10KSB/A 1 v056043_10ksba.txt U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB/A (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File Number: 000-29462 ADVANCED PLANT PHARMACEUTICALS, INC. (Name of small business issuer as specified in its charter) Delaware 59-2762023 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 43 West 33rd Street New York, NY 10001 ------------------------------------------------------------------------ (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (212) 695-3334 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: $.0007 par value common stock ------------------- Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No Check if no disclosure of delinquent filers pursuant 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 or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. |X| State issuer's revenues for the most recent reporting period (Fiscal year) were $11,577. Aggregate market value of the voting stock held by non-affiliates of the registrant at May 16, 2006, was approximately $1,209,852. As of May 16, 2006, the number of shares issued and outstanding was 798,157,996. The closing price of the common stock at that date was $0.0016. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) |_| Yes |X| No ADVANCED PLANT PHARMACEUTICALS, INC. Form 10-KSB/A - Index For the Fiscal Year Ended December 31, 2005 PART I Page Item 1. Description of Business 3 Item 2. Description of Properties 4 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 5 Item 6. Management's Discussion and Analysis 6 Item 7. Financial Statements 8 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 8 Item 8A. Controls and Procedures 9 Item 8B. Other Information 9 PART III Item 9. Directors and Executive Officers of the Registrant; Compliance with Section 16(a) 10 Item 10. Executive Compensation 11 Item 11. Security Ownership of Certain Beneficial Owners and Management 11 Item 12. Certain Relationships and Related Transactions 12 PART IV Item 13. Exhibits 15 Item 14. Principal Accountant Fees and Services 15 Signatures 16 This Form 10-KSB/A 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. 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. 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. 3 In December 2004, the Company acquired a 99% interest in Mazal Plant Pharmaceuticals, Inc. ("Mazal"), 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 a receivable of $50,000. On June 6, 2005, the Company consummated the transactions contemplated by the Share Exchange Agreement dated as of May 2005 (the "Share Exchange Agreement") by and among the Company, Akid Corporation ("Akid") and James B. Wiegand. Pursuant to the Share Exchange Agreement, the Company sold its entire ownership interest in 7,000,000 shares of the common stock of Mazal to Akid. In exchange, Akid agreed to issue to the Company 20,000,000 shares (the "Exchange Shares") of Akid's common stock. In addition, in a separate transaction, Akid acquired 3,130,00 shars of Mazal's outstanding shares from third parties in exchange for 6,180,000 shares of its common stock. Following the consummation of such share exchange, (i) the Company held 94.2% of Akid's issued and outstanding common stock and (ii) Akid held (including the 3,130,000 shares acquired in the separate transaction) 100% of Mazal's issued and outstanding common stock. In October 2005, Akid filed an amendment to its charter changing its name to "Mazal Plant Pharmaceuticals, Inc." In 2005, 90% of our products were sold to a single retail store in Brooklyn, NY offering healthy lifestyle products. The remaining 10% of our products were sold via our website on the internet. Employees As of December 31, 2005, we had a total of 3 employees, none of which are full time employees. Of these employees, 1 is involved in business development, 1 in sales and 1 in finance. We also employed 1 consultant as of December 31, 2005 who was involved in business development and financing activities. None of our employees are represented by a labor union and we have not entered into a collective bargaining agreement with any union. We have not experienced any work stoppages and consider our relations with our employees to be good. 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. ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of shareholders during the fourth quarter of 2005. 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 16, 2006, had 798,157,996 shares issued and outstanding. During the fiscal years of 2004 and 2005, the price of the shares of Common Stock of the Company reached the following high and low for each quarter. ENDED BID PRICES CALENDAR QUARTER HIGH LOW 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 June 30, 2005 $.006 $.003 September 30, 2005 $.002 $.001 December 31, 2005 $.002 $.001 THE HOLDERS As of May 15, 2006, 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. 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 1,250,000 shares of preferred stock to each David Lieberman and CJ Lieberman for repayment of $10,000 of accrued expenses and $10,000 in outstanding loans. On April 26, 2005, the Company issued 5,000,000 shares of its common stock at $0.0033 per share as consideration for accrued expenses totaling $16,500. On July 5, 2005, the Company issued 1,000,000 shares of its common stock to consultants at $0.001872 per share as compensation for services rendered. * 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. 6 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. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004 Revenues for the year ended December 31, 2005 were $11,577 as compared to $54,964 for the year ended December 31, 2004, which represents a decrease of $43,387. This decrease in revenues from the prior year is primarily due a decrease in marketing due to the lack of funding. COSTS AND EXPENSES Cost and expenses for the year ended December 31, 2005 were $5,108,228 as compared to $3,779,562 for the year ended December 31, 2004, an increase of $1,328,666. This increase was primarily due to an increase 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. Our selling, general and administrative (SG&A) expenses increased to $4,350,659 in the year ended December 31, 2005 from $497,829 in the comparable period for 2004. This increase in SG&A expnses is primarily based on Mazal's inactivity in 2004. Mazal's total SG&A expenses were $4,030,862 in 2005 comprised of $3,665,00 in consulting fees (stock and cash), $138,000 in legal/accounting fees, $101,000 in travel and entertainment, $39,000 in payroll taxes and $31,000 in rent expense. Our salaries and consulting fees decreased to $732,118 for the year ended December 31, 2005 from $2,747,550 for the comparable period in 2004. This decrease results from the fact that we did not issue any stock for services to stockholders in 2005 whereas we issued approximately 174 million shares of stock valued at $2.3 million in 2004. This decrease was partially offset by the following Mazal salaries and consulting fees: $203,000 for salaries pursuant to employment agreements and the issuance of 675,000 shares of Mazal/Akid common stock valued at $115,400. We recorded a gain on forgiveness of debt of $638,291 in 2005. This debt related to a write off of old accounts payable and accrued expenses, some of which is attributable to vendors who conducted clinical trials. This was a one time occurrence and there was no similar event in 2004. 7 Our cost of goods sold as a percentage of revenue decreased to 37% in the year ended December 31, 2005 from 191% in the comparable period in 2004. The reason for this decrease was primarily attributable to the write off of raw materials in 2004. NET LOSS AND NET LOSS PER SHARE Our net loss and net loss per share was $4,458,390 and $0.01 for the year ended December 31, 2005, as compared to $3,721,598 and $0.01 for the year ended December 31, 2004, an increase of $736,792. This increase was due primarily to an increase 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, 2005, we had working capital deficiency of $3,290,488 as compared with $3,288,393 at December 31, 2004, which has relatively stayed unchanged. 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 he 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 him to have an opportunity to comment on the disclosure. (b) Effective March 11, 2003, Livingston, Wachtell & Co., LLP, was retained as independent auditor of the Company. Prior to the engagement, the Company did not consult with Livingston, Wachtell & Co., LLP as to the application of accounting principles relating to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial statements and neither written or oral advice was provided that was considered to be an important factor considered by the small business issuer in reaching a decision as to the accounting, auditing or financial reporting issues. 8 (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 between the 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 uncertainty, 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 (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. 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. 9 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. Bielory 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. 10 ITEM 10. EXECUTIVE COMPENSATION The following table summarizes all compensation paid by us with respect to the fiscal year ended December 31, 2005 paid by us to our President, and all other executive officers whose total cash compensation exceeded $100,000 in the fiscal year ended December 31, 2005 (collectively, the "Named Executive Officers"). TABLE

OTHER ANNUAL NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION($) OPTIONS(#) -------------------------------- ---- ------------ --------------- ----------- David Lieberman 2005 $ 135,000 (1) Chief Executive Officer 2004 $ 135,000 (1) 2003 $ 56,000 (1)

(1) 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. Mr. 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. 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 2,500,000 5% 50% C.J. Lieberman 25,000,000 2,500,000 3 50% All Executive Officers 42,000,000 5% and Directors as a Group (1 person)

* Less than one percent (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. 11 (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 798,157,996 shares of common stock outstanding as of May 15, 2006, assuming no other changes in the beneficial ownership of the our securities. (5) The foregoing table is based upon 5,000,000 shares of preferred stock outstanding as of May 15, 2006, assuming no other changes in the beneficial ownership of the our securities. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS At various dates throughout 2005 and 2004, the sole designated director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 35,000,000 and 182,466,666 shares of the Company's common stock for consulting services, which is approximately 4% and 24% of the outstanding common stock of the Company at December 31, 2005 and 2004, respectively. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2005 and 2004 and prior years. Of this total, 174,450,000 was issued to related party consultants in 2004. No shares were issued to related party consultants in 2005. 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 "Salaries and consulting fees - stockholders". The value of the consulting services was determined by management based on the market quoted value of the stock as traded on the NASDAQ, Over the Counter Bulletin Board, at the time of each board resolution issuing 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 shares issued to Mr. C.J Lieberman ("Related Consultant"), the brother of David Lieberman, during 2003, was 71,500,000 shares, for services rendered in 2003 and prior years. 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 2005 and 2004, 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. As partial satisfaction of the amount owed to the Related Consultant, in the first quarter of 2004, the Company issued 25,000,000 shares of common stock to the Related Consultant. At December 31, 2005 and 2004, the balance due was $1,315,000. 12 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. No shares of common stock were issued to this consultant for services in 2005. The balance due the Related Consultant at December 31, 2005 and 2004 was $153,900 and $73,600. CJ Lieberman also entered into an employment agreement with Mazal. The agreement had a monthly base of $4,000 which was increased to $5,500 and has additional incentive clauses for payment in Mazal common stock and salary increases. The agreement expires December 10, 2006. We prepaid $28,150 in salaries to CJ Lieberman at December 31, 2005. 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. The balance due the Director at December 31, 2005 and 2004 was $696,897 and $564,249, respectively. The Director also entered into an employment agreement with Mazal. The agreement has a monthly base salary of $2,000 and expires on December 10, 2006. Our former secretary (and current employee) of the Company has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary and a five year option to purchase 70,000 shares of the Company's common stock at an exercise price of $0.02 per share. These options expired in June 2004. During 2004, the Company issued 1,000,000 shares of common stock to this officer valued at $10,000 as partial payment of accrued salaries. The balance due at December 31, 2005 and 2004 was $125,496 and $48,900, respectively. The party in the preceding paragraph also entered into an employment agreement with Mazal. The agreement has an annual salary of $36,000 and expires in January 2007. The Company has accrued salary of $8,018 for this individual at December 31, 2005. 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. During 2003, a stockholder loaned the Company $620,000 for working capital. During 2004, the stockholder loaned the Company $8,000 and 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, 2005 and 2004 was $128,000. 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. 13 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. 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 Bielory (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. Bielory 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, 2005 and 2004 royalty expense amounted to $31 and $64, respectively. On March 15, 2000, the Company entered into a consulting agreement with Dr. Bielory whereby under the terms of the agreement, the Company is required to pay Dr. Bielory 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. Bielory 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, 2005 and 2004 the balance due was $110,782 and $110,755, respectively. 14 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 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ----------------------------------------------------------------- 1 2 3 4 5 ----------------------------------------------------------------- FISCAL YEAR AUDIT-RELATED ALL OTHER ENDING AUDIT FEES FEES TAX FEES FEES ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2005 $40,000 -- -- -- ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, $32,500 -- -- -- 2004 ----------------------------------------------------------------- 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. 15 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: November 1, 2006 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. SIGNATURE / TITLE Date: November 1, 2006 By: /s/ David Lieberman -------------------- David Lieberman Sole Director 16 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 (RESTATED) and 2004 ITEM 7. FINANCIAL STATEMENTS TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Cash Flows F-4 Consolidated Statement of Stockholders' Deficiency F-6 Notes to Financial Statements F-9 17 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 sheets of Advanced Plant Pharmaceuticals, Inc. and Subsidiaries (a Delaware corporation) as of December 31, 2005 (restated) and 2004 and the related consolidated statements of operations, stockholders' deficiency and cash flows for the years 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 audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2005 (restated) and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. 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 $3,290,488 , an accumulated deficit of $22,792,391 , 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 significant related party stock transactions for services rendered to the Company and stock issued in 2005 and 2004. Meyler & Company, LLC Middletown, NJ May 16, 2006 (Except as to Notes A, J, K, L and N as to which the date is October 25, 2006) F-1 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

December 31, 2005 2004 ------------ ------------ (Restated) ASSETS CURRENT ASSETS Cash $ 11,688 $ 1,045 Accounts receivable 1,188 306 Prepaid expenses - stockholders 31,550 ------------ ------------ Total Current Assets 44,426 1,351 OFFICE EQUIPMENT, net of accumulated depreciation of $2,942 and $1,824 at December 31, 2005 and 2004, respectively 1,411 2,529 OTHER ASSETS Goodwill 10,406 10,406 Due from related companies 9,000 Other assets 7,144 7,144 ------------ ------------ 26,550 17,550 ------------ ------------ Total Assets $ 72,387 $ 21,430 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Bank overdraft $ 7,977 $ 5,111 Accounts payable 192,372 167,108 Accrued expenses 229,794 568,983 Accrued expenses - stockholders 1,220,481 901,246 Due to distributor 103,500 Due to stockholder - asset acquisition 1,315,000 1,315,000 Loans payable - stockholders 369,290 228,796 ------------ ------------ Total Current Liabilities 3,334,914 3,289,744 DEFERRED CREDIT 4,286,105 STOCKHOLDERS' DEFICIENCY Preferred stock, authorized 10,000,000 shares; $0.0007 par value; 5,000,000 and 2,500,000 shares issued and outstanding at December 31, 2005 and 2004, respectively 3,500 1,750 Common stock, authorized 880,000,000 shares; $0.0007 par value; 798,157,996 and 748,157,996 shares issued and outstanding at December 31, 2005 and 2004, respectively 558,711 523,711 Additional paid-in capital 14,681,548 14,540,226 Accumulated deficit (22,792,391) (18,334,001) ------------ ------------ Total Stockholders' Deficiency (7,548,632) (3,268,314) ------------ ------------ Total Liabilities and Stockholders' Deficiency $ 72,387 $ 21,430 ============ ============

See accompanying notes to financial statements. F-2 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2005 2004 ------------- ------------- (Restated) REVENUE - SALES $ 11,577 $ 54,964 COSTS AND EXPENSES Cost of goods sold 4,313 104,999 Salaries and consulting fees - stockholders 732,118 2,747,550 Selling, general and administrative expenses 4,350,659 497,829 Loss on impairment of assets 20,020 428,360 Depreciation 1,118 824 ------------- ------------- Total Costs and Expenses 5,108,228 3,779,562 ------------- ------------- NET OPERATING LOSS (5,096,651) (3,724,598) OTHER INCOME (EXPENSE) Miscellaneous income 3,000 Interest expense (30) ------------- ------------- (30) 3,000 ------------- ------------- LOSS BEFORE EXTRAORDINARY ITEM (5,096,681) (3,721,598) EXTRAORDINARY ITEM Forgiveness of debt, net 638,291 ------------- ------------- NET LOSS $ (4,458,390) $ (3,721,598) ============= ============= NET LOSS PER SHARE OF COMMON STOCK (basic and fully diluted) $ (.01) $ (.01) ============= ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (basic and fully diluted) 792,788,133 655,309,320 ============= =============

See accompanying notes to financial statements. F-3 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2005 2004 ------------ ------------ (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (4,458,390) $ (3,721,598) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 3,853,709 2,460,717 Depreciation expense 1,118 824 Provision for loss on impairment of assets 20,020 428,360 Forgiveness of debt income (638,291) Changes in assets and liabilities: Increase in accounts receivable (882) (306) Decrease in inventory 130,081 Increase in prepaid expenses - stockholders (31,550) (Increase) decrease in due from related companies (9,000) 11,738 Decrease in other assets 22,000 Increase (decrease) in accounts payable 83,695 (64,023) Increase in accrued expenses 153,671 30,849 Increase in accrued expenses - stockholders 329,235 332,064 ------------ ------------ Net cash used in operating activities (696,665) (369,294) CASH FLOWS FROM INVESTING ACTIVITIES Payments for office equipment (3,353) Payment for intangible asset (1,020) ------------ ------------ Net cash used in investing activities (1,020) (3,353) CASH FLOWS FROM FINANCING ACTIVITIES Bank overdraft 2,866 5,111 Cash acquired in acquisition of subsidiaries 100 Proceeds from loans payable - stockholders' 161,294 17,623 Payments on loans payable - stockholders' (29,800) Proceeds from issuance of common stock 573,968 85,000 ------------ ------------ Net cash provided by financing activities 708,328 107,834 ------------ ------------ Net increase (decrease) in cash 10,643 (264,813) CASH AT BEGINNING OF PERIOD 1,045 265,858 ------------ ------------ CASH AT END OF PERIOD $ 11,688 $ 1,045 ============ ============

See accompanying notes to financial statements. F-4 ADVANCED PLANT PHARMACEUTICALS, INC AND SUBSIDIARIES. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Years Ended December 31, 2005 2004 ----------- ----------- (Restated) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 30 NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock as compensation 3,284,053 $ 2,460,717 Fair market value of Mazal stock options granted recorded as compensation expense and deferred credit 569,656 Issuance of common stock in payment of loans payable to stockholders 500,000 Issuance of common stock for payment of accrued expenses 16,500 20,000 Cancellation of common stock upon termination of prepaid consulting agreement 150,000 Issuance of common stock for intangible assets (technology rights) 19,000 Issuance of preferred stock for payment of loans payable to stockholder 10,000 Issuance of preferred stock for payment of accrued expense - stockholder 10,000 Issuance of Mazal common stock classified as a deferred credit 3,716,449 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-5 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY For the Years Ended December 31, 2005 (Restated) and 2004

Preferred Stock Common Stock Additional --------------------------- ----------------------------- paid-in Shares Amount Shares Amount Capital ------------- ------------- ------------- ------------- ------------- Balance December 31, 2003 2,500,000 $ 1,750 536,665,632 $ 375,666 $ 11,772,554 Adjust opening balance for new reserved shares on old unexchanged shares 25,698 18 (18) Common stock issued January 22, 2004 for services at $0.027 29,200,000 20,440 767,960 Common stock issued March 1, 2004 for services at $0.02 64,050,000 44,835 1,236,165 Common stock issued March 1, 2004 for cash at $0.02 3,000,000 2,100 57,900 Common stock issued March 1, 2004 for loan payable at $0.02 25,000,000 17,500 482,500 Common stock issued April 20, 2004 for services at $0.02 800,000 560 15,440 Consulting Solutions Group-Cancellation April 20, 2004 (5,000,000) (3,500) (146,500) Common stock issued June 4, 2004 for services at $0.01 5,666,666 3,967 52,700 Common stock issued June 4, 2004 for accrued expenses at $0.01 2,000,000 1,400 18,600 Common stock issued July 23, 2004 for services at $0.01 1,500,000 1,050 13,950 Common stock issued July 23, 2004 for cash at $0.01 1,000,000 700 9,300 Common stock issued July 26, 2004 for services at $0.005 6,250,000 4,375 26,875 Common stock issued August 30, 2004 for cash at $0.005 3,000,000 2,100 12,900 Common stock issued September 23, 2004 for services at $0.0045 8,000,000 5,600 30,400 Common stock issued October 15, 2004 for services at $0.0045 25,000,000 17,500 95,000 Common stock issued December 21, 2004 for services at $0.0032 7,000,000 4,900 17,500 Common stock issued December 28, 2004 for services at $0.0029 35,000,000 24,500 77,000 Net loss for the year ended December 31, 2004 ------------- ------------- ------------- ------------- ------------- Balance December 31, 2004 2,500,000 $ 1,750 748,157,996 $ 523,711 $ 14,540,226

See accompanying notes to financial statements. F-6 Total Accumulated Stockholders' Deficit Deficiency ------------- ------------- Balance December 31, 2003 $ (14,612,403) $ (2,462,433) Adjust opening balance for new reserved shares on old unexchanged shares Common stock issued January 22, 2004 for services at $0.027 788,400 Common stock issued March 1, 2004 for services at $0.02 1,281,000 Common stock issued March 1, 2004 for cash at $0.02 60,000 Common stock issued March 1, 2004 for loan payable at $0.02 500,000 Common stock issued April 20, 2004 for services at $0.02 16,000 Consulting Solutions Group-Cancellation April 20, 2004 (150,000) Common stock issued June 4, 2004 for services at $0.01 56,667 Common stock issued June 4, 2004 for accrued expenses at $0.01 20,000 Common stock issued July 23, 2004 for services at $0.01 15,000 Common stock issued July 23, 2004 for cash at $0.01 10,000 Common stock issued July 26, 2004 for services at $0.005 31,250 Common stock issued August 30, 2004 for cash at $0.005 15,000 Common stock issued September 23, 2004 for services at $0.0045 36,000 Common stock issued October 15, 2004 for services at $0.0045 112,500 Common stock issued December 21, 2004 for services at $0.0032 22,400 Common stock issued December 28, 2004 for services at $0.0029 101,500 Net loss for the year ended December 31, 2004 (3,721,598) (3,721,598) ------------- ------------- Balance December 31, 2004 $ (18,334,001) $ (3,268,314) See accompanying notes to financial statements. F-7 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY For the Years Ended December 31, 2005 (Restated) and 2004

Preferred Stock Common Stock Additional --------------------------- -------------------------- paid-in Accumulated Shares Amount Shares Amount Capital Deficit ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2004 2,500,000 $ 1,750 748,157,996 $ 523,711 $ 14,540,226 $(18,334,001) Common stock issued January 18, 2005 for services at $0.00355 30,000,000 21,000 85,500 Common stock issued January 24, 2005 for cash at $0.002 10,000,000 7,000 13,000 Preferred stock issued February 1, 2005 for accrued expenses at $0.008 1,250,000 875 9,125 Preferred stock issued February 1, 2005 for loan payable at $0.008 1,250,000 875 9,125 Common stock issued April 26, 2005 for services at $0.0033 4,000,000 2,800 10,400 Common stock issued April 26, 2005 for accrued expenses at $0.0033 5,000,000 3,500 13,000 Common stock issued July 5, 2005 for services at $0.001872 1,000,000 700 1,172 Net loss for the Year Ended December 31, 2005 (4,458,390) ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2005 5,000,000 $ 3,500 798,157,996 $ 558,711 $ 14,681,548 $(22,792,391) ============ ============ ============ ============ ============ ============

Total Stockholders' Deficiency ------------ Balance, December 31, 2004 $ (3,268,314) Common stock issued January 18, 2005 for services at $0.00355 106,500 Common stock issued January 24, 2005 for cash at $0.002 20,000 Preferred stock issued February 1, 2005 for accrued expenses at $0.008 10,000 Preferred stock issued February 1, 2005 for loan payable at $0.008 10,000 Common stock issued April 26, 2005 for services at $0.0033 13,200 Common stock issued April 26, 2005 for accrued expenses at $0.0033 16,500 Common stock issued July 5, 2005 for services at $0.001872 1,872 Net loss for the Year Ended December 31, 2005 (4,458,390) ------------ Balance, December 31, 2005 $ (7,548,632) ============

See accompanying notes to financial statements. F-8 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) 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. On June 6, 2005, APPI entered into a stock exchange agreement with AKID Corporation ("AKID") to exchange 7,000,000 shares of Mazal's common stock held by APPI for 20,000,000 shares of AKID common stock. AKID also acquired 3,130,000 shares of Mazal's outstanding shares from the remaining Mazal stockholders in exchange for 6,180,000 shares of its common stock. In connection with the merger, Mazal became a wholly owned subsidiary of AKID. Prior to the merger, AKID was a non-operating "shell" corporation. Pursuant to Securities and Exchange Commission rules, the merger of a private operating company, Mazal Plant Pharmaceuticals, Inc., into a non-operating public shell corporation with nominal assets, AKID, is considered a capital transaction. At the time of the merger, the officers and directors of AKID resigned and were replaced with the officers and directors of Mazal. For Financial Statement presentation, the merger has been reflected in the Financial Statements as though it occurred on December 31, 2004. In October 2005, AKID filed a name change to Mazal Plant Pharmaceuticals, Inc. 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 $3,290,481, resulting in negative working capital and an accumulated deficit of $22,792,391. 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 and could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. 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. F-9 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. There are no cash equivalents at December 31, 2005 and 2004. Income Taxes The Company follows Statement of Financial Accounting Standards No. 109 ("SFAS" No. 109). Under this method, the Company recognizes a deferred tax liability or asset for temporary differences between the tax basis of an asset or liability and the related amount reported on the financial statements. The principal types of differences, which are measured at the current tax rates are the deductibility of stock based compensation for income tax purposes and net operating loss carry forwards. SFAS No. 109 requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. 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. 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, 2005 and 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 which is three years. 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. F-10 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2005 and 2004 amounted to $1,000 and $149,419, respectively. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeded the fair value of the assets. Recent Accounting Pronouncements In November 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 151 (SFAS 151), "Inventory Costs." SFAS 151 amends the guidance in APB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS 151 requires that those items be recognized as current period charges regardless of whether they meet the criteria of "so abnormal." In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for financial statements issued for fiscal years beginning after June 15, 2005. The adoption of SFAS 151 is not expected to have a material effect on the Company's financial position or results of operations. In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153 (SFAS 153), "Exchanges of Non-monetary Assets." SFAS 153 amends the guidance in APB No. 29, "Accounting for Non-monetary Assets." APB No.29 was based on the principle that exchanges of non-monetary assets should be measured on the fair value of the assets exchanged. SFAS 153 amends APB No. 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 151 is effective for financial statements issued for fiscal years beginning after June 15, 2005. The adoption of SFAS 153 is not expected to have a material effect on the Company's financial position or results of operations. In December 2004, the FASB revised Statement of Financial Accounting Standards No. 123 (SFAS 123(R)), "Accounting for Stock-Based Compensation." The SFAS 123(R) revision established standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services and focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It does not change the accounting guidance for share-based payment transactions with parties other than employees. For public entities that file as small business issuers, the revisions to SFAS 123(R) are effective as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. The adoption of SFAS 123(R) is not expected to have a material effect on the Company's financial position or results of operations. F-11 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recent Accounting Pronouncements (Continued) In May 2005, the FASB issued SFAS no. 154, "Accounting Changes and Error Corrections ("SFAS No. 154") which replaces APB Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements-An Amendment of ABP Opinion No. 28. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. Specifically, this statement requires "retrospective application" of the direct effect for a voluntary change in accounting principle to prior periods' financial statements, if it is practical to do so. SFAS No. 154 also strictly defines the term "restatement" to mean the correction of an error revising previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and are required to be adopted by the Company in the first quarter of fiscal year 2006. Although we will continue to evaluate the application of SFAS No. 154, management does not anticipate that adoption will have a material impact on our results of operations, financial position or cash flows. 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. 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 ======== ========== F-12 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE D - COMMON STOCK 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. 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. F-13 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE D - COMMON STOCK (CONTINUED) 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. 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 has been treated as stock based compensation and expensed in the current year. 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 1,250,000 shares of its preferred stock at $0.008 per share as payment of $10,000 against accrued expenses - stockholders. On February 1, 2005, the Company issued 1,250,000 shares of its preferred stock at $0.008 per share as payment of $10,000 against loan payable - stockholders. 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 $0.0033 per share. The aggregate remuneration of $13,200 has been treated as stock based compensation and expensed in the current year. On April 26, 2005, the Company issued 5,000,000 shares of its common stock at $0.0033 per share as payment of $16,500 against accrued expenses. On July 5, 2005, the Company issued 1,000,000 shares of its common stock to consultants at $0.001872 per share. The aggregate remuneration of $1,872 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, 2005 2004 --------- ---------- Computer equipment $4,353 $4,353 Less accumulated depreciation (2,942) (1,824) ------- ------- Office equipment, net $1,411 $2,529 ====== ====== == Depreciation expense for the years ended December 31, 2005 and 2004 amounted to $1,118 and $824, respectively. F-14 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE F - RELATED PARTY TRANSACTIONS At various dates throughout 2005 and 2004, the sole designated director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 35,000,000 and 182,466,666 shares of the Company's common stock for consulting services, which is approximately 4% and 24% of the outstanding common stock of the Company at December 31, 2005 and 2004, respectively. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2005 and 2004 and prior years. Of this total, 174,450,000 was issued to related party consultants in 2004. No shares were issued to related party consultants in 2005. 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 "Salaries and consulting fees - stockholders". The value of the consulting services was determined by management based on the market quoted value of the stock as traded on the NASDAQ, Over the Counter Bulletin Board, at the time of each board resolution issuing the stock. Due to Stockholder - Asset Acquisition On July 16, 1999, the Company entered into a Technology Purchase Agreement ("agreement") with a related party 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 party 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, 2005 and 2004, none of the stock related to this agreement had been issued. The Company 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 impairment discussed in Note G, management determined that no further amounts were due at December 31, 2005 or 2004, and therefore no outstanding liability was recorded for the additional 6,000,000 shares due pursuant to the agreement. During 2003, the Company paid $125,000 towards this liability. At December 31, 2005 and 2004 the balance due was $1,315,000. In addition, the Company agreed to pay 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 sale proceeds by the Company, the Company must 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 this related party 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 other expenses paid on behalf of the Company. Accrued expenses - stockholders consists of accrued salaries and consulting fees. Upon the resignation of C.J. Lieberman (the Related Party 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 Party Consultant received 26,500,000 shares of common stock in payment for services rendered valued at $540,500 during the year ended December 31, 2004. No shares of common stock were issued to this consultant for services in 2005. The balance due the Related Party Consultant at December 31, 2005 and 2004 was $153,900 and $73,600, respectively. F-15 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE F - RELATED PARTY TRANSACTIONS (CONTINUED) Loans Payable and Accrued Expenses - Stockholders (Continued) CJ Lieberman also entered into an employment agreement with Mazal. The agreement had a monthly base of $4,000 which was increased to $5,500 and has additional incentive clauses for payment in Mazal common stock and salary increases. The agreement expires December 10, 2006. Salary expense amounted to $95,900 for the year ended December 31, 2005, and included monthly payments totaling $63,000 and 500,000 shares of Mazal common stock valued at $32,900. Prepaid expenses include $28,150 of salaries paid in advance to CJ Lieberman at December 31, 2005. 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, 2005 and 2004 was $696,897 and $564,249, respectively. The Director also entered into an employment agreement with Mazal. The agreement has a monthly base salary of $2,000. The agreement expires December 10, 2006. Salary expense amounted to $24,000 for the year ended December 31, 2005. Accrued expenses - stockholders includes accrued salary of $9,000 at December 31, 2005. 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, 2005 and 2004 was $125,496 and $48,900, respectively. The above officer also entered into an employment agreement with Mazal. The agreement has an annual salary of $36,000 and expires January 2, 2007. Accrued expenses - stockholders includes accrued salary of $8,018 at December 31, 2005. During 2003, a stockholder loaned the Company $620,000 for working capital. During 2004, this stockholder loaned the Company $8,000 and 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, 2005 and 2004 was $128,000. On February 20, 2000, the Company entered into an asset purchase agreement with Dr. Leonard Bielory (former 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 were 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. Bielory 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 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. Bielory 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, 2005 and 2004 royalty expense amounted to $31 and $64, respectively. F-16 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE F - RELATED PARTY TRANSACTIONS (CONTINUED) Loans Payable and Accrued Expenses - Stockholders (Continued) On March 15, 2000, the Company entered into a consulting agreement with Dr. Bielory whereby under the terms of the agreement, the Company is required to pay Dr. Bielory 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. Bielory by issuing 2,000,000 shares of common stock. At December 31, 2005 and 2004 the balance due was $110,782 and $110,755, respectively. The President of Mazal entered into an employment agreement which had a monthly base salary of $4,000 which was increased to $5,500, and has additional incentive clauses for payment in Mazal common stock and salary increases. The agreement expires November 1, 2006. Salary expense amounted to $212,530 for the year ended December 31, 2005, and included monthly payments totaling $63,000 and 750,000 shares of Mazal common stock valued at $149,530. Accrued expenses - stockholders includes accrued salary of $13,000 at December 31, 2005. The Chief Financial Officer of Mazal entered into an employment agreement which had a monthly base of $2,900 and 75,000 shares of Mazal common stock upon signing. Salary expense amounted to $99,900 for the year ended December 31, 2005 and included monthly payments totaling $17,400 and 75,000 shares of Mazal common stock valued at $82,500. Prepaid expenses include $3,400 of prepaid salary payments at December 31, 2005. The Director of Regulatory and Clinical Operations of Mazal entered into an employment agreement with a monthly base of $2,200 which expires December 10, 2006. Salary expense for the year ended December 31, 2005 amounted to $59,800 and included monthly payments totaling $15,800 and 40,000 shares of Mazal common stock valued at $44,000. Accrued expenses - stockholders includes accrued salary of $2,200 at December 31, 2005. F-17 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE G - INTANGIBLE ASSETS/IMPAIRMENT LOSS Intangible assets consist of the following at December 31, 2005 2004 ------------- ------------- Technology rights $ 2,546,254 $ 2,526,234 Accumulated impairment loss 2,546,254 2,526,234 ------------- ------------- $ - $ - ============ ============ Pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", a long-lived asset group shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Due to a lack of sales in the five year period ending December 31, 2005, and no expected present value based on estimated future cash flows, the technology rights are deemed to have no fair value and an impairment loss in the amount of $20,020 and $428,360 was recognized in the years ended December 31, 2005 and 2004, respectively. NOTE H - RENT The Company maintains its corporate office in New York pursuant to an operating lease which expired October 30, 2005 and called for monthly lease payments of $2,156 plus $25 a month for garbage and 35% of the floors electricity cost. The Company is currently leasing the space on a month to month basis. Mazal maintains additional office space in Jerusalem, Israel pursuant to a one-year sub-lease expiring June 2006 at a monthly rate of $1,200. From January 2005 to May 2005, the Company rented office space in the home of the Company's President in the amount of $12,000. During 2005, the Company commenced sub-leasing part of its corporate office space in New York, on a month to month basis, to a related company for $750 per month. Sub-lease income amounting to $9,000 has been recorded as a reduction to rent expense during the year ended December 31, 2005. Rent expense for the years ended December 31, 2005 and 2004 amounted to $39,721 and $29,026, 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 2005 and 2004 grants been measured under the fair value recognition provision of SFAS No. 123. F-18 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE I - STOCK OPTIONS AND WARRANTS (CONTINUED) Stock Options (Continued) The following table summarizes transactions in stock options through December 31, 2005:

Weighted Weighted Average Average Exercise Options Exercise Options Price Exercisable Price 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 .01 6,000,000 .01 Granted Exercised Cancelled (6,000,000) .01 (6,000,000) .01 ----------- ----------- Balance at December 31, 2005 - - ================= =================

Stock Warrants The following table summarizes transactions in stock warrants through December 31, 2005:

Weighted Weighted Average Average Exercise Warrants Exercise Warrants Price Exercisable Price Granted in 2004 7,000,000 .03 7,000,000 .03 Exercised Cancelled ----------- --------- Balance at December 31, 2004 7,000,000 .03 7,000,000 .03 Granted Exercised Cancelled ------------ --------- Balance at December 31, 2005 7,000,000 .03 7,000,000 .03 ========= =========

As of December 31, 2005, there were 7,000,000 common stock warrants outstanding with a weighted average remaining life of 1.5 years and a weighted average price of $0.03. F-19 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE J - DEFERRED CREDIT The deferred credit of $4,776,409 results from the issuance of common stock by Mazal for cash and services. At December 31, 2005, Mazal has negative equity and therefore no minority interest will be reflected until Mazal has positive equity. Mazal stock issuances for the year ended December 31, 2005 are as follows: In January 2005, Mazal issued 50,000 shares of its common stock to an employee at $0.0001 per share. The aggregate remuneration of $5 has been treated as stock based compensation and expensed in the current year. In January 2005, Mazal issued 106,000 shares of its common stock to a consultant at $0.0001 per share. The aggregate remuneration of $11 has been treated as stock based compensation and expensed in the current year. In March 2005, Mazal issued 100,000 shares of its common stock to its President at $0.0001 per share. The aggregate remuneration of $10 has been treated as stock based compensation and expensed in the current year. In connection with a private placement on April 6, 2005, Mazal issued 100,000 shares of its common stock at $0.20 per share realizing $20,000. On April 19, 2005, Mazal issued 120,000 shares of its common stock to a consultant at $0.20 per share. The aggregate remuneration of $24,000 has been treated as stock based compensation and expensed in the current year. On June 6, 2005, Mazal issued 600,000 shares of its common stock to a consultant at $0.0658 per share. The aggregate remuneration of $39,480 has been treated as stock based compensation and expensed in the current year. In connection with a private placement on June 30, 2005, Mazal issued 3,800,000 shares of its common stock at $0.0658 per share realizing $250,000. On August 1, 2005, Mazal issued 500,000 shares of its common stock to an employee and major stockholder and founder of the Company at $0.0658 per share. The aggregate remuneration of $32,900 has been treated as stock based compensation and expensed in the current year. In connection with a private placement on August 1, 2005, Mazal issued 120,000 shares of its common stock at $0.417 per share realizing $50,000. In September, 2005, Mazal issued 450,000 shares of its common stock to consultants at $0.417 per share. The aggregate remuneration of $187,650 has been treated as stock based compensation and expensed in the current year. In connection with a private placement on October 31, 2005, Mazal issued 1,200,000 shares of its common stock at $0.40 per share realizing $182,000 after deducting costs amounting to $118,000 incurred in connection with the private placement. Mazal also issued options to purchase 1,000,000 shares of its common stock at an exercise price of $0.50 per share and are exercisable for three years. Stock based compensation of $569,656 has been recorded on the issuance of the options and expensed in the current year. On November 15, 2005, Mazal issued 800,000 shares of its common stock to a consultant at $1.03 per share. The aggregate remuneration of $824,000 has been treated as stock based compensation and expensed in the current year. F-20 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE J - DEFERRED CREDIT (CONTINUED) On December 7, 2005, Mazal issued 1,000,000 shares of its common stock to its former officers for consulting services at $1.25 per share. The aggregate remuneration of $1,250,000 has been treated as stock based compensation and expensed in the current year. In connection with a private placement on December 13, 2005, Mazal issued 200,000 shares of its common stock at $0.40 per share realizing $50,000. On December 15, 2005, Mazal issued 149,500 shares of its common stock for late filing of a registration statement, pursuant to the terms of a private placement agreement, at $1.15 per share. The aggregate remuneration of $171,925 has been treated as stock based compensation and expensed in the current year. On December 19, 2005, Mazal issued 75,000 shares of its common stock to its chief financial officer at $1.10 per share. The aggregate remuneration of $82,500 has been treated as stock based compensation and expensed in the current year. On December 19, 2005, Mazal issued 500,000 shares of its common stock for late filing of a registration statement, pursuant to the terms of a private placement agreement, at $1.10 per share. The aggregate remuneration of $550,000 has been treated as stock based compensation and expensed in the current year. Stock Options The following table summarizes transactions in stock options through December 31, 2005:

Weighted Weighted Average Average Exercise Options Exercise Options Price Exercisable Price Granted Exercised Cancelled --------- --------- Balance at December 31, 2004 Granted 1,000,000 $0.50 1,000,000 $0.50 Exercised Cancelled --------- --------- Balance at December 31, 2005 1,000,000 $0.50 1,000,000 $0.50 ========= =========

As of December 31, 2005, there were 1,000,000 common stock options outstanding with a weighted average remaining life of 2.83 years and a weighted average price of $0.50. Assumptions used to value stock options issued by Mazal are as follows: For the Years Ended December 31, 2005 2004 ---- ---- Annual dividend No N/A Volatility 10% N/A Risk free interest rate 5% N/A Expected life-years 3 N/A During the year ended December 31, 2005, Mazal recorded $569,656 of expense on the issuance of stock options. F-21 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE K - FORGIVENESS OF DEBT Forgiveness of debt income in the amount of $638,291 for the year ended December 31, 2005, represents old accounts payable and accrued expenses from prior years due to vendors and suppliers of the Company which will not be paid. No income taxes have been calculated on the debt forgiveness as the Company has net operating losses. The Company considers the write-off to be an extraordinary item as it is not part of the ordinary and typical activities of the Company. NOTE L - SUBSEQUENT EVENTS APPI The gain on sale of investment resulted from the sale of 500,000 shares of common stock of Amazon Biotech, Inc., an affiliated company, for $70,000 on June 22, 2006. The Company received $65,000 and $5,000 is included in miscellaneous receivables. The stock had a basis of $500. The gain on sale of investment also includes the transfer on June 22, 2006, of 1,200,000 shares of common stock of Amazon Biotech, Inc., to three officers of the Company in payment of accrued salaries - officers in the amount of $168,000 and compensation in the amount of $72,000. The stock had a basis of $1,200. On July 10, 2006, the Company entered into an agreement of settlement and release with a significant stockholder of the Company whereby the Company transferred 16,000,000 shares of common stock it held in Mazal in payment of accrued consulting fees of approximately $151,900, due to stockholder - asset acquisition of $1,315,000, loan payable stockholder of approximately $13,700 and stock based compensation of approximately $4,919,400. On July 10, 2006, the Company entered into an agreement of settlement and release with an officer of the Company whereby the Company transferred 1,000,000 shares of common stock it held in Mazal in payment of accrued salaries of approximately $102,000 and stock based compensation of approximately $298,000. On July 25, 2006, the Company entered into an agreement of settlement and release with its President and transferred 200,000 shares of common stock of Amazon Biotech, Inc., held as an investment, as payment of $34,000 of accrued salary. Mazal On January 24, 2006, Mazal issued 200,000 shares of its common stock to a consultant at $1.08 per share. The aggregate remuneration of $216,000 will be treated as stock based compensation and expensed in 2006. On January 25, 2006, Mazal issued 100,000 shares of its common stock to its President at $1.08 per share. The aggregate remuneration of $108,000 will be treated as stock based compensation and expensed in 2006. F-22 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2005 (Restated) NOTE L - SUBSEQUENT EVENTS (CONTINUED) On February 7, 2006, Mazal approved the issuance of 200,000 shares of its common stock at $0.25 per share pursuant to a private placement. Mazal incurred $5,000 in expenses related to the private placement and realized $45,000. On April 11, 2006, Mazal approved the issuance of 400,000 shares of its common stock at $0.25 per share pursuant to a private placement realizing $100,000. On July 1, 2006, Mazal authorized the issuance of 244,000 shares of its common stock for cash at $0.25 per share realizing $61,000. On July 11, 2006, Mazal amended its 2005 Stock Compensation Plan to allow for the issuance of 3,500,000 shares, an increase of 2,500,000 shares. On July 17, 2006, Mazal entered into a consulting agreement whereby the consultant is to introduce medical clinics and assist in the development of clinical trials for Mazal for a term of one year. Either party may terminate the contract with or without cause upon thirty days written notice. The agreement calls for the issuance of 500,000 shares of Mazal's common stock upon signing and 1,500,000 shares of Mazal's common stock upon Mazal receiving a letter of intent from a medical center that has previously performed clinical trials for a major pharmaceutical company, to perform clinical trials at competitive rates, in which at least one third (33%) of the payment shall be in shares of the Mazal's common stock. On July 31, 2006, Mazal entered into an Interim Letter of Agreement for a Phase I/II, double-blind, placebo and active-controlled, randomized, parallel-group study to evaluate the safety and efficacy of MAHDL01 alone and as an adjunct to statin therapy, versus placebo or statin therapy alone, in increasing HDL in subjects with hypoalphalipoproteinemia who are maintaining a restricted diet. The agreement calls for a minimum number of subjects of ten and a maximum of four hundred. Mazal is responsible for all external direct trial expenses. The consultant will receive $2,500 per subject who completes the study, where fifty percent (50%) will be paid in cash and the remaining fifty percent (50%) will be paid in shares of Mazal's common stock. NOTE M - RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the classifications used in 2005. NOTE N - RESTATEMENT The balance sheet at December 31, 2005, was restated to properly reflect accounts payable and the issuance of common stock by Mazal. The effect of these changes was to increase total current liabilities by $8,300, decrease the deferred credit by $490,304 and decrease accumulated deficit by $482,004. The statement of operations for the year ended December 31, 2005, was restated to properly reflect salaries and consulting fees - officers, and selling, general and administrative expenses for the additional payable and the decrease in stock based compensation. The effect of these changes was to decrease the net loss in the amount of $482,004. F-23