the Company advanced to the Company cash and paid expenses on behalf of the Company. The Director has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary of $135,000, reimbursement of all direct expenses incurred while providing services to the Company and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.01 per share. These options expired in June 2004, see Note I. The balance due the Director at December 31, 2004 and 2003 was $564,249 and $425,533, respectively. On January 2, 2004, the Company and Amazing Nutritionals, Inc., a company of which CJ Lieberman, the brother of David Lieberman, is an officer, director and shareholder, entered into an asset purchase agreement with the Company whereby the Company sold Amazing Nutritionals all rights, title, patents, trademarks, processes and related items of LHM123, which is a natural composition for the treatment of senile dementias in consideration for 3,300,000 shares of common stock of Amazing Nutritionals. In December 2004, the Company and Mazal Plant Pharmaceuticals, Inc., a development stage company, of which CJ Lieberman, the brother of David Lieberman, is an officer, director and shareholder entered into an asset purchase agreement with the Company whereby APPI sold Mazal all of its rights relating to or connected with developing, manufacturing and distributing of three of its products, plant based compositions designed to treat elevated cholesterol, leukemia and Alzheimer's disease, in consideration for 7,000,000 shares of Mazal's common stock and an amount due from Mazal of $50,000. During 2003, a stockholder loaned the Company $620,000 for working capital. During 2004, the Company issued 25,000,000 shares of common stock to the stockholder to reduce the debt by $500,000. The balance due the stockholder at December 31, 2004 and 2003 was $120,000 and $620,000, respectively. In March 2003, the Company issued 83,350,000 shares of common stock for services to Barry Clare, Sam Berkowitz, Mark Cooper, Tele-V LLC, Elliot Eauer, Michael Krome, Michael Finklestein, Aman Llassan Bhatti and CJ Lieberman. The services were valued at $833,500. In March 2003, the Company issued 2,500,000 shares of preferred stock to David Lieberman and CJ Lieberman in consideration for funds in the amount of $1,750. In April 2003, the Company issued 85,000,000 shares of common stock for reduction of debt to CJ Lieberman and Erziel Silberberg. The debt was valued at $425,000. In April 2003, the Company issued 51,000,000 shares of common stock for services to David Lieberman, Sam Berkowitz and Barry Clare. The services were valued at $510,000. 11 In May 2003, the Company issued 21,875,682 shares of common stock for services to Barry Clare, Sam Berkowitz, Jack Biemfeld, Barry Ginsburg, CJ Lieberman, Larry Farkash, Goel Appel, Vintage Filings LLC, Yosef Tzairi and Consulting Solutions Group. The services were valued at $656,270. In August 2003, the Company issued 10,000,000 shares of common stock for services to CJ Lieberman. The services were valued at $200,000. In September 2003, the Company issued 19,500,000 shares of common stock for services to CJ Lieberman, Barry Clare and Sam Berkowitz. The services were valued at $585,000. In November 2003, the Company issued 19,000,000 shares of common stock for services to CJ Lieberman. The services were valued at $760,000. On February 20, 2000, the Company entered into an asset purchase agreement with Dr. Leonard Bielroy (Chairman of the Board of Directors of APPI who resigned in 2003) whereby the Company acquired the exclusive rights and interest to allergy and sinus formulations he developed ("Assets"). The purchase price included options to purchase 18,000,000 shares of the Company's common stock at an aggregate exercise price of $180. The options are to be issued in two phases. The first phase was completed in 2000 and the options, for 12,000,000 shares of common stock, required to purchase the assets were issued in 2000. The fair value of the 12,000,000 shares, as determined by management, was $1,079,880 and is included in intangible assets. In addition, the Company agrees to pay Dr. Bielroy a royalty payment of $0.01 per bottle plus, 1% of the Company's suggested retail price of each product sold, plus 10% of the Company's net profits from the sale of products manufactured with these Assets. In the event the Company enters into an agreement with a third party for the sale of products manufactured with these assets, the agreement must unconditionally provide for payment to the Company of not less than $20,000,000 either in lump sum or over a period of four years. Upon receipt of the sale proceeds by the Company, the Company shall issue to Dr. Bielroy 5,000,000 shares for each $20,000,000 paid to the Company, not to exceed 25,000,000 shares. During the years ended December 31, 2004 and 2003 royalty expense amounted to $64 and $207, respectively. On March 15, 2000, the Company entered into a consulting agreement with Dr. Bielroy whereby under the terms of the agreement, the Company is required to pay Dr. Bielroy certain monthly amounts, some contingent on the Company achieving specified net profit levels. During 2004, the Company paid down $20,000 of the liability due to Dr. Bielroy by issuing 2,000,000 shares of common stock. Additionally, the Company accrued $12,000 of interest on the loan during 2004. At December 31, 2004 and 2003 the balance due was $110,755 and $118,691, respectively. PART IV ITEM 13. EXHIBITS (a) EXHIBITS. NUMBER TITLE OF DOCUMENT 2.1 Certificate of Incorporation (2) 2.2 Agreement and Plan of Merger (2) 2.3 By-Laws (2) 10.1 Asset Purchase Agreement entered between the Company and Amazing Nutritionals, Inc.(1) 10.2 Asset Purchase Agreement entered between the Company and Mazal Plant Pharmaceuticals, Inc. 31.1 Certification of the Principal Executive Officer and Principal Financial Officer of Advanced Plant Pharmaceuticals, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the Principal Executive Officer and Principal Financial Officer of Advanced Plant Pharmaceuticals, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 99.1 Code of Ethics and Business Conduct of Officers, Directors and Employees(1) (1) Filed as an exhibit to the Form 10-KSB filed on April 14, 2004. (2) Filed as exhibits to Form 10-SB, dated, July 23, 1999, as amended from time to time 12 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ----------------------------------------------------------------- 1 2 3 4 5 ----------------------------------------------------------------- FISCAL YEAR AUDIT-RELATED TAX FEES ALL OTHER ENDING AUDIT FEES FEES FEES ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2004 $22,500 -- -- -- ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, $30,480 -- -- -- 2003 ----------------------------------------------------------------- The following is a description of all services rendered: AUDIT FEES - fees billed for services rendered by the auditor for the audit of the annual financial statements and review of the quarterly financial statements. AUDIT-RELATED FEES - fees billed for assurance and related services by the auditor that are reasonably related to the performance of the audit or review of the company's financial statements and are not reported under Audit Fees. TAX FEES - fees billed for services rendered by the auditor for tax compliance, tax advice, and tax planning. ALL OTHER FEES - fees billed for products and services provided by the auditor, other than the above services. We do not have an audit committee of our board of directors. Our board of directors pre-approves all auditing services and non-audit services not prohibited by law to be performed by our independent auditors. The board also pre-approves all associated fees, except for de minimus amounts for non-audit services, which are approved by the audit committee prior to the completion of the audit. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 16, 2005 By: /s/ David Lieberman ---------------------------- David Lieberman Chief Executive Officer, President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. DATE SIGNATURE / TITLE Date: May 16, 2005 By: /s/ David Lieberman ---------------------------- David Lieberman Sole Director 13 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2004 Item 7. Financial Statements Table of Contents Reports of Independent Registered Public Accounting Firms F-1 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Cash Flows F-5 Consolidated Statement of Stockholders' Deficiency F-7 Notes to Financial Statements F-9 MEYLER & COMPANY, LLC CERTIFIED PUBLIC ACCOUNTANTS ONE ARIN PARK 1715 HIGHWAY 35 MIDDLETOWN, NJ 07748 Report of Independent Registered Public Accounting Firm Board of Directors Advanced Plant Pharmaceuticals, Inc. New York, NY We have audited the accompanying consolidated balance sheet of Advanced Plant Pharmaceuticals, Inc. and Subsidiaries (a Delaware corporation) as of December 31, 2004 and the related consolidated statements of operations, stockholders' deficiency and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note A to the consolidated financial statements, the Company has negative working capital of $3,288,393, an accumulated deficit of $18,334,001, and there are existing uncertain conditions which the company faces relative to its obtaining capital in the equity markets. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. See also Notes D and F regarding substantial related party stock transactions for services rendered to the Company and stock issued in 2004. Meyler & Company, LLC Middletown, NJ May 2, 2005 F-1 To the Board of Directors and Shareholders Advanced Plant Pharmaceuticals, Inc. New York, N.Y. INDEPENDENT AUDITORS' REPORT We have audited the accompanying balance sheet of Advanced Plant Pharmaceuticals, Inc. as of December 31, 2003 and the related statements of operations, changes in stockholders' deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Plant Pharmaceuticals, Inc. as of December 31, 2003 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note A to the financial statements, the Company has no established source of revenue, has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might be result from the outcome of this uncertainty. Also refer to Notes D and F regarding substantial related party stock transactions for services rendered to the Company and stock issued in 2003. Livingston, Wachtell & Co., LLP New York, N.Y. April 12, 2004 F-2 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

December 31, 2004 2003 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,045 $ 265,858 Accounts receivable 306 Inventory 130,081 ------------ ------------ Total Current Assets 1,351 395,939 OFFICE EQUIPMENT, net of accumulated depreciation of $1,824 2,529 OTHER ASSETS Goodwill 10,406 Intangible assets, net of impairment losses 428,360 Due from related companies 11,738 Prepaid and other assets 7,144 179,144 ------------ ------------ 17,550 619,242 ------------ ------------ Total Assets $ 21,430 $ 1,015,181 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Bank overdraft $ 5,111 Accounts payable 167,108 $ 231,131 Accrued expenses 568,983 548,518 Accrued expenses - stockholders 901,246 569,182 Due to distributor 103,500 103,500 Due to stockholder - asset acquisition 1,315,000 1,315,000 Loans payable - stockholders 228,796 710,283 ------------ ------------ Total Current Liabilities 3,289,744 3,477,614 STOCKHOLDERS' DEFICIENCY Preferred stock, authorized 10,000,000 shares; $0.0007 par value; 2,500,000 shares issued and outstanding at December 31, 2004 and 2003 1,750 1,750 Common stock, authorized 880,000,000 shares; $0.0007 par value; 748,157,996 and 536,665,632 shares issued and outstanding at December 31, 2004 and 2003 523,711 375,666 Additional paid-in capital 14,540,226 11,772,554 Accumulated deficit (18,334,001) (14,612,403) ------------ ------------ Total Stockholders' Deficiency (3,268,314) (2,462,433) ------------ ------------ Total Liabilities and Stockholders' Deficiency $ 21,430 $ 1,015,181 ============ ============

See accompanying notes to financial statements. F-3 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31, 2004 2003 ------------- ------------- REVENUE - SALES $ 54,964 $ 69,243 COSTS AND EXPENSES Cost of goods sold 104,999 61,479 Selling, general and administrative expenses 784,662 609,035 Stock based compensation 10,000 Stock issued for services 2,450,717 2,969,553 Loss on impairment of assets 428,360 291,560 Depreciation 824 ------------- ------------- Total Costs and Expenses 3,779,562 3,931,627 ------------- ------------- NET OPERATING LOSS (3,724,598) (3,862,384) OTHER INCOME Miscellaneous income 3,000 400 ------------- ------------- NET LOSS $ (3,721,598) $ (3,861,984) ============= ============= NET LOSS PER SHARE OF COMMON STOCK (basic and fully diluted) $ (.01) $ (.01) ============= ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (basic and fully diluted) 655,309,320 413,423,152 ============= ============= See accompanying notes to financial statements. F-4 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31, 2004 2003 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(3,721,598) $(3,861,984) Stock based compensation 2,460,717 2,969,553 Depreciation expense 824 Provision for loss on impairment of assets 428,360 291,560 Changes in assets and liabilities: (Increase) decrease in accounts receivable (306) 2,409 Decrease (increase) in inventory 130,081 (73,542) Decrease (increase) in other assets 22,000 (170,600) Decrease (Increase) in accounts payable (64,023) 43,441 Increase in accrued expenses 30,849 400,120 Increase in accrued expenses - stockholders 332,064 276,479 ----------- ----------- Net cash used in operating activities (381,032) (122,564) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of office equipment (3,353) Due from related parties 11,738 (11,738) ----------- ----------- Net cash provided by (used in) investing activities 8,385 (11,738) CASH FLOWS FROM FINANCING ACTIVITIES Bank overdraft 5,111 Cash acquired in acquisition of subsidiaries 100 Loans payable - stockholders' - net 17,623 398,191 Proceeds from issuance of common stock 85,000 Proceeds from issuance of preferred stock 1,750 ----------- ----------- Net cash provided by financing activities 107,834 399,941 ----------- ----------- Net (decrease) increase in cash (264,813) 265,639 CASH AT BEGINNING OF PERIOD 265,858 219 ----------- ----------- CASH AT END OF PERIOD $ 1,045 $ 265,858 =========== ===========

See accompanying notes to financial statements. F-5 ADVANCED PLANT PHARMACEUTICALS, INC AND SUBSIDIARIES. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Year Ended December 31, 2004 2003 ---- ---- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock as compensation $2,460,717 $2,969,553 Issuance of common stock in payment of loans payable to stockholders 500,000 425,000 Issuance of common stock for payment of accrued expenses 20,000 Cancellation of common stock upon termination of prepaid consulting agreement 150,000 Assets acquired and liabilities assumed in acquisition of subsidiaries: Cash acquired 100 Goodwill 10,406 Accrued expenses (9,616) Loans payable - stockholders (890)

See accompanying notes to financial statements. F-6 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY For the Years Ended December 31, 2004 and 2003

Preferred Stock Common Stock Additional Total --------------- -------------------- Contributed Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficiency ------ ------ ------ ------ ------- ------- ---------- Balance at December 31, 2002 246,939,950 $ 172,858 $ 8,005,592 $(10,750,419) $(2,571,969) Common stock issued in March 2003 for services at $0.01 83,350,000 58,345 775,155 833,500 Preferred stock issued in March 2003 cash at par 2,500,000 $1,750 1,750 Common stock issued in April 2003 for debt reduction at $.005 85,000,000 59,500 365,500 425,000 Common stock issued in April 2003 for services $0.01 51,000,000 35,700 474,300 510,000 Common stock issued in May 2003 for services at $0.03 21,875,682 15,313 640,957 656,270 Common stock issued in August 2003 services at $0.02 10,000,000 7,000 193,000 200,000 Common stock issued in September 2003 for services at $0.03 19,500,000 13,650 571,350 585,000 Common stock issued in November 2003 for services at $0.04 19,000,000 13,300 746,700 760,000 Net loss for the year ended December 31, 2003 (3,861,984) (3,861,984) --------- ----- ----------- ------- ---------- ----------- ---------- Balance December 31, 2003 2,500,000 1,750 536,665,632 375,666 11,772,554 (14,612,403) (2,462,433)

- continued - See accompanying notes to financial statements. F-7 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY (CONTINUED) For the Years Ended December 31, 2004 and 2003

Preferred Stock Common Stock --------------------- ---------------------- Shares Amount Shares Amount ------------------------------------------------------ Adjust opening balance for new reserved shares on old unexchanged shares 25,698 18 Common stock issued January 22, 2004 for services at $0.027 29,200,000 20,440 Common stock issued March 1, 2004 for services at $0.02 64,050,000 44,835 Common stock issued March 1, 2004 for cash at $0.02 3,000,000 2,100 Common stock issued March 1, 2004 for loan payable at $0.02 25,000,000 17,500 Common stock issued April 20, 2004 for services at $0.02 800,000 560 Consulting Solutions Group-Cancellation April 20, 2004 (5,000,000) (3,500) Common stock issued June 4, 2004 for services at $0.01 5,666,666 3,967 Common stock issued June 4, 2004 for accrued expenses at $0.01 2,000,000 1,400 Common stock issued July 23, 2004 for services at $0.01 1,500,000 1,050 Common stock issued July 23, 2004 for cash at $0.01 1,000,000 700 Common stock issued July 26, 2004 for services at $0.005 6,250,000 4,375 Common stock issued August 30, 2004 for cash at $0.005 3,000,000 2,100 Common stock issued September 23, 2004 for services at $0.0045 8,000,000 5,600 Common stock issued October 15, 2004 for services at $0.0045 25,000,000 17,500 Common stock issued December 21, 2004 for services at $0.0032 7,000,000 4,900 Common stock issued December 28, 2004 for services at $0.0029 35,000,000 24,500 Net loss for the year ended December 31, 2004 --------- ------ ----------- ------------ Balance December 31, 2004 2,500,000 $1,750 748,157,996 $ 523,711 ========= ====== =========== ============

Additional Total Contributed Accumulated Stockholders' Capital Deficit Deficiency ------------------------------------------------ Adjust opening balance for new reserved shares on old unexchanged shares (18) Common stock issued January 22, 2004 for services at $0.027 767,960 788,400 Common stock issued March 1, 2004 for services at $0.02 1,236,165 1,281,000 Common stock issued March 1, 2004 for cash at $0.02 57,900 60,000 Common stock issued March 1, 2004 for loan payable at $0.02 482,500 500,000 Common stock issued April 20, 2004 for services at $0.02 15,440 16,000 Consulting Solutions Group-Cancellation April 20, 2004 (146,500) (150,000) Common stock issued June 4, 2004 for services at $0.01 52,700 56,667 Common stock issued June 4, 2004 for accrued expenses at $0.01 18,600 20,000 Common stock issued July 23, 2004 for services at $0.01 13,950 15,000 Common stock issued July 23, 2004 for cash at $0.01 9,300 10,000 Common stock issued July 26, 2004 for services at $0.005 26,875 31,250 Common stock issued August 30, 2004 for cash at $0.005 12,900 15,000 Common stock issued September 23, 2004 for services at $0.0045 30,400 36,000 Common stock issued October 15, 2004 for services at $0.0045 95,000 112,500 Common stock issued December 21, 2004 for services at $0.0032 17,500 22,400 Common stock issued December 28, 2004 for services at $0.0029 77,000 101,500 Net loss for the year ended December 31, 2004 (3,721,598) (3,721,598) ------------ ------------ ------------ Balance December 31, 2004 $ 14,540,226 $(18,334,001) $ (3,268,314) ============ ============ ============

See accompanying notes to financial statements F-8 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2004 NOTE A - PRINCIPLES OF CONSOLIDATION AND NATURE OF BUSINESS The consolidated financial statements include the accounts of Advanced Plant Pharmaceuticals, Inc. ("APPI") and its majority owned subsidiaries, Amazing Nutritionals, Inc. ("Amazing") acquired in January 2004, and Mazal Plant Pharmaceuticals, Inc. ("Mazal") acquired in December 2004. The Company focuses on the sale of plant based dietary health supplements. The Company owns the rights to a thirteen step manufacturing process which utilizes whole plants to manufacture all natural dietary supplements. The Company intends to use this process to manufacture products for distribution worldwide. APPI was incorporated in November 1994 and had devoted most of its efforts since inception to 1999 conducting research and development, acquiring agreements to the rights of the thirteen step process, and one major sinus product. The Company's products are available for sale to retail stores and its operations are located in Long Island, New York and its corporate offices are located in New York City. Going Concern Uncertainty and Management's Plans As reflected in the accompanying financial statements, the Company has current liabilities in excess of current assets of $3,288,393, resulting in negative working capital. Management is presently seeking to raise permanent equity capital in the capital markets to eliminate negative working capital and provide working capital. Failure to raise equity capital or secure some other form of long-term debt arrangement will cause the Company to further increase its negative working capital deficit. However, there are no assurances that the Company will succeed in obtaining equity financing or some form of long-term debt instrument. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant Estimates Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. Significant areas requiring the use of management estimates include: valuation of inventory, impairment loss on intangible assets, accrued liabilities including contingent liabilities for payroll taxes, valuation of stock options and stock issued for debt and services provided by related parties. Cash and Cash Equivalents The Company considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents. F-9 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are adjusted by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Net Loss Per Common Share The Company computes per share amounts in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". SFAS No. 128 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available to Common Stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of Common Stock and Common Stock equivalents outstanding during the periods. Business Combinations Goodwill In July 2001, the Financial Accounting Standards Board ("FSAB") issued SFAS NO. 141, "Business Combinations". SFAS No. 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. In July, 2001, the FASB issued SFAS NO. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairment of goodwill. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 changes the accounting for long-lived assets to be held and used by eliminating the requirement to allocate goodwill to long-lived assets to be tested for impairment, by providing a probability weighted cash flow estimation approach to deal with situations in which alternative courses of action to recover the carrying amount of possible future cash flows and by establishing a primary-asset approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for long-lived assets to be held and used. SFAS No. 144 changes the accounting for long-lived assets to be disposed of other than by sale by requiring that the depreciable life of a long-lived asset to be abandoned be revised to reflect a shortened useful life and by requiring the impairment loss to be recognized at the date a long-lived asset is exchanged for a similar productive asset or distributed to owners in a spin-off if the carrying amount of the asset exceeds its fair value. SFAS No 144 changes the accounting for long-lived assets to be disposed of by sale by requiring that discontinued operations no longer be recognized in a net realizable value basis (but at the lower of carrying amount or fair value less costs to sell), by eliminating the recognition of future operating losses of discontinued components before they occur and by broadening the presentation of discontinued operations in the income statement to include a component of an entity rather than a segment of a business. A component of an entity comprises operations and cash flows that can be clearly distinguished operationally and for financial reporting purposes from the rest of the entity. F-10 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Allowance for Doubtful Accounts It is the Company's policy to provide an allowance for doubtful accounts when it believes there is a potential for non-collectibility. Inventories Inventories are stated at the lower of cost or market on the first-in, first-out ("FIFO") basis. There was no inventory at December 31, 2004. Office Equipment and Depreciation Office equipment is stated at cost and is depreciated using the straight line method over the estimated useful lives of the respective assets. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized. When office equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in operations. Stock-Based Compensation SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires employee compensation expense to be recorded (1) using the fair value method or (2) using the intrinsic value method as prescribed by accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB25") and related interpretations with pro forma disclosure of what net income and earnings per share would have been if the Company adopted the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of APB 25. For non-employee options and warrants, the company uses the fair value method as prescribed in SFAS 123. Revenue Recognition The Company recognizes revenue when the product is manufactured and shipped. Research and Development Costs Research and development costs are expensed as incurred. Total research and development expenditures for the years ended December 31, 2004 and 2003 amounted to $149,419 and $131,799, respectively. NOTE C - ACQUISITIONS In January 2004, the Company acquired a 44% interest in Amazing Nutritionals, Inc., (Amazing") a development stage company, whereby APPI sold Amazing all of the rights, title, patents, trademarks, processes and related items of LHM123 which is a natural composition for the treatment of senile dementias, in consideration for 3,300,000 shares of Amazing's common stock. F-11 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE C - ACQUISITIONS (CONTINUED) In December 2004, the Company acquired a 99% interest in Mazal Plant Pharmaceuticals, Inc., a development stage company, whereby APPI sold Mazal all of its rights relating to or connected with developing, manufacturing and distributing of three of its products, plant based compositions designed to treat elevated cholesterol, leukemia and Alzheimer's disease, in consideration for 7,000,000 shares of Mazal's common stock and an amount due from Mazal of $50,000. The allocation of the purchase price for these acquisitions was as follows: Sale of technology rights $ 3,300 $ 700 ======== ======== Fair value of net assets acquired: Amazing Mazal ------- ----- Cash $ 100 Intangible assets (Technology rights) 3,300 $ 50,700 Goodwill 9,041 1,365 Accrued expenses (2,224) (634) Due to related company (6,027) (50,731) Due to shareholder (890) -------- -------- $ 3,300 $ 700 ======== ======== NOTE D - COMMON STOCK On March 7, 2003 and October 1, 2003, the Director of the Company elected and the stockholders voted to amend the Certificate of Incorporation of the Company to increase the authorized number of shares of common stock from 250,000,000 to 880,000,000 shares and increase the authorized number of shares of preferred stock from 5,000,000 to 10,000,000 shares. In March 2003, the Company issued 83,350,000 shares of its common stock to consultants at $0.01 per share. The aggregate remuneration of $833,500 has been expensed in the current year. In March 2003 the Company issued 2,500,000 shares of its preferred stock at $0.0007 per share for cash realizing $1,750. In April 2003, the Company issued 85,000,000 shares of its common stock at $0.005 per share as debt reduction in the amount of $425,000. In April 2003, the Company issued 51,000,000 shares of its common stock to consultants at $0.01 per share. The aggregate remuneration of $510,000 has been expensed in the current year. In May 2003, the Company issued 21,875,682 shares of its common stock to consultants at $0.03 per share. The aggregate remuneration of $656,270 has been expensed in the current year. In August 2003, the Company issued 10,000,000 shares of its common stock to consultants at $0.02 per share. The aggregate remuneration of $200,000 has been expensed in the current year. F-12 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE D - COMMON STOCK (CONTINUED) In September 2003, the Company issued 19,500,000 shares of its common stock to consultants at $0.03 per share. The aggregate remuneration of $585,000 has been expensed in the current year. In November 2003, the Company issued 19,000,000 shares of its common stock to consultants at $0.04 per share. The aggregate remuneration of $760,000 has been expensed in the current year. On April 20, 2004, the company cancelled 5,000,000 shares of its common stock on the termination of a consulting contract resulting in a decrease in prepaid expense of $150,000. On January 22, 2004, the Company issued 29,200,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.027 per share. The aggregate remuneration of $788,400 has been treated as stock based compensation and expensed in the current year. On March 1, 2004, the Company issued 64,050,000 shares of its common stock to consultants at $0.02 per share. The aggregate remuneration of $1,281,000 has been treated as stock based compensation and expensed in the current year. In connection with a private placement, on March 1, 2004 the Company issued 3,000,000 shares of its common stock at $0.02 per share realizing $60,000. On March 1, 2004, the Company issued 25,000,000 shares of its common stock at $0.02 per share as payment of $500,000 against a loan payable. On April 20, 2004, the Company issued 800,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to a consultant at $0.02 per share. The aggregate remuneration of $16,000 has been treated as stock based compensation and expensed in the current year. On June 4, 2004, the Company issued 5,666,666 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.01 per share. The aggregate remuneration of $56,667 has been treated as stock based compensation and expensed in the current year. On June 4, 2004, the Company issued 2,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.01 per share as payment of $200,000 against a loan payable. On July 23, 2004, the Company issued 1,500,000 shares of its common stock to consultants at $0.01 per share. The aggregate remuneration of $15,000 has been treated as stock based compensation and expensed in the current year. In connection with a private placement, on July 23, 2004 the Company issued 1,000,000 shares of its common stock at $0.01 per share realizing $10,000. Additionally, the Company issued 1,000,000 common stock warrants at $0.03 per share to the investor in connection with the private placement. Each warrant is entitled to purchase one share of common stock. F-13 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE D - COMMON STOCK (CONTINUED) On July 26, 2004, the Company issued 6,250,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.005 per share. The aggregate remuneration of $31,250 has been treated as stock based compensation and expensed in the current year. In connection with a private placement, on August 30, 2004 the Company issued 3,000,000 shares of its common stock at $0.005 per share realizing $15,000. On September 23, 2004, the Company issued 8,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to a consultant at $0.0045 per share. The aggregate remuneration of $36,000 has been treated as stock based compensation and expensed in the current year. On October 15, 2004, the Company issued 25,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.0045 per share. The aggregate remuneration of $112,500 has been treated as stock based compensation and expensed in the current year. On December 21, 2004, the Company issued 7,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to a consultant at $0.0032 per share. The aggregate remuneration of $22,400 has been treated as stock based compensation and expensed in the current year. On December 28, 2004, the Company issued 35,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to a consultant at $0.0029 per share. The aggregate remuneration of $101,500 has been treated as stock based compensation and expensed in the current year. NOTE E - OFFICE EQUIPMENT Office equipment is comprised of the following: December 31, -------------------- 2003 2004 Computer equipment $ 4,353 $ 1,000 Less accumulated depreciation (1,824) (1,000) ------- ------- Office equipment, net $ 2,529 ======= ======= Depreciation expense for the years ended December 31, 2004 and 2003 amounted to $824 and $0, respectively. NOTE F - RELATED PARTY TRANSACTIONS At various dates throughout 2004, the sole director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 182,466,666 shares of the Company's common stock for consulting services, which is approximately 24% of the outstanding common stock of the Company at December 31, 2004. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2004 and prior years. Of this total, 174,450,000 was issued to related party consultants. The total consulting expense was $2,357,050 to related parties, and included in the accompanying statement of operations for the year ended December 31, 2004, in the caption "Stock issued for services". The value of the consulting services was determined by management to be the market quoted value of the stock as traded on the NASDAQ, Over the Counter Bulletin Board, at the time of each board resolution to issue the stock. At various dates throughout 2003, the sole director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 204,725,682 shares of the Company's common stock for consulting services, which is approximately 38% of the outstanding common stock of the Company at December 31, 2003. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2003 and prior years. Of this total, 201,034,302 was issued to related party consultants. The total consulting expense was $2,556,654 to related parties, and included in the accompanying statement of operations for the year ended December 31, 2003, in the caption "Stock issued for services". The value of the consulting services was determined by management to be the market quoted value of the stock as traded on the NASDAQ, Over the Counter Bulletin Board, at the time of each board resolution to issue the stock. Due to Stockholder - Asset Acquisition On July 16, 1999, the Company entered into a Technology Purchase Agreement ("agreement") with a related consultant whereby the Company acquired exclusive rights and interests to a thirteen-step manufacturing process, which utilizes virtually all of the nutrients found in certain plants needed to manufacture herbal dietary health supplements. The purchase price to the related consultant was 18,000,000 shares of the Company's common stock, which was to be issued to him in two phases. In 2001, the agreement called for 12,000,000 shares of the Company's common stock to be issued at the first phase. As of December 31, 2004 and 2003, none of the stock related to this agreement had been issued. The Company, therefore, in 2000 accrued $1,440,000, which was managements' determination of the common stock value of the 12,000,000 shares at the time of the agreement. Due to the asset F-14 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE F - RELATED PARTY TRANSACTIONS (CONTINUED) Due to Stockholder - Asset Acquisition (Continued) impairment discussed in Note G, no further liability was due at December 31, 2004 or 2003 as per management, and therefore no liability was recorded on the remaining value of the 6,000,000 shares due pursuant to the agreement. During 2003, the Company paid $125,000 towards the balance. At December 31, 2004 and 2003 the balance due was $1,315,000. In addition, the Company agreed to pay to the related consultant a royalty payment of $0.01 per bottle plus, 1% of the Company's suggested retail price of each bottle sold, plus 10% of the Company's net profits from the sale of products manufactured with the process. In the event the Company enters into an agreement with a third party for the sale of products manufactured with the process, the agreement must unconditionally provide for payment to the Company of not less than $20,000,000. Upon receipt of the sale proceeds by the Company, the Company shall issue to the related consultant 5,000,000 shares for each $20,000,000 paid to the Company, not to exceed 25,000,000 shares. Revenues to date have been insignificant and no payments or stock issuances to the related consultant have been made to date. Loans Payable and Accrued Expenses - Stockholders Loans payable - stockholders consists of unsecured, non-interest bearing short-term loans including cash for working capital and accrued salaries, consulting and other expenses paid on behalf of the Company. Upon the resignation of C.J. Lieberman (the Related Consultant) as President in 1996, the Company retained him as a consultant. His current consultant's agreement dated June 10, 1999, provides for monthly consulting fees of $9,000, reimbursement of all direct expenses incurred while providing services to the Company and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.02 per share. These options expired in June 2004, see Note I. In addition to $108,000 consulting expense pursuant to the consulting contract, the Related Consultant received 26,500,000 and 71,500,000 shares of common stock in payment for services rendered valued at $540,500 and $1,835,000 during the years ended December 31, 2004 and 2003, respectively. The balance due the Related Consultant at December 31, 2004 was $73,600. There was no balance due at December 31, 2003. The Director of the Company advanced to the Company cash and paid expenses on behalf of the Company. The Director has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary of $135,000, reimbursement of all direct expenses incurred while providing services to the Company and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.01 per share. These options expired in June 2004, see Note I. The balance due the Director at December 31, 2004 and 2003 was $564,249 and $425,533, respectively. An officer of the Company has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary of $75,000 and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.02 per share. These options expired in June 2004, see Note I. During 2004, The Company issued 1,000,000 shares of common stock to the officer valued at $10,000 as partial payment of accrued salaries. The balance due the Officer at December 31, 2004 was $48,900. There was no balance due at December 31, 2003. F-15 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE F - RELATED PARTY TRANSACTIONS (CONTINUED) During 2003, a stockholder loaned the Company $620,000 for working capital. During 2004, the Company issued 25,000,000 shares of common stock to the stockholder to reduce the debt by $500,000. The balance due the stockholder at December 31, 2004 and 2003 was $120,000 and $620,000, respectively. On February 20, 2000, the Company entered into an asset purchase agreement with Dr. Leonard Bielroy (Chairman of the Board of Directors of APPI who resigned in 2003) whereby the Company acquired the exclusive rights and interest to allergy and sinus formulations he developed ("Assets"). The purchase price included options to purchase 18,000,000 shares of the Company's common stock at an aggregate exercise price of $180. The options are to be issued in two phases. The first phase was completed in 2000 and the options, for 12,000,000 shares of common stock, required to purchase the assets were issued in 2000. The fair value of the 12,000,000 shares, as determined by management, was $1,079,880 and is included in intangible assets. In addition, the Company agreed to pay Dr. Bielroy a royalty payment of $0.01 per bottle plus, 1% of the Company's suggested retail price of each product sold, plus 10% of the Company's net profits from the sale of products manufactured with these Assets. In the event the Company enters into an agreement with a third party for the sale of products manufactured with these assets, the agreement must unconditionally provide for payment to the Company of not less than $20,000,000 either in lump sum or over a period of four years. Upon receipt of the sale proceeds by the Company, the Company shall issue to Dr. Bielroy 5,000,000 shares for each $20,000,000 paid to the Company, not to exceed 25,000,000 shares. During the years ended December 31, 2004 and 2003 royalty expense amounted to $64 and $207, respectively. On March 15, 2000, the Company entered into a consulting agreement with Dr. Bielroy whereby under the terms of the agreement, the Company is required to pay Dr. Bielroy certain monthly amounts, some contingent on the Company achieving specified net profit levels. During 2004, the Company paid down $20,000 of the liability due to Dr. Bielroy by issuing 2,000,000 shares of common stock. Additionally, the Company accrued $12,000 of interest on the loan during 2004. At December 31, 2004 and 2003 the balance due was $110,755 and $118,691, respectively. NOTE G - INTANGIBLE ASSETS/IMPAIRMENT LOSS Intangible assets consist of the following at December 31, 2004 2003 ---- ---- Technology rights $2,526,234 $2,526,234 Accumulated impairment loss 2,526,234 2,097,874 ---------- ---------- $ $ 428,360 ========== ========== Due to lack of sales in the five year period ending December 31, 2004, an impairment loss in the amount of $428,360 and $291,560 was recognized in the years ended December 31, 2004 and 2003, respectively. F-16 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE H - RENT The Company maintains its corporate office in New York pursuant to an operating lease which expires October 30, 2005 and calls for monthly lease payments of $2,156 plus $25 a month for garbage and 35% of the floors electricity. Rent expense for the years ended December 31, 2004 and 2003 amounted to $29,026 and $25,312, respectively. NOTE I - STOCK OPTIONS AND WARRANTS Stock Options The Company has adopted a stock incentive plan which allows for the issuance of shares of the Company's common stock to employees, directors, consultants and advisors. The exercise price for options granted and the maximum term of the options and the vesting period is determined by the Board of Directors and are set forth in each option agreement. In electing to continue to follow APB No. 25 for expense recognition purposes, the Company is obliged to provide the expanded disclosures required under SFAS No. 123 for stock-based compensation granted, including if materially different from reported results, disclosure of pro forma net loss and loss per share had compensation expense relating to 2004 and 2003 grants been measured under the fair value recognition provision of SFAS No. 123. The following table summarizes transactions in stock options through December 31, 2004:

Weighted Weighted Average Average Exercise Options Exercise Options Price Exercisable Price ------- ----- ----------- -------- Balance at December 31, 2002 9,000,000 $ .01 9,000,000 $ .01 Granted Exercised Cancelled --------- --------- Balance at December 31, 2003 9,000,000 .01 9,000,000 .01 Granted Exercised Cancelled (3,000,000) .02 (3,000,000) .02 ----------- ---------- Balance at December 31, 2004 6,000,000 .00001 6,000,000 .00001 =========== ==========

As of December 31, 2004, there were 6,000,000 common stock options outstanding which expired on February 28, 2005. F-17 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE I - STOCK OPTIONS AND WARRANTS (CONTINUED) Stock Warrants The following table summarizes transactions in stock warrants through December 31, 2004:

Weighted Weighted Average Average Exercise Warrants Exercise Warrants Price Exercisable Price -------- ----- ----------- -------- Granted 7,000,000 .03 7,000,000 .03 Exercised Cancelled --------- --------- Balance at December 31, 2004 7,000,000 .03 7,000,000 .03 ========= =========

As of December 31, 2004, there were 7,000,000 common stock warrants outstanding with a weighted average remaining life of 2.5 years and a weighted average price of $0.03. NOTE J - SUBSEQUENT EVENTS On January 18, 2005, the Company issued 30,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.00355 per share. The aggregate remuneration of $106,500 will be treated as stock based compensation and expensed in 2005. In connection with a private placement, on January 24, 2005 the Company issued 10,000,000 shares of its common stock at $0.002 per share realizing $20,000. On February 1, 2005, the Company issued 2,500,000 shares of its preferred stock at $0.008 per share as payment of $20,000 against loans payable - stockholders. On March 5, 2005, Amazing, a subsidiary of the Company, entered into an Agreement of Sale with Nature's Backyard, Inc., whereby Amazing agreed to buy all intellectual property, permits, patents (granted, pending, or applied for), trademarks, processes, formulation, exact ingredients, precise way of manufacturing, and related items of the "Slim Cookie", a product for weight loss and lowering cholesterol. The purchase price is as follows: (a) Payment of $1,000 and the issuance of 200,000 shares of common stock on signing the agreement, (b) 300,000 shares of common stock upon signing and filing of a provisional patent application by the Company, (c) 100,000 shares of common stock upon the issuance of a patent by the U.S. Patent and Trademark Office, (d) payment of $4,000 not more than 60 days from the execution of the Agreement, and (e) payment of $15,000 within 270 days of the execution of the Agreement. On April 26, 2005, the Company issued 4,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission to consultants at $0.00345 per share. The aggregate remuneration of $13,800 will be treated as stock based compensation and expensed in 2005. On April 26, 2005, the Company issued 5,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.00345 per share as payment for accrued expenses. F-18 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2004 NOTE K - RECLASSIFICATION Certain prior year amounts have been reclassified to conform to the classifications used in 2004. F-19