Nova BioGenetics, Inc.'s primary focus is to exploit its unique product line to become the leader in antimicrobials and biocides for consumer, Original Equipment Manufacturing, industrial, institutional, environmental services, and medical device markets. Nova products are an easily applied reactive coating that modifies surfaces of all types, by creating an invisible covalent bond between surfaces and a variety of chemical agents. Through the cross linking technology, these antimicrobial properties and other chemical agents can impart many performance-enhancing characteristics, such as residual antimicrobial activity, removal of surface-borne and air-borne allergens which may cause respiratory discomfort or asthma, infection resistance, anti-inflammation, lubricity and drug delivery onto many surfaces without changing the dimensions or physical properties of the modified surfaces.

Nova BioGenetics, Inc. believes that its antimicrobial technology have properties that make its products significantly more durable, effective and safer than currently available conventional antimicrobials, non-antibiotics, preservatives or biocides. The Company also believes that certain manufacturers who utilize its products will be able to significantly improve the performance of their products and in some situations differentiate their products in a highly competitive marketplace.

Consumer Products

Nova BioGenetics, Inc. believes that significant opportunities for revenue generation continue to exist in the mass-market retail outlets including supermarkets, mass merchandisers, drug outlets, home improvement centers, and selected chain specialty retailers. Household cleaners and odor eliminator products represent a retail market value in supermarkets alone of over $2 billion per year.

Nova Branded Products

The Company intends to develop, produce, sell, and market distinct products under the Nova name as well as other brand names to be trademarked. The Company has plans to begin shipping its products into initial test markets within the next twelve months. The Company intends to appoint representatives throughout the United States and abroad to market its unique blend of products primarily under various Nova brand names. New products are being developed for use on clothing and other in-home surfaces that will provide sanitation and residual protection from the growth of microorganisms. The Company plans to distribute these products through supermarkets and other selected outlets.

Private Label Products

As new products are developed some will be made available for private label distribution, particularly those that make non-pesticidal claims. In addition, private label opportunities will be extended into other retail channels such as mass merchandisers. The expansion of private label sales will only be executed in situations where both the anticipated volume and pricing are such that positive profitability is available.

Value Added Products

Utilization of Nova BioGenetic's products in leading consumer goods offered by other organizations represents potentially lucrative licensing revenues for the Company. The unique attributes of Nova technology permit incorporation into existing products as a value-added ingredient that imparts anti-microbial properties to the base product.

Consumer goods categories that offer significant potential include household cleaners, gloves, feminine hygiene, laundry and fabric care as well as deodorants and body washes. Many other products that benefit from an anti-microbial claim will be added in the future as research and development progresses.

Marketing programs for value-added products will be designed to support the global branding strategy of Nova. The Company intends to pursue licensing agreements with manufacturers that the Company anticipates will contain a marketing portion that outlines the requirements that each joint product will bear a notification of "Protected By Nova (branded name)" or other similar awareness building program. This extension of the Company's trademarks into categories, products, and geographies will enhance the long term branding campaign. However, no assurance can be given by the Company at the present time that such a program will be launched, or that if launched, will be successful.

Industrial and Institutional Markets (I&I)

The Company intends to follow a path taken by many other proprietary chemical manufacturers and has targeted leading industrial and institutional products companies that currently formulate and market to this industry.

The Institutional & Industrial Division business strategy could be profitable based upon accretive acquisitions and organic growth. The execution of both strategies simultaneously will provide accelerated growth within the Institutional and Industrial market segments.

Simultaneously with the acquisition strategy, the Institutional & Industrial Division will offer selected Nova products to other I&I companies. This action will occur on a restricted basis, primarily with products that do not require E.P.A. registration.

The marketing of Nova products with the Institutional & Industrial segments will be consistent with the other divisions of Nova. All products that contain any of Nova's technology will be clearly labeled. Advertising for the Company and its products will consist of traditional media, printed material in high distribution trade journals, direct mail, and active, visible participation in all appropriate industry conventions.

Specialty Chemical Companies

Nova is currently engaged in testing multiple applications using Nova's technology with leading manufacturers, many of whom are Fortune 500 companies. The Company is committed to a value-add strategy to have our antimicrobial products incorporated into the products of these leading manufacturers. It is Nova's intention to produce co-branded products in the future.

The Company intends to enter into agreements with specialty chemical companies to achieve national distribution. Nova believes there will be significant volume in these agreements that will drive substantial revenue and licensing growth.

New products are to be developed for sale to the industrial and institutional markets and will be submitted for regulatory approval. No assurances can be given that EPA approvals will be obtained and in what time frame.

Future Filings

The Company plans to seek approval on a variety of end use products with disinfectant and sanitization properties. Over the next several years, when adequately capitalized, the Company intends to seek EPA and FDA food contact approvals for Nova products as preservatives in FDA regulated products, including cosmetic articles, such as skin creams; hair treatment products, for example shampoos, and a variety of other products requiring regulatory approvals. However, no assurances can be given that the Company will be successful in commercializing any of these products or will receive any of the required regulatory approvals.

Research and Development

The Company's technologies are in aqueous reactive silanes and antimicrobial products. Combinations of both technologies are producing compounds with new properties and are setting new standards. The Company intends to produce new product releases in the near future. Research on silane based and non-silane based antimicrobial will expand application of antimicrobial Company products from pesticides to medications and treatments to preventive care. Research on silane based durable products will provide the applicator with the opportunity to give surfaces new desired properties.

Future development efforts are anticipated to focus on development of antimicrobial products for medical applications, specifically, human and animal skin treatments, new formaldehyde-free product preservatives, agricultural and food antimicrobial and new active ingredients and formulations useful in the markets currently providing antimicrobial products. Products range from antimicrobial absorbents to cleaning solutions and disinfectants and household products. Products in this category include materials treated by the manufacturer, for example socks, shower curtains and carpets. Product development in this category is anticipated on a market-need basis in collaboration with the manufacturers. In addition, a number of new applications based on the uniqueness of the Company's products are anticipated. There can be no assurance that the Company will be successful in developing these or other products.

Antimicrobial Biobarriers: Burn Care/Synthetic Skin. Commonly, the greater the skin damage, the greater the risk of infection. The skin damage and the risk of infection are especially serious in burn victims. To this day, proper treatment of burn patients remains a challenge to the healthcare professional. In addition to direct wound application, the Company believes that the Company's technology may, under certain conditions, be appropriate for application to skin grafts, either manufactured or harvested from cadavers and most importantly, animal collagen matrixes. Collagen matrix based products are frequently applied graft materials. In addition to their importance as skin grafts, their chemical composition is such that a very favorable bonding with the Company's antimicrobial products and the graft may be possible. The Company believes that the unique properties of the Company's primary technology may, in the future and under certain circumstances, allow certain products based upon its technology to form a bound protective layer that allows the grafted skin to breathe and transport liquids, but reduce and/or prohibit the entry of microorganisms.

Integration of the Company's products and research in the future may lead to new skin treatment products that the Company believes may provide effective skin condition treatment. Adverse skin conditions caused by microbes may be susceptible to treatment by the Company's products. However, no assurances can be given that the Company will be successful in commercializing any of these products or will receive any of the required regulatory approvals.

Transplant/Medical Device Treatments. A common problem in the transplant of organs or artificial implants is rejection by the receiving body's immune system. The rejection is often based on the recognition of the implant as a foreign body. This recognition is affected by the surface of the implant. Silane treatment of implants changes the surface of the implant. The treatment can be durable or temporary. One approach in the future may be to chemically bond currently available anti-rejection medication to the silane. This application will require FDA approval prior to clinical testing and commercial introduction. However, no assurances can be given that the Company will be successful in commercializing any of these products or will receive any of the required regulatory approvals.

Cleaning and Maintenance Products. The residual activity of the Company products provides protection to many surfaces. Application of the products is primarily to clean surfaces. Integration of the Company products into new cleaning products may lead to new products providing protection to surfaces and equipment while cleaning. These new cleaning and maintenance products will be developed for industrial and institutional applications, for example, hospitals, food processing plants and commercial cleaning and consumer applications, for example, bathroom, carpet and kitchen cleaning. However, no assurances can be given that the Company will be successful in commercializing any of these products.

Background / History

Nova is the result of its own extensive and costly technology formulation and development, including trials, supporting data and documentation. The process has been a lengthy and gradual one. The Company has through its European office created global alliances, product awareness and simultaneous testing of other chemistries for compatibility with our technology.

The over-riding objective has always been to take the Company's products worldwide by the most effective means. Nova intends to launch its global expansion strategy when properly capitalized. The Company is committed to meeting its contractual obligations worldwide; the establishment of a global Nova infrastructure will now allow it to support anticipated global contracts with other multinationals and wholesalers operating internationally.

Since early 2005 Nova has had a presence in Europe and the Middle East through its European Master Licensee, Eco Group International Ltd, which was acquired by Nova in June 2005. Nova BioGenetic's in Europe provides a strong platform for the Company's planned expansion into those regions. Dubai has been selected as the future Regional Headquarters for the Middle East.

Global Umbrella

As part of the implementation of the global strategy, strategic marketing and sales packages have been compiled and specific domains of responsibilities have been clearly defined. Considerable preparatory work, regarding global industries and markets, has been completed. The Company has identified 50 world leading companies requiring the application of our technology, many of which have already been approached. The response to our products has been very positive and the remaining targeted companies will be approached in due course. In Europe and other key regions, several Master Wholesalers have been established and have networks in all parts of the world.

Nova product formulation is the foundation on which a global alliance of companies can be formed. By working alongside each other, Nova, together with its clients, marketing partners and wholesalers are able to share their collective intellectual knowledge and to pool resources to best effect. This creates the ability to integrate technologies, to create new chemistries and products and to open up global markets quickly and cost-effectively.

By sharing existing global customer-bases, large sales teams and other pooled resources, penetration of global markets becomes automatic for all companies working under the umbrella of the alliance. As new chemistries and products are developed, they too can be brought to market rapidly and at minimal cost and effort through the ever-growing network.

Applications and Benefits

Products

Nova's antimicrobial products incorporate molecularly-bonded antimicrobial agents in a wide range of applications, e.g., industrial, medical, commercial and healthcare use, synthetic, woven and non-woven textile products, fibers, fabrics, liquids, cleaning products for general households, sealants, adhesives, stains, caulking compounds, coating systems and numerous other surface materials.

This technology is not only effective against a broad spectrum of micro-organisms, including certain viruses, mold, mildew, fungi, yeasts and gram (+) and gram (-) bacteria, but also permanently bonds molecularly to all surfaces to form a new antimicrobial surface which is durable. It will not wash off or dissipate into the air and does not exhibit loss of activity over the normal life of the surface which has been treated. The Nova line of products contains no heavy metals, tin, lead, mercury or formaldehyde and is virtually non-toxic.

Nova offers a systems process that allows for a variety of commercial and industrial applications. Nova's technology provides a long-term effective control of micro-organisms that are commonly associated with human and building health problems. The antimicrobial agent is non-migratory; it does not leach, gas or volatize. It stops and controls mold and mildew odors, soiling, staining and deterioration. It controls the growth of micro-organisms in order to prolong the life of the product.

The antimicrobial agent permanently bonds to surfaces to form a new antimicrobial surface which is durable and which does not exhibit loss of activity over the normal life of the treated surface. Unlike other antimicrobials, Nova's does not allow or cause microbial adaptation or resistance, is effective for use in solving microbial contamination problems and possesses unique features and advantages over conventional antibacterial agents.

Unlike other antimicrobial materials, the Nova product line has never been shown to allow or cause microbial adaptation, resistance, diffusion or migration. It is significantly different from conventional sanitizers, disinfectants, bleaches or biocides which, themselves, contaminate the environment with undesirable chemicals. Some of the differences are in its chemical nature and in its effectiveness, durability and safety.

This technology has a unique advantage over all previously known methods and applications in that the antimicrobial component material is bonded to the surface. Micro-organisms are then destroyed by simple contact with the surface. Nova's antimicrobial technology can be bonded to almost any solid surface such as metal, wood, siliceous material, plastic or organic materials.

In comparison to most other biocides, it is effective against single-celled organisms. Since it does not dissipate, it minimizes or eliminates the potential for micro-organisms to adapt or build up tolerance, or to become resistant. It acts by rupturing the cell membrane, not by poisoning the cell. By contrast, all other antimicrobials, sanitizers and disinfectants are designed to diffuse and be absorbed. Once absorbed, they act by poisoning the micro-organisms or causing fatal mutations. However, as they diffuse, they lose strength and adaptation can and usually does occur.

Conventional biocides are designed to volatize and be absorbed by organisms. Nova's antimicrobial, however, is a durable, broad spectrum antimicrobial that chemically bonds to and, literally, becomes part of the application surface. Treated surfaces remain active for a minimum of a least three months. It acts only when micro-organisms come into direct contact with it. Since the antimicrobial is not absorbed by organisms but remains a part of each application surface, in effect it transforms conventional surfaces and materials into active antimicrobial surfaces which will remain effective for extended periods and which will result in a significant reduction of air-borne microbial contaminants.

Competitive Position

Nova's technology and products exhibit revolutionary, highly potent activity with virtually no toxicity, unlike any other products and/or methods currently in use. Nova's antimicrobial products demonstrate chemical action drastically different from the conventional mechanism of action exhibited by contemporary antimicrobials and disinfectants. Nova's unique technology provides an unparalleled opportunity for market penetration in most industries.

Product Development

At the heart of Nova's success is its ongoing commitment to an extensive R&D program. This guarantees the successful development and introduction of new products, enhancement of existing products and the adaptation of products to yet new applications and wider markets. Nova will continue to evolve and expand its technology platform and is developing the next generation of chemistries and products.

Manufacturing, Blending and Distribution

The manufacturing of the chemistries has been outsourced in North America. Super-concentrate base chemistry is then shipped to designated blenders. This safeguards the integrity of the manufacturing and blending process.

Blending has been outsourced as well for Europe. Additional UK blending facilities and a pan-European distribution capability are available through a specific UK leading independent chemical distributor and operates solely in the UK and Ireland. The alliance includes key facilities in the USA, Asia and Germany.

Nova can provide bulk blending and distribution support when the Company moves to large-scale European production. If required, a further UK manufacturing capability has been negotiated. In Sweden we also have blending and distribution facilities available, as required. This provides a local platform into Scandinavia, the Baltic States and Russia in addition to other European countries.

By these means we have contingency coverage and volume capacity across Europe. North America and Europe both have their own in-house chemists and laboratory facilities, which enable us to augment our in-house testing and technical support for our customers worldwide.

Intellectual Property

From the outset it has been Nova's policy to pursue and secure various technologies and to protect the unique and novel chemistries that are commercially important to its business. The Company's current existing technology cover 163 different compounds. New patent licenses or patent applications, if and when awarded, typically have a twenty (20) year effective term.

Markets

Introduction

Specific markets have been identified as the priority focus for Nova's marketing and sales operations. Within selected industries we have listed those leading companies that either already are, or will become, our primary targets. Key industries are as follows:

Building Materials Industry Profile

One of the largest target markets for Nova is the worldwide construction industry. Used as an additive, Nova dramatically enhances many traditional building materials, including cement, grout, plaster, caulk, adhesives and joint compounds. When integrated into concrete, for example, it inhibits microbial growth, thereby dramatically enhancing the durability, strength and longevity of the finished product. It also prevents deterioration of the concrete by inhibiting the growth of bacteria, fungi and molds.

Nova's technology is also cleared throughout the United States for usage in both residential and commercial structures, and especially in confined or enclosed spaces which would make the usage of other toxic chemicals impractical and ultimately prohibitive. Our level of expertise and number of specialists and contacts throughout the remediation, protection and restoration markets are numerous. In addition to our Nova range of products, we also provide a growing number of other unique products that complete the portfolio we offer to the evolving construction industry.

Paints and Coatings Industry Profile

The specialized chemical industry is under intense, worldwide pressure to produce safer and more effective alternatives to the traditional biocides being sold today. The proliferation of microbial growth, combined with paint-and-coating specific problems, including clear coat finishes and `pinholing,' is fueling the growing interest in antimicrobial solutions. Nova has developed joint-research partnerships with two global market leaders in order to capitalize on this expanding market. This framework of cooperation and unrestricted access to joint findings, in addition to our strict adherence to new legislation, including the Biocidal Products Directive (BPD) in Europe, ensures that we can integrate cutting-edge technology into existing systems, throughout the world.

Textile Industry Profile

The textile industry has long recognized the overwhelming potential of successfully integrating antimicrobial technology into the production and manufacturing of textiles including wool, cotton, blended and synthetic fibers. By being cross-platform compatible, the Nova antimicrobial technology can be imparted seamlessly into these materials to provide protection against wear, bacterial growth and odor. By offering the ability to brand garments with a recognized Nova tag, the added value and perceived worth of these garments in the eye of the consumer is greatly enhanced.

Carpet / Flooring Industry Profile

Carpeting constitutes a major environmental surface for both residential and commercial establishments. By its construction and use, carpeting provides an ideal habitat for a large variety of micro-organisms, some of which not only produce putrid and mildew odors, but also contribute to unsightly defacement and deterioration of carpet components themselves. In addition, the micro-organisms often produce infections or allergic conditions in human beings.

In institutions all floor coverings, textile as well as hard surfaces, need to undergo periodic housekeeping to maintain a hygienic and aesthetic appearance. For this reason, antimicrobial additives should be used as a part of the cleaning procedures. Nova has a long history of effectiveness on flooring material; benefits include exceptional antistatic properties. We are currently working with a major European carpet manufacturer, who is looking to use our technology during the manufacturing process.

Marine Industry Profile

Nova products protect ships, ferries, yachts, boats, containers, marinas, offices and other marine areas. Benefits include health and hygiene protection in close-living conditions and prevention of external fouling, an ongoing problem and significant cost to the owner. External fixtures, ranging from hulls, ropes, masts, sails, handrails, life-jackets, lifeboats and deck areas, are protected and the effects of salt-corrosion and other damage from weathering are minimized. Nova antimicrobial treatment of all fabrics, furniture and fittings, together with walls and floors, prevents damage from micro-organisms and thereby increases the life of all the items appreciably.

In Europe, extensive marine work has been conducted along the Adriatic, Mediterranean and Atlantic coasts (in particular Spain, Portugal, Italy, Slovenia and the UK). We have premium products under development for the marine industry.

JanSan Industry Profile

The combined revenue generated annually by industrial contract and domestic cleaning companies in North America is staggering; the figure for the UK alone exceeds (pound)12bn. Many additives once deemed safe and/or acceptable by various worldwide sanctioning agencies, including the Environmental Protection Agency (EPA), are in the process of being banned. Published `white papers' in the United States and EU legislation are the catalysts driving the sweeping change throughout these massive markets. The need for registered and approved antimicrobial technology to replace the blacklisted chemicals is now imperative. We have written programs and are creating product ranges for hotels, gymnasia, spas and other areas of the leisure industry.

Commercial Laundry Industry Profile

We have expertise in the commercial laundry industry and are working on various products, suitable for either initial or ongoing washes. Benefits include: prevention of cross-contamination risk; reduced electricity and other major cost-savings, including reduced equipment maintenance and downtime; softener; ant-corrosive and anti-static properties, UV protection, together with extended life of sheets, uniforms, drapes and other items. We are working closely with several hospital suppliers in UK and have recently completed specific trials on their behalf, the results of which have been outstanding.

Air Filtration Systems & HVAC Industry Profile

An estimated 90% of antimicrobial contamination is generated by environmental sources. Increased scrutiny is being leveled at manufacturers of integral components needed for a preemptive solution, such as air filtration and HVAC systems, filters, duct work, cooling tower containers and drains. Consumer demand is outpacing supply in a majority of the world, and the common consensus is that antimicrobial, permanently-bonded agents are the preferred solution. The ability to pre-treat almost all of these components is what makes the Nova solution viable, cost-effective and easily implemented.

There is a wealth of existing data which directly pinpoints antimicrobial technology as being the only system to deal with these potential health hazards primarily at the source of their introduction into both commercial and residential environments.

Health Industry Profile

In recent years, the emergence of chemical and antibiotic resistant strains of bacteria (MRSA, VRSA, VRE and others) within high-risk environments has caused major problems for Health Services worldwide due to hospital acquired infections. Nova has developed a unique, fully integrated system of cleaning and surface preparation, protected by an environmentally balanced antimicrobial surface coating, which provides active protection against airborne and surface microbial contamination.

In addition, Nova can provide unique air filtration protection and greatly enhanced air quality. Programs have been written and successful MRSA and hospital trials have been completed. We are working with two global suppliers and manufacturers to the health industry on a wide range of products and services that will protect staff, patients and visitors at hospitals and other health-related locations, including doctors' and dentists' surgeries.

Marketing and Sales

Nova's route to market is simple and cost-effective. Our unique products offer selected, leading companies with many new business opportunities. In turn, this allows us to sell into large global markets on the back of these companies' extensive customer-bases. The process will accelerate as each global contract comes into play and the level of awareness of Nova and its proprietary products increases.

Stepped Process

Our marketing strategy is to demonstrate to clients how we can improve their products, give them the market edge and improve their profits and market share. We also offer global sharing of expertise, knowledge, contacts and customer bases.

Our marketing and sales strategy is based upon a process that is a series of steps that create awareness and interest in our technology and products so that the potential client is fully receptive by the sales stage of the program. The steps are:

o Research an industry and categorize potential clients within that industry;

o Research the compatibility of chemistries;

o Identify how our technology can be integrated into existing products and create new, leading-edge products for clients;

o Create a bespoke presentation showing the marketing, sales and business strategy, together with the full product range and marketing material for individual clients;

o Having raised the interest level, highlight the benefits and business opportunity;

o Finalize the sale.

This is the process that the Company will train all sales and/or account managers involved in Nova marketing and sales and becomes a system that can be replicated in each Nova region. The process is continually refined as feedback is received from our customers and our own sales force.

In addition, the process includes the provision of a package that clients themselves can adopt to increase their market share and profitability.

Customers

Nova's customers fall into 3 categories:

o Multi-nationals / global companies; o Wholesalers - both national and international; o Smaller national companies.

Multi-nationals / Global Companies ----------------------------------

The Company has been working with multinational manufacturing companies both in North America and Europe. Global contracts will be co-ordinated through Head Office and will subsequently be subdivided into regional sales and manufacturing contracts. This will ensure continuity of supply and guaranteed quality of products for customers around the world. A significantly large number of internationally recognized companies are now evaluating our technology and its potential applications across a diverse range of industries.

Wholesalers

It is estimated there are as many as 200,000 wholesalers in Europe. Due to the number of chemicals and products being taken off the market as a result of new EU legislation (Biocidal Products Directive {BPD} and other directives), wholesalers are actively seeking alternatives. The diverse applications of Nova products are leading wholesalers to increasingly look in our direction. Wholesalers provide a ready-made network of customers and a comparatively fast route to market.

Nova BioGenetic's Global strategy

The Nova global strategy is focused on harnessing our collective intelligence and avoiding any unnecessary duplication of cost or effort. Each region will contribute what it does best and will automatically benefit from all global contracts. Other benefits will include being part of a global infrastructure, lower production costs, shared ownership of all intellectual property and immediate access to new licensed technologies and products. This shall enhance Nova's overall earning power and share value.

Regions

Nova's global strategy is based upon four regions:

o THE AMERICAS o EUROPE o THE MIDDLE EAST o ASIA-PACIFIC

The objective is to build quickly upon the existing platforms in North America and Europe before moving into the Middle East. Once the infrastructure is in place in Dubai, it will act as the essential fall-back position for the Corporate Headquarters, should anything untoward happen in Atlanta. Until Dubai has been established and is able to blend products, Europe will provide the manufacturing and distribution capability for both the Middle East and Asia-Pacific.

North America

The Head Office in Atlanta will provide all regions with:

o central administration and policy; o R&D leading to new product and technology development; o corporate training; o technology, legal and essential approvals cover; o global sales and marketing material; o media and other public relations services; o website facilities.

Europe

In the UK, a senior management team with strong contacts within a vast network of companies both in Europe and the Middle-East is in place. The European team adds considerable talent, skill and experience in building and running large organizations. More importantly, it is well versed and comfortable with current uses and applications of antimicrobial products in various markets.

Laboratory facilities as well as banking, legal and other professional services are also available. Inventory has been shipped to the UK where in-house blending and product trials continue to be successful. Samples have been distributed and tested throughout Europe and elsewhere (for example, Morocco, Pakistan, India and Singapore).

Product ranges affiliated to the Nova technology have been identified and are being prepared for leading European companies in specific markets such as leisure, health, building materials, air filtration, remediation, paint, coatings and hygiene.

Dubai

The case for establishing a presence in Dubai is overwhelming. Not only is Dubai at the historical crossroads of East - West trade, but it is also positioned to become the centre of global business over the next decade.

We have visited the three Free Zones established at Sharjah Airport, Dubai International Airport and Jebel Ali Port. At each location we viewed office units, warehouses / light industrial units, shared business facilities and land sites. All the Zones offer outstanding facilities; in the light of our particular requirements, Jebel Ali Port is the best option and it is currently planned to lease an office / warehouse / blending facility there in early 2006. There are many advantages to setting up business in a Free Zone.

Asia-Pacific

Asia-Pacific is a distinct geographical territory; Europe will provide cover for this region until Dubai is up-and-running.

Biopharmeuticals Division

Nova's biopharmaceuticals' division is engaged in the discovery, development, and commercialization of new therapeutic agents that treat life threatening infectious diseases. Nova's biopharmaceuticals division's pipeline is based on various technologies, used as a broad base for applications with existing antibiotic compounds. Attaching certain technology with antibiotic compounds is intended to facilitate potential disruption of bacterial agents.

In particular, Nova's biopharmaceutical mission is to provide solutions to the major therapeutic dilemma of growing bacterial resistance to antibiotics in the present worldwide marketplace. It will use its technology to develop a suite of new antibiotics and antibiotic derivative products. Nova Biogenetics' antibiotic product suite will fall under "Antibiotic Resistance Technology," otherwise referred to as "ART"

Product Differentiation/Competitive Advantage

Nova's broad line of specialized antibiotic products has the potential of disrupting the cell membrane of targeted microorganisms, thus killing them. Presently, generic antibiotic formulations act by diffusing the targeted organism cells and providing the optimal environment for cellular activity to take over and combat the infection. Nova's compounds have the potential to actually kill the targeted organism, significantly enhancing existing generic antibiotic agents.

In addition, Nova possesses the competitive advantage of providing a product platform that can create longevity in the drugs that it produces, by delivering antibiotics that are less susceptible to adaptation or mutation. Much has been learned about the "ART" platform, adding to the volume of microbiologic information available, thus shortening the timeline for development and minimizing the research associated with creating a viable core platform from which to work.

Product Research & Development Pipeline

Nova views bacterial resistance as a major hurdle in effective therapeutic interventions for a significant number of infectious disease processes. This is ever apparent in the clinical practice, where physicians and other healthcare providers are constantly exposed to a number of new antibiotics being offered by pharmaceutical manufacturers, while familiar antibiotic therapy continues to be limited. In both cases, bacterial resistance and the broad spectrum of use are identified as the reasons for the introduction of the new and improved products.

Nova intends to file patents to secure the intellectual property of the compounds and effective molecules Nova will utilize in its pipeline.

The Market for Antibacterial Products

The worldwide sales of prescription antibiotics exceed $23 billion (Biotechnology Industry Association). Antibiotics represent the second largest therapeutic category in terms of pharmaceutical sales. While there are more than 100 different antibiotics from more than 30 different classes, approved for use in humans, a select few antibiotics and classes garner the majority of use. Most of the leading products are broad spectrum, with only a few reserved for targeted or restricted use. While the overall market continues to grow at a rate of 6.5% annually, as antibiotics are increasingly used in combination to combat resistant bacteria, a few new classes of antibiotics have been introduced during the past twenty years.

Explanation of Antibiotic Resistance

(Source: United States Food and Drug Administration)

Disease-causing microbes that have become resistant to drug therapy are an increasing public health concern. Tuberculosis, gonorrhea, malaria, and childhood ear infections are just a few of the diseases that have become hard to treat with conventional antibiotic drugs. Part of the problem is bacteria and other microorganisms that cause infections are remarkably resilient and can develop ways to survive drugs meant to kill or weaken them. This antibiotic resistance, also known as antimicrobial resistance or drug resistance is due largely to the increasing use of antibiotics. Other facts:

o Though food-producing animals are given antibiotic drugs for important therapeutic, disease prevention or production reasons, these drugs have the downside of potentially causing microbes to become resistant to drugs used to treat human illnesses, ultimately making some human ailments harder to treat.

o About 70 percent of bacteria that cause infections in hospitals are resistant to at least one of the drugs most commonly used to treat infections.

o Some organisms are resistant to all approved antibiotics and must be treated with experimental and potentially toxic drugs.

o Research has shown antibiotics are given to patients more often than the recommended guidelines set by federal and other healthcare organizations. For example, patients sometimes ask their doctors for antibiotics for a cold, cough, or the flu, all of which are viral and do not respond to antibiotics. In addition, patients who are prescribed antibiotics do not take the full dosing regimen, thus contributing to resistance.

o Unless antibiotic resistance problems are detected as they emerge, and actions are taken to contain them, the world could be faced with previously treatable diseases that have become once again untreatable, as in the pre antibiotics era.

Commercial Strategy -------------------

Nova is committed to developing its biopharmaceutical division and intends to be at the forefront of the therapeutic developments, focused on overcoming bacterial resistance to antibiotics.

Nova's commercial strategy is to partner with established pharmaceutical companies in the major antibacterial markets; while retaining rights to antibiotics based upon certain technology the Company will seek to develop and commercialize independently.

Antibiotic Resistance Technology (ART)

The widespread and uncontrolled use of antibiotics, both for human consumption and animal feed, has encouraged the development of drug resistance in a variety of pathogenic microorganisms. These microorganisms employ resistance mechanisms, which include the modification of the antibiotic structure, mutagenesis of key amino acids in the macromolecular targets of specific chemotherapeutics, or drug efflux from the cell, among others. These three main mechanisms have been identified in resistance profiles for systems involved in protein biosynthesis, nucleic acid replication, and bacterial cell wall generation.

Most antibiotics, presently used in humans, are natural products manufactured by different species of bacteria or fungi to be employed in their own survival -- for example, to kill other microbes in times of overpopulation. In a natural environment, such as soil, bacteria exchange genetic information (such as resistance genes) with great facility and lack of species specificity, thus allowing molecular determinants of resistance to be passed on to other microbes with great ease.

Such resistance-development methodologies fall into three main categories: (i) inactivation of the antibiotic by modification of its active chemical moiety; (ii) specific modification of the macromolecular target, i.e., by mutagenesis of key residues, and (iii) promotion of antibiotic efflux from the cell. Today, the emergence of bacterial strains, which display resistance to a variety of drugs (multiple drug resistant; MDR), is the major cause of failure of treatment of infections worldwide. Methicillin-resistant Staphylococcus aureus (MRSA) strains already require vancomycin as the last resort for treatment, and Streptococcus pneumoniae strains, which no longer respond to vancomycin, have already been identified. Multi-drug resistant Mycobaterium tuberculosis is another example of an emerging infectious disease with world-wide significance.

Nova's biopharmaceutical solution to emerging antibiotic resistance in microorganisms will use the application of its technology to develop a suite of new antibiotics and / or antibiotic derivatives. Nova Biogenetics' antibiotic product suite will fall under "Antibiotic Resistance Technology," otherwise referred to as "ART".

RISK FACTORS

Any investment in our common stock involves a significant degree of risk. You should not invest in our common stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this Form 10-KSB before deciding whether to invest in our common stock. We have only a limited operating history and have not operated profitably since commencement of operations. Our operations have never been profitable. We have incurred net losses since inception through June 30, 2006 of $4,657,316 and it is expected that we will continue to incur operating losses in the future. For the fiscal year ended June 30, 2006, we generated revenues of $221,248 and had a net loss of $1,669,353.

There is no assurance that we will operate profitably in the future. Our independent auditors have added an explanatory paragraph to their audit opinion, issued in connection with our financial statements, which states that our ability to continue as a going concern is uncertain due to our continued operating losses, the excess of our liabilities over our assets and uncertain conditions we face in our day-to-day operations.

Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our future revenues are unpredictable. As a result of our limited operating history and the highly competitive market in which we compete, we are unable to accurately forecast our revenues.

Revenues and operating results generally depend on the volume of, timing of and ability to fulfill services, and competitive conditions, which are difficult to forecast. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to our planned expenditures would have an immediate adverse effect on our business, prospects, financial condition and results of operations. We will need to raise additional funds to provide sufficient working capital to continue our operations. If we are unable to raise additional capital, our results of operations will be materially adversely affected. As described above, the report of our independent auditors for fiscal 2005 contains a qualification as to our ability to continue as a going concern. We will need to raise additional capital or our ability to continue our operations, implement our business strategy and to generate any significant revenues will be adversely affected. The amount of additional capital we require is based upon a number of factors, including the level of our continuing revenues and costs associated with the marketing of our services. Even if we raise additional capital, we cannot guarantee that we will ever generate any significant revenues or report profitable operations. In addition, our business plan may change or unforeseen events may occur which require us to raise additional funds. We do not presently have any agreements or understanding with third parties which will enable us to raise additional capital. Given our relatively small size, history of losses and overall weakness in the capital markets, we are unsure as to our ability to raise additional working capital. Even if we locate a source willing to invest in our company, additional funds may not be available on terms acceptable to us or when we need such funds. The unavailability of additional funds when needed is likely to have a material adverse effect on us. If adequate funds are not available to satisfy short-term or long-term requirements, our management will be required to consider a variety of other options including curtailing the development and growth of the services we propose to offer, as well as other cost cutting actions, including suspending all or a portion of our activities.

If we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of Nova BioGenetics Inc held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. There can be no assurance that acceptable financing can be obtained on suitable terms, if at all. Our inability to raise the additional funds need will have a material adverse affect on our results of operations in future periods.

Fluctuations in our operating results may adversely affect our stock price and purchasers of our shares of common stock may lose all or a portion of their investment. Historically, there has been volatility in the market price for our common stock, although no active or established trading market exists. Our quarterly operating results, changes in general conditions in the economy, the financial markets or the marketing industry, or other developments affecting us or our competitors, could cause the market price of our common stock to fluctuate substantially. We expect to experience significant fluctuations in our future quarterly operating results due to a variety of factors.

FACTORS THAT MAY ADVERSELY AFFECT OUR QUARTERLY OPERATING RESULTS INCLUDE

The announcement or introduction of new services and products by us and our competitors; - our ability to retain existing clients and attract new clients at a steady rate, and maintain client satisfaction - the amount and timing of operating costs and capital expenditures relating to expansion of our business and operations; - increased government regulation; and - general economic conditions and economic conditions specific to the biotech industry. As a result of these factors, in one or more future quarters, our operating results may fall below the expectations of securities analysts and investors. In this

event, the market price of our common stock would likely be materially adversely affected. In addition, the stock market in general and the market prices for biotech related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of those companies. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance. If we lose our key personnel or are unable to attract and retain additional personnel, our ability to compete would be harmed. We are highly dependent on our management, in particular Dr. Kevin Smith, our CEO. We are parties to employment agreements with these individuals, if for any reason we should be deprived of their services our business would be adversely affected until we could find a suitable replacement. In addition, in order to pursue our product development, marketing and commercialization plans, we will need to hire additional qualified personnel with expertise in sales and marketing, and finance. Attracting and retaining qualified personnel will be critical to our success, and competition for qualified personnel is intense. We may not be able to attract and retain personnel on acceptable terms given the competition for such personnel among technology and biotech companies, and universities. Our inability to attract and retain qualified personnel could harm our business and our ability to compete.

We do not intend to pay dividends. We have never paid any dividends on our common stock and it is unlikely that we will pay any dividends in the foreseeable future due to our anticipated substantial cash requirements for future operations. We anticipate using any proceeds of investments in us and any earnings received from operations for the marketing, development and expansion of our proposed business, for operating capital and for corporate development and expansion activities.

Our common stock is regulated as a "penny stock" by the Securities and Exchange Commission. We are subject to additional regulation by the Securities and Exchange Commission under its rules regulating broker-dealer practices in connection with transactions in "penny stocks." This type of regulation may reduce the level of trading activity or your ability to sell the common stock. Penny stocks generally are equity securities with a price of less than $4.00 that are not registered on certain national securities exchanges or quoted on the NASDAQ Stock Market.

The penny stock rules require a broker-dealer, prior to a transaction in a regulated penny stock, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide information concerning his compensation for the penny stock purchase, current prices of the penny stock, and a special written determination that the penny stock is a suitable investment for the purchaser.

The market for our common stock is poorly developed. Purchasers of our securities should anticipate a thin and volatile market. Investors that purchase our common stock may not be able to sell their securities. Our common stock is currently quoted on the OTCBB. There are many days when our common stock does not trade at all. The spread between the quoted bid and ask prices is usually great. As a result of the thinly traded nature of our common stock and lack of market support by brokers or dealers, purchasers of our shares may have great difficulty in liquidating their investments.