10KSB 1 v072068.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-KSB |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO __________ Commission File No. 000-29462 ADVANCED PLANT PHARMACEUTICALS, INC. ------------------------------------ (Exact name of registrant 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 office) (Zip Code) Registrant's telephone number, including area code: (212) 695-3334 --------------------------------------------------------------------- Former name, former address and former fiscal year, (if changed since last report) Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes |X| No |_| Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendments to this Form 10-k. Indicate by a check mark whether the registrant is a large accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| Indicate by a check mark whether the registrant is a shell Company (as defined by Rule 12b-2 of the Act). Yes |_| No |X| APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date: 866,382,384 shares of Common Stock, $.0007 par value, as of April 17, 2007. State issuer's revenues for its most recent fiscal year ended December 31, 2006: $12,144. The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to, as of April 17, 2007 was approximately $2,362,000 based on a closing bid price of $0.003 and a total of approximately 787,382,000 shares held by non-affiliates. APPLICALBE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY (Proceedings during the preceding five years) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes |_| No |_| Not Applicable |X| DOCUMENTS INCORPORATED BY REFERENCE: Form 10-KSB for the year ended December 31, 2005 and all amendments thereto All quarterly reports filed on Form 10-QSB for the 2006 fiscal year ADVANCED PLANT PHARMACEUTICALS, INC. Form 10-KSB - Index For the Fiscal Year Ended December 31, 2006 PART I Page Item 1. Description of Business 1 Item 2. Description of Properties 7 Item 3. Legal Proceedings 7 Item 4. Submission of Matter to a Vote of 8 Security Holders PART II Item 5. Market for Common Equity and Related Stockholder Matters 8 Item 6. Management's Discussion and Analysis 10 Item 7. Financial Statements 12 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 13 Item 8A. Controls and Procedures 13 Item 8B. Other Information 13 PART III Item 9. Directors and Executive Officers of the Registrant; Compliance with Section 16(a) 13 Item 10. Executive Compensation 15 Item 11. Security Ownership of Certain Beneficial Owners and Management 15 Item 12. Certain Relationships and Related Transactions 17 PART IV Item 13. Exhibits 20 Item 14. Principal Accountant Fees and Services 21 Signatures This annual report contains certain 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. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under Item 1. "Description of Business" and Item 6. "Management's Discussion and Analysis", including under the heading "- Risk Factors" under Item 6. Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe such comparisons cannot be relied upon as indicators of future performance. PART I ITEM 1. BUSINESS Advanced Plant Pharmaceuticals, Inc. ("we" "us" "our" the "Company" or "APPI" ) has through 2006 continued 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. On February 28, 2000, the Company entered into an Asset Purchase Agreement with Dr. Bielory to purchase his various allergy and nasal formulations. 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. Amazing Nutritions, Inc. has had no operations and is no longer considered a variable interest entity as defined by FIN 46R. Its operations were consolidated through September 30, 2006 and is included in discontinued operations. 1 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." During 2006, we transferred a majority of our equity holdings in Mazal to satisfy outstanding liabilities and the financial statements of Mazal are no longer included with our financial statements. Our Products: During 2006, we marketed the following products: 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. o Lo-Chol - Lo-Chol's 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 most 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. 2 During 2006 we generated revenues from the sale of Sinusol and Lo-Chol. Employees As of December 31, 2006, we had a total of three employees, none of which are full time employees. Of these employees, one is involved in business development, one in sales and one in finance. We also employed 1 consultant as of December 31, 2006 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. Subsequent Events: On January 16, 2007, the Company acquired all of the outstanding equity of World Health Energy, Inc., a Delaware corporation pursuant to the terms and conditions of a Securities Purchase Agreement and Plan of Reorganization (the "Agreement") dated as of January 9, 2007 by and among APPI, WHE and the stockholders of WHE. Pursuant to the Agreement, APPI agreed to issue 55,000,000 shares of its common stock, par value $0.0007 per share (the "Shares") to Edwin Zhao and David Miedzygorski, the sole stockholders of WHE as follows: (i) 5,000,000 Shares at Closing and (ii) 50,000,000 Shares within 3 days of the filing of an amendment to APPI's Articles of Incorporation with the Delaware Secretary of State to either (A) increase the Company's authorized Common Stock to at least 930,000,000 (a " Capitalization Increase ") or (B) to effectuate a reverse split of the Company's Common Stock (the " Reverse Split "). If the Company effects a Reverse Split prior to any Capitalization Increase, the Remaining Shares due Selling Stockholders shall be proportionately reduced to give effect to the Reverse Split. To date, the Company, has not increased its capitalization or authorized any type of reverse split. Business of World Health Energy: World Health Energy ("WHE") is a developmental stage company with limited operations to date. World Health Energy Inc. ("WHE") is an emerging energy company. The primary objective of the business is to produce and market high-quality, low-cost B100 biodiesel with a view towards creating energy independence. In addition to the production of biodiesel, the Company will design and manufacture biodiesel production plants in varying capacities to meet the demand of the market, thereby, providing much needed complementary renewable energy solutions to the international biodiesel communities. The Company hopes to develop strategic alliances and partnerships with proposed leased and owned facilities and make resale arrangements with international energy suppliers. World Health Energy intends to align itself with strategic partners to service local and global distributors and corporations seeking lower rates, high quality biodiesel and biodiesel manufacturing plants. WHE intends to enter into cooperative agreements with farming communities and local governments. 3 World Health Energy intends to establish biodiesel production operations and to acquire alliances, partnerships and joint ventures with other like minded parties interested in biodiesel technology. WHE plans to offer leadership models, marketing support services and financial support to our acquired alliances, partnerships and joint ventures and to service them for fees and percentages of the operations. World Health Energy's primary marketing objective will be to utilize existing, well-established distribution channels in each of the markets it enters, and train the local channel partners in the features and cost benefits of World Health Energy's products and services. The company will support this strategy with cooperative print marketing programs, web site information services, and direct sales efforts through resellers. Biodiesel technology although used in Europe for twenty years is a pioneering technology in North America and Asia. World Health Energy's main competitors in the future may arise from the larger oil distribution operation companies, Exxon, Shell, PetroCanada, and the new private companies that are also gearing to capitalize from the explosion of biodiesel growth. Most of these companies will have far greater capital resources than WHE. If we are to stay competitive, we must be able to offer the products on a cost competitive basis and provide superior customer service. WHE has targeted a community in northwest Florida to introduce its first product. Further development of this operation will be first subject to entering into a long term land lease program which will enable us to install our first bio-fuel facility. WHE believes that it will require a minimum of $700,000 to commence commercial operations. Significant additional sums will be required to implement the WHE business plan. There is currently no existing commitment for any type of funding, nor can there be any assurance that funding will be available at any time in the future. Without adequate funding, it is unlikely that WHE will be able to commence commercial operations . RISK FACTORS Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected and you could lose all of your investment in our company. 4 RISKS ASSOCIATED WITH THE COMPANY'S PROSPECTIVE BUSINESS AND OPERATIONS It is unlikely that we will be able to sustain profitability in the future. We incurred significant losses in 2006 and there can be no assurance that we will be able to reverse this trend. Even if we are able to successfully expand our operations and implement our new business strategy, there can be no assurance that we will be able to operate profitably. Our Independent Registered Public Accounting Firm has issued a going concern opinion. Due to our operating losses and deficits, our independent registered public accounting firm in their financial statements have raised substantial doubts about our ability to continue as a going concern. If we are not able to continue as a going concern, our operations will terminate and any investment in the Company will likely become worthless. We will require additional financing to continue our operations. We will require a significant infusion of capital to sustain our operations or implement our business plan. There are no plans, agreements, commitments or understandings with respect to any type of future financing. Future financing will likely involve the sale of our common stock. Given the current price of our common stock, it is unlikely that we will be able to secure the amount of financing we desire. Alternatively, if we are required to issue shares of common stock, current shareholders will be diluted. The loss of key members of our senior management team could adversely affect the execution of our business strategy and our financial results. We believe that the successful execution of our business strategy and our ability to build upon the restructuring we have undertaken depends on the continued employment of Mr. Lieberman and key employees from World Health. If Mr. Lieberman or any members of our senior management team become unable or unwilling to continue in their present positions, our financial results and our business could be materially adversely affected. We have had little success with our current business operations and there can be no assurance that our new business venture will be successful. We will continue to operate our current business until and unless we secure sufficient financing for World Health Energy. World Health Energy is a developmental stage company. There can be no assurance that World Health Energy will be able to successfully implement its planned business model. While its officers have significant experience in the field, without proper financing and/or government grants, it is highly unlikely that World Health Energy will be able to implement its business plan. World Health will face intense competition from larger, better capitalized companies We have a negative net worth. In order for us to implement our business plan, we will require a significant capital infusion. Even if we are successful in securing financing, there can be no assurance that we will be able to compete with larger better capitalized companies. 5 Risks Related to the Company's Common Stock The Company does not expect to pay dividends in the foreseeable future. The Company has never paid cash dividends on its common stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business. "Penny stock" rules may make buying or selling the common stock difficult and severely limit their market and liquidity. Trading in the Company's common stock is subject to certain regulations adopted by the SEC commonly known as the "Penny Stock Rules". The Company's common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), which imposes additional sales practice requirements on broker/dealers who sell the Company's common stock in the market. The "Penny Stock" rules govern how broker/dealers can deal with their clients and "penny stock". For sales of the Company's common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a sale. The additional burdens imposed upon broker/dealers by the "penny stock" rules may discourage broker/dealers from effecting transactions in the Company's common stock, which could severely limit its market price and liquidity. This could prevent investors from reselling our common stock and may cause the price of the common stock to decline. Although the Company's common stock is listed for trading on the Over-the-Counter Electronic Bulletin Board, the trading market in the common stock has substantially less liquidity than the average trading market for companies quoted on other national stock exchanges and our price may fluctuate dramatically. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to limited trading volume, the market price of the Company's common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company's performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company's common stock, and the current market price may not be indicative of future market prices. Our stock price may be volatile The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including: o technological innovations or new products and services by us or our competitors; o additions or departures of key personnel; o sales of our common stock o our ability to integrate operations, technology, products and services; o our ability to execute our business plan; o operating results below expectations; o loss of any strategic relationship; 6 o industry developments; o economic and other external factors; and o period-to-period fluctuations in our financial results. In addition, the securities markets have from time to time experience significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline. If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Owners of our Preferred Shares will continue to have significant ownership of our voting securities for the foreseeable future. Our CEO and his brother have been issued shares of our Preferred Shares. The Preferred Shares carry supermajority voting rights. As a result, these people will have the ability, acting as a group, to effectively control our affairs and business, including the election of directors and subject to certain limitations, approval or preclusion of fundamental corporate transactions. This concentration of voting power may: o Delay or prevent a change in control o Impede a merger, consolidation, takeover, or other transaction involving the Company; or o Discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company ITEM 2. DESCRIPTION OF PROPERTY The Company continues to lease space at 43 West 33rd Street, New York, New York 10001. The monthly rent was $2,330 and is currently $2,445 plus utilities. 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 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, nor is the Company aware of any pending or threatened litigation. 7 ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS None. 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 April 18, 2007 had 866,382,384 shares issued and outstanding. The following table sets forth, for the periods indicated, the range of high and low bid quotations for our common stock as quoted on the OTCBB. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions. BID PRICES CALENDAR QUARTER ENDED HIGH LOW FISCAL YEAR 2004 March 31 $ .0400 $ .0200 June 30 $ .0200 $ .0100 September 30 $ .0100 $ .0100 December 31 $ .0100 $ .0050 FISCAL YEAR 2005 March 31 $ .0100 $ .0030 June 30 $ .0060 $ .0030 September 30 $ .0020 $ .0010 December 31 $ .0020 $ .0010 FISCAL YEAR 2006 March 31 $ .0040 $ .0010 June 30 $ .0020 $ .0010 September 30 $ .0020 $ .0010 December 31 $ .0140 $ .0008 FISCAL YEAR 2007 March 31 $ .0070 $ .0006 8 (a) Transfer Agent Our transfer agent is Continental Stock Transfer & Trust Company, 17 Battery Place New York, NY 10004 Their telephone number is (212) 509-4000. (b) Stockholders As of April 18, 2007 there were approximately 440 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. (c) Dividend Policy. We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations. (d) Securities authorized for issuance under equity compensation plans As of December 31, 2006, we had no shares authorized for issuance pursuant to any type of equity compensation plan We did however in January 2007, authorize the issuance of up to 70,000,000 shares of the Company's Common Stock pursuant to a Stock Incentive Plan adopted by the Company. Recent Sales of Unregistered Securities. During the year ended December 31, 2006 we issued the following unregistered shares of our Common Stock On April 1, 2006, the Company issued 19,000,000 shares of its common stock to a vendor for prepaid services at $0.0016 per share. The aggregate remuneration of $30,400 has been treated as prepaid consulting expenses. On November 9, 2006, the Company issued 20,000,000 shares of its common stock to consultants for services at $0.0057 per share. The aggregate remuneration of $114,000 has been treated as stock based compensation and expensed in the current year. On December 10, 2006, the Company issued 25,000,000 shares of its common stock pursuant to a stock purchase agreement at $0.002 per share realizing $50,000. On December 19, 2006, the Company issued 13,000,000 shares of its common stock to consultants for services at $0.0068 per share. The aggregate remuneration of $88,400 has been treated as stock based compensation and expensed in the current year. . The securities issued in the foregoing transactions were made in reliance upon an exemption from registration under Rule 701 promulgated under Section 3(b) of the Securities Act and or Section 4(2) of the Securities Act. Alternatively, these issuances of securities were undertaken under Rule 506 of Regulation D under the Securities Act of 1933, as amended, by the fact that: 9 - the sale was made to a sophisticated or accredited investor, as defined in Rule 502; - we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished; - at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule 502(d)2; and - neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising; ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS From time to time, including herein, we may publish "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward looking statements. The Company undertakes no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise. GENERAL APPI focuses on the research and development of plant based dietary supplements. During July 1999, the Company acquired exclusive rights and interests to a thirteen-step process, which utilizes virtually the whole of the nutrients found in plants to manufacture all natural herbal dietary supplements. The Company intends to use this process to manufacture products that it hopes to distribute worldwide through various sales distribution contracts. Our products we are currently marketing are: o Lo-Chol - Lo-Chol's patent pending formula is derived from the "whole plant" parts of six selected plants that work in concert to help tip your lipid balance (good and bad cholesterol) towards a more normal level. These six plants are synergistically combined using a proprietary "whole plant technology" (a special pharmaceutical-grade process) that delivers virtually all the natural phyto-chemicals and active ingredients in the plants. Unlike almost all other herbal supplements on the market, Lo-Chol does not contain any extracts. Instead, it utilizes the entire part of a specific plant that is processed and standardized to deliver optimum potency and nutritional benefits. 10 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. Management has not been satisfied with the results of its operations in this field. Due to limited capital resources, it has not been able to properly promote or advertise its products. Moreover, even with increased brand awareness, competition in the field remains intense. As a result the Company is pursuing other business opportunities and has acquired all of the issued and outstanding shares of common stock of World Health. Assuming the Company can raise sufficient finances, the Company will focus its attention on the operations on World Health. In the interim, it will continue with its current operations. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005 Revenues for the year ended December 31, 2006 were $12,144 as compared to $11,577 for the year ended December 31, 2005, which represents an increase of $567. The modest increase in revenues did not offset our increased marketing costs. COSTS AND EXPENSES Cost and expenses for the year ended December 31, 2006 were $6,272,693 as compared to $633,644 for the year ended December 31, 2005. This increase was primarily due to an increase in salary and consulting fees to stockholders from $323,000 to $5,607,740. Most of these costs and expenses represent stock based compensation representing fees and other expenses due consultants and affiliates. Selling, general and administrative expenses increased from $305,213 to $660,387. We incurred a net operating loss for 2006 of $6,260,549 as compared to a net operating loss in 2005 totaling $622,067. 11 During 2006, we recorded a loss from discontinued operations of $2,471,156 and a gain on the disposition of discontinued operations totaling $7,091,210. The gain on disposition of discontinued operations is the result of Mazal and Amazing Nutritionals no longer being consolidated effective October 1, 2007. The loss from discontinued operations represents the discontinuance of the operations of both Mazal and Amazing Nutritionals. NET LOSS AND NET LOSS PER SHARE Our net loss and net loss per share was $1,575,613 and $0.00 for the year ended December 31, 2006, as compared to $4,458,390 and $0.01 for the year ended December 31, 2005. This decrease was due primarily to the recognized gain on the disposal of discontinued operations. OTHER MATTERS We will require a significant capital infusion if we are going to fully implement or even see World Health commence operations. There can be no assurance that we will be successful in securing this funding. 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 As of December 31, 2006 we had current assets of $7,600 and total assets of $29,694 as compared to current assets of $44,426 and total assets of $72,387 as of December 31, 2005. We had current liabilities of $1,799,134 as compared to $3,334,914. The significant decline in our current liabilities is primarily attributable to the disposal of the discontinued operations. At December 31, 2006, we had working capital deficiency of $1,791,534 as compared with a working capital deficiency of $3,290,488 at December 31, 2005. 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. 12 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. 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. 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 42 CEO, President and Director David Lieberman has served as President and Chief Executive Officer 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. 13 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 discretion of the Board of Directors. The Company's sole executive officer, David Lieberman, is also the sole director 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. 14 ITEM 10. EXECUTIVE COMPENSATION The following table summarizes all compensation paid by us with respect to the fiscal year ended December 31, 2006 paid by us to our President, and all other executive officers whose total cash compensation exceeded $100,000 in the fiscal year ended December 31, 2006 (collectively, the "Named Executive Officers"). TABLE OTHER ANNUAL NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION($) OPTIONS(#) --------------------------- ---- ------------ -------------- ---------- David Lieberman 2006 $ 135,000 (1) $24,000(2) Chief Executive Officer 2005 $ 135,000 (1) 2004 $ 135,000 (1) (1)All salaries have been accrued but not paid. (2)Paid by transferring shares of Amazon Biotech, Inc. stock held by the Company. EMPLOYMENT AND OTHER AGREEMENTS The Company entered into a 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. The Company has a consulting Agreement with C.J. Lieberman, the brother of our sole officer and director. 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. 15 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 4.8% 50% C.J. Lieberman 25,000,000 2,500,000 2.9% 50% All Executive Officers 42,000,000 2,500,000 4.8% and Directors as a Group (1 person) (1) Officer and/or Directors of the Company. The address of each executive officer and/or director is c/o the Company at 43 West 33rd Street, New York, New York 10001. 16 (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 875,157,996 shares of common stock outstanding as of December 31, 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 December 31, 2006 assuming no other changes in the beneficial ownership of the our securities. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS At various dates throughout 2006 and 2005, the sole designated director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 52,000,000 and 35,000,000 shares of the Company's common stock for consulting services, which is approximately 6% and 4% of the outstanding common stock of the Company at December 31, 2006 and 2005, respectively. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2006 and 2005. Of this total, no shares were issued to related party consultants in 2006 or 2005. 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 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, 2006 and 2005, 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, management determined that no further amounts were due at December 31, 2006 or 2005, 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. During 2006, the Company transferred shares of common stock it held in Mazal as payment in full of this liability. At December 31, 2006 and 2005 the balance due was $-0- and $1,315,000 respectively. 17 In addition, the Company agreed to pay a related party 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. No shares of common stock were issued to this consultant for services in 2006 or 2005. During 2006, the Company transferred shares of Mazal and Amazon Biotech, Inc. ("Amazon") common stock held for investment to the consultant in payment in the amount of $207,900. The balance due the related party consultant at December 31, 2006 and 2005 was $47,000 and $153,900, respectively. 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 $49,500 for the year ended December 31, 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. During 2006, the Company transferred shares of Amazon common stock held for investment in payment of $90,000. The balance due the Director at December 31, 2006 and 2005 was $738,839 and $696,897, 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 $18,000 and $24,000 for the years ended December 31, 2006 and 2005, respectively. Accrued expenses - stockholders includes accrued salary of $9,000 at December 31, 2005. 18 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. During 2006, the Company transferred shares of Mazal and Amazon common stock held for investment as payment in the amount of $157,650. The balance due the Officer at December 31, 2006 and 2005 was $29,346 and $125,496, 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, 2006 and 2005 was $128,000. There is no due date and the loan is to be repaid with the issuance of 26,000,000 shares of the Company's common stock. A stockholder loaned the Company $5,000 for working capital. The balance due to the stockholder at December 31, 2006 and 2005 was $5,000. There is no due date and the loan is to be repaid with the issuance of 1,000,000 shares of the Company's common stock. 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, 2006 and 2005 royalty expense amounted to $56 and $31, 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. At December 31, 2006 and 2005 the balance due was $122,417 and $110,782, 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 $157,500 and $212,530 for the years ended December 31, 2006 and 2005, and included monthly payments totaling $49,500 and $63,000, and 100,000 and 750,000 shares of Mazal common stock valued at $108,000 and $149,530, respectively. Accrued expenses - stockholders includes accrued salary of $13,000 at December 31, 2005. 19 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 $26,100 for the year ended December 31, 2006. 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. 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. 20 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, 2006 $40,000 -- -- $2,500 ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, $40,000 -- -- -- 2005 ----------------------------------------------------------------- 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. 21 SIGNATURES In accordance with the Exchange Act, this report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated. Date: April 19, 2007 ADVANCED PLANT PHARMACEUTICALS, INC. ---------------------------------------- (Registrant) By: /s/ David Lieberman ------------------- David Lieberman, CEO/President/Director Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ David Lieberman President/CEO/ Director April 19, 2007 ------------------- David Lieberman 22 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (RESTATED) 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 Statements of Stockholders' Deficiency F-6 Notes to Financial Statements F-8 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, 2006 and 2005 (restated), 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, 2006 and 2005 (restated), 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 B to the consolidated financial statements, the Company has negative working capital of $1,791,534, an accumulated deficit of $24,368,004, 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 B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. See also Notes E and G regarding significant related party stock transactions for services rendered to the Company and stock issued in 2006 and 2005. Meyler & Company, LLC Middletown, NJ April 16, 2007 F-1 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

December 31, 2006 2005 ------------ ------------ (Restated) ASSETS CURRENT ASSETS Cash $ -- $ 11,688 Accounts receivable -- 1,188 Prepaid expenses - stockholders -- 31,550 Prepaid consulting expenses 7,600 -- ------------ ------------ Total Current Assets 7,600 44,426 OFFICE EQUIPMENT, net of accumulated depreciation of $4,058 and $2,942 at December 31, 2006 and 2005, respectively 295 1,411 ------------ ------------ OTHER ASSETS Goodwill -- 10,406 Due from related companies 16,120 9,000 Other assets 5,679 7,144 ------------ ------------ 21,799 26,550 ------------ ------------ Total Assets $ 29,694 $ 72,387 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Bank overdraft $ 5,468 $ 7,977 Accounts payable 181,946 192,372 Accrued expenses 425,694 229,794 Accrued expenses - stockholders 871,549 1,220,481 Due to related companies 8,484 -- Due to stockholder - asset acquisition -- 1,315,000 Loans payable - stockholders 305,993 369,290 ------------ ------------ Total Current Liabilities 1,799,134 3,334,914 DEFERRED CREDIT -- 4,286,105 STOCKHOLDERS' DEFICIENCY Preferred stock, authorized 10,000,000 shares; $0.0007 par value; 5,000,000 and 5,000,000 shares issued and outstanding at December 31, 2006 and 2005, respectively 3,500 3,500 Common stock, authorized 880,000,000 shares; $0.0007 par value; 875,157,996 and 798,157,996 shares issued and outstanding at December 31, 2006 and 2005, respectively 612,611 558,711 Additional paid-in capital 21,982,453 14,681,548 Accumulated deficit (24,368,004) (22,792,391) ------------ ------------ Total Stockholders' Deficiency (1,769,440) (7,548,632) ------------ ------------ Total Liabilities and Stockholders' Deficiency $ 29,694 $ 72,387 ============ ============

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

For the Years Ended December 31, 2006 2005 ------------- ------------- (Restated) REVENUE - SALES $ 12,144 $ 11,577 ------------- ------------- COSTS AND EXPENSES Cost of goods sold 3,450 4,313 Salaries and consulting fees - stockholders 5,607,740 323,000 Selling, general and administrative expenses 660,387 305,213 Loss on impairment of assets -- -- Depreciation 1,116 1,118 ------------- ------------- Total Costs and Expenses 6,272,693 633,644 ------------- ------------- NET OPERATING LOSS (6,260,549) (622,067) OTHER INCOME (EXPENSE) Gain on sale of investment 69,500 -- Interest expense (4,618) (30) ------------- ------------- 64,882 (30) ------------- ------------- LOSS BEFORE EXTRAORDINARY ITEM & DISCONTINUED OPERATIONS (6,195,667) (622,097) EXTRAORDINARY ITEM Forgiveness of debt, net -- 638,291 ------------- ------------- INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (6,195,667) 16,194 ------------- ------------- Loss from discontinued operations, net of income taxes of $-0- (2,471,156) (4,474,584) Gain on disposal of discontinued operations, net of income taxes of $-0 7,091,210 -- ------------- ------------- Net discontinued operations 4,620,054 (4,474,584) ------------- ------------- NET LOSS $ (1,575,613) $ (4,458,390) ============= ============= NET LOSS PER SHARE OF COMMON STOCK Income (loss) before discontinued operations (basic and fully diluted) $ .01 $ (.01) ============= ============= Net loss (basic and diluted) $ (.00) $ (.01) ============= ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (basic and fully diluted) 817,347,037 792,788,133 ============= =============

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

For the Years Ended December 31, 2006 2005 ----------- ----------- (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(1,575,614) $(4,458,390) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 2,149,900 3,853,709 Gain on discontinued operations (7,091,210) -- Gain on sale of investment (69,500) -- Stock held for investment issued for services 5,289,741 -- Depreciation expense 1,116 1,118 Provision for loss on impairment of assets -- 20,020 Gain on forgiveness of debt -- (638,291) Changes in assets and liabilities: Decrease (increase) in accounts receivable 1,188 (882) Decrease in prepaid consulting expenses 22,800 -- Decrease (increase) in prepaid expenses - stockholders 31,550 (31,550) Increase in due from related companies (4,500) (9,000) Increase in accounts payable 94,383 83,695 Increase in accrued expenses 300,003 153,671 Increase in accrued expenses - stockholders 431,836 329,235 ----------- ----------- Net cash used in operating activities (418,307) (696,665) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investment 70,000 -- Payment for intangible asset -- (1,020) ----------- ----------- Net cash provided by (used in) investing activities 70,000 (1,020) CASH FLOWS FROM FINANCING ACTIVITIES Bank overdraft (322) 2,866 Cash paid in disposal of discontinued operations (43) -- Increase in deposits to acquire common stock 52,275 -- Proceeds from issuance of Mazal common stock 206,000 -- Proceeds from issuance of common stock 50,000 573,968 Payments on loans payable - stockholders' -- (29,800) Proceeds from loans payable - stockholders' 28,709 161,294 ----------- ----------- Net cash provided by financing activities 336,619 708,328 ----------- ----------- Net increase (decrease) in cash (11,688) 10,643 CASH AT BEGINNING OF PERIOD 11,688 1,045 ----------- ----------- CASH AT END OF PERIOD $ -- $ 11,688 =========== ===========

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, 2006 2005 ----------- ----------- (Restated) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 4,618 $ 30 NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock as compensation 2,149,900 3,284,053 Transfer of investments in payment of accrued expenses - stockholders' 455,550 Transfer of investments in payment of due to stockholder - asset acquisition 1,315,000 Transfer of investments in payment of loans payable - stockholders' 13,709 Transfer of investments to stockholders' for compensation classified as additional paid-in capital 7,072,005 Issuance of common stock for prepaid consulting expenses 30,400 Fair market value of Mazal stock options granted recorded as compensation expense and deferred credit 569,656 Issuance of common stock for payment of accrued expenses 16,500 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 and liabilities disposed of in discontinued operations: Cash (43) Due from related companies (12,984) Goodwill (10,406) Bank overdraft 2,187 Accounts payable 104,808 Accrued expenses 104,103 Accrued expenses - stockholders' 325,218 Due to related companies 7,120 Loans payable - stockholders' 78,297 Deposits to acquire common stock 52,275 Deferred credit 6,440,635 Accumulated deficit (7,091,210)

F-5 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY For the Years Ended December 31, 2006 and 2005 (Restated)

Additional Preferred Stock Common Stock Paid-in Shares Amount Shares Amount Capital --------- ------ ----------- -------- ----------- Balance, December 31, 2004 2,500,000 $1,750 748,157,996 $523,711 $14,540,226 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 --------- ------ ----------- -------- ----------- Balance, December 31, 2005 5,000,000 $3,500 798,157,996 $558,711 $14,681,548 ========= ====== =========== ======== ===========

Total Accumulated Stockholders' Deficit Deficiency ------------ ----------- Balance, December 31, 2004 $(18,334,001) $(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) (4,458,390) ------------ ----------- Balance, December 31, 2005 $(22,792,391) $(7,548,632) ============ ===========

See accompanying notes to financial statements. F-6

Preferred Stock Common Stock Additional Total ------------------ ---------------------- Paid-in Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficiency --------- ------- ----------- --------- ------------ ------------- ------------- Balance, December 31, 2005 5,000,000 $ 3,500 798,157,996 $ 558,711 $ 14,681,548 $(22,792,391) $ (7,548,632) Common stock issued April 1, 2006 for services at $0.0016 19,000,000 13,300 17,100 30,400 Adjustments to record transfers of Amazon and Mazal stock to shareholders as stock based compensation June-July 2006 7,072,005 7,072,005 Common stock issued November 9, 2006 for services at $0.0057 20,000,000 14,000 100,000 114,000 Common stock issued December 10, 2006 pursuant to private placement at $0.002 25,000,000 17,500 32,500 50,000 Common stock issued December 19, 2006 for services at $0.0068 13,000,000 9,100 79,300 88,400 Net loss for the Year Ended December 31, 2006 (1,575,613) (1,575,613) --------- ------- ----------- --------- ------------ ------------ ------------ Balance, December 31, 2006 5,000,000 $ 3,500 875,157,996 $ 612,611 $ 21,982,453 $(24,368,004) $ (1,769,440) ========= ======= =========== ========= ============ ============ ============

See accompanying notes to financial statements. F-7 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE A - 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. NOTE B - 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 net 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. During 2006, as a result of the Company transferring shares of Mazal common stock to the Company's stockholders' in payment of debt, Mazal ceased to be a subsidiary. As a result of shares of stock issued by Amazing, the Company no longer holds a majority interest. The results of operations for Mazal and amazing are included in the 2006 financial statements from January 1, 2006 through September 30, 2006. 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. F-8 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE B - PRINCIPLES OF CONSOLIDATION AND NATURE OF BUSINESS (CONTINUED) 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 $1,791,534, resulting in negative working capital and an accumulated deficit of $24,368,004. 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 C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Significant Estimates Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. Significant areas requiring the use of management estimates include: valuation of inventory, impairment loss on intangible assets, accrued liabilities including contingent liabilities for payroll taxes, valuation of stock options and stock issued for debt and services provided by related parties. Cash and Cash Equivalents The Company considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents. There are no cash equivalents at December 31, 2006 and 2005. 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. F-9 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2006 and 2005. 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. 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, 2006 and 2005 amounted to $-0- and $1,000, respectively. F-10 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 June 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation 48, "Accounting for Income Tax Uncertainties" ("FIN 48"). FIN 48 defines the threshold for recognizing the benefits of tax return positions in the financial statements as "more-likely-than-not" to be sustained by the taxing authority. Recently issued literature also provides guidance on the derecognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. FIN 48 also includes guidance concerning accounting for income tax uncertainties in interim periods and increases the level of disclosures associated with any recorded income tax uncertainties. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company expects to adopt the provisions of FIN 48 beginning in the first quarter of 2007. The Company is currently in the process of determining the impact, if any, of adopting the provisions of FIN 48 on its financial position, results of operations and liquidity. In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which defines fair value, establishes a framework for measuring fair value under other accounting pronouncements that permit or require fair value measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effect of certain of the measurements on earnings (or changes in net assets). SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption, as of the beginning of an entity's fiscal year, is also permitted, provided interim financial statements have not yet been issued. The Company expects to adopt the provisions of FIN 48 beginning in the first quarter of 2008. The Company is currently evaluating the potential impact, if any, that the adoption of SFAS No. 157 will have on its consolidated financial statements. In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB No. 108"). SAB No. 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in the current year financial statements. SAB No. 108 requires registrants to quantify misstatements using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB No. 108 does not change the guidance in SAB No. 99, "Materiality," when evaluating the materiality of misstatements. F-11 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recent Accounting Pronouncements (Continued) SAB No. 108 is effective for fiscal years ending after November 15, 2006. Upon initial application, SAB No. 108 permits a one-time cumulative effect adjustment to beginning retained earnings. The Company adopted SAB No. 108 for the fiscal year ended December 31, 2006. Adoption of SAB No. 108 did not have a material impact on the consolidated financial statements. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 allows entities to measure at fair value many financial instruments and certain other assets and liabilities that are not otherwise required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We have not determined what impact, if any, that adoption will have on our results of operations, cash flows or financial position. NOTE D - 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. In 2006, the Company distributed most of its shares in Mazal. As of December 31, 2006 the Company no longer owns as majority or controlling interest in Mazal. NOTE E - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL 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. F-12 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE E - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL (CONTINUED) 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. On April 1, 2006, the Company issued 19,000,000 shares of its common stock to a vendor for prepaid services at $0.0016 per share. The aggregate remuneration of $30,400 has been treated as prepaid consulting expenses. On November 9, 2006, the Company issued 20,000,000 shares of its common stock to consultants for services at $0.0057 per share. The aggregate remuneration of $114,000 has been treated as stock based compensation and expensed in the current year. On December 10, 2006, the Company issued 25,000,000 shares of its common stock pursuant to a stock purchase agreement at $0.002 per share realizing $50,000. On December 19, 2006, the Company issued 13,000,000 shares of its common stock to consultants for services at $0.0068 per share. The aggregate remuneration of $88,400 has been treated as stock based compensation and expensed in the current year. Additional paid-in capital includes $272,600 for the transfer of 1,400,000 shares of common stock of Amazon Biotech, Inc., held as an investment by the Company, to three stockholders' of the Company in payment of accrued expenses - stockholders' in the amount of $202,000 and compensation in the amount of $72,000. The stock had a basis of $1,400. Additional paid-in capital includes $6,799,405 for the transfer of 17,000,000 shares of common stock of Mazal, held as an investment by the Company, to two stockholders' in payment of accrued expenses - stockholders' in the amount of $253,550, due to stockholder - asset acquisition in the amount of $1,315,000, loans payable - stockholders' in the amount of $13,709, and compensation in the amount of $5,217,741. The stock had a basis of $595. Included in shares of common stock outstanding at December 31, 2006, are 88,750,000 shares authorized for issuance by the director of the Company which have not been issued by the Company's stock transfer agent. NOTE F - OFFICE EQUIPMENT Office equipment is comprised of the following: December 31, 2006 2005 Computer equipment $ 4,353 $ 4,353 Less accumulated depreciation (4,058) (2,942) ------- ------- Office equipment, net $ 295 $ 1,411 ======= ======= Depreciation expense for the years ended December 31, 2006 and 2005 amounted to $1,116 and $1,118, respectively. F-13 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE G - RELATED PARTY TRANSACTIONS At various dates throughout 2006 and 2005, the sole designated director of the Company, Mr. David Lieberman, ("Director") authorized the issuance of 52,000,000 and 35,000,000 shares of the Company's common stock for consulting services, which is approximately 6% and 4% of the outstanding common stock of the Company at December 31, 2006 and 2005, respectively. Management and the Director issued this stock to various consultants for professional services rendered to the Company during 2006 and 2005. Of this total, no shares were issued to related party consultants in 2006 or 2005. 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 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, 2006 and 2005, 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 H, management determined that no further amounts were due at December 31, 2006 or 2005, 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. During 2006, the Company transferred shares of common stock it held in Mazal as payment in full of this liability. At December 31, 2006 and 2005 the balance due was $-0- and $1,315,000 respectively. In addition, the Company agreed to pay a related party 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. F-14 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE G - RELATED PARTY TRANSACTIONS (CONTINUED) Loans Payable and Accrued Expenses - Stockholders (Continued) 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 J. No shares of common stock were issued to this consultant for services in 2006 or 2005. During 2006, the Company transferred shares of Mazal and Amazon Biotech, Inc. ("Amazon") common stock held for investment to the consultant in payment in the amount of $207,900. The balance due the related party consultant at December 31, 2006 and 2005 was $47,000 and $153,900, respectively. 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 $49,500 for the year ended December 31, 2006. Salary expense amounted to $95,900 for the years 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 J. During 2006, the Company transferred shares of Amazon common stock held for investment in payment of $90,000. The balance due the Director at December 31, 2006 and 2005 was $738,839 and $696,897, 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 $18,000 and $24,000 for the years ended December 31, 2006 and 2005, respectively. 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 J. During 2006, the Company transferred shares of Mazal and Amazon common stock held for investment as payment in the amount of $157,650. The balance due the Officer at December 31, 2006 and 2005 was $29,346 and $125,496, respectively. F-15 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE G - RELATED PARTY TRANSACTIONS (CONTINUED) 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, 2006 and 2005 was $128,000. There is no due date and the loan is to be repaid with the issuance of 26,000,000 shares of the Company's common stock. A stockholder loaned the Company $5,000 for working capital. The balance due the stockholder at December 31, 2006 and 2005 was $5,000. There is no due date and the loan is to be repaid with the issuance of 1,000,000 shares of the Company's common stock. 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, 2006 and 2005 royalty expense amounted to $56 and $31, 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. At December 31, 2006 and 2005 the balance due was $122,417 and $110,782, 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 $157,500 and $212,530 for the years ended December 31, 2006 and 2005, and included monthly payments totaling $49,500 and $63,000, and 100,000 and 750,000 shares of Mazal common stock valued at $108,000 and $149,530, respectively. Accrued expenses - stockholders includes accrued salary of $13,000 at December 31, 2005. F-16 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE G - RELATED PARTY TRANSACTIONS (CONTINUED) 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 $26,100 for the year ended December 31, 2006. 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. NOTE H - INTANGIBLE ASSETS/IMPAIRMENT LOSS Intangible assets consist of the following at December 31, 2006 2005 ---------- ---------- Technology rights $2,526,234 $2,546,254 Accumulated impairment loss 2,526,234 2,546,254 ---------- ---------- $ -- $ -- ========== ========== Under 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 for Amazing, and no expected present value based on estimated future cash flows, the technology rights are deemed to have no value and an impairment loss in the amount of $-0- and $20,020 was recognized in the years ended December 31, 2006 and 2005, respectively. The loss is included in loss from discontinued operations for the year ended December 31, 2005. NOTE I - RENT The Company maintains its corporate office in New York pursuant to an operating lease which expires March 31, 2008 and calls for monthly lease payments of $2,330 through March 2007 and $2,445 from April 2007 through March 2008, plus 35% of the floors electricity cost and $100 per month May to September for air conditioning. 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, Mazal rented office space in the home of the Company's President in the amount of $12,000. F-17 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE I - RENT (CONTINUED) 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, 2006 and 2005 amounted to $37,174 and $39,721, respectively. NOTE J - 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. The following table summarizes transactions in stock options through December 31, 2006:

Weighted Weighted Average Average Exercise Options Exercise Options Price Exercisable Price ---------- --------- ---------- ---------- Balance at December 31, 2004 6,000,000 $ .01 6,000,000 $ .01 Cancelled (6,000,000) .01 (6,000,000) .01 ---------- --------- ---------- ---------- Balance at December 31, 2005 -- -- Cancelled -- -- ---------- --------- ---------- ---------- Balance at December 31, 2006 ========== ========= ========== ==========

F-18 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE J - STOCK OPTIONS AND WARRANTS (CONTINUED) Stock Warrants The following table summarizes transactions in stock warrants through December 31, 2006:

Weighted Weighted Average Average Exercise Warrants Exercise Warrants Price Exercisable Price --------- --------- --------- --------- 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 Granted Exercised Cancelled --------- --------- Balance at December 31, 2006 7,000,000 .03 7,000,000 .03 ========= =========

As of December 31, 2006, there were 7,000,000 common stock warrants outstanding with a weighted average remaining life of 0.5 years and a weighted average price of $0.03. NOTE K - DEFERRED CREDIT At December 31, 2005, 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. Issuances of Mazal common stock 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. F-19 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE K - DEFERRED CREDIT (CONTINUED) 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. 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. F-20 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE K - DEFERRED CREDIT (CONTINUED) On December 15, 2005, Mazal issued 149,500 shares of its common stock to 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. 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 has been treated as stock based compensation and expensed in the current period. 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 has been treated as stock based compensation and expensed in the current period. 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 approved the issuance of 244,000 shares of its common stock at $0.25 per share pursuant to a private placement realizing $61,000. On July 31, 2006, Mazal issued 2,000,000 shares of its common stock to a consultant at $0.80 per share. The aggregate remuneration of $1,600,000 has been treated as stock based compensation and expensed in the current period. On September 6, 2006, Mazal issued 50,000 shares of its common stock to a consultant at $0.47 per share. The aggregate remuneration of $23,500 has been treated as stock based compensation and expensed in the current period. F-21 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE K - DEFERRED CREDIT (CONTINUED) Stock Options The following table summarizes transactions in stock options through December 31, 2006:

Weighted Weighted Average Average Exercise Options Exercise Options Price Exercisable Price --------- ----------- ----------- -------0 Granted in 2005 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 ========= =========

There were no options exercised , granted or cancelled in 2006. Assumptions used to value stock options issued by Mazal are as follows: For the Years Ended December 31, 2006 2005 ---- ----- Annual dividend N/A No Volatility N/A 10% Risk free interest rate N/A 5% Expected life-years N/A 3 During the year ended December 31, 2005, Mazal recorded $569,656 of expense on the issuance of stock options. NOTE L - GAIN ON SALE OF INVESTMENT The gain on sale of investment IN THE AMOUNT OF $69,500 FOR THE YEAR ENDED December 31, 2006, resulted from the sale of 500,000 shares of common stock of Amazon Biotech, Inc., an affiliated company, for $70,000. The stock had a basis of $500. NOTE M - 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. F-22 ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS December 31, 2006 NOTE N - LETTER OF INTENT On December 19, 2006 the entered into a letter of intent with H & H Equipment Company, Inc ("H&H") under which H&H is to provide $1,200,000 for the construction of two Bio-Diesel plants for the Company in exchange for a 33% in the Company in the form of convertible preferred stock. H&H has not yet provided the funds and therefore no stock has been issued. NOTE O - RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the classifications used in 2006. NOTE P - SUBSEQUENT EVENTS Securities Purchase Agreement and Plan of Reorganization On January 16, 2007, the Company's board of directors approved a Securities Purchase Agreement and Plan of Reorganization entered into on January 9, 2007, between the Company and World Health Energy, Inc. ("WHE") to effect a merger of the two companies. The agreement calls for APPI to purchase 100% of the shares of WHE in exchange for 55,000,000 shares of the Company. The resulting entity would be known as World Health Energy, Inc. In addition, the agreement calls for an employment agreement with the shareholder of WHE as the Chief Operating Officer ("COO") of the Company which will include the issuance of 25,000,000 shares of the current APPI common stock (or the equivalent upon execution of the exchange) and an additional 15,000,000 shares will be allocated to an employment performance package. The COO will also receive a bonus of one percent (1%) of net profits once the Company reaches $5,000,000 in revenue. Issuance of Common stock On January 4, 2007, the Company authorized the issuance of 4,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.0072 per share to the Company's attorney in consideration of accrued legal services. On March 19, 2007, the Company authorized the issuance of 17,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.0047 per share for services rendered. F-23