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| Delaware                                                       | 11-3516358                              |
|----------------------------------------------------------------|-----------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |

| Large Accelerated Filer                       | o | Accelerated Filer         |  ̈ |
|-----------------------------------------------|---|---------------------------|--------|
| Non-Accelerated Filer                         | o | Smaller reporting company | þ |
| (Do not check if a smaller reporting company) |

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REXAHN PHARMACEUTICALS, INC.

|       | Page                                                                                        |
|------------|---------------------------------------------------------------------------------------------|
|       |                                                                                        |
| PART I     | FINANCIAL INFORMATION                                                                       |   |
|       |                                                                                        |   |
| Item 1     | Financial Statements                                                                        |   |
|       |                                                                                        |   |
|       | 1)                                                                                          | Condensed Balance Sheets at June 30, 2010 (unaudited) and December 31, 2009 | 3 |
|       |                                                                                        |   |   |
|       | 2)                                                                                          | Condensed Statements of Operations for the three months and six months ended June 30, 2010 and 2009 (unaudited) and cumulative from March 19, 2001 (inception) to June 30, 2010 (unaudited) | 4 |
|       |                                                                                        |   |   |
|       | 3)                                                                                          | Condensed Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (unaudited) and cumulative from March 19, 2001 (inception) to June 30, 2010 (unaudited) | 5 |
|       |                                                                                        |   |   |
|       | 4)                                                                                          | Notes to Condensed Financial Statements for the six months ended June 30, 2010 and 2009 (unaudited) | 6 |
|       |                                                                                        |   |   |
| Item 2     | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
|       |                                                                                        |   |
| Item 3     | Quantitative and Qualitative Disclosures About Market Risk                                  | 28 |
|       |                                                                                        |   |
| Item 4     | Controls and Procedures                                                                     | 28 |
|       |                                                                                        |   |
| PART II    | OTHER INFORMATION                                                                           |   |
|       |                                                                                        |   |
| Item 1     | Legal Proceedings                                                                           | 29 |
|       |                                                                                        |   |
| Item 1A    | Risk Factors                                                                                | 29 |
|       |                                                                                        |   |
| Item 2     | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 31 |
|       |                                                                                        |   |
| Item 3     | Defaults Upon Senior Securities                                                             | 32 |
|       |                                                                                        |   |
| Item 4     | (Removed and Reserved)                                                                      | 32 |
|       |                                                                                        |   |
| Item 5     | Other Information                                                                           | 32 |
|       |                                                                                        |   |
| Item 6     | Exhibits                                                                                    | 32 |
|       |                                                                                        |   |
|       |                                                                                        |
| SIGNATURES | 33                                                                                          |

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Table of Contents

REXAHN PHARMACEUTICALS, INC

|                                                                                                                                                             | June 30, 2010(unaudited) |   | December 31, 2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|--------|------------------------|--------|
|                                                                                                                                                             |                          |   |                   |   |
| ASSETS                                                                                                                                                           |                          |
| Current Assets:                                                                                                                                                  |                          |   |                   |   |
| Cash and cash equivalents                                                                                                                                        |                          | $      | 17,814,799             |   |   | $ | 7,298,032 |   |
| Marketable securities                                                                                                                                            |                          |   | 100,000                |   |   |   | 175,000 |   |
| Prepaid expenses and other current assets (note 3)                                                                                                               |                          |   | 588,974                |   |   |   | 320,935 |   |
| Note receivable – current portion                                                                                                                          |                          |   | 23,353                 |   |   |   | - |   |
| Total Current Assets                                                                                                                                             |                          |   | 18,527,126             |   |   |   | 7,793,967 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Restricted Cash Equivalents (note 14)                                                                                                                            |                          |   | 1,292,506              |   |   |   | 2,026,060 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Note Receivable                                                                                                                                                  |                          |   | 32,694                 |   |   |   | - |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Equipment, Net (note 4)                                                                                                                                          |                          |   | 148,795                |   |   |   | 168,978 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Total Assets                                                                                                                                                     |                          | $      | 20,001,121             |   |   | $ | 9,989,005 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                             |                          |
| Current Liabilities:                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Accounts payable and accrued expenses (note 5)                                                                                                                   |                          | $      | 1,609,939              |   |   | $ | 785,904 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Deferred Revenue (note 6)                                                                                                                                        |                          |   | 937,500                |   |   |   | 975,000 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Other Liabilities (note 7)                                                                                                                                       |                          |   | 143,340                |   |   |   | 128,501 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Total Liabilities                                                                                                                                                |                          |   | 2,690,779              |   |   |   | 1,889,405 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Commitment and Contingencies (note 13)                                                                                                                           |                          |   |                   |   |   |   |   |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Stockholders' Equity (note 9):                                                                                                                                   |                          |   |                   |   |   |   |   |   |
| Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding                                                                   |                          |   | -                      |   |   |   | - |   |
| Common stock, par value $0.0001, 500,000,000 authorized shares, 82,801,368 (2009 – 71,938,701) issued and 82,787,163 (2009 – 71,924,496) outstanding |                          |   | 8,280                  |   |   |   | 7,194 |   |
| Additional paid-in capital                                                                                                                                       |                          |   | 58,302,183             |   |   |   | 44,414,723 |   |
| Accumulated deficit during the development stage                                                                                                                 |                          |   | (40,971,711            |   |   |   | (36,293,907 | ) |
| Treasury stock, 14,205 shares, at cost                                                                                                                           |                          |   | (28,410                | )      |   |   | (28,410 | ) |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Total Stockholders' Equity                                                                                                                                       |                          |   | 17,310,342             |   |   |   | 8,099,600 |   |
|                                                                                                                                                             |                          |   |                   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                                                       |                          | $      | 20,001,121             |   |   | $ | 9,989,005 |   |

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Table of Contents

REXAHN PHARMACEUTICALS, INC

|                                                                                                 |   | Three Months Ended June 30, |       |   | Six MonthsEnded June 30, |   |       | Cumulative from March 19, 2001 (Inception) to June 30, 2010 |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|--------|--------------------------|--------|------------|------------------------------------------------------------------|--------|
|                                                                                                 |   | 2010                             |       |   | 2009                     |   |       | 2010                                                             |   |   |   2009 |   |
| Revenues:                                                                                            |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |
| Research                                                                                             |   | $                                | 18,750     |   |                     | $      | 18,750     |                                                             |   | $ | 37,500 |   |   | $ | 37,500 |   |   | $ | 562,500 |   |
|                                                                                                 |   |                             |       |   |                     |   |
| Expenses:                                                                                            |   |                             |       |   |                     |   |
| General and administrative                                                                           |   |                             | 1,805,534  |   |                     |   | 838,630    |                                                             |   |   | 2,861,999 |   |   |   | 1,561,737 |   |   |   | 20,670,541 |   |
| Research and development                                                                             |   |                             | 1,328,389  |   |                     |   | 872,231    |                                                             |   |   | 1,819,511 |   |   |   | 1,594,157 |   |   |   | 18,303,326 |   |
| Patent fees                                                                                          |   |                             | 62,208     |   |                     |   | 96,666     |                                                             |   |   | 114,942 |   |   |   | 150,803 |   |   |   | 1,339,995 |   |
| Depreciation and amortization                                                                        |   |                             | 11,633     |   |                     |   | 12,355     |                                                             |   |   | 23,180 |   |   |   | 24,346 |   |   |   | 567,988 |   |
|                                                                                                 |   |                             |       |   |                     |   |
| Total Expenses                                                                                       |   |                             | 3,207,764  |   |                     |   | 1,819,882  |                                                             |   |   | 4,819,632 |   |   |   | 3,331,043 |   |   |   | 40,881,850 |   |
|                                                                                                 |   |                             |       |   |                     |   |
| Loss from Operations                                                                                 |   |                             | (3,189,014 | )      |                     |   | (1,801,132 | )                                                                |   |   | (4,782,132 | ) |   |   | (3,293,543 | ) |   |   | (40,319, 350 | ) |
|                                                                                                 |   |                             |       |   |                     |   |
| Other (Income) Expense                                                                               |   |                             |       |   |                     |   |
| Realized (gain)/loss on marketable securities         . |   |                             | -          |   |                     |   | (11,025    | )                                                                |   |   | - |   |   |   | (11,025 | ) |   |   | 9,341 |   |
| Interest income                                                                                      |   |                             | (26,267    | )      |                     |   | (7,293     | )                                                                |   |   | (48,281 | ) |   |   | (14,902 | ) |   |   | (1,227,080 | ) |
| Interest expense                                                                                     |   |                             | -          |   |                     |   | -          |                                                             |   |   | - |   |   |   | - |   |   |   | 301,147 |   |
| Other income                                                                                         |   |                             | (56,047    | )      |                     |   | -          |                                                             |   |   | (56,047 | ) |   |   | - |   |   |   | (56,047 | ) |
| Beneficial conversion feature                                                                        |   |                             | -          |   |                     |   | -          |                                                             |   |   | - |   |   |   | - |   |   |   | 1,625,000 |   |
| Total Other (Income) Expense                                                                         |   |                             | (82,314    | )      |                     |   | (18,318    | )                                                                |   |   | (104,328 | ) |   |   | (25,927 | ) |   |   | 652,361 |   |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss Before Provision for Income Taxes                                                           |   |                             | (3,106,700 | )      |                     |   | (1,782,814 | )                                                                |   |   | (4,677,804 | ) |   |   | (3,267,616 | ) |   |   | (40,971,711 | ) |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for Income Taxes                                                                           |   |                             | -          |   |                     |   | -          |                                                             |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                             |   | $                                | (3,106,700 | )      |                     | $      | (1,782,814 | )                                                                |   | $ | (4,677,804 | ) |   | $ | (3,267,616 | ) |   | $ | (40,971,711 | ) |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss per share, basic and diluted                                                                    |   | $                                | (0.04      | )      |                     | $      | (0.03      | )                                                                |   | $ | (0.06 | ) |   | $ | (0.06 | ) |   |   |   |   |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                             |       |   |                     |   |       |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding, basic and diluted                                     |   |                             | 74,247,302 |   |                     |   | 58,214,542 |                                                             |   |   | 73,875,701 |   |   |   | 57,120,095 |   |   |   |   |   |

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Table of Contents

REXAHN PHARMACEUTICALS, INC.

|                                                                        |   | Six Months EndedJune 30, |       |   | CumulativeFrom March 19, 2001(Inception) to June 30, |   |
|-----------------------------------------------------------------------------|--------|--------------------------|------------|--------|------------------------------------------------------|--------|
|                                                                        |   | 2010                     |       |   | 2009                                                 |   |   | 2010 |   |
| Cash Flows from Operating Activities:                                       |   |                     |       |   |                                                 |   |   |   |   |
| Net loss                                                                    |   | $                        | (4,677,804 | )      |                                                 | $      | (3,267,616 | ) |   | $ | (40,971,711 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Beneficial conversion feature                                               |   |                     | -          |   |                                                 |   | - |   |   |   | 1,625,000 |   |
| Compensatory stock                                                          |   |                     | 876,000    |   |                                                 |   | - |   |   |   | 897,877 |   |
| Depreciation and amortization                                               |   |                     | 23,180     |   |                                                 |   | 24,346 |   |   |   | 567,988 |   |
| Stock option compensation                                                   |   |                     | 323,702    |   |                                                 |   | 342,029 |   |   |   | 4,678,067 |   |
| Amortization of deferred revenue                                            |   |                     | (37,500    | )      |                                                 |   | (37,500 | ) |   |   | (562,500 | ) |
| Note receivable                                    |   |                     | (56,047    | )      |                                                 |   | - |   |   |   | (56,047 | ) |
| Realized (gains) losses on marketable securities                            |   |                     | -          |   |                                                 |   | (11,025 | ) |   |   | 9,341 |   |
| Amortization of deferred lease incentive                                    |   |                     | (10,000    | )      |                                                 |   | - |   |   |   | (20,000 | ) |
| Deferred lease expenses                                                     |   |                     | 24,839     |   |                                                 |   | - |   |   |   | 63,340 |   |
| Loss on impairment of intangible assets                                     |   |                     | -          |   |                                                 |   | - |   |   |   | 286,132 |   |
| Changes in assets and liabilities:                                          |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                   |   |                     | (268,039   | )      |                                                 |   | 137,747 |   |   |   | (588,974 | ) |
| Accounts payable and accrued expenses                                       |   |                     | 824,035    |   |                                                 |   | 409,796 |   |   |   | 1,609,939 |   |
| Net Cash Used in Operating Activities                                       |   |                     | (2,977,634 | )      |                                                 |   | (2,402,223 | ) |   |   | (32,461,548 | ) |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                       |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Restricted cash equivalents                                                 |   |                     | 733,554    |   |                                                 |   | (100,000 | ) |   |   | (1,292,506 | ) |
| Purchase of equipment                                                       |   |                     | (2,997     | )      |                                                 |   | (9,547 | ) |   |   | (546,699 | ) |
| Purchase of marketable securities                                           |   |                     | -          |   |                                                 |   | (1,196,824 | ) |   |   | (10,770,000 | ) |
| Proceeds from sales of marketable securities                                |   |                     | 75,000     |   |                                                 |   | 4,758,079 |   |   |   | 10,660,659 |   |
| Payment of licensing fees                                                   |   |                     | -          |   |                                                 |   | - |   |   |   | (356,216 | ) |
| Net Cash Provided by (Used in) Investing  Activities              |   |                     | 805,557    |   |                                                 |   | 3,451,708 |   |   |   | (2,304,762 | ) |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities:                                       |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Issuance of common stock and units, net of  issuance costs        |   |                     | 9,318,228  |   |                                                 |   | 2,775,000 |   |   |   | 42,585,300 |   |
| Proceeds from exercise of stock options                                     |   |                     | 107,240    |   |                                                 |   | - |   |   |   | 110,842 |   |
| Proceeds from exercise of stock warrants                                    |   |                     | 3,263,376  |   |                                                 |   | - |   |   |   | 3,263,376 |   |
| Proceeds from long-term debt                                                |   |                     | -          |   |                                                 |   | - |   |   |   | 5,150,000 |   |
| Proceeds from research contribution                                         |   |                     | -          |   |                                                 |   | - |   |   |   | 1,500,000 |   |
| Principal payments on long-term debt                                        |   |                     | -          |   |                                                 |   | - |   |   |   | (28,410 | ) |
| Net Cash Provided by Financing Activities                                   |   |                     | 12,688,844 |   |                                                 |   | 2,775,000 |   |   |   | 52,581,109 |   |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                   |   |                     | 10,516,767 |   |                                                 |   | 3,824,485 |   |   |   | 17,814,799 |   |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - beginning of period                             |   |                     | 7,298,032  |   |                                                 |   | 369,130 |   |   |   | - |   |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - end of period                                   |   | $                        | 17,814,799 |   |                                                 | $      | 4,193,615 |   |   | $ | 17,814,799 |   |
|                                                                        |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Interest paid                                                               |   | $                        | -          |   |                                                 | $      | - |   |   | $ | 301,147 |   |
| Non-cash financing and investing activities:                                |   |                     |       |   |                                                 |   |   |   |   |   |   |   |
| Warrants issued                                                             |   | $                        | 1,691,390  |   |                                                 | $      | - |   |   | $ | 5,569,142 |   |
| Leasehold improvement incentive                                             |   | $                        | -          |   |                                                 | $      | - |   |   | $ | 100,000 |   |
| Settlement of lawsuit                                                       |   | $                        | 43,953     |   |                                                 | $      | - |   |   | $ | - |   |

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Table of Contents

REXAHN PHARMACEUTICALS, INC.

| 1. | Operations and Organization |
|----|-----------------------------|

| 2. | Recent Accounting Pronouncement Affecting the Company |
|----|-------------------------------------------------------|

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Table of Contents

| 3. | Prepaid Expenses and Other Current Assets |
|----|-------------------------------------------|

|                  |   | June 30,        |    |   | December 31, |   |
|-----------------------|--------|-----------------|---------|--------|--------------|--------|
|                  |   | 2010(unaudited) |    |   | 2009         |   |
|                  |   |            |    |   |         |   |
| Deposits on contracts |   | $               | 398,398 |   |         | $      | 245,476 |   |
| Other assets          |   |            | 190,576 |   |         |   | 75,459 |   |
|                  |   |            |    |   |         |   |   |   |
|                  |   | $               | 588,974 |   |         | $      | 320,935 |   |

| 4. | Equipment, Net |
|----|----------------|

|                          |   | June 30,        |     |   | December 31, |   |
|-------------------------------|--------|-----------------|----------|--------|--------------|--------|
|                          |   | 2009(unaudited) |     |   | 2009         |   |
|                          |   |            |     |   |         |   |
| Furniture and fixtures        |   | $               | 32,169   |   |         | $      | 32,169 |   |
| Office equipment              |   |            | 75,382   |   |         |   | 72,385 |   |
| Lab and computer equipment    |   |            | 428,816  |   |         |   | 428,816 |   |
| Leasehold improvements        |   |            | 110,713  |   |         |   | 110,713 |   |
|                          |   |            |     |   |         |   |   |   |
|                          |   |            | 647,080  |   |         |   | 644,083 |   |
| Less accumulated depreciation |   |            | (498,285 | )      |         |   | (475,105 | ) |
|                          |   |            |     |   |         |   |   |   |
| Net carrying amount           |   | $               | 148,795  |   |         | $      | 168,978 |   |

| 5. | Accounts Payable and Accrued Expenses |
|----|---------------------------------------|

|                |   | June 30,        |      |   | December 31, |   |
|---------------------|--------|-----------------|-----------|--------|--------------|--------|
|                |   | 2010(unaudited) |      |   | 2009         |   |
|                |   |            |      |   |         |   |
| Trade payables      |   | $               | 475,934   |   |         | $      | 132,212 |   |
| Accrued expenses    |   |            | 984,785   |   |         |   | 512,659 |   |
| Payroll liabilities |   |            | 149,220   |   |         |   | 141,033 |   |
|                |   |            |      |   |         |   |   |   |
|                |   | $               | 1,609,939 |   |         | $      | 785,904 |   |

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Table of Contents

| 6. | Deferred Revenue |
|----|------------------|

|                          |   | June 30,        |    |   | December 31, |   |
|-------------------------------|--------|-----------------|---------|--------|--------------|--------|
|                          |   | 2010(unaudited) |    |   | 2009         |   |
|                          |   |            |    |   |         |   |
| Deferred lease incentive      |   | $               | 100,000 |   |         | $      | 100,000 |   |
| Less accumulated amortization |   |            | (20,000 | )      |         |   | (10,000 | ) |
|                          |   |            |    |   |         |   |   |   |
| Balance                       |   | $               | 80,000  |   |         | $      | 90,000 |   |

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Table of Contents

| 8. | Net Loss per Common Share |
|----|---------------------------|

| 9. | Common Stock |
|----|--------------|

| a) | On May 10, 2001, the Company issued 3,600,000 shares of common stock to the Company's founders for $1. |
|----|--------------------------------------------------------------------------------------------------------|

| b) | On August 10, 2001, the Company issued: |
|----|-----------------------------------------|

| i) | 1,208,332 shares of common stock to the directors of the Company for cash of $1,450,000. |
|----|------------------------------------------------------------------------------------------|

| ii) | 958,334 shares of common stock to Rexgene for cash of $550,000. |
|-----|-----------------------------------------------------------------|

| iii)  | 360,000 shares of common stock in a private placement to individual investors for cash of $1,080,000. |
|------------|-------------------------------------------------------------------------------------------------------|

| c) | On October 10, 2001, the Company issued 400,000 shares of common stock to Chong Kun Dang Pharmaceutical Corp. ("CKD") for cash of $479,991 and 400,000 shares of common stock to an individual investor for cash of $479,991. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d) | On October 10, 2001, the Company issued 200,000 shares of common stock to CKD for cash of $479,985. |
|----|-----------------------------------------------------------------------------------------------------|

| e) | Since inception, the Company's founders have transferred 800,000 shares of the common stock described in a) to officers and directors of the Company. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| f) | In July 2003, the shareholders described in b) (iii) and e) transferred an aggregate of 1,268,332 shares of common stock to a voting trust.  The trust allows for the unified voting of the stock by the trustees.  The appointed trustees are senior management of the Company who, together with their existing shares, control a majority of the voting power of the Company. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g) | On August 20, 2003, the Company issued 500,000 shares of common stock to KT&G Corporation for cash of $2,000,000. |
|----|-----------------------------------------------------------------------------------------------------------------------|

| h) | On October 29, 2004, an option holder exercised options to purchase shares of the Company’s common stock for cash of $1,800 and the Company issued an aggregate of 1,500 shares. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| i) | Pursuant to the agreement and plan of merger which occurred on May 13, 2005, (i) each share of the issued and outstanding common stock of Rexahn, Corp (“Rexahn”) (other than dissenting shares) was converted into the right to receive five shares of Rexahn Pharmaceuticals common stock; (ii) each issued, outstanding and unexercised option to purchase a share of Rexahn common stock was converted into an option to purchase five shares of Rexahn Pharmaceuticals common stock and (iii) the par value of Rexahn's common stock was adjusted to reflect the par value of Corporate Road Show  Com Inc. (“CRS”) common stock.  In the acquisition merger, 289,780,000 CRS pre-reverse stock split shares were converted into 2,897,802 post-reverse stock split Rexahn Pharmaceuticals shares, and an additional 500,000 post-reverse stock split Rexahn Pharmaceuticals shares were issued to a former executive of CRS.  All shares and earnings per share information have been retroactively restated in these financial statements. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| j) | On August 8, 2005, the Company issued, in a transaction exempt from registration under the Securities Act, 4,175,000 shares of common stock at a purchase price of $2.00 per share. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| k) | On October 3, 2005, the Company issued 7,000 shares of common stock for $21,877 and $7,500 cash in exchange for services. |
|----|---------------------------------------------------------------------------------------------------------------------------|

| l) | On December 2, 2005, the holders of a convertible note, representing $1,300,000 aggregate principal amount, exercised their option to convert the entire principal amount of the note into the Company's common stock.  Based on a $2.00 per share conversion price, the holders received an aggregate of 650,000 shares. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| m) | On December 27, 2005, option holders exercised options to purchase shares of the Company's common stock for cash of $9,600 and the Company issued an aggregate of 40,000 shares. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| n) | On February 22, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $1,200 and the Company issued an aggregate of 5,000 shares. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o) | On April 12, 2006, an option holder exercised options to purchase shares of the Company’s common stock for cash of $3,409 and the Company issued an aggregate of 14,205 shares.  On the same date, the Company agreed to repurchase common stock from the option holder based on the then market price for treasury in exchange for the aggregate purchase price of $28,410 in cash. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| p) | On May 13, 2006, holders of the $3,850,000 convertible notes issued on February 28, 2005, exercised their rights to convert the entire principal amount of the notes into shares of the Company’s common stock. Based on a $1.00 per share conversion price, the Company issued 3,850,000 shares of common stock in connection with the conversion. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| q) | On October 9, 2006, an option holder exercised options to purchase shares of the Company’s common stock for cash of $2,400 and the Company issued an aggregate of 10,000 shares. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| r) | On November 19, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $1,800 and the Company issued an aggregate of 7,500 shares. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| s) | On December 19, 2006, an option holder exercised options to purchase shares of the Company's common stock for cash of $6,000 and the Company issued an aggregate of 25,000 shares. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| t) | On April 18, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $14,400 and the Company issued an aggregate of 18,000 shares. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| u) | On July 23, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 15,000 shares. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| v) | On September 27, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $15,600 and the Company issued an aggregate of 19,500 shares. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| w) | On December 18, 2007, the Company issued 4,857,159 units at a price $1.40 per share for total gross proceeds of $6,800,023.  Investors also were issued one warrant for every five shares purchased.  One warrant will entitle the holder to purchase an additional share of common stock at a purchase price of $1.80 at any time over a period of three years from the date of the closing of the private placement valued at $1,103,164 on closing and were charged to additional paid in capital. Private placement closing costs of $139,674, including 107,144 warrants issued, valued at $91,119, were recorded as a reduction of the issuance proceeds. The anti-dilutive protection provision is indexed to the Company's own stock and has other equity characteristics. The provision is structured in a way that is designed to protect a holder's position from being diluted and contains a price protection based on a mathematical calculation. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| x) | On December 27, 2007, an option holder exercised options to purchase shares of the Company's common stock for cash of $18,000 and the Company issued an aggregate of 75,000 shares. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| y) | On March 20, 2008, the Company issued 642,858 units consisting of one share of the Company’s common stock and one warrant for every five common shares purchased in a private placement at a price of $1.40 per unit for total gross proceeds of $900,001. One warrant will entitle the holder to purchase an additional share of common stock at a price of $1.80 at any time over a period of three years from the date of the private placement. The warrants were valued at $220,005 and were charged to additional paid-in-capital. The anti-dilutive protection provision is indexed to the Company's own stock and has other equity characteristics. The provision is structured in a way that is designed to protect a holder's position from being diluted and contains a price protection based on a mathematical calculation. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| z) | On May 30, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $7,200 and the Company issued an aggregate of 30,000 shares. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| aa) | On June 2, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 50,000 shares. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ab) | On June 30, 2008, an option holder exercised options to purchase shares of the Company's common stock for cash of $12,000 and the Company issued an aggregate of 10,000 shares. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ac) | On May 19, 2009, the Company entered into a purchase agreement to issue 2,857,143 shares of common stock at a price of $1.05 per share to an institutional investor for total gross proceeds of $2,710,910 and incurred $289,090 of stock issuance costs.  The investor was also issued: |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1)  | Series I warrants to purchase 2,222,222 shares of common stock at a purchase price of $1.05 per share at any time before September 3, 2009; |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 2)  | Series II warrants to purchase 1,866,666 shares of common stock at a purchase price of $1.25 per share at any time from December 3, 2009 to June 5, 2012; and |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3)  | Series III warrants to purchase 1,555,555 shares of common stock at a purchase price of $1.50 per share at any time from December 3, 2009 to June 5, 2014. |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ad) | On June 9, 2009, the Company issued 1,833,341 shares of common stock and 862,246 warrants to purchase common stock at a purchase price of $1.05 per share to existing stockholders pursuant to the anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ae) | On September 4, 2009, an option holder exercised options to purchase shares of the Company's common stock for cash of $3,600 and the Company issued an aggregate of 15,000 shares. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| af) | On September 21, 2009, the Company issued 3,102,837 shares of common stock at a purchase price of $1.13 per share to an institutional investor for net proceeds of $3,371,340, which includes $128,659 of stock issuance costs. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ag) | On October 19, 2009, the Company entered into a purchase agreement to issue 6,072,383 shares of common stock at a price of $0.82 per share to five institutional investors for net proceeds of $4,648,070, which includes $351,928 of stock issuance costs.  The investors were also issued warrants to purchase 2,125,334 shares of common stock at a purchase price of $1.00 per share, exercisable on or after the date of delivery until the five-year anniversary.  These warrants have been valued at $909,399 and recorded in additional paid-in-capital.  The closing costs included 245,932 warrants valued at $104,722 and were recorded as a reduction of the total gross proceeds.  The anti-dilutive protection provision is indexed to the Company’s own stock and has other equity characteristics.  The provision is structured in a way that is designed to protect a holder's position from being diluted based on a mathematical calculation. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ah) | On October 19, 2009, the Company issued 2,018,143 shares of common stock and 569,502 warrants to purchase common stock at a purchase price of $0.82 per share to existing stockholders pursuant to anti-dilution protection provisions of the private placements transacted on December 24, 2007 and March 20, 2008.  The warrants were valued at $121,491 and are recorded as a reduction in issuance proceeds of the October 19, 2009 transaction as described above. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ai) | On February 12, 2010, the Company entered into two agreements to issue 300,000 restricted shares of common stock upon the execution of the agreements.  Upon the extension of the term, 200,000 shares of common stock for each month will be issued until the termination of services.  On May 24, 2010 and June 15, 2010 the Company issued 200,000 shares, which had a fair value of $510,000, based upon the market value of the Company’s stock on the date of issuance. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | aj) | In March 2010, warrant holders exercised their warrants to purchase shares of Company’s common stock for cash of $1,297,001 and the Company issued an aggregate of 1,197,001 shares. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ak) | In March 2010, option holders exercised options to purchase shares of Company’s common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | al) | In April 2010, warrant holders exercised their warrants to purchase shares of Company’s common stock for cash of $1,966,375 and the Company issued an aggregate of 1,595,825 shares. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | am) | On April 20, 2010, an option holder exercised options to purchase shares of Company’s common stock for cash of $86,000 and the Company issued an aggregate of 107,500 shares. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | an) | In May 2010, warrant holders exercised warrants pursuant to the cashless exercise permitted within the warrant agreement to obtain shares of Company’s common stock and the Company issued an aggregate of 547,674 shares. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ao) | On June 30, 2010, the Company completed a purchase agreement to issue 6,666,667 shares of common stock at a price of $1.50 per share to investors for net proceeds of $9,318,228, which includes $681,773 of stock issuance costs.  The investors were also issued warrants to purchase 2,000,000 shares of common stock at a purchase price of $1.90 per share, exercisable on or after the date of delivery until the five-year anniversary.  These warrants have been valued at $1,537,627 and recorded in additional paid-in capital.  The closing costs included 200,000 warrants valued at $153,763 and were recorded as a reduction of the total proceeds.  The provisions included in the warrant agreements are indexed to the Company’s own stock and have other equity characteristics.  The provisions are structured in a way that are designed to protect the holders’ position from being diluted based on a mathematical calculation. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.  | Stock-Based Compensation |
|-----------|--------------------------|

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|                                                  |   | Six Months Ended |    |   | March 19, 2001 |   |
|-------------------------------------------------------|--------|------------------|---------|--------|--------------------------|--------|
|                                                  |   | June 30,2010     |    |   | June 30,2009             |   |   | (Inception) toJune 30, 2010 |   |
| Income statement line item:General and administrative |   |             |    |   |                     |   |   |   |   |
| Payroll                                               |   | $                | 191,636 |   |                     | $      | 236,909 |   |   | $ | 1,791,727 |   |
| Consulting and other professional fees                |   |             | 88,812  |   |                     |   | 9,221 |   |   |   | 755,188 |   |
| Research and development:                             |   |             |    |   |                     |   |   |   |   |   |   |   |
| Payroll                                               |   |             | 31,355  |   |                     |   | 95,874 |   |   |   | 830,710 |   |
| Consulting and other professional fees                |   |             | 11,899  |   |                     |   | 25 |   |   |   | 1,300,442 |   |
|                                                  |   |             |    |   |                     |   |   |   |   |   |   |   |
| Total                                                 |   | $                | 323,702 |   |                     | $      | 342,029 |   |   | $ | 4,678,067 |   |

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|                                       |   | Six Months Ended June 30, |              |
|--------------------------------------------|--------|---------------------------|-------------------|
| Black-Scholes weighted average assumptions |   | 2010                      |              |   | 2009 |   |
| Expected dividend yield                    |   | $                         |  0           |   |   | $ | 0 |   |
| Expected volatility                        |   |                      | 100 - 114         | % |   |   | 108 | % |
| Risk free interest rate                    |   |                      | 0.38 – 4.84 | % |   |   | 2.55-5.60 | % |
| Expected term (in years)                   |   | 1 – 5 years         |              |   | 1 – 5 years |   |

|                     |   | Six Months Ended June 30, |      |
|--------------------------|--------|---------------------------|-----------|
|                     |   | 2010                      |      |   | 2009 |   |
|                     |   | Subject to Options        |      |   | SharesWeighted Avg. Exercise Prices |   |   | Weighted Avg. Fair Value on Date of Grant |   |   | Subject to Options |   |   | SharesWeighted Avg. Exercise Prices |   |   | Weighted Avg. Fair Value on Date of Grant |   |
| Outstanding at January 1 |   |                      | 7,715,795 |   |   | $ | 0.98 |   |   |   |   |   |   | 7,760,795 |   |   | $ | 1.01 |   |   |   |   |
| Granted                  |   |                      | 535,000   |   |   |   | 1.28 |   |   |   | 447,969 |   |   |   | 130,000 |   |   |   | 1.23 |   |   |   | 107,758 |   |
| Exercised                |   |                      | (155,500  | ) |   |   | 0.69 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cancelled                |   |                      | (62,000   | ) |   |   | 1.06 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                     |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at June 30   |   |                      | 8,033,295 |   |   | $ | 1.02 |   |   |   |   |   |   |   | 7,890,795 |   |   | $ | 1.01 |   |   |   |   |   |

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|                         |   | SharesSubjectto Options |      |   | WeightedAvg. Exercise Prices |   | Weighted AverageRemaining Contractual Term |   | AggregateIntrinsicValue |   |
|------------------------------|--------|-------------------------|-----------|--------|-----------------------------------|--------|------------------------------------------------------|--------|-------------------------|--------|
| Outstanding at June 30, 2010 |   |                    | 8,033,295 |   |                              | $      | 1.01                                                 |   | 5.26 years              |   | $ | 4,176,071 |   |
|                         |   |                    |      |   |                              |   |                                                 |   |                    |   |   |   |   |
| Exercisable at June 30, 2010 |   |                    | 6,133,795 |   |                              | $      | 1.00                                                 |   | 5.19 years              |   | $ | 3,465,196 |   |

|                         |   | SharesSubjectto Options |      |   | WeightedAvg. Exercise Prices |   | Weighted AverageRemaining Contractual Term |   | AggregateIntrinsicValue |   |
|------------------------------|--------|-------------------------|-----------|--------|-----------------------------------|--------|------------------------------------------------------|--------|-------------------------|--------|
| Outstanding at June 30, 2009 |   |                    | 7,890,795 |   |                              | $      | 1.01                                                 |   | 6.3 years               |   | $ | 650,569 |   |
|                         |   |                    |      |   |                              |   |                                                 |   |                    |   |   |   |   |
| Exercisable at June 30, 2009 |   |                    | 5,878,045 |   |                              | $      | 0.96                                                 |   | 1.5 years               |   | $ | 592,525 |   |

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| 11. | Warrants |
|-----|----------|

|                        |   | 2010               |       |   | 2009                            |   |
|-----------------------------|--------|--------------------|------------|--------|---------------------------------|--------|
|                        |   | Number of warrants |       |   | Weighted average exercise price |   |   | Number of warrants |   |   | Weighted average exercise price |   |
| Balance, January 1          |   |               | 8,575,243  |   |                            | $      | 1.10 |   |   |   | 1,207,148 |   |   | $ | 1.80 |   |
| Issued during the period    |   |               | 2,200,000  |   |                            | $      | 1.90 |   |   |   | 6,649,546 |   |   | $ | 1.22 |   |
| Exercised during the period |   |               | (3,682,877 | )      |                            | $      | (0.89 | ) |   |   | - |   |   | $ | - |   |
| Expired during the period   |   |               | -          |   |                            | $      | - |   |   |   | - |   |   | $ | - |   |
|                        |   |               |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30            |   |               | 7,092,366  |   |                            | $      | 1.35 |   |   |   | 7,856,694 |   |   | $ | 1.26 |   |

| Range of exercise prices |   |   | Number of warrants |      |  Average remaining contractual life |       | Weighted average exercise price |                           |
|--------------------------|--------|--------|--------------------|-----------|------------------------------------------|------------|---------------------------------|--------------------------------|
| $0.82 - 1.90             |   |   |               | 7,092,366 |                                     | 3.17 years |                            | $     1.35 |   |

|                                       |   | Six Months Ended June 30, |   |
|--------------------------------------------|--------|---------------------------|--------|
|                                       |   | 2010                      |   |   | 2009 |   |
| Black-Scholes weighted average assumptions |   |                      |   |   |   |   |
| Expected dividend yield                    |   | $                         | 0      |   |   | $ | 0 |   |
| Expected volatility                        |   |                      | 105    | % |   |   | 108 | % |
| Risk free interest rate                    |   |                      | 1.40   | % |   |   | 0.20 – 2.85 | % |
| Expected term (in years)                   |   | 4 years                   |   |   | 0.25 – 5 years |   |

| 12. | Income Taxes |
|-----|--------------|

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|                              |   | 2010   |        |   | 2009   |   |
|-----------------------------------|--------|--------|-------------|--------|--------|--------|
| Net operating loss carry-forwards |   | $      | 14,725,306  |   |   | $      | 12,606,156 |   |
| Valuation allowance               |   |   | (14,725,306 | )      |   |   | (12,606,156 | ) |
| Net deferred tax assets           |   | $      | -           |   |   | $      | - |   |

| 13. | Commitments and Contingencies |
|-----|-------------------------------|

| a) | The Company has contracted with various vendors to provide research and development services. The terms of these agreements usually require an initiation fee and monthly or periodic payments over the term of the agreement, ranging from 2 months to 36 months. The costs to be incurred are estimated and are subject to revision. As of June 30, 2010, the total estimated cost to be incurred under these agreements was approximately $5,209,928 and the Company had made payments totaling $3,276,934 under the terms of the agreements as of June 30, 2010.  All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)  | The Company and three of its key executives entered into employment agreements. Each of these agreements was renewed on August 10, 2009 and expires on August 10, 2012.  The agreements result in annual commitments of $200,000, $350,000 and $250,000, respectively. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c) | On June 22, 2009, the Company entered into a License Agreement with Korea Research Institute of Chemical Technology ("KRICT") to acquire the rights to all intellectual properties related to Quinoxaline-Piperazine derivatives that were synthesized under a Joint Research Agreement.  The initial license fee was $100,000, all of which was paid as of December 31, 2009.  The agreement with KRICT calls for a one-time payment of $1,000,000 within 30 days after the first achievement of marketing approval of the first commercial product arising out of or in connection with the use of KRICT’s intellectual properties. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| d) | On June 26, 2009, the Company entered into a securities purchase agreement with Teva Pharmaceutical Industries Limited (“Teva”).  Contemporaneous with the execution and delivery of this agreement, the parties executed a research and exclusive license option agreement (“RELO”) pursuant to which the Company shall use $2,000,000 from the gross proceeds of the issuance and sale of shares to Teva to fund a research and development program for the pre-clinical development of RX-3117 and included this amount in restricted cash equivalents at December 31, 2009.  The Company will be eligible to receive royalties on net sales of RX-3117 worldwide.  During the fourth quarter of 2009, research and development work began on the RX-3117 research and development program.  The Company used $733,554 of the restricted cash during the six months ended June 30, 2010 to fund current research and development programs. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e) | On June 29, 2009, the Company signed a five year lease for 5,466 square feet of office space in Rockville, Maryland commencing on June 29, 2009.  The lease requires annual base rents of $76,524 with increases over the next five years. Under the leasing agreement, the Company pays its allocable portion of real estate taxes and common area operating charges. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2010                                                                               |   | $      | 70,156  |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| 2011                                                                               |   |   | 148,593 |   |
| 2012                                                                               |   |   | 158,835 |   |
| 2013                                                                               |   |   | 162,806 |   |
| 2014              |   |   | 82,408  |   |
|                                                                               |   | $      | 622,798 |   |

|   | f) | The Company has a 401(k) plan established for its employees.  The Company elected to match 100% of the first 3% of the employee's compensation plus 50% of the employee's deferral that exceeds 3% of the employee's compensation (limited to 5% total employee compensation). Expense related to this matching contribution aggregated $35,142 and $0 for the six months ended June 30, 2010 and 2009, respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | Fair Value Measurements |
|-----|-------------------------|

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| Level 1 Inputs | — |   | Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;                                     |
|--------------------------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |    |   |                                                                                                                                                  |
| Level 2 Inputs           | — |   | Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; |
|                     |    |   |                                                                                                                                                  |
| Level 3 Inputs           | — |   | Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.                        |

|                        |   |   |      |   | Fair Value Measurements as of June 30, 2010 |   |
|-----------------------------|--------|--------|-----------|--------|---------------------------------------------|--------|
|                        |   | Total  |      |   | Level 1                                     |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                |   |   |      |   |                                        |   |   |   |   |   |   |   |
| Restricted cash equivalents |   | $      | 1,292,506 |   |                                        | $      | 1,190,406 |   |   | $ | 102,100 |   |   |   | - |   |
| Marketable securities       |   | $      | 100,000   |   |                                        | $      |  100,000 |   |   |   | - |   |   |   | - |   |
|                        |   |   |      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |   |      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                |   | $      | 1,392,506 |   |                                        | $      | 1,290,406 |   |   | $ | 102,100 |   |   | $ | - |   |
|                        |   |   |      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |

| a)   | Money market funds valued at the net asset value of shares held be the Company and is classified within level 1 of the fair value hierarchy; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | Certificate of deposit valued based upon the underlying terms of a letter of credit, as discussed in note 13, and classified within level 2 of the fair value hierarchy |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   |   |    |   | Fair Value Measurements as of June 30, 2009 |   |
|-----------------------------|--------|--------|---------|--------|---------------------------------------------|--------|
|                        |   | Total  |    |   | Level 1                                     |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                     |   |   |    |   |                                        |   |   |   |   |   |   |   |
| Restricted cash equivalents |   | $      | 100,000 |   |                                        |   | - |   |   | $ | 100,000 |   |   |   | - |   |

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| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|--------|---------------------------------------------------------------------------------------------|

| ·  | our lack of profitability and the need for additional capital to operate our business; |
|--------------|----------------------------------------------------------------------------------------|

| ·  | our ability to obtain the necessary U.S. and worldwide regulatory approvals for our drug candidates; |
|--------------|------------------------------------------------------------------------------------------------------|

| ·  | successful and timely completion of clinical trials for our drug candidates; |
|--------------|------------------------------------------------------------------------------|

| ·  | demand for and market acceptance of our drug candidates; |
|--------------|----------------------------------------------------------|

| ·  | the availability of qualified third-party researchers and manufacturers for our drug development programs; |
|--------------|------------------------------------------------------------------------------------------------------------|

| ·  | our ability to develop and obtain protection of our intellectual property; and |
|--------------|--------------------------------------------------------------------------------|

| ·  | other risks and uncertainties, including those detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”). |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·  | the progress of our product development activities; |
|--------------|-----------------------------------------------------|

| ·  | the number and scope of our product development programs; |
|--------------|-----------------------------------------------------------|

| ·  | the progress of our pre-clinical and clinical trial activities; |
|--------------|-----------------------------------------------------------------|

| ·  | the progress of the development efforts of parties with whom we have entered into collaboration agreements; |
|--------------|-------------------------------------------------------------------------------------------------------------|

| ·  | our ability to maintain current collaboration programs and to establish new collaboration arrangements; |
|--------------|---------------------------------------------------------------------------------------------------------|

| ·  | the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and |
|--------------|-----------------------------------------------------------------------------------------------------------|

| ·  | the costs and timing of regulatory approvals. |
|--------------|-----------------------------------------------|

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| Item 3 | Quantitative and Qualitative Disclosures About Market Risk |
|--------|------------------------------------------------------------|

| Item 4 | Controls and Procedures |
|--------|-------------------------|

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| Item 1 | Legal Proceedings |
|--------|-------------------|

| Item 1A | Risk Factors |
|---------|--------------|

| ·  | continued pre-clinical development and clinical trials for our current and new drug candidates; |
|--------------|-------------------------------------------------------------------------------------------------|

| ·  | efforts to seek regulatory approvals for our drug candidates; |
|--------------|---------------------------------------------------------------|

| ·  | implementing additional internal systems and infrastructure; |
|--------------|--------------------------------------------------------------|

| ·  | licensing in additional technologies to develop; and |
|--------------|------------------------------------------------------|

| ·  | hiring additional personnel. |
|--------------|------------------------------|

| ·  | We may be unable to identify manufacturers on acceptable terms or at all because the number of potential manufacturers is limited and the FDA must approve any replacement contractor. This approval would require new testing and compliance inspections. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, the production of our products after receipt of FDA approval, if any. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Our third-party manufacturers might be unable to formulate and manufacture our drugs in the volume and of the quality required to meet our clinical needs and commercial needs. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·  | Our contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA, the Drug Enforcement Agency (DEA), and corresponding state agencies to ensure strict compliance with good manufacturing practice and other government regulations and corresponding foreign standards.  We do not have control over third-party manufacturers' compliance with these regulations and standards, but we may be ultimately responsible for any of their failures. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | If any third-party manufacturer makes improvements in the manufacturing process for our products, we may not own, or may have to share, the intellectual property rights to the innovation. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | A third party manufacturer may gain knowledge from working with us that could be used to supply one of our competitors with a product that competes with ours. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | the degree and range of protection any patents will afford us against competitors, including whether third parties will find ways to invalidate or otherwise circumvent our licensed patents; |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | if and when patents will issue in the United States or any other country; |
|--------------|---------------------------------------------------------------------------|

| ·  | whether or not others will obtain patents claiming aspects similar to those covered by our licensed patents and patent applications; |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·  | whether we will need to initiate litigation or administrative proceedings which may be costly whether we win or lose; |
|--------------|-----------------------------------------------------------------------------------------------------------------------|

| ·  | whether our patents will be challenged by competitors alleging that a patent is invalid or unenforceable and, if opposed or litigated, the outcome of any administrative or court action as to patent validity, enforceability or scope; |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | whether a competitor will develop a similar compound that is outside the scope of protection afforded by a patent or whether the patent scope is inherent in the claims or modified due to interpretation of claim scope by a court; |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | whether there were activities previously undertaken by a licensor that could limit the scope, validity or enforceability of licensed patents and intellectual property; |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | whether there will be challenges or litigation brought by a licensor alleging breach of a license agreement and its effect on our ability to practice particular technologies and the outcome of any such challenge or litigation; or |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | whether a competitor will assert infringement of its patents or intellectual property, whether or not meritorious, and what the outcome of any related litigation or challenge may be. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·  | the announcement of new products or product enhancements by us or our competitors; |
|--------------|------------------------------------------------------------------------------------|

| ·  | changes in our relationships with our licensors and other strategic partners; |
|--------------|-------------------------------------------------------------------------------|

| ·  | developments concerning intellectual property rights and regulatory approvals; |
|--------------|--------------------------------------------------------------------------------|

| ·  | variations in our and our competitors’ results of operations; |
|--------------|---------------------------------------------------------------------|

| ·  | changes in earnings estimates or recommendations by securities analysts; and |
|--------------|------------------------------------------------------------------------------|

| ·  | developments in the biotechnology industry. |
|--------------|---------------------------------------------|

| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
|--------|-------------------------------------------------------------|

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| Item 3 | Defaults Upon Senior Securities |
|--------|---------------------------------|

| Item 4 | (Removed and Reserved) |
|--------|------------------------|

| Item 5 | Other Information |
|--------|-------------------|

| Item 6  |  Exhibits |
|--------------|----------------|

| Exhibit No |   | Description                                                                                                                 |   | Location       |
|------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|       |   |                                                                                                                        |   |           |
| 10.1       |   | Consulting Agreement, dated February 12, 2010, by and between the Company and JFS Investments                               |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 10.2       |   | Financial Advisory Services Agreement, dated February 12, 2010, by and Between the Company and Garden State Securities Inc. |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 31.1       |   | Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)                                                        |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 31.2       |   | Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)                                                        |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 32.1       |   | Section 1350 Certificate (Principal Executive Officer)                                                                      |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 32.2       |   | Section 1350 Certificate (Principal Financial Officer)                                                                      |   | Filed herewith |

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SIGNATURES

|                  |   | REXAHN PHARMACEUTICALS, INC.                                                                                                                                       |
|-----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                          (Registrant) |
|                  |   |                                                                                                                                                               |
|                  | By:    | /s/ Chang H. Ahn                                                                                                                                                   |
| Date: August 16, 2010 |   | Chang H. Ahn                                                                                                                                                       |
|                  |   | Chairman and Chief Executive Officer                                                                                                                               |
|                  |   |                                                                                                                                                               |
|                  | By:    | /s/ Tae Heum Jeong                                                                                                                                                 |
| Date: August 16, 2010 |   | Tae Heum Jeong                                                                                                                                                     |
|                  |   | Chief Financial Officer and Secretary                                                                                                                              |

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| Exhibit No |   | Description                                                                                                                 |   | Location       |
|------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|       |   |                                                                                                                        |   |           |
| 10.1       |   | Consulting Agreement, dated February 12, 2010, by and between the Company and JFS Investments                               |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 10.2       |   | Financial Advisory Services Agreement, dated February 12, 2010, by and Between the Company and Garden State Securities Inc. |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 31.1       |   | Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)                                                        |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 31.2       |   | Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)                                                        |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 32.1       |   | Section 1350 Certificate (Principal Executive Officer)                                                                      |   | Filed herewith |
|       |   |                                                                                                                        |   |           |
| 32.2       |   | Section 1350 Certificate (Principal Financial Officer)                                                                      |   | Filed herewith |

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