<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

[X]      Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities
         Exchange Act Of 1934.

         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                                       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 small business issuer 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)

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

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [X] No [ ]

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

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:

Common stock, Class A, $0.0001 par value    5,828,604 shares outstanding on
                                                       May 11, 2006
Common stock, Class B, $0.0001 par value    4,500,000 shares outstanding on
                                                       May 11, 2006







<PAGE>

                        VASO ACTIVE PHARMACEUTICALS, INC.

                              INDEX TO FORM 10-QSB

                                                                            Page
                                                                            ----

PART I. FINANCIAL INFORMATION

ITEM 1 - Condensed Financial Statements (unaudited):

Condensed Balance Sheets as of March 31, 2006 and December 31, 2005............3
Condensed Statements of Operations for the Three-month Periods Ended
     March 31, 2006 and 2005...................................................4
Condensed Statements of Cash Flows for the Three-Month Periods Ended
     March 31, 2006 and 2005...................................................5
Notes to the Condensed Financial Statements................................... 6

ITEM 2 - Management's Discussion and Analysis.................................10

ITEM 3 - Controls and Procedures..............................................16

PART II . OTHER INFORMATION

ITEM 6 - Exhibits.............................................................17

Signatures....................................................................18

         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

                                                                                 MARCH 31,         DECEMBER 31,
                                                                                    2006               2005
                                                                                ------------       ------------
                                                                                (UNAUDITED)
                                ASSETS
<S>                                                                             <C>                <C>
CURRENT ASSETS:
Cash and cash equivalents                                                       $    242,374       $    707,640
Accounts receivable                                                                      731                628
Inventory                                                                            204,713             14,964
Debt issuance costs                                                                  223,318            274,852
Prepaid expenses                                                                      27,099             76,954
                                                                                ------------       ------------

         TOTAL CURRENT ASSETS                                                        698,235          1,075,038

Restricted cash                                                                      323,022            385,901
Property and equipment - net                                                          50,050             53,802
                                                                                ------------       ------------
                                                                                $  1,071,307       $  1,514,741
                                                                                ============       ============

                 LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable                                                                $    481,120       $    401,668
Accrued compensation                                                                  26,674             18,019
Other accrued expenses                                                                86,623            151,723
Obligations under capital leases - short-term portion                                  2,418              2,387
Due to parent company                                                                263,358             79,505
                                                                                ------------       ------------
         TOTAL CURRENT LIABILITIES                                                   860,193            653,302
                                                                                ------------       ------------

LONG-TERM LIABILITIES:
Accrued legal settlement                                                                  --            885,000
Senior secured convertible notes, net of discount                                  2,140,883          2,058,011
Notes payable                                                                        870,000                 --
Obligations under capital leases - long-term portion                                  11,006             11,622
                                                                                ------------       ------------
               Total  long-term liabilities                                        3,021,889          2,954,633

Commitments and contingencies (Note 1)
                                                                                ------------       ------------
                                                                                   3,882,082          3,607,935
                                                                                ------------       ------------
STOCKHOLDERS' DEFICIENCY:
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, 10,328,604 at March 31, 2006 and
December 31, 2005                                                                      1,033              1,033
Additional paid-in capital                                                         8,720,301          8,674,344
Deferred compensation                                                               (115,458)          (130,559)
Accumulated deficit                                                              (11,416,651)       (10,638,012)
                                                                                ------------       ------------

         TOTAL STOCKHOLDERS' DEFICIENCY                                         (2,810,775)        (2,093,194)
                                                                                ------------       ------------
                                                                                $  1,071,307       $  1,514,741
                                                                                ============       ============

                             See notes to the unaudited condensed financial statements.

                                                           3







<PAGE>

                                       VASO ACTIVE PHARMACEUTICALS, INC.
                                 UNAUDITED CONDENSED STATEMENTS OF OPERATIONS


                                                                     THREE-MONTH PERIOD ENDED MARCH 31,
                                                                      -------------------------------
                                                                          2006                2005
                                                                      ------------       ------------
Net revenues                                                          $      5,543       $      4,597
Cost of revenues                                                            16,380              6,248
                                                                      ------------       ------------
         GROSS PROFIT                                                      (10,837)            (1,651)

Costs and expenses:
    Marketing, advertising and promotion                                    33,096            169,803
    Selling, general and administrative                                    525,221            683,541
    Research and development                                                    --             90,030
    Stock based compensation                                                15,101             15,101
                                                                      ------------       ------------
    Loss from operations                                                  (584,255)          (960,126)

Interest income (expense), net                                            (194,385)             7,338
                                                                      ------------       ------------

NET LOSS                                                              $   (778,640)      $   (952,788)
                                                                      ============       ============

 Net loss per share - basic and diluted (Note 2)                      $      (0.08)      $      (0.09)
                                                                      ============       ============

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


              Selling, general and administrative (2)                 $     45,960                 --
                                                                      ============       ============


                          See notes to the unaudited condensed financial statements.



                                                      4







<PAGE>

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

                                                                THREE MONTH PERIOD ENDED MARCH 31,
                                                                ----------------------------------
                                                                       2006              2005
                                                                   -----------       -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                           $  (778,640)      $  (952,788)
Adjustments to reconcile net loss to net cash used in
  operating activities:
    Depreciation and amortization                                        3,752             2,274
    Stock-based compensation (Note 2)                                   61,059            15,101
    Amortization of discount and offering costs
      associated with convertible debt                                 134,406                --
    Increase (decrease) in cash from change in:
         Accounts receivable                                              (103)             (225)
         Inventory                                                    (189,749)             (575)
         Prepaid expenses                                               49,855            (9,914)
         Accounts payable                                               79,452           (86,473)
         Accrued compensation                                            8,655            (2,031)
         Other accrued expenses                                        (65,100)           57,610
                                                                   -----------       -----------
             Net cash used in operating activities                    (696,413)         (977,021)
                                                                   -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Decreases to restricted cash                                        62,879                --
    Purchase of property and equipment                                                   (11,063)
                                                                   -----------       -----------
             Net cash used in investing activities                      62,879           (11,063)
                                                                   -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:


Accrued legal settlement                                               (15,000)
Repayment of capital lease obligations                                    (585)
    Increase in amount due to parent company                           183,853            11,945
                                                                   -----------       -----------
             Net cash provided by financing activities                 168,268            11,945
                                                                   -----------       -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                  (465,266)         (976,139)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         707,640         2,175,388
                                                                   -----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                           $   242,374       $ 1,199,249
                                                                   ===========       ===========

SUPPLEMENTAL DISCLOSURES:

    Interest paid                                                      197,595                --
                                                                   ===========       ===========
Suopplemental Disclosure of Non-Cash Activity

    Accrued legal settlement converted to notes payable            $   870,000                --
                                                                   ===========       ===========


                          See notes to the unaudited condensed financial statements.
</TABLE>





                                                     5








<PAGE>

                        VASO ACTIVE PHARMACEUTICALS, INC.

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS


THE COMPANY

         Vaso Active Pharmaceuticals, Inc. (the "Company") is an early-stage
company focused on commercializing, marketing and selling over-the-counter
("OTC") pharmaceutical products that incorporate the vaso active lipid
encapsulated ("VALE") technology and the proprietary PENtoCORE technology. The
Company is subject to a number of risks similar to those of other companies in
an early stage of development. Principal among these risks are dependencies on
key individuals, competition from substitute products and larger companies, the
successful development and marketing of its products and the need to obtain
adequate additional financing necessary to fund future operations.

         The Company is engaged in a single operating segment of the OTC
pharmaceutical industry

BUSINESS DEVELOPMENT

         The Company commenced operations in January 2001 as the OTC division of
BioChemics, Inc. ("BioChemics"), a privately owned biopharmaceutical company. In
January 2003, the Company incorporated in the state of Delaware and became a
wholly-owned subsidiary of BioChemics. The Company licenses the VALE patents and
PENtoCORE technology from BioChemics. As discussed in Notes 6 and 8, the Company
issued 4,500,000 shares of its Class B common stock to BioChemics in
consideration for the exclusive worldwide rights to commercialize market and
sell the VALE technology for OTC pharmaceutical products. These shares were
issued pursuant to authorization from the Company's Board of Directors on June
20, 2003.

INITIAL PUBLIC OFFERING

         On December 15, 2003, the Company completed an initial public offering
of 5,002,500 shares of Class A common stock at a price of $1.67 per share
raising approximately $6.4 million, net of issuance costs.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION - The accompanying unaudited condensed financial
statements have been prepared on the same basis as the annual financial
statements. In the opinion of management, all significant adjustments, which are
normal and recurring in nature and necessary for the fair presentation of the
Company's financial position, cash flows and results of operations, have been
consistently recorded. The operating results for the interim period presented
are not necessary indicative of expected performance for the entire year.


                                       6







<PAGE>

         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 pursue in 2006. 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.

         USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities and the reported amounts of revenue and expenses. Significant
estimates relied upon in preparing these financial statements include revenue
recognition, allowances for doubtful accounts, product return reserves, expected
future cash flows used to evaluate the recoverability of long-lived assets and
the determination of the useful lives of property and equipment. Although the
Company regularly assesses these estimates, actual results could differ
materially from those estimates. Changes in estimates are recorded in the period
in which they become known.

         CASH AND CASH EQUIVALENTS - The Company classifies investments with
original maturities of three months or less when acquired as cash equivalents.
The Company invests its excess cash in money market funds that invest primarily
in U.S. government securities, commercial paper and municipal obligations and
are subject to minimal credit and market risk. The Company maintains deposits in
financial institutions, which occasionally exceed federally insured limits.
Management continually reviews the financial stability of these institutions.

         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 collectibility 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 Company held little
outstanding trade receivables at December 31, 2005 and 2004 and therefore no
allowance for doubtful accounts provision has been established.

         INVENTORY - Inventory is stated at the lower of cost or market, with
cost being determined on the first-in, first-out method. The Company uses
third-party contract manufacturers for the production of its products.
Therefore, all inventory is in the form of finished goods.

         PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.
Depreciation is provided using the straight-line method over the estimated
useful lives of the related assets, generally three to five years. Repairs and
maintenance are expensed as incurred.

         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. The due to parent balance represents the net
obligation from the Company to BioChemics at March 31, 2006 and December 31,
2005.

         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
collectibility 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


                                       7







<PAGE>

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 collectibility 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 fiscal 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, while the pro forma disclosure for the three months ended March
31, 2005 includes only those options that had been forfeited during that period.
The Company has continued to use the Black-Scholes option pricing model to
determine the fair value of options under SFAS 123(R) and has elected to use the
modified-prospective transition method, in which prior period financial
statements will not be restated but disclosure of the pro forma net loss
calculation will be included in the footnotes to the financial statements for
periods prior to fiscal 2006 and the adoption of 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 7 to the
Company's Annual Report on Form 10-KSB for the period ended December 31, 2005.

         Prior to the first quarter of fiscal 2006, the Company recorded
stock-based compensation issued to employees and directors using the intrinsic
value method and stock-based compensation issued to non-employees using the fair
value method. Stock-based compensation was previously recognized on stock
options issued to employees only if the option exercise price was less than the
market price of the underlying stock on the date of grant. During the three
months ended March 31, 2005, no stock-based compensation was recorded under the
intrinsic value method.

         During the three months ended March 31, 2006, the Company recorded
stock compensation expense of $45,960 in accordance with SFAS 123(R).

         The following table illustrates the effect on net loss and net loss per
share if the Company had applied the fair-value recognition provisions of SFAS
No. 123, as amended, to options granted under the stock option plans and rights
to acquire stock granted under the Company's stock option plans. For purposes of
this PRO-FORMA disclosure, the value of the options is estimated using a
Black-Scholes option pricing model and amortized ratably to expense over the
options' vesting periods. Because the estimated value is determined as of the
date of grant, the actual value ultimately realized by the employee may be
significantly different.

                                       8







<PAGE>
<TABLE>

                                                                                 THREE-MONTH
                                                                                    PERIOD
                                                                                    ENDED
                                                                                MARCH 31, 2005
                                                                                --------------
<S>                                                                             <C>
Net loss, as reported                                                           $   (952,788)

Add: stock-based compensation included in the determination of net loss               15,101

Less: stock-based compensation had all options been recorded at fair value          (111,958)

Adjusted net loss                                                               $ (1,049,645)


Weighted average shares outstanding, basic and diluted                            10,328,613
                                                                                ============
Net loss per share, basic and diluted, as reported                              $      (0.09
                                                                                ============

Adjusted net loss per share, basic and diluted                                  $      (0.10)
                                                                                ============


Net loss, as reported                                                               (952,788)
                                                                                ============
</TABLE>

         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 antidilutive.

         For the three-month periods ended March 31, 2006 and 2005, 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.

                                       9







<PAGE>

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

FORWARD-LOOKING INFORMATION

         This Quarterly Report on Form 10-QSB 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-QSB and the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2005. This Quarterly Report on Form
10-QSB, including the following discussion, contains 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-QSB 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.

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

         o    an inability to arrange additional debt or equity financing;
         o    our ability to finance our business;

         o    the timing, impact and other uncertainties related to pending and
              future acquisitions by us;
         o    the impact of new technologies;

         o    changes in laws or rules or regulations of governmental agencies;
         o    outcome in pending litigation matters;

         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    adverse regulatory developments in the United States;


                                       10







<PAGE>

         o    entrance of competitive products in our markets;
         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    legal proceedings;

         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; and

         o    our ability to repay our indebtedness, including repayment of the
              notes issued recently.

         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,
2005. 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
publicly update any forward-looking statements to reflect subsequent events or
circumstances.


BUSINESS OVERVIEW
-----------------

         Vaso Active is an early stage company, organized in January 2003, which
focuses on commercializing, marketing and selling over-the-counter
pharmaceutical products that we believe incorporate a proprietary PENtoCORE
technology. Vaso Active is also focused on pre-clinical testing and research on
a patented vaso active lipid encapsulated ("VALE") technology.

         The unique VALE technology is intended to be a patchless, lipid-based
delivery system which the Company's parent, Biochemics, is formulating into
various applications which the Company hopes to market in the future, subject to
receipt of appropriate FDA approvals. The technology uses an active process,
incorporating chemical vasodilators, to deliver drugs through the skin and into
the bloodstream.

         The PENtoCORE technology is a topical formulation, in contrast to the
VALE transdermal technology. The Company is currently marketing three products
that incorporate the proprietary PENtoCORE technology; the Company has one
additional product candidate currently undergoing package design and branding
and multiple additional product candidates at various stages of formulation and
development, none of which have yet been approved by or listed with the FDA.

         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.

                                       11







<PAGE>

         As an early stage company, we are subject to a number of risks typical
of early stage companies including, but not limited to, our need to obtain
additional financing and generate profitability and cash flows from operations.
As a company engaged in the pharmaceutical industry, we are subject to a number
of risks typical of pharmaceutical companies including, but not limited to, our
need to adhere to strict governmental regulations, our ability to withstand
intense competition from larger companies with greater financial resources and
our ability to defend our intellectual property, as licensed from BioChemics.

         Our general business strategy was adversely affected beginning in April
2004 by regulatory action taken against us and our former President, and by
private securities actions taken against us and our management. At the same
time, we suspended the marketing and sale of our products until we were
reasonably sure that our product marketing was consistent with the FDA's
requirements and policies. We also voluntarily delisted our common stock from
trading on NASDAQ. As a result of our voluntary delisting, the action taken by
the SEC against us, issues regarding the regulatory status of our products, and
the significant decline in the market value of our securities concurrent with
and subsequent to these matters, several shareholder actions were filed against
Vaso Active and its officers and directors. Since February 17, 2006 our Class A
common stock has been quoted on the Over the Counter Bulletin Board under the
symbol "VAPH.ob".

         In September 2005, the Company and certain of its officers and
directors entered into agreements to settle (i) a consolidated securities class
action lawsuit that alleged that the Company and those individuals violated the
federal securities laws with respect to certain disclosures concerning the
Company; and (ii) derivative lawsuits based on the class action allegations. In
October 2005, the court granted preliminary approval to each of the litigation
settlements, following which joint notices of the settlements and claim forms
were sent to appropriate stockholders. The parties to the agreements obtained
the court's final approval of the settlements on December 14, 2005. For further
information, see Item 3, "Legal Proceedings."

         CRITICAL ACCOUNTING ESTIMATES

         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 collectibility 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.

                                       12







<PAGE>

         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 collectibility 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.

         STOCK-BASED COMPENSATION - As part of our compensation programs offered
to our employees, we grant stock options. We grant stock options to employees
based on the fair value of the Class A common stock at the grant date. As
allowed under SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS
No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure,"
we have adopted the disclosure-only requirements of these accounting standards.
Accordingly, we do not recognize stock-based compensation expense for stock
options granted to employees at their fair value. The fair value of options
granted to non-employees is expensed in accordance with SFAS 123 using the
Black-Scholes option-pricing model. See Note 4 to our condensed financial
statements for the impact on earnings had we fully adopted SFAS 123.

         In December 2004, the FASB issued a revision to SFAS No. 123,
"Share-Based Payment," requiring companies to recognize as compensation expense
the fair value of stock options and other equity-based compensation issued to
employees. This revised statement eliminates the intrinsic value method provided
under Accounting Principles Board, or APB, No. 25, "Accounting for Stock Issued
to Employees," which is the method we currently use to value stock options
awarded to our employees. This revised standard is effective as of the beginning
of the first annual reporting period beginning after December 15, 2005 and is
expected to have a material impact on our results of operations. We are
currently evaluating the two methods of adoption allowed by this revised
standard; the modified-prospective transition method and the
modified-retrospective transition method.


THREE MONTHS ENDED MARCH 31, 2006 AND MARCH 31, 2005

         NET REVENUES - Net revenues for the three-month period ended March 31,
2006 increased $946 to $5,543 from $4,597 in the comparable period in 2005.
Since re-introducing our products to the marketplace in September 2004, with
revised labeling, we have not generated significant revenues. The increase in
sales over the comparable quarter in 2005 was primarily due to increase in
orders from our website and from Osteon re-orders from existing Osteon
customers. No single customer represented more than 10% of net revenues in
either period. All of our revenues during each of the periods were generated
from the sale of our three OTC products.

         COST OF SALES - In general, our cost of sales is proportionately
variable to our net revenues. However, we maintain certain fixed manufacturing
costs. Cost of sales increased $10,132 to $16,380 from $6,248 in the comparable
period in 2005. This increase in cost of sales was attributable mostly to an
inventory write-down of approximately $14,000 for the three months ended March
31, 2006 in connection with Osteon inventories with less than one year of shelf
life remaining.

         MARKETING, ADVERTISING AND PROMOTION - Marketing, advertising and
promotion expenses decreased $136,707, or approximately 81%, to $33,096 for the
three-month period ended March 31, 2006 from $169,803 in the comparable period
in 2005. This decrease was primarily attributable to substantial decreases in
the rate of spending on television commercials, partially offset by a slight
increase in rate of spending on print advertising and product sampling for the
three months ended March 31, 2006 over the comparable period in the prior year.

                                       13







<PAGE>

         SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and
administrative expenses decreased by $158,320 to $525,221 during the three
months ended March 31, 2006 as compared to $683,541 in the comparable period in
2005. The decrease is mostly due to savings on the current year director and
officer's liability insurance policy and significantly lower business consultant
costs and legal fees. The decreases were partially offset by stock compensation
expense of $45,960 charged for the three months ended March 31, 2006 in
connection with stock options previously granted to employees and directors in
accordance with SFAS 123(R). There was no corresponding charge in the comparable
period in the prior year.

         RESEARCH AND DEVELOPMENT - Research and development expenses decreased
$90,030 to $0.00 for the three months ended March 31, 2006 over the comparable
period in 2005. We suspended research and development activities in January 2006
due to a lack of funds. In the comparable quarter in 2005 we, through our
agreement with Biochemics, incurred research and development costs in connection
with our Acne product candidate and our product candidate utilizing the
analgesic ibuprofen.

         STOCK-BASED COMPENSATION -

         Prior to the first quarter of fiscal 2006, the Company recorded
stock-based compensation issued to employees and directors using the intrinsic
value method and stock-based compensation issued to non-employees using the fair
value method. Stock-based compensation was previously recognized on stock
options issued to employees only if the option exercise price was less than the
market price of the underlying stock on the date of grant. During the three
months ended March 31, 2005, no stock-based compensation was recorded under the
intrinsic value method.

         During the three months ended March 31, 2006, the Company recorded
stock compensation expense of $15,101 for consultants in accordance with SFAS
123(R).


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 $440,000 was placed into escrow to fund substantially all of the
Company's interest payments on the Notes (assuming that the Notes continue to
accrue interest at the initial rate of 10% per annum).

         THE NOTES. The Notes have a term of 21 months, and the principal of the
Notes is due and payable in a single payment on May 1, 2007. The Notes bear
interest at the six month LIBOR plus 6% with a floor of 10.0% and a ceiling of
12.0%. The Notes presently accrue interest at 10% per annum. Interest is payable
quarterly, in arrears, beginning October 31, 2005, on each July 31, October 31,
January 30 and April 30, until the earlier of the Notes' maturity or conversion
date.

         Amounts scheduled to be paid by the Company under the Notes may be
accelerated upon the occurrence of certain events, including any default in the
payment of interest when due and payable; the default by the Company under other
notes, mortgage, or credit facility; the failure of the Company to perform
certain obligations to deliver certificates for Underlying Shares or to timely
register the Underlying Shares for resale as required under the Purchase
Agreement; and in the event of bankruptcy.

                                       14







<PAGE>

         The Notes are secured by all of the assets of the Company. The Notes
are convertible 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).

         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.

         Additional Investment Rights (AIRS). In addition, the investors
received AIRs to purchase up to $1,875,000 in aggregate principal amount of
additional Notes at any time through May 1, 2007, which is the maturity date of
the notes, together with additional five-year Warrants to purchase a total of
974,026 shares of Class A Common Stock. Any additional Notes would be
convertible and any additional Warrants would be exercisable at the same
respective initial prices per share as the Notes and Warrants issued on August
16, 2005.

         Under the Purchase Agreement, the Company is required to reserve for
issuance a total of 8,522,727 shares of Class A Common Stock, in connection with
the possible conversion of Notes (including the additional Notes) and the
possible exercise of the Warrants (including the additional Warrants).

         At March 31, 2006, we had unrestricted cash of approximately $242,000
and working capital of approximately $117,000, excluding $323,000 of
restricted cash held in escrow to fund future interest payments on the senior
secured convertible notes we sold in 2005, and 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 recent
regulatory and shareholder actions taken against us. Having obtained final court
approval of our recent litigation settlements, we expect our expenditures for
legal and professional fees to decrease accordingly in the future.

         We do not believe that we will receive cash flows from sales of our
existing products at least until the middle of 2006. We believe that our current
cash position will be sufficient to satisfy our cash requirements only through
June 30, 2006 excluding amounts due to Biochemics and contested amounts due for
professional fees. The August 2005 private financing investors have informally
indicated to us recently that they will not purchase the additional notes and
warrants available to them under the AIRS unless we are willing to renegotiate
the terms of this purchase. Therefore, we are actively pursuing alternative
financing sources to replace this previously anticipated source of funds, but we
are uncertain whether we will be successful in obtaining any such financing. If
we do not raise additional capital from third parties prior to May 2006, we will
explore ways to reduce further our operating expenses, such as by obtaining
agreements from employees and BioChemics to defer payment of funds we owe them.
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 or receiving net cash flows from sales of our products. 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.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

         The following table sets forth our contractual obligations and
commitments for the next five years, as of March 31, 2006.

<TABLE>
                                                     LESS THAN         1 - 3          3 - 5            5 - 7
         DESCRIPTION                  TOTAL           1 YEAR           YEARS           YEARS           YEARS
------------------------------      ---------         -------         -------         -------         -------
<S>                                <C>             <C>             <C>             <C>             <C>
Long-term debt                     $3,370,000      $       --      $3,370,000      $       --      $       --

Capital leases                         13,424           2,418           5,252           5,754              --

Operating leases                           --              --              --              --              --

Unconditional purchase
obligations                                --              --              --              --              --

Employment agreements               2,205,000         315,000         630,000         630,000         630,000

Total contractual obligations       5,588,424         317,418       4,005,252         635,754         630,000
</TABLE>


                                       15







<PAGE>

         The written employment agreements with Mr. Masiz and Dr. Carter
terminate their initial terms on June 30, 2008, but are deemed automatically
extended for successive periods of two years under the terms of their respective
written agreements. This table is presented reflecting the effects of the deemed
automatic extensions and it reflects $315,000 beyond 2009. This amount,
$315,000, will be the annual ongoing obligation of the Company if the agreements
for Mr. Masiz and Dr. Carter do in fact extend under the present agreements.


OFF-BALANCE SHEET ARRANGEMENTS

         We have no material off-balance sheet financing such as a facility
lease or other long-term commitments. We have employment agreements with three
key employees. Please refer to "Contractual Obligations and Commitments" for a
summary of the employment agreement obligations.

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.


ITEM 3.  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.

                                       16







<PAGE>


                           PART II - OTHER INFORMATION


ITEM 6 (a). EXHIBITS

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

3(i)     Amended and Restated Certificate of Incorporation. (1)
3(ii)    Amended and Restated Bylaws. (1)
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.

(1)      Previously filed as an exhibit to our registration statement on Form
         SB-2/A filed on September 12, 2003.


                                       17







<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 May 15, 2006.

                                   VASO ACTIVE PHARMACEUTICALS, INC.

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


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