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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 

|       | Page                                                                                        |
|------------|---------------------------------------------------------------------------------------------|
|       |                                                                                        |
| PART I     | FINANCIAL INFORMATION                                                                       |   |
|       |                                                                                        |   |
| Item 1     | Financial Statements                                                                        |   |
|       |                                                                                        |   |
|       | 1)                                                                                          | Condensed Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009 | 3 |
|       |                                                                                        |   |   |
|       | 2)                                                                                          | Condensed Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) and cumulative from March 19, 2001 (inception) to March 31, 2010 (unaudited) | 4 |
|       |                                                                                        |   |   |
|       | 3)                                                                                          | Condensed Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) and cumulative from March 19, 2001 (inception) to March 31, 2010 (unaudited) | 5 |
|       |                                                                                        |   |   |
|       | 4)                                                                                          | Notes to Condensed Financial Statements (unaudited) | 6 |
|       |                                                                                        |   |   |
| Item 2     | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
|       |                                                                                        |   |
| 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                                 | 29 |
|       |                                                                                        |   |
| Item 3     | Defaults Upon Senior Securities                                                             | 29 |
|       |                                                                                        |   |
| Item 4     | (Removed and Reserved)                                                                      | 29 |
|       |                                                                                        |   |
| Item 5     | Other Information                                                                           | 29 |
|       |                                                                                        |   |
| Item 6     | Exhibits                                                                                    | 30 |
|       |                                                                                        |   |
|       |                                                                                        |
| SIGNATURES | 31                                                                                          |

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Table of Contents

| REXAHN PHARMACEUTICALS, INC.(A Development Stage Company)Condensed Balance Sheets                                                                           |   |                     |        |   |             |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|--------|------------------|--------|
|                                                                                                                                                             |   | March 31,2010(unaudited) |        |   | December 31,2009 |   |
|                                                                                                                                                             |   |                     |        |   |             |   |
| ASSETS                                                                                                                                                           |   |
| Current Assets:                                                                                                                                                  |   |                     |        |   |             |   |
| Cash and cash equivalents                                                                                                                                        |   | $                        | 7,682,191   |   |             | $      | 7,298,032 |   |
| Marketable securities                                                                                                                                            |   |                     | 175,000     |   |             |   | 175,000 |   |
| Prepaid expenses and other current assets (note 3)                                                                                                               |   |                     | 491,923     |   |             |   | 320,935 |   |
| Total Current Assets                                                                                                                                             |   |                     | 8,349,114   |   |             |   | 7,793,967 |   |
| Restricted Cash Equivalents (note 13)                                                                                                                            |   |                     | 1,909,827   |   |             |   | 2,026,060 |   |
| Equipment, Net (note 4)                                                                                                                                          |   |                     | 158,701     |   |             |   | 168,978 |   |
| Total Assets                                                                                                                                                     |   | $                        | 10,417,642  |   |             | $      | 9,989,005 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                             |   |
| Current Liabilities:                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Accounts payable and accrued expenses (note 5)                                                                                                                   |   | $                        | 917,356     |   |             | $      | 785,904 |   |
|                                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Deferred Revenue (note 6)                                                                                                                                        |   |                     | 956,250     |   |             |   | 975,000 |   |
|                                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Other Liabilities (note 7)                                                                                                                                       |   |                     | 135,921     |   |             |   | 128,501 |   |
|                                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Total Liabilities                                                                                                                                                |   |                     | 2,009,527   |   |             |   | 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, 73,483,702 (2009 – 71,938,701) issued and 73,469,497 (2009 – 71,924,496) outstanding |   |                     | 7,349       |   |             |   | 7,194 |   |
| Additional paid-in capital                                                                                                                                       |   |                     | 46,294,187  |   |             |   | 44,414,723 |   |
| Accumulated deficit during the development stage                                                                                                                 |   |                     | (37,865,011 | )      |             |   | (36,293,907 | ) |
| Treasury stock, 14,205 shares, at cost                                                                                                                           |   |                     | (28,410     | )      |             |   | (28,410 | ) |
|                                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Total Stockholders' Equity                                                                                                                                       |   |                     | 8,408,115   |   |             |   | 8,099,600 |   |
|                                                                                                                                                             |   |                     |        |   |             |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                                                       |   |                     | 10,417,642  |   |             |   | 9,989,005 |   |

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Table of Contents

| REXAHN PHARMACEUTICALS, INC.(A Development Stage Company)Condensed Statement of Operations(Unaudited) |   |                        |       |   |                                                        |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|-------------------------------------------------------------|--------|
|                                                                                                  |   | Three MonthsEnded March 31, |       |   | Cumulative from March 19, 2001 (Inception) to March 31,2010 |   |
|                                                                                                  |   | 2010                        |       |   | 2009                                                        |   |   |   |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |
| Revenue:                                                                                              |   |                        |       |   |                                                        |   |   |   |   |
| Research                                                                                              |   | $                           | 18,750     |   |                                                        | $      | 18,750 |   |   | $ | 543,750 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Expenses:                                                                                             |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| General and administrative                                                                            |   |                        | 1,056,465  |   |                                                        |   | 723,107 |   |   |   | 18,865,007 |   |
| Research and development                                                                              |   |                        | 491,122    |   |                                                        |   | 721,926 |   |   |   | 16,974,937 |   |
| Patent fees                                                                                           |   |                        | 52,734     |   |                                                        |   | 54,137 |   |   |   | 1,277,787 |   |
| Depreciation and amortization                                                                         |   |                        | 11,547     |   |                                                        |   | 11,991 |   |   |   | 556,355 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Total Expenses                                                                                        |   |                        | 1,611,868  |   |                                                        |   | 1,511,161 |   |   |   | 37,674,086 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Loss from Operations                                                                                  |   |                        | (1,593,118 | )      |                                                        |   | (1,492,411 | ) |   |   | (37,130,336 | ) |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Other (Income) Expense                                                                                |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Realized loss on securities available-for-sale                                                        |   |                        | -          |   |                                                        |   | - |   |   |   | 9,341 |   |
| Interest  income                                                                            |   |                        | (22,014    | )      |                                                        |   | (7,609 | ) |   |   | (1,200,813 | ) |
| Interest expense                                                                                      |   |                        | -          |   |                                                        |   | - |   |   |   | 301,147 |   |
| Beneficial conversion feature                                                                         |   |                        | -          |   |                                                        |   | - |   |   |   | 1,625,000 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
|                                                                                                  |   |                        | (22,014    | )      |                                                        |   | (7,609 | ) |   |   | 734,675 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Loss Before Provision for Income Taxes                                                                |   |                        | (1,571,104 | )      |                                                        |   | (1,484,802 | ) |   |   | (37,865,011 | ) |
| Provision for Income Taxes                                                                            |   |                        | -          |   |                                                        |   | - |   |   |   | - |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Net Loss                                                                                              |   | $                           | (1,571,104 | )      |                                                        | $      | (1,484,802 | ) |   |   | 37,865,011 |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Net Loss per share , basic and diluted                                                                |   | $                           | ( 0.02     | )      |                                                        | $      | (0.03 | ) |   |   |   |   |
|                                                                                                  |   |                        |       |   |                                                        |   |   |   |   |   |   |   |
| Weighted average number of shares,basic and diluted                                                   |   |                        | 72,271,780 |   |                                                        |   | 55,025,649 |   |   |   |   |   |

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Table of Contents

| REXAHN PHARMACEUTICALS, INC.(A Development Stage Company)Condensed Statement of Cash Flows(Unaudited) |   |                        |       |   |                                                  |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|-------------------------------------------------------|--------|
|                                                                                                  |   | Three Months EndedMarch 31, |       |   | Cumulative From March 19,2001 (Inception) toMarch 31, |   |
|                                                                                                  |   | 2010                        |       |   | 2009                                                  |   |   | 2010 |   |
| Cash Flows from Operating Activities:                                                                 |   |                        |       |   |                                                  |   |   |   |   |
| Net loss                                                                                              |   | $                           | (1,571,104 | )      |                                                  | $      | (1,484,802 | ) |   | $ | (37,865,011 | ) |
| Adjustments to reconcile net (loss) to net cash used in operating activities:                         |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Beneficial conversion feature                                                                         |   |                        | -          |   |                                                  |   | - |   |   |   | 1,625,000 |   |
| Compensatory stock                                                                                    |   |                        | 366,000    |   |                                                  |   | - |   |   |   | 387,877 |   |
| Depreciation and amortization                                                                         |   |                        | 11,547     |   |                                                  |   | 11,991 |   |   |   | 556,355 |   |
| Stock option compensation                                                                             |   |                        | 195,378    |   |                                                  |   | 134,910 |   |   |   | 4,549,743 |   |
| Amortization of deferred revenue                                                                      |   |                        | (18,750    | )      |                                                  |   | (18,750 | ) |   |   | (543,750 | ) |
| Realized losses on marketable Securities                                                              |   |                        | -          |   |                                                  |   | - |   |   |   | 9,341 |   |
| Amortization of deferred lease incentive                                                              |   |                        | (5,000     | )      |                                                  |   | - |   |   |   | (15,000 | ) |
| Deferred lease expenses                                                                               |   |                        | 12,420     |   |                                                  |   | - |   |   |   | 50,921 |   |
| Loss on impairment of intangible assets                                                               |   |                        | -          |   |                                                  |   | - |   |   |   | 286,132 |   |
| Changes in assets and liabilities:                                                                    |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                                             |   |                        | (170,988   | )      |                                                  |   | 184,186 |   |   |   | (491,923 | ) |
| Accounts payable and accrued expenses                                                                 |   |                        | 131,452    |   |                                                  |   | 115,494 |   |   |   | 917,356 |   |
| Net Cash Used in Operating Activities                                                                 |   |                        | (1,049,045 | )      |                                                  |   | (1,056,971 | ) |   |   | (30,532,959 | ) |
| Cash Flows from Investing Activities:`                                                                |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Restricted cash equivalents                                                                           |   |                        | 116,233    |   |                                                  |   | - |   |   |   | (1,909,827 | ) |
| Purchase of equipment                                                                                 |   |                        | (1,270     | )      |                                                  |   | (835 | ) |   |   | (544,972 | ) |
| Purchase of marketable securities                                                                     |   |                        | -          |   |                                                  |   | (1,001,345 | ) |   |   | (10,770,000 | ) |
| Proceeds from sales of marketable securities                                                          |   |                        | -          |   |                                                  |   | 3,550,001 |   |   |   | 10,585,659 |   |
| Payment of licensing fees                                                                             |   |                        | -          |   |                                                  |   | - |   |   |   | (356,216 | ) |
| Net Cash Provided (Used in) by Investing  Activities                                        |   |                        | 114,963    |   |                                                  |   | 2,547,821 |   |   |   | (2,995,356 | ) |
| Cash Flows from Financing Activities:                                                                 |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Issuance of common stock and units, net of  issuance costs                                  |   |                        | -          |   |                                                  |   | - |   |   |   | 33,267,073 |   |
| Proceeds from exercise of stock options                                                               |   |                        | 21,240     |   |                                                  |   | - |   |   |   | 24,842 |   |
| Proceeds from exercise of stock warrants                                                              |   |                        | 1,297,001  |   |                                                  |   | - |   |   |   | 1,297,001 |   |
| 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                                                             |   |                        | 1,318,241  |   |                                                  |   | - |   |   |   | 41,210,506 |   |
| Net Increase in Cash and Cash Equivalents                                                             |   |                        | 384,159    |   |                                                  |   | 1,490,850 |   |   |   | 7,682,191 |   |
| Cash and Cash Equivalents - beginning of period                                                       |   |                        | 7,298,032  |   |                                                  |   | 369,130 |   |   |   | - |   |
| Cash and Cash Equivalents - end of period                                                             |   |                        | 7,682,191  |   |                                                  |   | 1,859,980 |   |   | $ | 7,682,191 |   |
| Supplemental Cash Flow Information                                                                    |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Interest paid                                                                                         |   | $                           | -          |   |                                                  | $      | - |   |   | $ | 301,147 |   |
| Non-cash financing and investing activities:                                                          |   |                        |       |   |                                                  |   |   |   |   |   |   |   |
| Warrants issued                                                                                       |   | $                           | -          |   |                                                  | $      | - |   |   | $ | 3,877,752 |   |
| Leasehold improvement incentive                                                                       |   | $                           | -          |   |                                                  | $      | - |   |   | $ | 100,000 |   |

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Table of Contents

REXAHN 

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

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

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Table of Contents

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

|                  |   | March 31,       |    |   | December 31, |   |
|-----------------------|--------|-----------------|---------|--------|--------------|--------|
|                  |   | 2010(unaudited) |    |   | 2009         |   |
|                  |   |            |    |   |         |   |
| Deposits on contracts |   | $               | 415,713 |   |         | $      | 245,476 |   |
| Other assets          |   |            | 76,210  |   |         |   | 75,459 |   |
|                  |   |            |    |   |         |   |   |   |
|                  |   | $               | 491,923 |   |         | $      | 320,935 |   |

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

|                           |   | March 31,       |     |   | December 31, |   |
|--------------------------------|--------|-----------------|----------|--------|--------------|--------|
|                           |   | 2010(unaudited) |     |   | 2009         |   |
|                           |   |            |     |   |         |   |
| Furniture and fixtures         |   | $               | 32,169   |   |         | $      | 32,169 |   |
| Office equipment               |   |            | 73,655   |   |         |   | 72,385 |   |
| Lab and computer equipment     |   |            | 428,816  |   |         |   | 428,816 |   |
| Leasehold improvements         |   |            | 110,713  |   |         |   | 110,713 |   |
|                           |   |            |     |   |         |   |   |   |
|                           |   |            | 645,353  |   |         |   | 644,083 |   |
| Less, Accumulated depreciation |   |            | (486,652 | )      |         |   | (475,105 | ) |
|                           |   |            |     |   |         |   |   |   |
| Net carrying amount            |   | $               | 158,701  |   |         | $      | 168,978 |   |

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

|                |   | March 31,       |    |   | December 31, |   |
|---------------------|--------|-----------------|---------|--------|--------------|--------|
|                |   | 2010(unaudited) |    |   | 2009         |   |
|                |   |            |    |   |         |   |
| Trade payables      |   | $               | 146,745 |   |         | $      | 132,212 |   |
| Accrued expenses    |   |            | 658,743 |   |         |   | 512,659 |   |
| Payroll liabilities |   |            | 111,868 |   |         |   | 141,033 |   |
|                |   |            |    |   |         |   |   |   |
|                |   | $               | 917,356 |   |         | $      | 785,904 |   |

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

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Table of Contents

| 7. | Other Liabilities |
|----|-------------------|

|                          |   | March 31,       |    |   | December 31, |   |
|-------------------------------|--------|-----------------|---------|--------|--------------|--------|
|                          |   | 2010(unaudited) |    |   | 2009         |   |
|                          |   |            |    |   |         |   |
| Deferred lease incentive      |   | $               | 100,000 |   |         | $      | 100,000 |   |
| Less accumulated amortization |   |            | (15,000 | )      |         |   | (10,000 | ) |
|                          |   |            |    |   |         |   |   |   |
| Balance                       |   | $               | 85,000  |   |         | $      | 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. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | 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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Table of Contents

|   | 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. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 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. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 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. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ai) | On February 12, 2010, the Company entered into an agreement to issue 180,000 shares of common stock for consulting services and an agreement to issue 120,000 shares of common stock for consulting services. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | aj) | In March 2010, warrant holders exercised their warrant to purchase shares of Company 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 common stock for cash of $21,240 and the Company issued an aggregate of 48,000 shares. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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|                                                  |   | Three Months Ended |    |   | Inception(March 19,2001) toMarch 31, 2010 |   |
|-------------------------------------------------------|--------|--------------------|---------|--------|-------------------------------------------|--------|
|                                                  |   | March 31,2010      |    |   | March 31,2009                             |   |   |   |
| Income statement line item:General and administrative |   |               |    |   |                                      |   |   |   |   |
| Payroll                                               |   | $                  | 100,886 |   |                                      | $      | 82,761 |   |   | $ | 1,700,977 |   |
| Consulting and other professional fees                |   |               | 75,444  |   |                                      |   | 4,187 |   |   |   | 741,820 |   |
| Research and development:                             |   |               |    |   |                                      |   |   |   |   |   |   |   |
| Payroll                                               |   |               | 15,384  |   |                                      |   | 47,937 |   |   |   | 814,739 |   |
| Consulting and other professional fees                |   |               | 3,664   |   |                                      |   | 25 |   |   |   | 1,292,207 |   |
|                                                  |   |               |    |   |                                      |   |   |   |   |   |   |   |
| Total                                                 |   | $                  | 195,378 |   |                                      | $      | 134,910 |   |   | $ | 4,549,743 |   |

|                                       |   | Three Months Ended March 31, |              |
|--------------------------------------------|--------|------------------------------|-------------------|
|                                       |   |                         |              |   |   |   |
|                                       |   | 2010                         |              |   | 2009 |   |
| Black-Scholes weighted average assumptions |   |                         |              |   |   |   |
| Expected dividend yield                    |   | $                            | 0                 |   |   | $ | 0 |   |
| Expected volatility                        |   |                         | 107               | % |   |   | 0 | % |
| Risk free interest rate                    |   |                         | 2.40 – 4.10 | % |   |   | 0 | % |
| Expected term (in years)                   |   | 1 – 5 years            |              |   | 0 years |   |

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|                    |   | 2010               |      |   |  Weighted Ave. Fair Value on Date of Grant |   |   | 2009   |   |               |  Weighted Avg. Fair Value on Date of Grant |   |
|-------------------------|--------|--------------------|-----------|--------|-------------------------------------------------|--------|--------|--------|--------|--------------------|-------------------------------------------------|--------|
|                    |   | Subject to Options |      |   | SharesWeighted Avg. Exercise Prices             |   |   |   |   | Subject to Options |                                            |   | SharesWeighted Avg. Exercise Prices |   |   |   |
| Outstanding atJanuary 1 |   |               | 7,715,795 |   |                                            | $      | 0.98   |   |   |               |                                            |   |   | 7,760,795 |   |   | $ | 1.01 |   |   |   |   |
| Granted                 |   |               | 375,000   |   |                                            |   | 1.33   |   |   |               | 304,043                                         |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Exercised               |   |               | (48,000   | )      |                                            |   | 0.44   |   |   |               | -                                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Cancelled               |   |               | -         |   |                                            |   | -      |   |   |               | -                                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                    |   |               |      |   |                                            |   |   |   |   |               |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at March 31 |   |               | 8,042,795 |   |                                            | $      | 1.01   |   |   |               |                                            |   |   |   | 7,760,795 |   |   | $ | 1.01 |   |   |   |   |   |

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|                          |   |  SharesSubject to Options |      |   | Weighted Average Exercise Prices |   | WeightedAverage Remaining Contractual Term |   |  AggregateIntrinsicValue |   |
|-------------------------------|--------|--------------------------------|-----------|--------|----------------------------------|--------|--------------------------------------------|--------|-------------------------------|--------|
|                          |   |                           |      |   |                             |   |                                       |   |                          |   |
| Outstanding at March 31, 2010 |   |                           | 8,042,795 |   |                             | $      | 1.01                                       |   | 5.5 years                     |   | $ | 5,622,427 |   |
|                          |   |                           |      |   |                             |   |                                       |   |                          |   |   |   |   |
| Exercisable at March 31, 2010 |   |                           | 6,241,295 |   |                             | $      | 0.99                                       |   | 5.20 years                    |   | $ | 4,595,367 |   |

|                          |   |  SharesSubject to Options |      |   | Weighted Average Exercise Prices |   | WeightedAverage Remaining Contractual Term |   |  AggregateIntrinsicValue |   |
|-------------------------------|--------|--------------------------------|-----------|--------|----------------------------------|--------|--------------------------------------------|--------|-------------------------------|--------|
|                          |   |                           |      |   |                             |   |                                       |   |                          |   |
| Outstanding at March 31, 2009 |   |                           | 7,760,795 |   |                             | $      | 1.01                                       |   | 6.6 years                     |   | $ | 375,266 |   |
|                          |   |                           |      |   |                             |   |                                       |   |                          |   |   |   |   |
| Exercisable at March 31, 2009 |   |                           | 5,625,920 |   |                             | $      | 0.94                                       |   | 6.5 years                     |   | $ | 375,266 |   |

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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 |   |   |   | 1,207,151 |   |   | $ | 1.80 |   |
| Issued during the period    |   |               | -          |   |                            | $      | - |   |   |   | - |   |   | $ | - |   |
| Exercised during the period |   |               | (1,197,001 | )      |                            | $      | (1.08 | ) |   |   | - |   |   | $ | - |   |
| Expired during the period   |   |               | -          |   |                            | $      | - |   |   |   | - |   |   | $ | - |   |
|                        |   |               |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31           |   |               | 7,378,242  |   |                            | $      | 1.10 |   |   |   | 1,207,151 |   |   | $ | 1.80 |   |

| Range of exercise prices | Number of warrants | Average remaining contractual life | Weighted average exercise price |
|--------------------------|--------------------|------------------------------------|---------------------------------|
| $0.82 - 1.50             | 7,378,242          | 2.23 years                         | $   1.10         |

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

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|                              |   | 2010   |        |   | 2009   |   |
|-----------------------------------|--------|--------|-------------|--------|--------|--------|
| Net operating loss carry-forwards |   | $      | 13,544,760  |   |   | $      | 11,928,687 |   |
| Valuation allowance               |   |   | (13,544,760 | )      |   |   | (11,928,687 | ) |
|                              |   |   |        |   |   |   |   |   |
| 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 March 31, 2010, the total estimated cost to be incurred under these agreements was approximately $7,972,512 and the Company had made payments totaling $2,743,984 under the terms of the agreements as of March 31, 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. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | On April 20, 2009, Amarex, LLC filed suit against the Company in the Circuit Court of Montgomery County, Maryland, seeking damages for an alleged breach of a contract between the Company and Amarex, LLC entered into on January 6, 2006.  Amarex, LLC claims damages of $93,156 plus interest.  On May 22, 2009, the Company filed an answer and an affirmative defense to the complaint denying the claims of damages made by Amarex, LLC.  On June 16, 2009, the Company filed a counterclaim against Amarex, LLC for breach of the same contract in the amount of $354,824 plus interest.  The court ordered the Company and Amarex, LLC to proceed with a non-binding mediation.  The mediation has taken place, but the parties were not able to reach an amicable resolution as of March 31, 2010.  The trial is scheduled to commence on June 14, 2010. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | On May 21, 2009, the Company entered into a 1 year agreement to use lab space commencing on July 1, 2009.  The Company agreed to pay monthly payments of $4,594 from October 1, 2009 to June 30, 2010.  The agreement shall terminate on June 30, 2010 and may be renewed for two additional one year terms upon 60 days prior to the expiration of the agreement. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | e) | 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 milestone 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. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | 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 has included this amount in restricted cash equivalents.  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.  Pursuant to the Purchase Agreement, Teva has the option to purchase additional shares of Rexahn’s Common Stock. If Teva exercises such option, it will acquire additional shares of Common Stock having a value of $750,000 plus such additional amount equal to the amount, if any, then anticipated to be required to complete the development of RX-3117. The price for any such Common Stock purchased by Teva will equal 120% of the closing price of the Common Stock on the last trading day prior to the date of purchase; provided, that if the number of shares subject to purchase by Teva would exceed 7% of the total outstanding Common Stock upon the completion of such purchase, then the aggregate purchase price shall remain the same, but the number of shares subject to purchase will be reduced so as not to exceed such amount. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g) | 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   |   | $      | 89,287  |   |
|--------|--------|--------|---------|--------|
| 2011   |   |   | 148,593 |   |
| 2012   |   |   | 158,835 |   |
| 2013   |   |   | 162,806 |   |
| 2014   |   |   | 82,408  |   |
|   |   | $      | 641,929 |   |

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|   | h) | 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 $18,643 and nil for the three months ended March 31, 2010 and 2009, respectively. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 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 March 31, 2010 |   |
|-----------------------------------------------|--------|--------|-----------|--------|----------------------------------------------|--------|
|                                          |   | Total  |      |   | Level 1                                      |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                                       |   |   |      |   |                                         |   |   |   |   |   |   |   |
|    Restricted cash equivalents |   | $      | 1,909,827 |   |                                         | $      | 1,808,261 |   |   | $ | 101,566 |   |   |   | - |   |
|    Marketable securities       |   | $      | 175,000   |   |                                         | $      |  175,000 |   |   |   | - |   |   |   | - |   |
|                                          |   |   |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |   |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                  |   | $      | 2,084,827 |   |                                         | $      | 1,983,261 |   |   | $ | 101,566 |   |   | $ | - |   |

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|   | 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 March 31, 2009 |   |
|-------------------------------------|--------|--------|---------|--------|----------------------------------------------|--------|
|                                |   | Total  |    |   | Level 1                                      |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                             |   |   |    |   |                                         |   |   |   |   |   |   |   |
|                                |   | $      | 994,870 |   |                                         |   | - |   |   | $ | 994,870 |   |   |   | - |   |
| Market Index Target Term Securities |   |   |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                        |   | $      | 994,870 |   |                                         | $      | - |   |   | $ | 994,870 |   |   | $ | - |   |

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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; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

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|   | · | 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. |
|--------|--------|-----------------------------------------------|

| 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 |
|---------|--------------|

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

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

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

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

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

| Exhibit No |   | Description                                                          |   | Location                                                                       |
|------------|--------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|
|       |   |                                                                 |   |                                                                           |
| 3.2        |   | Amended & Restated Bylaws as amended                             |   | Filed as Exhibit 3.1 to the Current Report on Form 8-K filed on March 26, 2010 |
|       |   |                                                                 |   |                                                                           |
| 10.1       |   | Form of Termination and Release Agreement dated May 17, 2010         |   | 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: May 21, 2010 |   | Chang H. Ahn                                                                                                                                                       |
|               |   | Chairman and Chief Executive Officer                                                                                                                               |
|               |   |                                                                                                                                                               |
|               | By:    | /s/ Tae Heum Jeong                                                                                                                                                 |
| Date: May 21, 2010 |   | Tae Heum Jeong                                                                                                                                                     |
|               |   | Chief Financial Officer and Secretary                                                                                                                              |

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| Exhibit No |   | Description                                                          |   | Location                                                                            |
|------------|--------|----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|       |   |                                                                 |   |                                                                                |
| 3.2        |   | Amended & Restated Bylaws as amended                             |   | Filed as Exhibit 3.1 to the Current Report on Form 8-K filed on March 26, 2010 |
|       |   |                                                                 |   |                                                                                |
| 10.1       |   | Form of Termination and Release Agreement dated May 17, 2010         |   | 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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