<page>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

           FOR THE TRANSITION PERIOD FROM ____________ TO_____________

                        COMMISSION FILE NUMBER: 001-31925

                        VASO ACTIVE PHARMACEUTICALS, INC.
        (Exact name of registrant as specified in its charter)

              DELAWARE                                    02-0670926
     (State or other jurisdiction             (IRS Employer Identification No.)
   of incorporation or organization)

     99 ROSEWOOD DRIVE, SUITE 260
             DANVERS, MA                                    01923
(Address of principal executive offices)                  (Zip code)

                  REGISTRANT'S TELEPHONE NUMBER: (978) 750-1991

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.Yes [_] No [X]

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

Large accelerated filer [_]                      Accelerated filer [_]
Non-accelerated filer [_]                        Smaller reporting company [X]
(do not check if smaller reporting company)

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

         Yes [_] No [X]

         Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
<TABLE>
<CAPTION>
<S>     <C>
Common stock, Class A, $0.0001 par value           5,828,604 shares outstanding on November 11, 2008
Common stock, Class B, $0.0001 par value           4,500,000 shares outstanding on November 11, 2008
</TABLE>


<page>

<TABLE>
<CAPTION>
<S>     <C>


                                    VASO ACTIVE PHARMACEUTICALS, INC.

                                           INDEX TO FORM 10-Q

                                                                                                    Page
                                                                                                    ----

PART I.     FINANCIAL INFORMATION

ITEM 1 - Condensed Financial Statements (unaudited):

Condensed Balance Sheets as of September 30, 2008 and December 31, 2007                               3
Condensed Statements of Operations for the Three and Nine-Month Periods Ended September 30, 2008
           and 2007                                                                                   4
Condensed Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2008 and 2007       5
Notes to the Condensed Financial Statements                                                           6

ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations        8

ITEM 4T - Controls and Procedures                                                                     14

PART II.    OTHER INFORMATION

ITEM I.  Legal Proceedings                                                                            14

ITEM 6 - Exhibits                                                                                     14

Signature                                                                                             15
</TABLE>

Unless the context requires otherwise, references in this Quarterly Report to
"Vaso Active," "the Company," "we," "our" and "us" refer to Vaso Active
Pharmaceuticals, Inc. Vaso Active, A-R Extreme(R), Termin8(R), and our logo are
trademarks of the Company. Osteon(R), RepiDerm(R) and PENtoCORE(R) are
registered trademarks of BioChemics, Inc. This Quarterly Report also contains
trademarks and trade names of other parties.


                                       2



<page>
<TABLE>

                                          VASO ACTIVE PHARMACEUTICALS, INC.
                                               CONDENSED BALANCE SHEETS


                                                                                SEPTEMBER 30,          DECEMBER 31
                                                                                    2008                  2007
                                                                              ----------------      ----------------
                                                                                (UNAUDITED)
<S>                                                                           <C>                   <C>
                                                        ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                     $          1,893      $          6,324
Restricted cash                                                                         11,683                11,683
Accounts receivable                                                                     26,245                25,699
Inventory                                                                               34,056                57,515
Prepaid expenses                                                                        26,679                19,783
                                                                              ----------------      ----------------

     TOTAL CURRENT ASSETS                                                              100,556               121,004

Property and equipment - net                                                             5,517                17,638
                                                                              ----------------      ----------------
                                                                              $        106,073      $        138,642
                                                                              ================      ================

                                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable                                                              $        818,416      $        597,733
Accrued compensation                                                                   416,275               233,290
Other accrued expenses                                                                 718,145               389,120
Obligations under capital leases - short-term portion                                       --                 2,558
Senior secured convertible notes, net of discount                                    2,781,250             2,612,500
Notes payable                                                                          860,000               860,000
Due to parent company                                                                3,056,857             2,395,475
Deferred revenue                                                                        31,000                26,000
                                                                              ----------------      ----------------
     TOTAL CURRENT LIABILITIES                                                       8,681,943             7,116,676

LONG-TERM LIABILITIES:

Obligations under capital leases - long-term portion                                        --                 6,529
                                                                              ----------------      ----------------
     TOTAL LONG-TERM LIABILITIES                                                            --                 6,529
                                                                              ----------------      ----------------

                                                                                     8,681,943             7,123,205
                                                                              ----------------      ----------------

Commitments and contingencies (Note 1)

STOCKHOLDERS' EQUITY:
Preferred stock - $0.0001 par value; authorized
   10,000,000 shares; issued and outstanding, none                                          --                    --
Common stock - $0.0001 par value; authorized
   60,000,000 shares; issued and outstanding, 10,328,613                                 1,033                 1,033
Additional paid-in capital                                                           8,971,004             8,968,669
Deferred compensation                                                                       --                (4,007)
Accumulated deficit                                                                (17,547,907)          (15,950,258)
                                                                              ----------------      ----------------

TOTAL STOCKHOLDERS' DEFICIENCY                                                      (8,575,870)           (6,984,563)
                                                                              ----------------      ----------------
                                                                              $        106,073      $        138,642
                                                                              ================      ================


                              See notes to the unaudited condensed financial statements


                                                          3



<page>

                                               VASO ACTIVE PHARMACEUTICALS, INC.
                                          UNAUDITED CONDENSED STATEMENTS OF OPERATIONS


                                                        Three-Month Period Ended                Nine-Month Period Ended
                                                             September 30,                           September 30,
                                                  ------------------------------------    ------------------------------------
                                                        2008                2007                2008                2007
                                                  ----------------    ----------------    ----------------    ----------------

Net revenues                                      $         16,833    $         14,804    $         42,279    $         38,668
Cost of revenues                                            14,216              12,535              38,811              31,121
                                                  ----------------    ----------------    ----------------    ----------------
    GROSS PROFIT                                             2,617               2,269               3,468               7,547
                                                  ----------------    ----------------    ----------------    ----------------

Costs and expenses:
  Marketing, advertising and promotion                       4,143              63,212              43,392             178,626
  Selling, general and administrative (1)                  261,850             357,750           1,048,326           1,130,073
  Research and development                                      --                  --                  --                 150
  Stock based compensation                                      --              15,101               4,007              45,303
                                                  ----------------    ----------------    ----------------    ----------------

    Loss from operations                                  (263,376)           (433,794)         (1,092,257)         (1,346,605)

Interest income (expense), net                            (112,192)           (113,543)           (336,642)           (451,054)
Charge for default premium on senior
  Secured convertible notes                                     --                  --            (168,750)           (112,500)
Debt restructuring expense                                      --                  --                  --             (43,993)
                                                  ----------------    ----------------    ----------------    ----------------
                                                          (112,192)           (113,543)           (505,392)           (607,547)

  NET LOSS                                        $       (375,568)   $       (547,337)   $     (1,597,649)   $     (1,954,152)
                                                  ================    ================    ================    ================

  Net loss per share - basic and
    diluted (Note 2)                              $          (0.04)   $          (0.05)   $          (0.15)   $          (0.19)
                                                  ================    ================    ================    ================

Weighted average shares outstanding -
  basic and diluted (Note 2)                            10,328,613          10,328,613          10,328,613          10,328,613
                                                  ================    ================    ================    ================

    (1) Includes stock based compensation of:                   --              45,960               2,335             137,880


                                   See notes to the unaudited condensed financial statements.


                                                                         4



<page>

                                                  VASO ACTIVE PHARMACEUTICALS, INC.
                                            UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS


                                                                                                     Nine-Month Period Ended
                                                                                                          September 30,
                                                                                               ------------------------------------
                                                                                                     2008                2007
                                                                                               ----------------    ----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                                       $     (1,597,649)  $      (1,954,152)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization                                                                          5,604              11,256
   Stock-based compensation (Note 4)                                                                      6,342             183,183
   Disposition of capital lease                                                                          (2,102)                 --
   Amortization of discount and offering costs associated with convertible debt                              --             179,211
   Inventory write-off                                                                                       --              22,591
   Accrued debt restructuring expenses                                                                       --              43,993
   Increase in senior secured convertible notes for default premium                                     168,750             112,500
   Increase (decrease) in cash from change in:
   Accounts receivable                                                                                     (546)             14,051
     Inventory                                                                                           23,459              61,631
     Prepaid expenses                                                                                    (6,896)            (27,151)
     Accounts payable                                                                                   220,683             (64,959)
     Accrued compensation                                                                               182,985              34,108
     Deferred revenue                                                                                     5,000               6,000
     Other accrued expenses                                                                             329,025             146,848
                                                                                               ----------------    ----------------
           Net cash used in operating activities                                                       (665,345)         (1,230,890)
                                                                                               ----------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Decrease (additions) in restricted cash                                                                   --             124,636
                                                                                               ----------------    ----------------
           Net cash provided by (used in) investing activities                                               --             124,636
                                                                                               ----------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Obligations under capital leases                                                                        (468)             (1,886)
   Due to/from parent company                                                                           661,382           1,106,885
                                                                                               ----------------    ----------------
           Net cash provided by financing activities                                                    660,914           1,104,999
                                                                                               ----------------    ----------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                     (4,431)             (1,255)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                            6,324               8,627
                                                                                               ----------------    ----------------


CASH AND CASH EQUIVALENTS, END OF PERIOD                                                       $          1,893    $          7,372
                                                                                               ================    ================

SUPPLEMENTAL DISCLOSURES:
   Interest paid                                                                               $             --    $        451,054
   Income taxes paid                                                                           $             --    $             --

NONCASH DISCLOSURES:
   Issuance of capital leases and acquired equipment                                           $             --    $             --


                                     See notes to the unaudited condensed financial statements.


                                                                 5
</TABLE>


<page>


                       VASO ACTIVE PHARMACEUTICALS, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


1.       INTERIM FINANCIAL STATEMENTS

         The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission for reporting on Form 10-Q. Accordingly,
certain information and footnote disclosure required for complete financial
statements are not included herein. It is recommended that these financial
statements be read in conjunction with the financial statements and related
notes of Vaso Active Pharmaceuticals, Inc. (the "Company") as reported in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2007. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of financial position,
results of operations, and cash flows at the dates and for the periods presented
have been included. The results of operations for the three and nine months
ended September 30, 2008 may not be indicative of the results that may be
expected for the year ending December 31, 2008, or any other period.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         GOING CONCERN - These financial statements have been prepared on the
assumption that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business. This assumption is presently in
question and contingent upon the Company's ability to raise additional funds.
Management is in the process of identifying various fund-raising strategies it
will continue to pursue in 2008. These strategies may include an additional
private placement of the Company's equity securities. There are no assurances
that Management will successfully execute such strategies.

         ACCOUNTS RECEIVABLE - Accounts receivable consist primarily of trade
receivables from the sale of OTC pharmaceutical products. The allowance for
doubtful accounts is based on the Company's assessment of the collectability of
specific customer accounts and an assessment of economic risk as well as the
aging of the accounts receivable. The Company's policy is to write-off
uncollectible trade receivables after significant measures have failed to result
in their collection. An allowance for doubtful accounts is established to
represent the estimated uncollectible trade receivables. The allowance for
doubtful accounts was $9,000 at September 30, 2008. No allowance was recorded at
December 31, 2007.

         NON-CASH INVESTING AND FINANCING ACTIVITIES: During the nine months
ended September 30, 2008 the Company returned used office equipment with a net
book value of $6,518 to the vendor in exchange for cancellation of the remaining
payments due on a capital lease. The value of the remaining payments on the
lease, discounted for interest, was $8,620.

         DUE TO PARENT - The Company reimburses certain administrative services
provided by BioChemics as well as general overhead fees pursuant to agreements
between the Company and BioChemics. In addition, the Company has been receiving
working capital advances from BioChemics in the form of cash advances and from
BioChemics' payment of certain Company expenses on behalf of the Company. The
due to parent balance represents the net obligation from the Company to
BioChemics at September 30, 2008 and December 31, 2007.

         REVENUE RECOGNITION - The Company recognizes revenue from product sales
in accordance with accounting principles generally accepted in the United States
of America, including the guidance in Staff Accounting Bulletin ("SAB") Bulletin
No. 104 "Revenue Recognition" and Statement of Financial Accounting Standards
("SFAS") No. 48, "Revenue Recognition When Right of Return Exists."
Specifically, revenue is recognized when there is persuasive evidence of an
arrangement, delivery has occurred, the price is fixed and determinable and
collectability is reasonably assured.

         In general, revenue is recognized when products are shipped to
customers. It is the Company's policy that all sales are final. As is common in
the consumer products industry, customers return products for a variety of
reasons including products damaged in transit, packaging changes, product
discontinuance and shipping errors. As sales are recorded, the Company accrues
an estimated amount for product returns as a reduction of revenue. These
estimates are based on historical experience and known specific events such as
product expiration dates.

         Revenue is not recognized unless collectability is reasonably assured.
The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of customers to make required payments. If a
customer's financial condition were to deteriorate and result in an impairment
of their ability to make payments, additional allowances may be required.

         STOCK-BASED COMPENSATION - In the first quarter of 2006 the Company
adopted Statement of Financial Accounting Standards No. 123(R) "Share-Based
Payments" ("SFAS 123(R)"), which requires all share-based payments to employees,
including stock options and stock issued under certain employee stock purchase
plans, to be recognized in the Company's financial statements at their fair
value. SFAS 123(R) requires the Company to estimate future forfeitures of
stock-based compensation. The Company utilizes the Black-Sholes option pricing

                                       6

<page>

model to determine the fair value of options under SFAS 123(R).

         The Company has an employee stock incentive plan and a non-employee
director compensation plan, which are described more fully in Note 8 to the
Company's Annual Report on Form 10-KSB for the period ended December 31, 2007.

         During the three months ended September 30, 2008 and 2007, the Company
recorded stock compensation expense of $-0- and $61,061 respectively in
accordance with SFAS 123(R), of which $-0- and $45,960 was included in selling,
general and administrative for the three months ended September 30, 2008 and
2007, respectively. During the nine months ended September 30, 2008 and 2007,
the Company recorded stock compensation expense of $6,342 and $183,183
respectively, of which $2,335 and $137,880 was included in selling, general and
administrative.

         NET LOSS PER SHARE - Basic net loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding for the
period. Diluted net loss per share reflects, in addition to the weighted average
number of common shares, the potential dilution if stock options and warrants
outstanding were exercised and/or converted into common stock, unless the effect
of such equivalent shares was anti dilutive.

         For the three-month and nine-month periods ended September 30, 2008 and
2007, the effect of stock options and other potentially dilutive shares were
excluded from the calculation of diluted net loss per common share as their
inclusion would have been antidilutive.


                                       7

<page>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING INFORMATION

         This Quarterly Report on Form 10-Q contains "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended (the "1934 Act"), that are based on management's exercise of
business judgment as well as assumptions made by, and information currently
available to management. When used in this document, the words "may," "will,"
"anticipate," "believe," "estimate," "intend," and words of similar import, are
intended to identify any forward-looking statements. You should not place undue
reliance on these forward-looking statements. These statements reflect our
current view of future events and are subject to certain risks and uncertainties
as noted below. Should one or more of these risks and uncertainties materialize,
or should underlying assumptions prove incorrect, our actual results could
differ materially from those anticipated in these forward-looking statements. We
undertake no obligation and do not intend to update, revise or otherwise
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
any unanticipated events after the date hereof or to reflect the occurrence of
any unanticipated events. Although we believe that our expectations are based on
reasonable assumptions, we can give no assurance that our expectations will
materialize.

         Management's Discussion and Analysis should be read together with our
condensed financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2007. This Quarterly Report on Form 10-Q,
including the following discussion, may contain trend analysis and other
forward-looking statements within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Any statements in this Quarterly
Report on Form 10-Q that are not statements of historical facts are
forward-looking statements. These forward looking statements made herein are
based on our current expectations, involve a number of risks and uncertainties
and should not be considered as guarantees of future performance.

         The single most pressing factor that could cause actual results to
differ materially and adversely is our lack of working capital and our need to
raise additional capital to repay Senior Secured Convertible Notes in the
principal amount of $2,781,250 that became due on May 1, 2007 and 5%
Subordinated Callable Convertible Notes in the aggregate principal amount of
$860,000 that became due in December 2007 and February 2008 and that remain
unpaid at this time. On July 24, 2008, we received a notice of default from
Iroquois Master Fund, Ltd ("Iroquois"), as further described herein. See
"Liquidity and Capital Resources".

         Other factors that could cause actual results to differ materially
include without limitation:

     o    our inability to repay our debt and the potential consequences
          thereof, such as bankruptcy;
     o    an inability to arrange debt or equity financing;
     o    our ability to finance our business;
     o    the outcome of pending litigation or future legal proceedings;
     o    the impact of new technologies on our products and our competition;
     o    adverse changes in laws or rules or regulations of governmental
          agencies;
     o    interruptions or cancellation of existing contracts;
     o    impact of competitive products and pricing;
     o    product demand and market acceptance and risks;
     o    the presence of competitors with greater financial resources;
     o    product development and commercialization risks;
     o    our ability to maintain our current pricing model and/or decrease our
          cost of sales;
     o    continued availability of supplies or materials used in manufacturing
          at the current prices;
     o    the ability of management to execute plans and motivate personnel in
          the execution of those plans;
     o    adverse publicity related to our products or the Company itself;
     o    adverse claims relating to our intellectual property;
     o    the adoption of new, or changes in, accounting principles;
     o    the costs inherent with complying with new statutes and regulations
          applicable to public reporting companies, such as the Sarbanes-Oxley
          Act of 2002;
     o    other new lines of business that the Company may enter in the future.

         These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements in this quarterly report. Other unknown or
unpredictable factors also could have material adverse effects on our future
results, including the factors described under the heading "Risk Factors" in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2007. The forward-looking statements in this quarterly report are made only as
of the date of this quarterly report, and we do not have any obligation to


                                       8

<page>

publicly update any forward-looking statements to reflect subsequent events or
circumstances.


BUSINESS OVERVIEW

         Vaso Active, organized in January 2003, focuses on commercializing,
marketing and selling over-the-counter pharmaceutical products that we believe
incorporate a proprietary PENtoCORE technology. Vaso Active's earlier focus on
pre-clinical testing and research on a patented VALE technology has been
adversely limited due to lack of adequate working capital.

         We began our operations in January 2001, as a division of BioChemics, a
privately-owned pharmaceutical company engaged in the development of transdermal
and topical drug delivery systems. BioChemics is based in Danvers,
Massachusetts. BioChemics was founded in 1989 by John J. Masiz and was
incorporated in Delaware in 1991. BioChemics began developing the VALE
technology in 1989 and has subsequently been issued four U.S. patents in
connection with this technology. BioChemics has licensed the VALE patents and
the PENtoCORE technology to us.

         During 2006 the Company commenced wholesale distribution under purchase
orders to chain drug and grocery stores. Currently our products are being
distributed through eight drug and grocery chains totaling more than 1,000
retail stores plus 120 independent pharmacies. In addition our products are
available for purchase on Amazon.com, AmericaRX.com, HarmonDiscount.com, and
AlleonPharmacy.net. Online sales have not been significant to date.


CRITICAL ACCOUNTING POLICIES

         GOING CONCERN ASSUMPTION - The financial statements do not include any
adjustments relating to the recoverability and classification of assets or the
amounts and classification of liabilities that might be necessary should we be
unable to continue as a going concern. If the financial statements were prepared
on a liquidation basis, the carrying value of our assets and liabilities would
be adjusted to net realizable amounts. In addition, the classification of the
assets and liabilities would be adjusted to reflect the liquidation basis of
accounting.

         REVENUE RECOGNITION - We recognize revenue from product sales in
accordance with generally accepted accounting principles in the United States,
including the guidance in Staff Accounting Bulletin, or SAB, No. 104, "Revenue
Recognition," which supersedes SAB No. 101, "Revenue Recognition in Financial
Statements," and Statement of Financial Accounting Standards, or SFAS, No. 48,
"Revenue Recognition When Right of Return Exists."

         Revenue from product sales is recognized when there is persuasive
evidence of an arrangement, delivery has occurred, the price is fixed and
determinable, and collectability is reasonably assured. However, because our
products are sold with limited rights of return, revenue is recognized when the
price to the buyer is fixed, the buyer is obligated to pay us and the obligation
to pay is not contingent on resale of the product, the buyer has economic
substance apart from the us, we have no obligation to bring about the sale of
the product and the amount of returns can be reasonably estimated.

         We record allowances for product returns, rebates and discounts, and
report revenue net of such allowances. We must make judgments and estimates in
preparing the allowances that could require adjustments in the future. For
instance, our customers have the right to return any product that is held past
the labeled expiration date. We base our estimates on historic patterns of
returns and on the expiration dates of product currently being shipped, or as a
result of an actual event that may give rise to a significant return amount such
as the discontinuance of a product.

         We do not recognize revenue unless collectability is reasonably
assured. We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. If the
financial condition of our customers were to deteriorate and result in an
impairment of their ability to make payments, additional allowances may be
required.

         EXPENSE ALLOCATIONS / MANAGEMENT FEES - BioChemics provides us with
certain administrative, marketing and management services, as well as our
facilities and general corporate infrastructure. Our statement of operations
includes allocations of these costs that BioChemics and we considered to be
reasonable.

         INCOME TAXES - We account for income taxes and deferred tax assets and
liabilities in accordance with SFAS No. 109 "Accounting for Income Taxes."
Because we project future operating losses in the near term, we have provided a
full valuation allowance against the deferred tax assets created by these
losses.


                                       9

<page>

         STOCK-BASED COMPENSATION - As part of our compensation programs offered
to our employees, we have historically granted stock options. We grant stock
options to employees based on the fair value of the Class A common stock at the
grant date.

         In the first quarter of 2006 the Company adopted Statement of Financial
Accounting Standards No. 123(R) "Share-Based Payments" ("SFAS 123(R)"), which
requires all share-based payments to employees, including stock options and
stock issued under certain employee stock purchase plans, to be recognized in
the Company's financial statements at their fair value. SFAS 123(R) requires the
Company to estimate future forfeitures of stock-based compensation. The Company
utilizes the Black-Sholes option pricing model to determine the fair value of
options under SFAS 123(R).

         The Company has an employee stock incentive plan and a non-employee
director compensation plan, which are described more fully in Note 6 to the
Company's Annual Report on Form 10-KSB for the period ended December 31, 2007.


THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

      NET REVENUES - Net revenues increased $2,029 to $16,833 for the three
month period ended September 30, 2008 as compared to $14,804 in the prior
comparable period. In the three months ended September 30, 2008 we recognized
increased sales of our three OTC products to approximately the same number of
chain supermarkets as in the comparable period in 2007.

      COST OF SALES - Cost of sales increased $1,681 to $14,216 during the three
month period ended September 30, 2008 from $12,535 in the comparable period in
2007. In general, our cost of sales is variable to our net revenues. However,
certain manufacturing events such as inventory adjustments may distort our cost
of sales, and therefore our gross profit, during any particular period.

      GROSS PROFIT - Gross profit as a percentage of net revenues for the three
month period ended September 30, 2008 was 15.5% as compared to 15.3% the three
month period ended September 30, 2007. We do not believe that any comparison
between periods is meaningful in our current stage of development and due to our
limited sales to date.

      MARKETING, ADVERTISING AND PROMOTION - Marketing, advertising and
promotion expenses decreased by $59,069 to $4,143 for the three-month period
ended September 30, 2008 from $63,212 during the three-month period ended
September 30, 2007. The decrease is primarily related a reduction in print and
television
media advertising and sampling programs brought about by budgetary reductions
due to working capital constraints.

      SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and administrative
expenses decreased by $95,900 to $261,850 during the three-month period ended
September 30, 2008 as compared to $357,750 in the comparable period in 2007. The
decrease is primarily related to decreased charges in stock based compensation
of approximately $46,000 plus decreases in wages and numerous other expense
categories brought about by budgetary reductions due to working capital
constraints.

      STOCK BASED COMPENSATION - We are required to record stock-based
compensation when we grant options to purchase our common stock to employees and
non-employees in accordance with SFAS 123R. The value of these options is
calculated using the Black-Scholes option-pricing model. Stock based
compensation for the three-month period ended September 30, 2007 was $45,960 and
$15,101 to employees and non-employees, respectively. Since no grants were made
to employees or non-employees during these periods, the amount recorded was
attributable to the normal amortization of fair value of these awards into
expense over the vesting period of the awards. The fair value of the existing
awards became fully amortized into expenses during the quarter ended March 31,
2008. Accordingly, there is no stock based compensation expenses recorded during
the three month period ended September 30, 2008.

      INTEREST EXPENSE, net - Interest expense, net decreased by $1,351 to
$112,192 during the three months ended September 30, 2008 from $113,543 in the
comparable period in 2007. Interest expense in each three month period is
substantially all related to interest charges being accrued at 18%, annual
percentage rate, on the Senior Secured Convertible Notes.



                                       10


<page>

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

      NET REVENUES - Net revenues increased $3,611 to $42,279 for the nine month
period ended September 30, 2008 as compared to $38,668 in the prior
comparable period. In the three months ended September 30, 2008 we recognized
increased sales of our three OTC products to approximately the same number of
chain supermarkets as in the comparable period in 2007.

      COST OF SALES - Cost of Sales increased $7,690 to $38,811 during the nine
month period ended September 30, 2008 from $31,121 in the comparable prior
period. In general, our cost of sales is variable to our net revenues. However,
certain manufacturing events such as inventory adjustments may distort our cost
of sales, and therefore our gross profit, during any particular period.

      GROSS PROFIT - Gross profit as a percentage of net revenues for the nine
month period ended September 30, 2008 was a 8.2% compared to a 19.5% for the
nine month period ended September 30, 2007. We do not believe that any
comparison between periods is meaningful in our current stage of development and
due to our limited sales to date.

      MARKETING, ADVERTISING AND PROMOTION - Marketing, advertising and
promotion expenses decreased $135,234 to $43,392 for the nine-month period ended
September 30, 2008 from $178,626 for the nine-month period ended September 30,
2007. The decrease is primarily related a reduction in print and television
media advertising and sampling programs brought about by budgetary reductions
due to working capital constraints.

      SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and administrative
expenses decreased by $81,747 to $1,048,326 during the nine-month period ended
September 30, 2008 as compared to $1,130,073 in the comparable period in 2007.
The decrease in the current period results from $135,545 less charges for stock
based compensation expense partially offset by net increases in other expenses,
including additional charges for professional services fees for expert
witnesses, in the amount of $80,000, not incurred in the prior comparable
period.

      RESEARCH AND DEVELOPMENT - Research and development expenses decreased by
$150 to $0 for the nine-month period ended September 30, 2008 as compared to
$150 in the comparable prior period in 2007. Due to working capital constraints,
we suspended substantially all research and development activities at the end of
2005.

      STOCK-BASED COMPENSATION - We are required to record stock-based
compensation when we grant options to purchase our common stock to employees and
non-employees in accordance with SFAS 123R. The value of these options is
calculated using the Black-Scholes option-pricing model. Stock based
compensation for the nine-month period ended September 30, 2007 was $137,880 and
$45,303 to employees and non-employees, respectively. Since no grants were made
to employees or non-employees during these periods, the amount recorded was
attributable to the normal amortization of fair value of these awards into
expense over the vesting period of the awards. The fair value of the existing
awards became fully amortized into expenses during the quarter ended March 31,
2008. The stock based compensation expenses recorded during the nine month
period ended September 30, 2008 was $2,335 and $4,007 to employees and
non-employees, respectively.

      INTEREST EXPENSE, net - Interest expense, net decreased by $114,412 to
$336,642 during the nine months ended September 30, 2008 from $451,054 in the
comparable period in 2007. The decrease results from decreased interest charges
in connection with debt issuance costs and warrant costs being fully accreted on
May 1, 2007. The prior comparable period in 2007 recorded four months of those
charges. This decrease was partially offset by increased interest charges from
May 2, 2007 to the present because the interest rate on the Senior Secured
Convertible Notes increased to 18% on May 2, 2007.


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<page>


LIQUIDITY AND CAPITAL RESOURCES

         The Company has incurred substantial operating losses and negative cash
flows from operations since inception. In 2004 and 2005, until the completion of
our private financing in August 2005, operations were financed primarily from
the proceeds of our December 2003 initial public offering and from the exercise
of warrants. Net of offering costs, we raised approximately $6.4 million and
$450,000, respectively, through these transactions. Prior to our receipt of
these proceeds, we relied on BioChemics, together with the proceeds from an
offering of convertible notes in early 2003, as the source of our working
capital. We have expended all of the funds raised from our initial public
offering.

         On August 16, 2005, under a Securities Purchase Agreement (the
"Purchase Agreement"), we issued a series of Senior Secured Convertible Notes
(the "Notes") due May 1, 2007 in the aggregate principal amount of $2,500,000.
The Company received approximately $1,700,000 in net cash proceeds from
financing after placement fees, legal expenses, other offering costs, and
funding of an escrow for future interest payments on the Notes. Placement fees,
legal expenses and other offering costs paid were approximately $360,000, and
approximately $437,000 was placed into escrow to fund substantially all of the
Company's interest payments on the Notes (assuming that the Notes continued to
accrue interest at the initial rate of 10% per annum).

         THE NOTES. The Notes had an initial term of 21 months, and the
principal of the Notes was due and payable in a single payment on May 1, 2007.
The original terms of the Notes provided for interest at the six month LIBOR
plus 6% with a floor of 10.0% and a ceiling of 12.0% and a default rate of
interest of 18% per annum. The Notes presently accrue interest at 18% per annum
because they are currently in default. We are not currently making any interest
payments on these notes and are not likely to be able to do so in the
foreseeable future.

         The Notes are secured by all of the assets of the Company. The Notes
are convertible, by the holders of the Notes, at any time into shares of the
Company's Class A Common Stock at a price of $0.70 per share (subject to
adjustment under certain circumstances, e.g., anti-dilution adjustments).

         On May 1, 2007, the Company failed to pay the principal amount
outstanding under the Notes and the principal amount plus accrued interest and
certain default premiums continue to be unpaid at this time. Under the terms of
the Notes, this may be deemed to be an Event of Default, which gives the holders
of the Notes the right to require the Company to repurchase the notes at 115% of
the outstanding principal, plus interest or, if greater, 115% of the value of
the shares that such holder could receive upon conversion of the Notes, based on
a five day trading average price, (the "Event Price"). The default rate of
interest on any unpaid amounts is 18%. In addition, Iroquois Master Fund, L.P.
("Iroquois"), as collateral agent for the purchasers of the Notes, may assert
its rights under the Security Agreement, dated August 16, 2005, among the
Company, Iroquois and the purchasers of the Notes.

         On May 18, 2007, the Company received written notice (the "Notice")
from Portside Growth and Opportunity Fund, ("Portside") that an Event of Default
had occurred under the Portside Note and that Portside had elected to require
the Company to redeem the Portside Note at the Event Price.

         On July 17, 2007 Portside entered into a Secondary Securities Purchase
Agreement (the "Agreement") with Frontier Holdings Company, Inc. ("Frontier")
whereby Portside sold to Frontier an interest in its Senior Secured Convertible
Note (the "Note") due May 1, 2007, representing $253,772 in principal amount of
the Note of $341,617. John Masiz, a key employee and stockholder of the Company,
holds a controlling interest in Frontier.

         Simultaneously with the execution of the Agreement, Portside entered
into an Amendment to Senior Secured Convertible Note (the "Amendment") with the
Company. Under the terms of the Amendment, in exchange for an extension fee in
the amount of $43,993, payable December 31, 2007, Portside agreed to extend the
original maturity date of its remaining $87,845 in principal amount of the Note
to December 31, 2007. Upon the amended maturity date, the Company agreed to pay
Portside (i) $87,845 representing the principal amount of the Note outstanding,
(ii) any accrued and unpaid interest thereunder, and (iii) the extension fee in
the amount of $43,993. As part of the Amendment, Portside waived any Default or
Event of Default by the Company based on the failure by the Company to repay
amounts due under the Note any time prior to December 31, 2007 and rescinded the
Notice of an Event of Default previously disclosed in the Company's Form 8-K
dated May 18, 2007. Portside also dismissed a lawsuit it had filed in the
Supreme Court in the State of New York seeking to enforce its rights under the
Note. The Company also agreed that it would give Portside the benefit of any
higher extension fee that it may agree to pay to other holders of the Company's
Senior Secured Convertible Notes due May 1, 2007. The Company has recorded debt
restructuring expense in the amount of $43,993 for the year ended December 31,
2007 in connection with the Agreement. On December 31, 2007 the Company failed
to repay the remaining $87,845 in principal amount of the Portside Note and the
extension fee in the amount of $43,993 and those amounts continue to be unpaid.

         On June 1, 2007, the Company received written notice (the "Smithfield
Notice") from Smithfield Fiduciary, LLC ("Smithfield") that an Event of Default
had occurred under the Smithfield Note, in the original principal amount of
$750,000, and that Smithfield had elected to require the Company to redeem the
Smithfield Note at the Event Price, as defined in the Smithfield Note. The Event
Price is equal to 115% of the outstanding principal, plus accrued interest (or,
if greater, 115% of the value of shares that such holder could receive upon

                                       12

<page>

conversion of the Smithfield Note, based on a five day trading average price).
In addition, the default rate of interest on any unpaid amounts is 18%. In
connection with receipt of the Smithfield Notice, the Company has recorded a
charge for default premium on senior secured convertible notes in the amount of
$112,500 during the year ended December 31, 2007.

         On July 24, 2008, the Company received written notice (the "Iroquois
Notice") from Iroquois Master Fund LTD ("Iroquois") that Events of Default had
occurred under the Iroquois Note, in the original principal amount of
$1,125,000, and that Iroquois had elected to require the Company to redeem the
Iroquois Note at the Event Price, as defined in the Iroquois Note. The Event
Price is equal to 115% of the outstanding principal, plus accrued interest (or,
if greater, 115% of the value of shares that such holder could receive upon
conversion of the Iroquois Note, based on a five day trading average price). In
addition, the default rate of interest on any unpaid amounts is 18%. In
connection with receipt of the Iroquois Notice, the Company has recorded a
charge for default premium on senior secured convertible notes in the amount of
$168,750 during the quarter ended June 30, 2008. Iroquois is also the collateral
agent for the other note holders.

         As of November 11, 2008 the Company has not received similar notices
from the other note holders. If the Company had received similar notices from
all the other remaining note holders, the Company would have recorded an
additional charge for default premium on senior secured convertible notes in the
amount of approximately $80,250 during the quarter ended September 30, 2008.

         THE WARRANTS. The investors also received five-year warrants
("Warrants"), which entitle the investors to purchase a total of 1,298,701
shares of the Company's Class A Common Stock at an exercise price of $0.77 per
share. The number of shares which may be purchased upon exercise of the Warrants
and the exercise price per share of the Warrants are subject to adjustment under
certain circumstances, e.g., anti-dilution adjustments.

         Under the Purchase Agreement, the Company is required to reserve for
issuance a total of 4,870,130 shares of Class A Common Stock, in connection with
the possible conversion of Notes and the possible exercise of the Warrants.

         At September 30, 2008 the Company had unrestricted cash of $1,893 and a
working capital deficiency of approximately $8.34 million, excluding
approximately $237,000 of accounts payable related to legal fees that we intend
to contest. Our financial condition has been materially and adversely affected
by regulatory and shareholder actions taken against us during 2004 and 2005.

         Our ability to continue our business activities, including increasing
our marketing support for our existing products, funding of the development of
our product candidates through BioChemics and the commercialization of these
product candidates, will depend upon, among other things, raising capital from
third parties, receiving net cash flows from sales of our products, or a
recovery in our lawsuit against Robinson & Cole LLP. If we successfully generate
cash through any of these methods, our priorities will be: (i) to contribute to
support our existing products; (ii) to bring our acne product candidate to
market; and (iii) to commence clinical trials for our ibuprofen candidate.

         Presentations and discussions with potential investors in an attempt to
obtain financing in order to provide important funds to the Company have been
unsuccessful to date. Without these funds, or some other source of capital, we
will be unable to repay our outstanding debt which is past due. We are uncertain
whether we will obtain any financing. To date the Company has not negotiated a
forbearance, extension or other arrangement, may be forced to seek relief from
its creditors in bankruptcy, or the holders of such notes might seek to
foreclose on the Company assets, liquidate the Company, or have it declared
insolvent.

         Working capital has been provided to the Company by BioChemics, under a
verbal agreement, in the form of cash advances and payments made on behalf of
the Company. BioChemics it is under no obligation to make further advances.
There can be no assurance that BioChemics can or will be willing or able to
continue to provide working capital to the Company.

OFF-BALANCE SHEET ARRANGEMENTS

         We have no material off-balance sheet financing such as a facility
lease or other long-term commitments.

OWNERSHIP STRUCTURE

         Through our parent company, BioChemics, John J. Masiz controls
approximately 70% of the combined voting power of all classes of stock of the
Company and approximately 44% of the combined equity interest of the Company.
BioChemics owns 100% of the Class B Common Stock of the Company.

                                       13

<page>


ITEM 4T. CONTROLS AND PROCEDURES

         As of the end of the period covered by this quarterly report, our
Acting Chief Executive Officer and Chief Financial Officer (the "Certifying
Officer") conducted evaluations of our disclosure controls and procedures. As
defined under Sections 13a-15(e) and 15d-15(e) of the 1934 Act, the term
"disclosure controls and procedures" means controls and other procedures of an
issuer that are designed to ensure that information required to be disclosed by
the issuer in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the issuer's management,
including the Certifying Officer, to allow timely decisions regarding required
disclosure. Based on this evaluation, the Certifying Officer has concluded that
our disclosure controls and procedures were effective to ensure that material
information is recorded, processed, summarized and reported by our management on
a timely basis in order to comply with our disclosure obligations under the 1934
Act, and the rules and regulations promulgated there under.

         Further, there were no changes in our internal control over financial
reporting during the quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         As previously disclosed in the Company's Annual Report filed on Form
10-KSB for the fiscal year ended December 31, 2007, the Company filed a lawsuit
in 2006 in the Massachusetts Superior Court against the law firm of Robinson &
Cole LLP (Civil Action No. 06-4958-BLS2). Discovery in the lawsuit has been
completed. Robinson & Cole has moved for partial summary judgment, or
alternatively for an order IN LIMINE, to preclude the Company from measuring its
damages on the basis of the drop in the value of the Company's common stock in
public trading resulting from the law firm's malpractice. The Company has
opposed the motion and oral argument has been heard but the court has not yet
issued a ruling. The Company anticipates that the case will be scheduled for a
2009 jury trial.


ITEM 6. EXHIBITS

EXHIBIT NUMBER      DESCRIPTION OF EXHIBIT
---------------     ----------------------

31.1                Certification of Joseph Frattaroli, Acting Chief Executive
                    Officer and Chief Financial Officer, pursuant to Section 302
                    of the Sarbanes-Oxley Act of 2002.

32.1                Certification of Joseph Frattaroli, Acting Chief Executive
                    Officer and Chief Financial Officer, pursuant to Section 906
                    of the Sarbanes-Oxley Act of 2002.


------------


                                       14

<page>


                                   SIGNATURES

         In accordance with Section 13 and 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on November 14, 2008.




                                           VASO ACTIVE PHARMACEUTICALS, INC.


                                           By:   /s/ Joseph Frattaroli
                                                 ------------------------------
                                                 Joseph Frattaroli
                                                 President and Acting Chief
                                                 Executive Officer Chief
                                                 Financial Officer

                                       15