Organa Gardens International 10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________

FORM 10-Q


(Mark One)
[ X ]	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended June 30, 2010,

[ ]	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

Commission File Number: 0-13597

Organa Gardens International Inc.

((Exact name of small business issuer as specified in it’s charter)

Nevada

(State or other jurisdiction of incorporation or organization)

88-0195105
(I.R.S. Employer Identification No.)

1802 Goya Street, Jonquiere

Quebec, Canada, G7Z 1C3

(Address of principal executive offices)

514-688-3289

(Issuer’s telephone number)

Indicate by 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. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ]Yes[ ]No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

(Do not check if a smaller reporting company)

Smaller reporting company [X]

-1-

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

On July 31, 2010 there were 34,070,133 shares outstanding of the issuer’s common stock.

INDEX	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 2010 (Unaudited) and December 31, 2009	F-1
Statements of Operations (Unaudited) For the Three Months Ended June 30, 2010 and 2009, and the Period from January 1, 1996 through June 30, 2010	F-2
Statements of Cash Flows (Unaudited) For the Three Months Ended June 30, 2010 and 2009, and the Period from January 1, 1996 through June 30, 2010	F-3
Notes To Financial Statements (Unaudited)	F-4
Item 2. Management's Discussion and Analysis or Plan of Operation	3
Item 3. Quantitative and Qualitative Disclosures About Market Risk	10
Item 4T. Controls and Procedures	11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults Upon Senior Securities	13
Item 4. Submission of Matters to a Vote of Security Holders	14
Item 5. Other Information	14
Item 6. Exhibits	14
SIGNATURES	14

-2-

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

BALANCE SHEETS


	June 30, 2010 (unaudited)	December 31, 2009

ASSETS

CURRENT ASSETS
Cash	$ 63	$ 1,592
Taxes recoverable	1,306	1,200

TOTAL CURRENT ASSETS	1,369	2,792

AVAILABLE FOR SALE SECURITIES – related parties	34,427	66,879
DUE FROM LEGACY WINE & SPIRITS INTERNATIONAL LTD.	131,373	131,373
OIL AND GAS PROPERTIES, (full cost method of accounting unproven)	3	3

TOTAL ASSETS	$ 167,172	$ 201,047

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$ 482,306	$ 490,160
Due to related parties	69,573	13,253
Due to Golden Spirit Enterprises Ltd.	7,003	7,253

TOTAL CURRENT LIABILITIES	558,882	510,666


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
Convertible Preferred: - Class A voting stock, $0.001 par value, 5,000,000 shares authorized		-
- Class B voting stock, $0.001 par value, 5,000,000 shares authorized		-
Common stock, $0.001 par value, 200,000,000 shares authorized
34,070,133 (December 31, 2009 – 30,865,133) shares issued and outstanding	34,070	30,865
Additional paid-in capital	24,128,188	24,104,343
Deferred Compensation	(13,908)	(15,756)
Deficit accumulated during the development stage	(20,098,036)	(20,019,499)
Deficit accumulated prior to the development stage	(4,460,633)	(4,460,633)
Accumulated other comprehensive income	18,609	51,061

TOTAL STOCKHOLDERS’ DEFICIT	(391,710)	(309,619)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$ 167,172	$ 201,047

The accompanying notes are an integral part of these financial statements

F-1

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months ended June 30,				Six Months ended June 30,			For the period from January 1, 1996 to June 30,
		2010		2009		2010		2009	2010

GENERAL & ADMINSTRATIVE EXPENSES
Litigation settlement		$ -		$ -		$ -		$ -	$ 2,291,070
Management and consulting fees		10,316		5,995		10,690		5,995	4,866,926
Consulting fees – stock based compensation		-		-		-		-	1,919,869
Exploration costs		-		-		-		-	113,678
Loss on settlement of debt		-		-		-		-	718,784
General and administrative		21,651		21,562		44,532		39,755	2,720,875
Professional fees		8,254		(1,186)		16,315		5,041	1,144,757
Interest expense		-		-		-		-	98,282
Research and development costs		-		106,568		7,000		140,882	285,231
Software development costs		-		-		-		-	737,300

TOTAL GENERAL & ADMINISTRATIVE EXPENSES		40,221		132,939		78,537		191,673	14,896,772

OTHER (INCOME ) EXPENSES
Interest, Royalty and Other Income		-		-		-		-	(82,138)
(Gain)/loss on sale of securities – related parties		-		-		-		2,987	(21,541)
Property option income		-		-		-		-	(130,000)
Write-down of investment in Legacy		-		-		-		-	128,288
Write-down of interest in ACGT Corporation		-		-		-		-	1,406,000
Write-down of interest in oil and gas properties		-		-		-		-	3,815,655
Loss on Iceberg Drive Inn Investment		-		-		-		-	85,000

TOTAL OTHER (INCOME ) EXPENSES		(40,221)		(132,939)		(78,537)		(194,660)	5,201,264

Loss before Income Taxes		-		-		-			(20,098,036)
Income Tax Provision		-		-		-			-

NET LOSS FOR THE PERIOD		$ (40,221)		$ (133,030)		$ (78,537)		$ (194,660)	$ (20,098,036)

BASIC NET LOSS PER SHARE	$ (.00)		$ (.01)		$ (.00)		$ (.01)

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING	33,289,913		19,101,916		32,414,194		18,494,757

The accompanying notes are an integral part of these financial statements

F-2

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(unaudited)


	Six months ended June 30,		For the period from January 1, 1996 to June 30,
	2010	2009	2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	$ (78,537)	$ (194,660)	$ (20,098,036)
Adjustments to reconcile net loss to net cash used in operating activities:
- fees and services paid for with common shares	6,848	4,000	3,422,745
- non cash research and development	-	105,000	105,000
- other stock-based compensation	-		1,919,468
- interest paid for with common shares	-		80,872
- loss on settlement of debt	-		718,784
- software development costs paid for with common shares	-		600,000
- non cash exploration costs	-		110,000
- write-down of interest in oil and gas properties	-		2,970,718
- write-down of investment in Legacy Mining Ltd.	-		128,288
- write-down of interest in ACGT Corporation	-		2,250,937
- loss on Iceberg Drive Inn investment	-		85,000
- (Gain)/loss on sale of securities held for resale – related parties	-	2,987	(21,816)
- non cash option income received in shares	-		(130,000)
- interest accrued on promissory notes receivable	-		(63,136)
- other non-cash expenses	-		2,557,382
- net changes in working capital items	(7,960)	(13,793)	324,742

CASH FLOWS USED IN OPERATING ACTIVITIES	(79,649)	(96,466)	(5,039,052)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on promissory notes receivable	-	-	63,136
Investment in Iceberg Acquisition Corporation	-	-	(120,000)
Proceeds from sale of securities – related party	-	22,420	136,790
Interest in oil and gas properties, net of finders fees	-	-	(1,522,804)

CASH FLOWS USED IN INVESTING ACTIVITIES	-	22,420	(1,442,878)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds on sale of common stock	-	44,000	5,098,325
Net advances (to) from related parties	78,120	28,361	963,668
Advances receivable	-	-	420,000

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES	78,120	72,361	6,481,993

NET INCREASE (DECREASE) IN CASH	(1,529)	(1,685)	63

CASH, BEGINNING OF PERIOD	1,592	2,723	-

CASH, END OF PERIOD	$ 63	$ 1,038	$ 63

Supplemental cash flow information (See Note 9)

The accompanying notes are an integral part of these financial statements

F-3

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 1 – NATURE OF OPERATIONS

The Company was incorporated as Venture Investments Inc. under the Laws of the State of Nevada on November 29, 1983. The Company underwent a name change to Asdar Group on December 10, 1987, a name change to Precise Life Sciences Ltd. on April 30, 2002, a name change to Iceberg Brands Corporation on February 18, 2003, a name change to Avalon Gold Corporation on August 28, 2003, a name change to Avalon Energy Corporation on March 22, 2005, a name change to Shotgun Energy Corporation on September 25, 2007, and a name change to Organa Gardens International Inc. on February 26, 2009. The Company was dormant from 1991 to 1996 and currently has no revenue generating operations. In accordance with FASB ASC 915, “Development Stage Enterprises”, the Company was considered a development stage company since January 1, 1996 and as a result of changing its business focus to vertical hydroponic farming is still considered to be an development stage company. Expected operati ons will consist of growing fruits and vegetables using a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind.

GOING CONCERN

The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date and has incurred losses during the development stage of $20,098,036 and at June 30, 2010 had a working capital deficiency of $557,513. Further losses are expected in the development of thevertical hydroponic farming project . The Company will depend almost exclusively on outside capital through the issuance of common shares to finance ongoing operating losses and to fund the acquisition, exploration and development of its resource properties. The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able t o raise the necessary funds when needed to finance its ongoing costs. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

NOTE 2 – BASIS OF PRESENTATION

The unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X Article 8 “Financial Statements of Smaller Reporting Companies” as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2009 indexed in Form 10-K. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.

Operating results for the six month period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

F-4

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 2 – BASIS OF PRESENTATION (con’t.)

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Recent Accounting Pronouncements

On July 1, 2009, the FASB officially launched the FASB ASC 105 -- Generally Accepted Accounting Principles, which established the FASB Accounting Standards Codification (“the Codification”), as the single official source of authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The Codification is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to the Codification in respect of the appropriate accounting standards throughout this document as “FASB ASC”. Implementation of the Codification did not have any impact on the Company’s consolidated financial statements

On June 30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic 105) – Generally Accepted Accounting Principles – amendments based on – Statement of Financial Accounting Standards No. 168 – The FASB Accounting and Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. Beginning with this Statement the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standard Updates. This ASU includes FASB Statement No. 168 in its entirety. While ASU’s will not be considered authoritative in their own right, they will serve to update the Codification, provide the bases for conclusions and changes in the Codification, and provide background information about the guidance. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative . ASU No. 2009-01 is effective for financial statements issued for the interim and annual periods ending after September 15, 2009, and the Company does not expect any significant financial impact upon adoption.

In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

In September 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

F-5

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 2 – BASIS OF PRESENTATION (con’t.)

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers. Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively . Early adoption is permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

NOTE 3 – AVAILABLE-FOR-SALE SECURITIES – RELATED PARTIES

Golden Spirit

During 2004, the Company received 111,111 restricted Rule 144 shares of Golden Spirit Enterprises Ltd. (“Golden Spirit”), a public company with directors and significant shareholders in common. The restricted shares were received as non-refundable consideration pursuant to agreements with Golden Spirit dated November 10, 2004 and December 10, 2004 to acquire certain mineral property interests from the Company. These agreements were subsequently terminated.

Effective December 31, 2004 the Company recorded, as other comprehensive loss for the year, a $10,000 unrealized loss in the carrying value of its shares of Golden Spirit. During the years ended December 31, 2005 and 2006 the Company recorded additional unrealized losses in the carrying value of its shares of Golden Spirit totalling $90,000 and $8,889 respectively, which were recorded as other comprehensive loss for those years. During the year ended December 31, 2007, the Company sold 2,500 shares resulting in a realized gain of $165 and recorded an additional unrealized loss of $473 in 2007. During the year ended December 31, 2008, the Company sold 10,000 shares resulting in a realized loss of $800 and recorded an additional unrealized loss of $15,026 to December 31, 2008. As a result, the carrying value of the available for sale shares of Golden Spirit is $2,712 as at December 31, 2008. During the year ended December 31, 2009, the Company recorded an unrealized gain of $1 ,232. As a result, the carrying value of the available for sale shares of Golden Spirit is $3,945 as at December 31, 2009.

During the six month period ended June 30, 2010, the Company sold Nil Golden Spirit shares and recorded an additional unrealized loss of $986 to June 30, 2010. As a result, the carrying value of the available for sale shares of Golden Spirit is $2,959 as at June 30, 2010.

F-6

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 3 – AVAILABLE-FOR-SALE SECURITIES – RELATED PARTIES (con’t)

Legacy

During 2003 the Company settled an outstanding debt receivable of $122,988 from Legacy Mining Ltd. (“Legacy”) for the issue of 1,229,880 restricted shares of Legacy representing a then 9.8% interest in Legacy. During 2004, the Company wrote this investment down to $1 because management determined that it was not recoverable within a reasonable period of time.

Effective December 31, 2007, the Company recorded, as other comprehensive income for the year, a $604,440 unrealized gain in the carrying value of its shares of Legacy. During the year ended December 31, 2008, the Company sold 150,000 Legacy shares resulting in a realized gain of $26,100 and recorded an additional unrealized gain of $270,562 to December 31, 2008. As a result, the carrying value of the available for sale shares of Legacy was $885,502 as at December 31, 2008. During the year ended December 31, 2009, the Company sold 30,985 Legacy shares resulting in a realized loss of $2,987 (net of commissions of $595) and recorded an additional unrealized loss of $797,161 to December 31, 2009. As a result, the carrying value of the available for sale shares of Legacy is $62,934 as at December 31, 2009.

During the six month period ended June 30, 2010, the Company sold Nil Legacy shares and recorded an additional unrealized loss of $31,466 to June 30, 2010. As a result, the carrying value of the available for sale shares of Legacy is $31,468 as at June 30, 2010.

Available for sale securities – related parties include the following:



	June 30,	December 31,
	2010	2009

1,048,895 (2009-1,048,895) shares of Legacy Wine & Spirits	$ 31,468	$ 62,934
98,612 (2009- 98,612) shares of Golden Spirit Enterprises Ltd.	2,959	3,945

	$ 34,427	$ 66,879

NOTE 4 – OIL AND GAS PROPERTIES

Oil and gas properties include the following:



	June 30,	December 31,
	2010	2009

Acquisition and exploration costs, unproved, not subject to depletion.	$ 3	$ 3

The Company's oil and gas activities are currently conducted in the United States. The following costs were incurred in oil and gas acquisition and exploration activities:

Harvester Property, California, USA:

The Company owns a 2% royalty interest carried at a nominal value of $1 due to the uncertainty of realization.

LAK Ranch Oil Project, Wyoming, USA:

The Company owns a 0.7% gross overriding royalty interest on 6,360 acres of oil and natural gas rights located in the Powder River Basin of eastern Wyoming carried at a nominal value of $1 due to the uncertainty of realization.

F-7

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 4 – OIL AND GAS PROPERTIES (con’t.)

Uinta Basin Property, Utah:

On October 26, 2004, the Company entered into a Letter of Intent with Pioneer Oil and Gas (“Pioneer”), whereby the Company could acquire an undivided Eighty-Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in Wasatch County, Utah, known as the “Uinta Basin”. The Company paid Pioneer a deposit of $50,000 for the exclusive right to enter into a Participation Agreement with Pioneer on or before January 18, 2005.

On January 18, 2005, the Company entered into the Participation Agreement with Pioneer as described above. The total consideration paid to Pioneer, including the $50,000 deposit described above, was $706,279. In addition, the Company issued 1,200,000 restricted common shares valued at $264,000 on February 7, 2005 as finders’ fees to certain third parties who were responsible for tabling the Uinta Basin Overpressured Gas Project to the Company. The Company also committed to paying a 1.5% gross royalty on all revenue received by it from the Uinta Basin Project.

As part of the agreement, Pioneer agreed to provide the Company with 2-D seismic data crossing the acreage. Any additional seismic that Pioneer or the Company may mutually agree to acquire over the acreage shall be paid for entirely by the Company with the parties owning the data in the same proportion as their working interest in the acreage. In addition, the Company will be required to drill an initial test well at a location on the acreage mutually agreed upon by Pioneer and the Company. The Company will serve as the Operator in drilling the acreage.

The Company shall pay 100% of all costs of drilling the first two wells drilled on the acreage along with 100% of all costs of logging or testing the wells. If either of the first two test wells is deemed a dry hole, the Company shall pay 100% of all costs of plugging and abandoning such well(s) and restoration of the surface upon which the well(s) reached its authorized depth and completion of all tests deemed necessary by the Operator. If the Company elects to complete either or both of the first two wells drilled on the acreage, the Company shall pay 100% of all completion costs through the tanks along with any costs associated to hook up the well(s) to pipeline for the well(s) to be capable of producing into a commercial pipeline for sale. After the first two wells drilled, if productive, are hooked-up to a pipeline and capable of producing oil and gas in commercial quantities, the Company shall pay 85% of all costs of operating the first two wells and Pioneer shal l pay 15% of the operation costs of such wells as reflected in their working interest ownership in such wells. The Company is required to drill a well on the acreage before November 1, 2010, or the acreage acquired will revert back to Pioneer. During the year ended December 31, 2008 the Company incurred $Nil (2007 -$508,435) on exploration of the property. The Company was seeking joint venture drilling partners during 2008 in order to meet its 2010 drilling commitment. The Company was unable to secure a joint venture drilling partner or raise any capital to satisfy an approximate $12,000,000 drilling cost for a 15,000 ft. initial well. Due to this inability to find funding, the Uinta property was being carried at a nominal value of $1 due to the uncertainty of realization. During the year ended December 31, 2009, the Company re-conveyed its interest in the Uinta property to its original owner, Pioneer Oil and Gas.

NOTE 5 – ACQUISITION

On March 6, 2009, the Company signed an agreement to acquire all of the assets of Organa Gardens Inc.(OGI), a Nevada Corporation in the business of hydroponics vertical farming. These assets include, but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E). Both the OGS-D and OGS-E are a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.

The Company will issue up to 25,000,000 Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:

(a) Release of 10,000,000 shares of the Company upon signing this Agreement.

(b) Release of 5,000,000 shares of the Company upon attaining $1,000,000 US in gross revenue.

F-8

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 5 – ACQUISITION (con’t.)

(d) Release of 5,000,000 shares of the Company upon attaining $4,000,000 US in gross revenue.

None of these shares have been issued to date and the agreement has not yet been finalized.

The Company will raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc.agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.

On June 9, 2009, the Registrant signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).

Under the terms of the acquisition, the Company issued 3,500,000 restricted 144 shares to Organa Gardens Inc.and/or its nominees (issued) and render a cash commitment of up to $250,000 to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.

All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the year ended December 31, 2009, the Company incurred $278,231(2008-$Nil) in research and development costs. During the six months ended June 30, 2010 an additional $7,000 was incurred in research and development.

NOTE 6 – DEFERRED COMPENSATION

On August 15, 2007, the Company entered into an agreement with Palisades Financial Ltd., (“Palisades”) a private company owned by a significant shareholder of the Company, for a four year term, whereby Palisades will provide investor relations services to the Company (valued at $32,000) in exchange for 133,333 restricted shares of the Company’s common stock. Palisades will provide services such as researching, editing and generating a company profile, relaying the Company’s business perspectives and distribution of corporate updates, including press releases.

On November 18, 2009 the Company entered into an agreement with Compte de Sierge Accomodative Corp. (“Compte”), a private company controlled by a significant shareholder, with an eighteen month term, whereby Compte provides investor relations services to the Company specific to the hydroponic vertical farming project (valued at $7,600) in exchange for 500,000 restricted shares of the Company’s common stock.

On May 15, 2010, the Company entered into an agreement with Domain Land Holdings Ltd. (“Domain”), a private company controlled by a significant shareholder, with a two-year term, whereby Domain provides investment-banking services to the Company (valued at $5,000) in exchange for 1,000,000 restricted shares of the Company’s common stock.

The Company amortizes the costs of these services over the respective terms of the contracts. During the six months ended June 30, 2010 and 2009, the Company recorded amortization of deferred compensation totaling $6,848 and $4,000 respectively. As of June 30, 2010 the unamortized portion of the deferred compensation totaled $13,908. (December 31, 2009 - $15,756).

F-9

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 7- STOCKHOLDERS’ EQUITY

On February 20, 2009, a majority of the Company’s shareholders entitled to vote on such matters approved a change of the Company’s name to Organa Gardens International Inc. On February 26, 2009, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the Company’s name to Organa Gardens International Inc. The Company also took the necessary steps to change its trading symbol and CUSIP Number whereby the CUSIP Number has changed from 825358 10 4 to 68618Y 10 6. Effective at the opening of business on April 7, 2009, the trading symbol changed from SGNE to OGNG. The name change did not involve any change in the issued or authorized capital of the Company.

(1) 2010 Stock Transactions

During the six months ended June 30, 2010:

The Company issued a total of 2,205,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan at $0.01 per share to satisfy debt to related parties in the amount of $22,050.

During the six months ended June 30, 2010, 1,000,000 restricted common shares were issued valued at $5,000 pursuant to a deferred compensation contract with a related party. See note 6.

(2) 2009 Stock Transactions

During the six months ended June 30, 2009:

(a) The Company issued a total of 500,000 common shares to four (4) placees pursuant to certain private placement agreements. The Company received proceeds of $44,000.

(b) On February 27, 2008 the Company issued 3,500,000 restricted common shares valued at $105,000 with respect to the acquisition of the assets of Organa Gardens Inc. See note 5.

(3) 2010 Stock Options

During the six months ended June 30, 2010, 2,205,000 stock options were granted by the Company, which were immediately exercised at $0.01 per share to satisfy debt to related parties in the amount of $22,050. Accordingly, no compensation expense was recorded.

The Company’s stock option activity is as follows:



	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)
Balance, December 31, 2007	-	-	-
Granted during 2008	419,300	0.11	5.00
Exercised during 2008	(419,300)	0.11
Balance, December 31, 2008	-	-	-
Granted during the period	8,498,000	0.03
Exercised during the period	(8,498,000)	0.03
Balance, December 31, 2009	-	-	-
Granted during the period	2,205,000	0.03
Exercised during the period	(2,205,000)	0.03

Balance, June 30, 2010	-	-	-

F-10

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 7- STOCKHOLDERS’ EQUITY (con’t.)

(b) As of June 30, 2010, there were 1,333,333 stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.

(c) As of June 30, 2010, there were 120,700 stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.

(d) As of June 30, 2010, there were 7,872,000 stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.

On June 29, 2009, the Company filed Registration Statements on Form S-8 to register 7,500,000 to be issue pursuant to the Company’s 2009 Stock. Incentive and Option Plan. 7,423,000 shares have been granted and exercised under the June 2009 Stock Option Plan. On November 24, 2009, the Company filed Registration Statements on Form S-8 to register 10,000,000 to be issue pursuant to the Company’s 2009 Stock. Incentive and Option Plan. 1,205,000 shares have been granted and exercised under the november 2009 Stock Option Plan.

(4) 2009 Stock Options

During the six months ended June 30, 2009, no options were granted by the Company.

(a) The Company’s stock option activity is as follows:



	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
Balance, December 31, 2006	-
Granted during 2007	601,667	0.21	5 years
Exercised during 2007	(601,667)	-
Balance, December 31, 2007	-
Granted during 2008	419,300	0.13	5 years
Exercised during 2008	(419,300)
Balance, December 31, 2008	-
Balance, June 30, 2009	-

F-11

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

(a) As of June 30, 2009, there were 1,141,667 stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.

(b) As of June 30, 2009, there were 1,539,033 stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.

(c) On June 29, 2009, the Company filed Registration Statements on Form S-8 to register 7,500,000 to be issued pursuant to the Company’s 2009 Stock Incentive and Option Plan. No options were granted.

NOTE 8 – RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2010, the Company incurred $2,190 (2009 -$3,160) in management fees to directors. As at March 31, 2010 the Company owes $9,000 in management fees.

During the six months ended June 30, 2010 the Company incurred $14,881 (2009 - $10,958) in rent and office expenses to a private company controlled by a shareholder.

During the six months ended June 30, 2010, three companies controlled by significant shareholders earned $6,848 (2009 - $4,000) pursuant to prepaid services agreements.

At June 30, 2010, an amount of $7,003 (December 31, 2009 - $7,253) was payable to Golden Spirit. These amounts are non-interest bearing and have no specific terms of repayment.

At June 30, 2010, an amount of $131,373 (December 31, 2009 - $131,373) was receivable from Legacy. These amounts are unsecured, non-interest bearing and have no specific terms of repayment.

The following amounts are due to related parties at:



	June 30, 2010	December 31, 2009

Director	$ 9,000	$ 9,000
Significant shareholders	60,573	4,253

	$ 69,573	$ 13,253

F-12

ORGANA GARDENS INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 9 – SUPPLEMENTAL CASH FLOW INFORMATION



	Six months ended June 30,
	2010	2009
Cash paid during the period for:
Interest	$ -	$ -
Income taxes	$ -	$ -
Shares issued for debt	$ 22,050	$ -
Shares issued for deferred compensation	$ 5,000	$ -

The Company issued 2,205,000 shares of common stock with a value of $22,050 for satisfaction of debt to related parties during the six month period ended June 30, 2010. No stock was issued for this purpose during the six months ended June 30, 2009.

During the six months ended June 30, 2010, 1,000,000 restricted common shares were issued valued at $5,000 pursuant to a deferred compensation contract with a related party

The Company paid no cash for interest and income taxes for the six months ended June 30, 2010 and 2009.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation (“ACGT”). The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of

Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificates released and subsequently cancelled. As of June 30, 2010, the Company is still in the process of having the certificates released.

In February, 2008, the Company received a demand notice from CGG Veritas for failure to pay an outstanding balance of $317,380 pursuant to a Master Agreement and Job Supplement for the Shotgun Draw 2D Seismic Program in Utah. In accordance with Section 15.3 of the Master Agreement and Job Supplement dated March 21, 2007, CGG has demanded payment by April 25, 2008. If CGG Veritas is forced to proceed with litigation of this matter, it will seek reimbursement of its attorneys’ fees and expenses related to the litigation. The Company is currently examining various alternatives to resolve this matter. CGG Veritas has not proceeded with litigation as of June 30, 2010.

Since August 1, 2002, Organa Gardens International Inc. has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,050 per month for a period of 3 years and was renewed for an additional 3 years at $2,050 per month. The current tenancy agreement began August 1, 2008 for 3 additional years at $2,200 per month.

F-13

Item 2. Management’s Discussion and Analysis or Plan of Operation.

The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

Our Company, Organa Gardens International Inc., was formed under the laws of the State of Nevada on November 29, 1983 under the name Venture Group, Inc. On February 11, 1986, an amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Corporation. On December 10, 1987, another amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Group. On February 18, 2001, Asdar Group filed a Certificate of Reinstatement with the Secretary of State of Nevada. On April 30, 2002, another amendment to the Articles of Incorporation was filed changing the corporate name to Precise Life Sciences Ltd. Additional amendments to the Articles of Incorporation were filed changing the corporate name as follows:

February 18, 2003	-	Iceberg Brands Corporation
August 28, 2003	-	Avalon Gold Corporation
March 22, 2005	-	Avalon Energy Corporation
September 25, 2007	-	Shotgun Energy Corporation
April 7, 2009	-	Organa Gardens International Inc.

Our Company holds (1) an undivided Eighty-Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in Wasatch County, Utah, known as the "Uinta Basin" and (2) a 0.7% gross overriding royalty interest on 6,360 acres of oil and natural gas rights located in the Powder River Basin of eastern Wyoming.

Our Company has undertaken a new project in 2009. Organa Gardens International Inc. has a vertical hydroponics farming system built to make the most efficient use of light, energy, water, land, temperature and production cycle while growing the highest quality and healthiest plants in an optimum, consistent environment unaffected by weather. The Organa Garden Systems (OGS) provide a means for food production and consumption change to global environmental and ecological sustainability through vertical hydroponics rotary farming.

There are two OGS models; the Discovery (OGS-D) and the Enterprise (OGS-E)

Both the OGS-D and OGS-E are rotary hydroponics vertical farming systems designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.

The Discovery is a strong, low cost ABS plastic model for the home gardener and the Enterprise is a powder-coated steel version for the commercial grower. Both models are modular and can be expanded by stacking them. "The more you stack the more you grow"

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Benefits of the Organa Garden Systems:

- Fresh, nutritious and abundant produce all year-round
- - Localized year-round farming possible, eliminating costly transportation,
spoilage and pollution.
- - Reduces the use of pesticides and preservatives.

- Urban renewal and sustainable community building.
- - Energy and water conservation.

- More frequent harvest.
- - Fully automated and easy to operate.

- Business opportunity for the entrepreneurial businessman or established farmer

The Company was to issue up to 25,000,000 Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:

(a) Release of 10,000,000 shares of the Company upon signing this Agreement.

(b) Release of 5,000,000 shares of the Company upon attaining $1,000,000 US in gross revenue.

(d) Release of 5,000,000 shares of the Company upon attaining $4,000,000 US in gross revenue.

The Company was raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc. agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.

However, On June 9, 2009, the Registrant signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).

Under the terms of the acquisition, the Registrant will issue 3,500,000 restricted 144 shares to Organa Gardens Inc. and/or its nominees (issued) and render a cash commitment of up to $250,000 to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.

-4-

All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the six months ended June 30, 2010, the incurred $7,000 in research and development costs. (2009 – $140,882)

Currently, the Company is in the process of applying for a world-wide patent for its vertical hydroponic farming system, Organa Gardens System - Enterprise (OGS-E). The management of Organa Gardens is in the final steps of determining the types of materials that will be used to mass produce the OGS-E units economically so that the units can be sold and used affordably by the general population who would like to grow their own food organically and efficiently.

Further, The Company is in discussions with a China-based company to manufacture and distribute the Company's Organa Garden Systems-Enterprise (OGS-E) Initial marketing emphasis will target second tier cities such as Chengdu and Tianjin in central and northern China where farming is seasonal. The recent explosive growth of the Chinese organic produce sector is a big advantage, having increased tenfold between 1999 and 2004 and has since continued to be aggressively promoted and supported by the Chinese government. Organa Garden's growing wheel will enable the tier two cities to grow organic foods without the risks of pesticides, crops pest, and soil-borne diseases while reaping the rewards of higher yields and seasonal extension of crop growth. Organa Gardens will allow China to grow organic foods on a smaller scale to accommodate variable demands while being cost and energy efficient

Our Oil and Gas Properties

The Wyoming Property.

Derek Oil and Gas Corporation, a public company and the operator, now holds a 95% working interest in the LAK Ranch project and is the project operator. The LAK Ranch Project is a strong fit for Derek's corporate focus of using enhanced oil recovery (EOR) techniques to develop new production from reservoirs in North America. Derek and its partner, SEC Oil and Gas Partnership are confident in the ability of Derek's management to drive this project forward as promptly as possible in 2007.

Based on Shotgun’s ongoing agreement with respect to the LAK Ranch, if Derek sells any or all of its interest in the LAK Ranch Property, it will pay to Shotgun, subject to adjustments, 7.5% of the net sales proceeds on the first USD $7,500,000 and 1% on any balance over and above USD$7,500,000.

The LAK Ranch field, originally discovered in the 1920s, covers approximately 7,500 acres in the Powder River basin. Historically, oil production has been sporadic from a limited number of wells completed in the Newcastle Sand due to the abnormally low reservoir temperature in this part of the basin. However, the oil contains high levels of naphtha and the viscosity should respond dramatically to the application of heat through steam injection. To date, Derek has completed SAGD test well pair that was drilled to a depth of 1,000 feet and 1,800 feet horizontally into the Newcastle sand formation. More than 5,000 barrels of oil were recovered in limited preliminary testing. Shotgun, through its predecessor Asdar has received royalty payments from the sale of every barrel of oil sold to date.

The Company has received $Nil in oil royalties for the six months ended June 30, 2010

(2009 - $Nil).

Derek Oil and Gas Corporation has the following plans for the Property over the next twelve months:

* Increase overall production as reservoir heats up from the 12 well program.

-5-

* Purchase, permit and install another steam generator to provide more steam into the reservoir.

* Conduct another drilling program in 2008 to increase production, earnings, and cash flow per share, thereby increasing shareholder value.

Derek Oil & Gas Corporation has secured from a U.S.A. governmental agency the use of twelve beam pumping units that will aid the advancement towards the goal of achieving commercial petroleum production at the Wyoming based LAK Ranch Project. Six of these beam pumping units will be deployed on the Company's existing pilot vertical steam drive production wells. Management believes that this equipment change will improve productivity, lifting efficiencies, steam drive response and enable higher bottom-hole temperatures. The remaining six beam pumping units will be utilized later in 2009. Previous artificial lift in our pilot project consisted of progressive cavity pumping units that could not withstand the reservoir temperatures reached during a thermal recovery project.

Derek's current focus is on the further development and increasing production from their prime property located in NE Wyoming's prolific Powder River Basin.

2. The California Property.

The Company owns a 2% royalty interest in the Harvester Property carried at a nominal value of $1 due to the uncertainty of realization.

3. The Utah Property.

On October 26, 2004, the Company entered into a letter of intent with Pioneer Oil and Gas ("Pioneer"), a Utah Corporation for the exclusive right to enter into a Participation agreement with Pioneer on or before January 18, 2005. The Company advanced Pioneer a $50,000 non-refundable deposit and in return was pledged an exclusivity period to carry out its due diligence with respect to acquiring certain overpressured gas leases in the Uinta Basin, Utah. On January 18, 2005, the Company entered into a Participation Agreement with Pioneer to acquire an undivided Eighty-Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in Wasatch County, Utah, known as the "Uinta Basin".

The Company had an independent title search conducted on the acreage involved in the Participation Agreement and determined that Pioneer had good and marketable title to the leases. As such, on January 18, 2005, the Participation Agreement was duly signed and the balance of $656,279 was delivered to Pioneer to complete the closing. The total consideration paid to Pioneer to acquire the 13,189 acres was $706,279.

In addition, certain non-related parties were responsible for tabling the Uinta Basin Over-pressured Gas Project to the Company. The Company issued 1,200,000 restricted common shares valued at $264,000 on February 7, 2005 to these parties for their efforts resulting in the acquisition of 13,189 acres in Wasatch County, Utah.

The Company has spent a total of $970,279 in acquisition costs and $604,442 in development costs on the Uinta property to date. On January 4, 2007, the USDA Forest Service decided to allow Shotgun Energy to conduct their first proposed seismic exploration project. Shotgun’s project would consist of approximately 7 miles of 2D seismic exploration in the Strawberry Peak and Shotgun Draw area of the South Unit of the Ashley National Forest.

Due to seasonal access constraints, it is expected that the project would not begin until summer of 2007.

-6-

Recording sensors would be placed along the seismic lines every 22 feet, with surface cables connecting the sensors to a central recording station (large truck). Recording sensors consist of a small microphone, attached to a metal stake. Shot-holes would also be drilled along the seismic line, every 330 feet, to a depth of about 60 feet. Drill holes would be loaded with a small explosive charge, backfilled with cuttings and swelling clays, and then shot to produce seismic energy. Drilling of the shot holes would be conducted using small portable drilling rigs, transported from site to site by either buggy or helicopter. Along existing roads, buggy drills would be used, whereas helicopter drills would be used on steep topography away from existing roads. Access to the seismic line off of existing roads would be by helicopter, by foot, or by ATV. No new roads would be required, and no vegetatio n would need to be cleared or removed. After completion, all recording sensors and surface cables would be removed. The entire operation is expected to last about 10 days. The Company is currently accepting bids to complete the first seismic line. The Company has accepted a bid from CGG Veritas of Houston to complete the first seismic line. Preparations for the Vibrator Seismic Shoot continue on schedule with the surveying work having been completed the week of August 6, 2007. The vibrator seismic line will be shot under the direction of Veritas DGC Land Inc of Denver covering eight miles along the forest road. The line travels in an east west direction over the southwestern edge of the property and after cutting the north-west regional fault, swings north-north-east along Twelve Hundred Dollar Ridge spanning the property in that direction and crossing two of the three well locations. This ridge is sub-parallel to the north-south regional fault which also represents possible stratigra phic closure for shallower target horizons. In October, 2007, we confirm the completion of the 2D Seismic Shoot despite inconsistent weather conditions.

The cost of the seismic program was approximately $350,000. The results of the 2D Seismic program will be processed along with available data from a previous Texaco Seismic shoot which will add to the confidence in the interpretation of the data. In addition, the Company is starting to work on public scoping for the second proposed seismic line (with vibrator trucks).

As part of the agreement, Pioneer has agreed to provide the Company with 2-D seismic data crossing the acreage, on a confidential basis. Any additional seismic that Pioneer or the Company may mutually agree to acquire over the acreage shall be paid entirely by the Company with the parties owning the data in the same proportion as their working interest in the acreage. In addition, the Company will be required to drill an initial test well at a location

on the acreage mutually agreed upon by Pioneer and the Company. The Company will serve as the Operator in drilling the acreage and must drill the initial well prior to November 1, 2010.

The Company shall pay One Hundred Percent (100%) of all costs of drilling the first two wells drilled on the acreage along with 100% of all costs of logging or testing the wells. If either of the first two test wells is deemed a dry hole, the Company shall pay One Hundred Percent (100%) of all costs of plugging and abandoning such well(s) and restoration of the surface upon which the well(s) reached its authorized depth and completion of all tests deemed necessary by the Operator.

If the Company elects to complete either or both of the first two wells drilled on the acreage, the Company shall pay One Hundred Percent (100%) of all completion costs through the tanks along with any costs associated to hook up the well(s) to pipeline for the well(s) to be capable of producing into a commercial pipeline for sale. If the Company does not wish to participate in an attempted completion of a well, the Company shall so notify Pioneer within Twenty-Four (24) hours (excluding Saturday, Sunday and legal holidays) after reaching Casing Point and all electric logs have been received, at which time the provisions of Article VI of the Operating Agreement shall govern such completion attempt.

-7-

After the first two wells are drilled and if productive are hooked-up to a pipeline and capable of producing oil and gas in commercial quantities, the Company shall pay 85% of all costs of operating the first two wells and Pioneer shall pay 15% of the operation costs of such wells as reflected in their working interest ownership in such wells.

Subsequent wells drilled after the first two wells on the Contract Acreage shall require Pioneer to either farm out its interest on a well by well basis under Article VI herein or participate or not participate for its interest in the well pursuant to the provisions contained in the Operating Agreement.

The Company is required to drill a well on the acreage before November 1, 2010, or the acreage acquired will revert back to Pioneer. During the year ended December 31, 2008 the Company incurred $Nil (2007 -$508,435) on exploration of the property. The Company was seeking joint venture drilling partners during 2008 in order to meet its 2010 drilling commitment. The Company was seeking joint venture drilling partners during 2008 in order to meet its 2010 drilling commitment. The Company was unable to secure a joint venture drilling partner or raise any capital to satisfy an approximate $12,000,000 drilling cost for a 15,000 ft. initial well. Due to this inability to find funding, the Uinta property is being carried at a nominal value of $1 due to the uncertainty of realization. During the year ended December 31, 2009, the Company re-conveyed its interest in the Uinta property to its original owner, Pioneer Oil and Gas.

Available for Sale Securities – related parties.

Golden Spirit

Effective December 31, 2004 the Company recorded, as other comprehensive loss for the year, a $10,000 unrealized loss in the carrying value of its shares of Golden Spirit. During the years ended December 31, 2005 and 2006 the Company recorded additional unrealized losses in the carrying value of its shares of Golden Spirit totalling $90,000 and $8,889 respectively, which were recorded as other comprehensive loss for those years. During the year ended December 31, 2007, the Company sold 2,500 shares resulting in a realized gain of $165 and recorded an additional unrealized loss of $473 in 2007. During the year ended December 31, 2008, the Company sold 10,000 shares resulting in a realized loss of $800 and recorded an additional unrealized loss of $15,026 to December 31, 2008. As a result, the carrying value of the available for sale shares of Golden Spirit is $2,712 as at December 31, 2008. During the year ended December 31, 2009, the Company recorded an unrealized gain of $1,232. As a result, the carrying value of the available for sale shares of Golden Spirit is $3,945 as at December 31, 2009.

-8-

Legacy

Available for sale securities – related parties include the following:



	June 30,	December 31,
	2010	2009

1,048,895 (2009-1,048,895) shares of Legacy Wine & Spirits	$ 31,468	$ 62,934
98,612 (2009- 98,612) shares of Golden Spirit Enterprises Ltd.	2,959	3,945

	$ 34,427	$ 66,879

Liquidity and Capital Resources.

At June 30, 2010, we had total assets of $167,172 including cash of $63 and taxes recoverable of $1,306. We have $3 invested in oil and gas properties, which is represented by $1 for 13,189 acres of gas leases located in Utah, $1 for an oil and gas interest located in Wyoming and $1 for an oil and gas interest located in San Joaquin, California. We have available for sale securities with a fair value of $34,427 as at June 30, 2010 and a long-term receivable from Legacy Wine & Spirits International Ltd. at a value of $131,373. As of December 31, 2009, we had total assets of $201,047. The decrease in assets is primarily due to a decrease in the fair value of available for sale securities.

At June 30, 2010, we had current liabilities of $558,882, which was represented by accounts payable and accrued liabilities of $482,306, $69,573 due to related parties and $7,003 due to Golden Spirit Enterprises Ltd. As of December 31, 2009 we had current liabilities of $510,666. The slight increase in liabilities was a result of an increase in related party payables. At June 30, 2010, we had a working capital deficiency of $557,513 (December 31, 2009 - $507,874).

We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.

-9-

Results of Operations

We have not yet realized any revenue from operations to date. Loss from operations for the three month period ended June 30, 2010 was $40,221 (2009 - $133,030). This decrease in loss was due to the incurrence of fewer expenditures in research and development costs.

From inception to June 30, 2010 our Company has incurred cumulative net losses of $20,098,036 resulting primarily from the write-down of $3,815,655 in its interests in oil and gas properties, write-down of $1,406,000 in its interest in ACGT Corporation, write-down of its investment in Legacy Wine & Spirits International Ltd. of $128,288 and also as a result of selling, general and administrative expenses including a litigation settlement of $2,291,070; management and consulting fees of $6,786,795, office and general expenses of $2,720,875; professional fees of $1,144,757; interest expense of $98,282, software development costs of $737,300 and research and development costs of $285,231. In addition, we received $130,000 in property option income as a recorded value of certain restricted shares in Golden Spirit Enterprises Ltd. (See Item 2, Utah property), $82,138 in interest and royalty income and a gain on the sale of securities – related parti es of $21,541.

The cash and equivalents constitute our present internal sources of liquidity.

Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.

Our Plan of Operation for the Next Twelve Months

We do anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. Organa Gardens International Inc. does not anticipate any significant exploration costs within the next 12 months, nor does the Organa Gardens International Inc. anticipate that it will lease or purchase any significant equipment within the next 12 months. Organa Gardens International Inc. does not anticipate a significant change in the number of its employees within the next 12 months. However, Organa Gardens International Inc. will be required to raise $250,000 for its new hydroponic vertical farming project – See above.

Off-Balance Sheet Arrangements

Our company has not entered into any off balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of June 30, 2010, we had cash in the amount of $63. We have not generated any revenues since inception and have incurred a net loss of $20,098,036 from our re-entry into development stage on January 1, 1996 to June 30, 2010. Our current operating funds are insufficient to cover an environmental study and permitting and preparation costs to initiate drilling of a gas well. It will have to obtain funds through entering into arrangements with collaborative partners or others to accomplish these expenditures. However, we do not have any specific plans for raising the required funds. There is no assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our anticipated exploration expenditures.

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Item 4T. Controls and Procedures.

An evaluation was conducted by our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2009. Based on that evaluation, the CEO and CFO concluded that our controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

1. On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation. The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificate released and subsequently cancelled. As of June 30, 2010, the Company is still in the legal process of having the certificate released.

ITEM 1A. Risk Factors

Not Applicable

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

(1) 2010 Stock Transactions

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During the six months ended June 30, 2010:

During the six months ended June 30, 2010, 1,000,000 restricted common shares were issued valued at $5,000 pursuant to a deferred compensation contract with a related party.

(2) 2009 Stock Transactions

During the six months ended June 30, 2009:

(a) The Company issued a total of 500,000 common shares to four (4) placees pursuant to certain private placement agreements. The Company received proceeds of $44,000.

(b) On February 27, 2008 the Company issued 3,500,000 restricted common shares valued at $105,000 with respect to the acquisition of the assets of Organa Gardens Inc.

(3) 2010 Stock Options

During the six months ended June 30, 2010, 2,205,000 stock options were granted by the Company, which were immediately exercised. Accordingly, no compensation expense was recorded.

The Company’s stock option activity is as follows:



	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)
Balance, December 31, 2007	-	-	-
Granted during 2008	419,300	0.11	5.00
Exercised during 2008	(419,300)	0.11
Balance, December 31, 2008	-	-	-
Granted during the period	8,498,000	0.03
Exercised during the period	(8,498,000)	0.03
Balance, December 31, 2009	-	-	-
Granted during the period	2,205,000	0.03
Exercised during the period	(2,205,000)	0.03

Balance, June 30, 2010	-	-	-

(b) As of June 30, 2010, there were 1,333,333 stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.

(c) As of June 30, 2010, there were 120,700 stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.

(d) As of June 30, 2010, there were 7,872,000 stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.

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(4) 2009 Stock Options

During the six months ended June 30, 2009, no options were granted by the Company.

(a) The Company’s stock option activity is as follows:



	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
Balance, December 31, 2006	-
Granted during 2007	601,667	0.21	5 years
Exercised during 2007	(601,667)	-
Balance, December 31, 2007	-
Granted during 2008	419,300	0.13	5 years
Exercised during 2008	(419,300)
Balance, December 31, 2008	-
Balance, June 30, 2009	-

(b) As of June 30, 2009, there were 1,141,667 stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.

(c) As of June 30, 2009, there were 1,539,033 stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.

(d) On June 29, 2009, the Company filed Registration Statements on Form S-8 to register 7,500,000 to be issued pursuant to the Company’s 2009 Stock Incentive and Option Plan. No options were granted.

ITEM 3. Defaults Upon Senior Securities

None.

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ITEM 4. Submission of Matters to Vote of Security Holders

None.

ITEM 5. Other Information

None

ITEM 6. EXHIBITS

Exhibit 31.1 - Section 906 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 31.2 - Section 906 Certification of Periodic Report of the Chief Financial Officer.

Exhibit 32.1 - Section 302 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 32.2 - Section 302 Certification of Periodic Report of the Chief Financial Officer.

SIGNATURES

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



	ORGANA GARDENS INTERNATIONAL INC.


Date: August 10,2010	By: /s/ C. Scheive
	Christopher Scheive
	President and C.E.O

Date: August 10,2010	By: /s/ Jaclyn Cruz
	Jaclyn Cruz
	Secretary. Treasurer and C.F.O.

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	/s/Christopher Scheive
	Name: Christopher Scheive
	Date: August 10, 2010