----

| Nevada                                   | 52-2340974             |
|------------------------------------------|------------------------|
| (State or other jurisdiction of          | (I.R.S. Employer       |
| incorporation or organization)           | Identification Number) |
|                                     |                   |
| 2611 SW Third Avenue, Suite 200          |                        |
| Portland, OR                             | 97201                  |
| (Address of principal executive offices) | (Zip Code))            |

| Large accelerated filer   [   ]           |                                          | Accelerated      filer                         [   ] |
|---------------------------------------------------------------|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Non-accelerated filer     [   ] | (Do not check if a smaller reporting company) | Smaller reporting company [X]                                                                                                                            |

----

|                      |                                                                                                                                                                                           | Page          |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                      |                                                                                                                                                                                           |          |
| PART I               |
|                      |                                                                                                                                                                                           |          |
| Item 1.                   | Business                                                                                                                                                                                       | 1             |
| Item 1A.                  | Risk Factors                                                                                                                                                                                   | 8             |
| Item 1B.                  | Unresolved Staff      Comments                                                                                                                                                                 | 8             |
| Item 2.                   | Properties                                                                                                                                                                                     | 8             |
| Item 3.                   | Legal Proceedings                                                                                                                                                                              | 8             |
| Item 4.                   | Submission of Matters to a Vote of      Security Holders                                                                                                                                       | 8             |
|                      |                                                                                                                                                                                           |          |
| PART II              |
|                      |                                                                                                                                                                                           |          |
| Item 5.                   | Market for Registrant's Common Equity,      Related Shareholder Matters and Issuer Purchases of Equity Securities                                                                              | 10            |
| Item 6.                   | Selected Financial Data                                                                                                                                                                        | 12            |
| Item 7.                   | Management's Discussion and Analysis of      Financial Condition and Results of Operation                                                                                                      | 12            |
| Item 7A.                  | Quantitative and      Qualitative Disclosures About Market Risk                                                                                                                                | 23            |
| Item 8.                   | Financial Statements and Supplementary      Data                                                                                                                                               | 24            |
| Item 9.                   | Changes in and      Disagreements With Accountants on Accounting and Financial Disclosure                                                                                                      | 25            |
| Item 9A(T).               | Controls and Procedures                                                                                                                                                                        | 26            |
| Item 9B.                  | Other Information                                                                                                                                                                              | 27            |
|                      |                                                                                                                                                                                           |          |
| PART III             |
|                      |                                                                                                                                                                                           |          |
| Item 10. Item 11.Item 12. | Directors, Executive Officers and Corporate      Governance Executive CompensationSecurity      Ownership of Certain Beneficial Owners and      Managementand Related      Stockholder Matters | 28 30 35 |
| Item 13.                  | Certain Relationships and Related      Transactions, and Director Independence                                                                                                                 | 36            |
| Item 14.                  | Principal Accounting    Fees                                                                                                                                                                   | 36            |
|  PART IV        |
|                      |                                                                                                                                                                                           |          |
| Item 15.                  | Exhibits, Financial Statement Schedules                                                                                                                                                        | 59            |
|                      |                                                                                                                                                                                           |          |
| SIGNATURES           | 61                                                                                                                                                                                             |

----

- identify potential drug compounds to treat inflammation, osteoporosis and  metabolic disorders such as diabetes and then collaborate with large  pharmaceutical or biotechnology companies for the clinical development and  commercialization of such compounds; and        
- collaborate with pharmaceutical partners to successfully derive and  advance preclinical drug candidates from their internal drug discovery  programs. 

- establishing and validating the disease models and measurement systems  that demonstrate the ability of the zebrafish technology to identify drugs in  a broad range of diseases;        
- forming the first collaborations with pharmaceutical companies;        
- initiating discussions with pharmaceutical companies to collaborate on  further development of novel compounds discovered by us; and,        
- filing patents on the first novel compounds discovered in multiple disease  areas. 

----

- Vertebrate physiology in  a small organism with a short life cycle . Zebrafish are small, develop  ex utero, and have a short generation time. Female fish lay approximately 200  eggs per week, year-round. At three to five days post-fertilization, each fish  is a free-swimming, free- feeding organism complete with almost all of the  organ systems found in mammals, including heart, brain, blood, and pancreas.  It is estimated that zebrafish have 80-90 percent of the genes found in  humans. 

----

-  Rapid screening.  The zebrafish is suited for rapid screening as a live animal. The  three-to-five day old fish is approximately 1 to 2 mm in length, and can be  examined using high-throughput screening assays.     
-  Simple and efficient  drug administration. The zebrafish is an excellent organism with regard  to drug dosing, since small molecules can be dosed simply by dissolving them  in the fish water in a microtiter plate.     
-  Direct observation of  internal organs. The zebrafish is transparent for approximately the  first seven days of its development. Thus, in contrast to the mouse, the  structure and function of internal organs, cells, and tissues in the zebrafish  can be readily observed, and direct visualization can thus form the basis for  automated drug and drug target screens.     

----

----

----

- zebrafish disease models;        
- zebrafish methods and assay systems;        
- drug targets based on discovered or functionally defined genes and  proteins; and        
- proteins or chemical compounds to serve as therapeutic drugs for human  diseases. 

----

----

----

----

| Fiscal Year Ended December 31,      2007   |
|------------------------------------------------------|
|                                                 | High $ | Low $ |
| March 30                                             | — | $ — |
| June 30                                              | — | $ — |
| September 30                                         | — | $ — |
| December 31.                                         | $ 3.20 | $ 2.65 |

| Fiscal Year Ended December 31,      2008   |
|------------------------------------------------------|
|                                                 | High $ |  Low $ |
| March 30                                             | $3.20 | $2.90 |
| June 30                                              | $3.00 | $2.25 |
| September 30                                         | $2.90 | $1.01 |
| December 31.                                         | $1.03 | $0.02 |

----

| Equity Compensation Plan Information              |   |
|-------------------------------------------------------------|--------|
| As of December 31,      2008                 |   |
|                                                        |   |   |   |   |   |   |   | Number of |   |
|                                                        |   |   |   |   |   |   |   | securities |   |
|                                                        |   |   |   |   |   |   |   | remaining |   |
|                                                        |   |   |   |   |   |   |   | available for |   |
|                                                        |   | Number of |   |   |   |   |   | future |   |
|                                                        |   | securities to |   |   | Weighted- |   |   | issuance |   |
|                                                        |   | be issued |   |   | average |   |   | under equity |   |
|                                                        |   | upon |   |   | exercise |   |   | compensation |   |
|                                                        |   | exercise of |   |   | price of |   |   | plans |   |
|                                                        |   | outstanding |   |   | outstanding |   |   | (excluding |   |
|                                                        |   | options, |   |   | options, |   |   | securities |   |
|                                                        |   | warrants and |   |   | warrants and |   |   | reflected in |   |
|                                                        |   | rights |   |   | rights |   |   | column (a)) |   |
| Plan category                                               |   | (a)(1) |   |   | (b) |   |   | (c)(1) |   |
| Equity compensation plans approved by      security holders |   | 1,795,621 |   | $ |  1.31 |   |   | 397,637 |   |
|                                                        |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |
| Equity compensation plans not approved by security holders  |   | - |   |   | - |   |   | - |   |
|      Total                                   |   | 1,795,621 |   | $ |  1.31 |   |   | 397,637 |   |

----

----

- identify potential drug compounds to treat inflammation, osteoporosis and  metabolic disorders such as diabetes, and then collaborate with large  pharmaceutical or biotechnology companies for the clinical development and  commercialization of such compounds; and        
- collaborate with pharmaceutical partners to successfully derive and  advance preclinical candidates from their internal drug discovery programs.  

- creating an integrated scientific and business plan focused on the central  pharmaceutical and biotechnology need in research and development to test all  medicinal chemistry compounds on a whole animal (zebrafish) instead of relying  on the poorly predictive models used today;        
- building an experienced leadership team and developing the necessary  disease model, assay system and other technologies, and starting to validate  the systems to ensure the robustness and reliability; and        
- making significant progress on our key programs in the fields of  inflammation, osteoporosis and metabolic diseases. 

- establishing and validating the disease models and measurement systems  that demonstrate the ability of the zebrafish technology to identify drugs in  a broad range of diseases;        
- forming the first collaborations with pharmaceutical companies;        
- initiating discussions with pharmaceutical companies to collaborate on  further development of novel compounds discovered by us;        
- filing patents on the first novel compounds discovered in multiple disease  areas; and 

----

- establishing and validating the disease models and measurement systems  that demonstrate the ability of our zebrafish technology to identify drugs in  a broad range of diseases. 

- testing compounds from early pharmaceutical company programs to validate  leads and targets for pharmacological effect in animals (lead discovery);        
- partnering our drug discovery platform with pharmaceutical companies to  help rescue failed medicinal chemistry programs or to enhance existing  programs (lead optimization/rescue);        
- identifying and developing novel optimized compounds from our internal  drug discovery programs (clinical product candidate discovery);        
- continuing to pursue licenses with academic and biotechnology partners to  secure new disease models, assays and drug compounds developed in their  laboratories to strengthen our drug discovery efforts; and        
- pursuing various National Institute of Health grants to develop disease  models. 

----

----

----

----

----

----

----

----

----

----

| F-1    | Reports of Independent Registered Public Accounting      Firms                                                                                              |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                        |
| F-3    | Balance Sheets as of December 31, 2008 and 2007                                                                                                             |
|   |                                                                                                                                                        |
| F-4    | Statements of Operations — Years Ended December 31,      2008 and 2007 and the period from September 13, 2001 (Inception) to      December 31, 2008   |
|   |                                                                                                                                                        |
| F-5    | Statement of Stockholders' Equity for the period from      September 13, 2001 (Inception) to December 31, 2008                                              |
|   |                                                                                                                                                        |
| F-6    | Statements of Cash Flows — Years Ended December 31,      2008 and 2007 and the period from September 13, 2001 (Inception) to      December 31, 2008   |
|   |                                                                                                                                                        |
| F-7    | Notes to Financial Statements                                                                                                                               |

----

----

----

|                                                                                             |   | 2008        |   |   | Restated 2007 |   |
|--------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|
| Assets                                                                                           |   |        |   |   |          |   |
| Current assets:                                                                                  |   |        |   |   |          |   |
| Cash and cash equivalents                                                                        | $      |  469   |   | $      |  3,659   |   |
| Accounts receivable, net                                                                         |   | 43          |   |   | 106           |   |
| Prepaid and other expenses                                                                       |   | 160         |   |   | 74            |   |
|                                                                                             |   |        |   |   |          |   |
| Total current assets                                                                             |   | 672         |   |   | 3,839         |   |
| Property and equipment, net of accumulated depreciation                                          |   | 411         |   |   | 321           |   |
| Total assets                                                                                     | $      |  1,083 |   | $      |  4,160   |   |
|                                                                                             |   |        |   |   |          |   |
| Liabilities and Stockholders'      Equity                                                        |   |        |   |   |          |   |
| Current liabilities:                                                                             |   |        |   |   |          |   |
| Accounts payable                                                                                 | $      |  237   |   | $      |  154     |   |
| Accrued liabilities                                                                              |   | 64          |   |   | 30            |   |
| Deferred revenue                                                                                 |   | 252         |   |   | 514           |   |
| Current portion of long term liabilities                                                         |   | –     |   |   | 10            |   |
|                                                                                             |   |        |   |   |          |   |
| Total current liabilities                                                                        |   | 553         |   |   | 708           |   |
| Total liabilities                                                                                |   | 553         |   |   | 708           |   |
|                                                                                             |   |        |   |   |          |   |
| Stockholders' equity:                                                                            |   |        |   |   |          |   |
| Common stock, $0.001 par value, 90,000,000      shares authorized, 11,370,060 and                |   |        |   |   |          |   |
|      11,072,560 shares      issued and outstanding at December 31, 2008 and 2007, |   |        |   |   |          |   |
|      respectively                                                            |   | 11          |   |   | 11            |   |
| Additional paid-in capital                                                                       |   | 6,235       |   |   | 5,625         |   |
| Deficit accumulated during the development      stage                                            |   | (5,716      | )      |   | (2,184        | )      |
|                                                                                             |   |        |   |   |          |   |
| Total stockholders' equity                                                                       |   | 530         |   |   | 3,452         |   |
| Total liabilities and stockholders' equity                                                       | $      |  1,083 |   | $      |  4,160   |   |

----

|                                                                       |   |              |   |   |              |   |   | September      13,   |   |
|----------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|----------------------|--------|
|                                                                       |   | Year      Ended   |   |   | Year      Ended   |   |   | 2001(Inception)      |   |
|                                                                       |   | December      31, |   |   | December      31, |   |   | to      December 31, |   |
|                                                                       |   | 2008              |   |   | 2007              |   |   | 2008                 |   |
| Sales related to products and services                                     | $      |  351         |   | $      |  198         |   | $      |  975            |   |
| Grant revenue                                                              |   | –           |   |   | 438               |   |   | 2,006                |   |
|                 Total sales and revenue      |   | 351               |   |   | 636               |   |   | 2,981                |   |
| Operating expenses:                                                        |   |              |   |   |              |   |   |                 |   |
|    Cost of products and services                                 |   | 979               |   |   | 1,023             |   |   | 2,434                |   |
|    Grant expense                                                 |   | –           |   |   | 438               |   |   | 2,006                |   |
|    Selling, general and      administrative                      |   | 2,208             |   |   | 345               |   |   | 2,752                |   |
|    Research and development                                      |   | 756               |   |   | 17                |   |   | 1,526                |   |
|                 Total operating expenses     |   | 3,943             |   |   | 1,823             |   |   | 8,718                |   |
| Loss from operations                                                       |   | (3,592            | )      |   | (1,187            | )      |   | (5,737               | )      |
| Other income (expense):                                                    |   |              |   |   |              |   |   |                 |   |
|      Investment income                                      |   | 64                |   |   | 38                |   |   | 111                  |   |
|      Interest expense                                       |   | (1                | )      |   | (5                | )      |   | (53                  | )      |
|      Other expense, net                                     |   | (3                | )      |   | (38               | )      |   | (37                  | )      |
|                 Total other income (expense) |   | 60                |   |   | (5                | )      |   | 21                   |   |
| Loss before income taxes                                                   |   | (3,532            | )      |   | (1,192            | )      |   | (5,716               | )      |
| Income taxes                                                               |   | –           |   |   | –           |   |   | –              |   |
|      Net loss                                               | $      |  (3,532      | )      | $      |  (1,192      | )      | $      |  (5,716         | )      |
| Loss per common share data:                                                |   |              |   |   |              |   |   |                 |   |
|      Basic and diluted                                      | $      |  (0.32       | )      | $      |  (0.35       | )      |   |                 |   |
| Weighted average common shares outstanding:                                |   |              |   |   |              |   |   |                 |   |
|      Basic and diluted                                      |   | 11,112,498        |   |   | 3,414,509         |   |   |                 |   |

----

|                                                                                 |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | Deficit       |   |   |          |   |
|--------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|---------------------------|--------|--------|--------------|--------|--------|---------------|--------|--------|-------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                                                                 |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | accumulated   |   |   |          |   |
|                                                                                 |   | Series A      convertible |   |   | Series B      convertible |   |   |         |   |   |          |   |   | Additional  |   |   | during        |   |   |          |   |
|                                                                                 |   | preferred stock           |   |   | preferred stock           |   |   | Common stock |   |   | paid-in       |   |   | development |   |   |          |   |
|                                                                                 |   | Shares                    |   |   | Amount                    |   |   | Shares       |   |   | Amount        |   |   | Shares      |   |   | Amount        |   |   | Capital       |   |   | stage         |   |   | Total         |   |
|                                                                            |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   |          |   |   |          |   |
| Balance at September      13, 2001                                         |   |                      |   | $      |  –             |   |   |         |   | $      |  – |   |   |        |   | $      |  – |   | $      |  – |   | $      |  – |   | $      |  – |   |
| Issuance of common      stock to founders - September 13,  2001            |   |                      |   |   |                      |   |   |         |   |   |          |   |   | 1,500       |   |   | 15            |   |   |          |   |   |          |   |   | 15            |   |
| Issuance of Series      A convertible preferred stock - January 30, 2002   |   | 657                       |   |   | 7                         |   |   |         |   |   |          |   |   |        |   |   |          |   |   | 650           |   |   |          |   |   | 657           |   |
| Issuance of Series B      convertible preferred stock - April 13, 2005          |   |                      |   |   |                      |   |   | 127          |   |   | 1             |   |   |        |   |   |          |   |   | 253           |   |   |          |   |   | 254           |   |
| Contribution of      laboratory equipment                                       |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   | 23            |   |   |          |   |   | 23            |   |
| Net loss from September      13, 2001 to December 31, 2005                 |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | (863          | )      |   | (863          | )      |
| Balance at December 31,      2005                                               |   | 657                       |   |   | 7                         |   |   | 127          |   |   | 1             |   |   | 1,500       |   |   | 15            |   |   | 926           |   |   | (863          | )      |   | 86            |   |
| Net loss                                                                        |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | (129          | )      |   | (129          | )      |
| Balance at December 31,      2006                                               |   | 657                       |   |   | 7                         |   |   | 127          |   |   | 1             |   |   | 1,500       |   |   | 15            |   |   | 926           |   |   | (992          | )      |   | (43           | )      |
| Cancellation of      preferred and common stock on merger                       |   | (657                      | )      |   | (7                        | )      |   | (127         | )      |   | (1            | )      |   | (1,500      | )      |   | (15           | )      |   |          |   |   |          |   |   | (23           | )      |
| Issuance of common      stock on merger                                    |   |                      |   |   |                      |   |   |         |   |   |          |   |   | 11,073      |   |   | 11            |   |   | 4,198         |   |   |          |   |   | 4,209         |   |
| Issuance of stock      warrants                                                 |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   | 207           |   |   |          |   |   | 207           |   |
| Stock option      compensation                                                  |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   | 294           |   |   |          |   |   | 294           |   |
| Net loss                                                                        |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | (1,192        | )      |   | (1,192        | )      |
| Balance at December 31,      2007                                               |   | –                   |   |   | –                   |   |   | –      |   |   | –       |   |   | 11,073      |   |   | 11            |   |   | 5,625         |   |   | (2,184        | )      |   | 3,452         |   |
| Issuance of common      stock                                                   |   |                      |   |   |                      |   |   |         |   |   |          |   |   | 297         |   |   | –       |   |   | 439           |   |   |          |   |   | 439           |   |
| Stock option      compensation                                                  |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   | 171           |   |   |          |   |   | 171           |   |
| Net loss                                                                        |   |                      |   |   |                      |   |   |         |   |   |          |   |   |        |   |   |          |   |   |          |   |   | (3,532        | )      |   | (3,532        | )      |
| Balance at December 31,      2008                                               |   | –                   |   | $      |  –             |   |   | –      |   | $      |  – |   |   | 11,370      |   | $      |  11      |   | $      |  6,235   |   | $      |  (5,716  | )      | $      |  530     |   |

----

|                                                                                                                |   |              |   |   |              |   |   | 2001              |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                                                                                                |   | Year      Ended   |   |   | Year      Ended   |   |   | (Inception) to    |   |
|                                                                                                                |   | December      31, |   |   | December      31, |   |   | December      31, |   |
|                                                                                                                |   | 2008              |   |   | 2007              |   |   | 2008              |   |
| Cash flows from operating      activities:                                                                     |   |              |   |   |              |   |   |              |   |
| Net loss                                                                                                       | $      |  (3,532      | )      | $      |  (1,192      | )      | $      |  (5,716      | )      |
|      Adjustments to      reconcile net loss to net cash used in by operating activities:   |   |              |   |   |              |   |   |              |   |
| Loss on sale of property and equipment                                                                         |   | 3                 |   |   | –           |   |   | 3                 |   |
| Depreciation and amortization                                                                                  |   | 141               |   |   | 87                |   |   | 410               |   |
| Stock-based compensation charges                                                                               |   | 171               |   |   | 294               |   |   | 465               |   |
| Stock warrants, expense                                                                                        |   | –           |   |   | 37                |   |   | 37                |   |
| Issuance of stock for licensing and      services                                                              |   | 319               |   |   | –           |   |   | 385               |   |
|      Changes in operating      assets and liabilities:                                          |   |              |   |   |              |   |   |              |   |
| Accounts receivable                                                                                            |   | 63                |   |   | (34               | )      |   | (43               | )      |
| Prepaid and other expenses                                                                                     |   | (16               | )      |   | (60               | )      |   | (89               | )      |
| Accounts payable                                                                                               |   | 83                |   |   | 148               |   |   | 237               |   |
| Accrued liabilities                                                                                            |   | 34                |   |   | (83               | )      |   | 64                |   |
| Deferred grant revenue and expense                                                                             |   | –           |   |   | (23               | )      |   | –           |   |
| Deferred revenue                                                                                               |   | (262              | )      |   | 177               |   |   | 253               |   |
| Net cash used by operating activities                                                                          |   | (3,007            | )      |   | (649              | )      |   | (4,006            | )      |
|                                                                                                                |   |              |   |   |              |   |   |              |   |
| Cash flows from investing      activities:                                                                     |   |              |   |   |              |   |   |              |   |
| Capital expenditures                                                                                           |   | (234              | )      |   | (169              | )      |   | (884              | )      |
| Net cash used by investing activities                                                                          |   | (234              | )      |   | (169              | )      |   | (884              | )      |
|                                                                                                                |   |              |   |   |              |   |   |              |   |
| Cash flows from financing      activities:                                                                     |   |              |   |   |              |   |   |              |   |
| Proceeds from issuance of common stock, net                                                                    |   | 50                |   |   | 4,356             |   |   | 4,406             |   |
| Proceeds from issuance of preferred stock                                                                      |   | –           |   |   | –           |   |   | 860               |   |
| Proceeds from sale of equipment                                                                                |   | -                 |   |   | –           |   |   | 82                |   |
| Proceeds from US Bank line of credit                                                                           |   | –           |   |   | 160               |   |   | 640               |   |
| Principal payments, capital leases and      notes payable                                                      |   | (10               | )      |   | (177              | )      |   | (640              | )      |
| Net cash provided by financing activities                                                                      |   | 40                |   |   | 4,339             |   |   | 5,348             |   |
| Net (decrease) increase in cash and cash      equivalents                                                      |   | (3,190            | )      |   | 3,521             |   |   | 469               |   |
| Cash at beginning of period                                                                                    |   | 3,659             |   |   | 138               |   |   | –           |   |
| Cash at end of period                                                                                          | $      |  469         |   | $      |  3,659       |   | $      |  469         |   |
|                                                                                                                |   |              |   |   |              |   |   |              |   |
| Supplemental      disclosures:                                                                                 |   |              |   |   |              |   |   |              |   |
| Cash paid for interest                                                                                         | $      |  1           |   | $      |  5           |   | $      |  30          |   |
| Cash paid for income taxes                                                                                     | $      |  –     |   | $      |  –     |   | $      |  –     |   |
| Issuance of common stock for prepaid      consulting fees                                                      | $      |  70          |   | $      |  –     |   | $      |  70          |   |

----

| • | Each share of Znomics Delaware common stock issued and      outstanding immediately prior to the closing of the Merger was converted      into the right to receive one share of common stock. As a result, the      shareholders of Znomics Delaware received 5,740,849 newly issued shares of      common stock.                                                                                                                                                                                                                                                                          |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • | 3,253,333 shares of common stock were issued to      investors as a result of closing a private offering exempt from      registration under Rule 506 of Regulation D of the Securities Act of 1933.                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • | Outstanding options under the Znomics Delaware stock      option plan to purchase 672,346 shares of Znomics Delaware common stock      have been converted into options to purchase 672,346 shares of common      stock on the same terms and conditions, including varying exercise prices      between $0.41 per share to $1.11 per share and exercise termination dates      between June 2015 and September 2017. The assumed stock option plan allows      the issuance of options to purchase a maximum of 2,193,258 shares of our      common stock, inclusive of these issuances.   |

----

- Outstanding warrants of Znomics Delaware entitling holders to purchase  65,893 shares of Znomics Delaware common stock were assumed. These warrants  will be converted into warrants to acquire 65,893 shares of common stock. Of  these warrants, 56,131 shares are held at an exercise price of $0.82 per share  and exercisable until October 17, 2008 and 9,762 shares are held at an  exercise price of $1.50 per share and exercisable until June 30, 2012. In  addition, the Company issued warrants to purchase 227,733 shares of common  stock at a price of $1.50 per share to the placement agent in the private  offering, as partial payment, in exchange for their services.  
- Following the closing of the merger, in a separate transaction, the former  PSRI Chief Executive Officer and sole director and certain other shareholders  agreed to cancel and return a portion or all of their PSRI common stock into  treasury. In total, these shareholders retired 4,731,085 shares of common  stock.  
- As a result, following these events, there were 11,072,560 shares of the  Company’s common stock issued and outstanding at November 5, 2007. 

----

----

----

----

----

|                                 |   | December 31 |   |
|--------------------------------------|--------|-------------|--------|
|                                 |   | 2008        |   |   | 2007 |   |
| Receivable for fish lines            | $      |  52    |   | $ |  100 |   |
| Receivable - Harvard                 |   | 3           |   |   | 5 |   |
| Other                                |   | 5           |   |   | 1 |   |
|                                 |   | 60          |   |   | 106 |   |
| Less allowance for doubtful accounts |   | (17         | )      |   | – |   |
|                                 | $      |  43    |   | $ |  106 |   |

|                        |   | December 31 |   |
|-----------------------------|--------|-------------|--------|
|                        |   | 2008        |   |   | 2007 |   |
| Investor relations expenses | $      |  71    |   | $ |  29 |   |
| Various insurance policies  |   | 47          |   |   | 45 |   |
| Other expenses              |   | 42          |   |   | – |   |
|                        | $      |  160   |   | $ |  74 |   |

|                           |   | December 31, |   |
|--------------------------------|--------|--------------|--------|
|                           |   | Useful Lives |   |   | 2008 |   |   | 2007 |   |
| Compound Library               |   | 3 years      |   | $ |  17 |   | $ |  17 |   |
| Office equipment               |   | 2-3 years    |   |   | 135 |   |   | 91 |   |
| Laboratory equipment           |   | 3-5 years    |   |   | 526 |   |   | 366 |   |
| Donated laboratory equipment   |   | 2-5 years    |   |   | 23 |   |   | 23 |   |
| Equipment under capital leases |   | 5 years      |   |   | 40 |   |   | 40 |   |
|                           |   |         |   |   | 741 |   |   | 537 |   |
| Less accumulated depreciation  |   |         |   |   | (347 | ) |   | (216 | ) |
| License Agreement              |   | 5 years      |   |   | 20 |   |   | – |   |
| Less accumulated Amortization  |   |         |   |   | (3 | ) |   | – |   |
| Property and equipment, net    |   |         |   | $ |  411 |   | $ |  321 |   |

----

|                |   | December 31 |   |
|---------------------|--------|-------------|--------|
|                |   | 2008        |   |   | 2007 |   |
| Payroll liabilities | $      |  36    |   | $ |  23 |   |
| Accrued vacation    |   | 31          |   |   | 7 |   |
|                | $      |  64    |   | $ |  30 |   |

----

|              |   | December 31 |   |
|-------------------|--------|------------------|--------|
|              |   | 2008             |   |   | 2007 |   |
| Washington Mutual | $      |  –    |   | $ |  9 |   |

----

-  Each share of Znomics Delaware common stock issued and outstanding  immediately prior to the closing of the Merger was converted into the right to  receive one share of common stock. As a result, the shareholders of Znomics  Delaware received 5,740,849 newly issued shares of common stock.     
-  3,253,333 shares of common stock were issued to investors as a result of  closing a private offering exempt from registration under Rule 506 of  Regulation D of the Securities Act of 1933.     
-  Outstanding options under the Znomics Delaware stock option plan to  purchase 672,346 shares of Znomics Delaware common stock have been converted  into options to purchase 672,346 shares of common stock on the same terms and  conditions, including varying exercise prices between $0.41 per share to $1.11  per share and exercise termination dates between June 2015 and September 2017.  The assumed stock option plan allows the issuance of options to purchase a  maximum of 2,193,258 shares of Company common stock, inclusive of these  issuances.     
-  Outstanding warrants of Znomics Delaware entitling holders to purchase  65,893 shares of Znomics Delaware common stock were assumed. These warrants  will be converted into warrants to acquire 65,893 shares of common stock. Of  these warrants, 56,131 shares are held at an exercise price of $0.82 per share  and exercisable until October 17, 2008 and 9,762 shares are held at an  exercise price of $1.50 per share and exercisable until June 30, 2012. In  addition, the Company issued warrants to purchase 227,733 shares of common  stock at a price of $1.50 per share to the placement agents in the private  offering, as partial payment, in exchange for their services.     
-  Following the closing of the merger, in a separate transaction, the  former PSRI Chief Executive Officer and sole director and certain other  shareholders agreed to cancel and return a portion or all of their PSRI common  stock into treasury. In total, these shareholders retired 4,731,085 shares of  common stock.     
-  As a result, following these events, there were 11,072,560 shares of the  Company's common stock issued and outstanding at November 5, 2007.     

----

----

|                             |   | Number of |   |   |     |   |   |                    |   |
|----------------------------------|--------|-----------|--------|--------|----------|--------|--------|-------------------------|--------|
|                             |   |      |   |   |     |   |   |                    |   |   | Aggregate |   |
|                             |   |      |   |   |     |   |   | Exercise      Price     |   |   | Intrinsic |   |
|                             |   | Options   |   |   | Warrants |   |   | per Share               |   |   | Value |   |
| Outstanding at December 31, 2006 |   | 225,000   |   |   | 23,000   |   | $      |  0.82 – 2.25 |   |   |   |   |
| Granted                          |   | 296,189   |   |   | 237,495  |   |   | 1.00 - 2.80             |   |   |   |   |
| Repriced                         |   | 410,571   |   |   | 33,131   |   |   | 0.41-1.15               |   |   |   |   |
| Exercised                        |   | –   |   |   | –  |   |   |                    |   |   |   |   |
| Expired                          |   | –   |   |   | –  |   |   |                    |   |   |   |   |
| Forfeited                        |   | (48,812   | )      |   | –  |   |   | 0.98                    |   |   |   |   |
|                             |   |      |   |   |     |   |   |                    |   |   |   |   |
| Outstanding at December 31, 2007 |   | 882,948   |   |   | 293,626  |   |   | 0.41 – 1.50       |   |   |   |   |
| Granted                          |   | 971,238   |   |   | –  |   |   | 1.50 – 2.58       |   |   |   |   |
| Exercised                        |   | –   |   |   | –  |   |   |                    |   |   |   |   |
| Expired                          |   | –   |   |   | (56,131  | )      |   | 0.82                    |   |   |   |   |
|                             |   |      |   |   |     |   |   |                    |   |   |   |   |
| Forfeited                        |   | (58,565   | )      |   | –  |   |   | 0.82-2.75               |   |   |   |   |
|                             |   |      |   |   |     |   |   |                    |   |   |   |   |
| Outstanding at December 31, 2008 |   | 1,795,621 |   |   | 237,495  |   |   | 0.41-2.75               |   | $ |  0.00 |   |
|                             |   |      |   |   |     |   |   |                    |   |   |   |   |
| Exercisable at end of year       |   | 562,376   |   |   | 237,495  |   |   | 0.41-2.75               |   |   |   |   |

| Options Outstanding |   |        | Options Exercisable |   |
|---------------------|--------|-------------|---------------------|--------|
|                |   |        |                |   | Weighted |   |   |   |   |   |   |   |   |   |   |
|                |   |        |                |   | Average |   |   | Weighted |   |   |   |   |   | Weighted |   |
| Exercise            |   | Number      |                |   | Remaining |   |   | Average |   |   | Number |   |   | Average |   |
| Price               |   | Outstanding |                |   | Contractual Life |   |   | Exercise Price |   |   | Exercisable |   |   | Exercisable Price |   |
| $0.41-$0.98         |   | 441,760     |                |   | 5.31 |   | $ |  0.73 |   |   | 436,879 |   | $ |  0.73 |   |
|                |   |        |                |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.02-$1.50         |   | 153,935     |                |   | 8.32 |   | $ |  1.14 |   |   | 72,497 |   | $ |  1.11 |   |
|                |   |        |                |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.80-$2.75         |   | 1,199,926   |                |   | 9.51 |   | $ |  2.10 |   |   | 53,000 |   | $ |  2.58 |   |
|                |   |        |                |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.41-$2.75         |   | 1,795,621   |                |   | 8.37 |   | $ |  1.31 |   |   | 562,376 |   | $ |  0.95 |   |

|                    | 2008 | 2007 |
|-------------------------|------|------|
| Risk free interest rate | 3.2% | 4.1% |
| Expected life in years  | 6.46 | 8.4  |
| Expected dividend yield | 0.0% | 0.0% |

----

| Expected volatility                  | 69.67% | 49.0% |
|--------------------------------------|--------|-------|
| Estimated annualized forfeiture rate | 0.0%   | 0.0%  |

|                                                                         |   | Year Ended   |   |   | Year Ended   |   |
|------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|
|                                                                         |   | December 31, |   |   | December 31, |   |
|                                                                         |   | 2008         |   |   | 2007         |   |
| Cost of sales and services                                                   | $      |  37     |   | $      |  199    |   |
| General and administrative                                                   |   | 134          |   |   | 95           |   |
| Total stock-based compensation expense      included in loss from operations | $      |  171    |   | $      |  294    |   |

|                                                   |   | December 31   |   |
|--------------------------------------------------------|--------|---------------|--------|
|                                                   |   | 2008          |   |   | 2007 |   |
| Tax computed at the federal statutory rate      of 34% | $      |  (1,201  | )      | $ |  (405 | ) |
| State income taxes, net of federal benefit             |   | (230          | )      |   | (58 | ) |
| Stock-based compensation                               |   | 44            |   |   | 99 |   |
| Permanent differences and other                        |   | 32            |   |   | 13 |   |
| Change in valuation allowance                          |   | 1,355         |   |   | 351 |   |
| Income tax provision                                   | $      |  – |   | $ |  – |   |

----

|                                                       |   | December 31   |   |
|------------------------------------------------------------|--------|---------------|--------|
|                                                       |   | 2008          |   |   | 2007 |   |
| Deferred tax assets:                                       |   |          |   |   |   |   |
| Accrued expenses and other                                 | $      |  161     |   | $ |  182 |   |
| Net operating loss carryforwards                           |   | 1,929         |   |   | 563 |   |
| Valuation allowance                                        |   | (2,067        | )      |   | (712 | ) |
| Total deferred tax assets, net of valuation      allowance |   | 23            |   |   | 33 |   |
|                                                       |   |          |   |   |   |   |
| Deferred tax liabilities:                                  |   |          |   |   |   |   |
| Fixed assets                                               |   | 23            |   |   | 33 |   |
| Net deferred tax assets (liabilities)                      | $      |  – |   | $ |  – |   |

----

|   |                                                       |   | 2008         |   |   | 2007         |   |
|--------|------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|
|   | Basic earnings (loss) per share      calculation:          |   |         |   |   |         |   |
|   | Net income (loss) to common shareholders                   | $      |  (3,532 | )      | $      |  (1,192 | )      |
|   | Weighted average of common shares      outstanding         |   | 11,112,498   |   |   | 3,414,509    |   |
|   | Basic net earnings (loss) per share                        | $      |  (0.32  | )      | $      |  (0.35  | )      |
|   |                                                            |   |         |   |   |         |   |
|   | Diluted earnings (loss) per      share calculation:        |   |         |   |   |         |   |
|   | Net income (loss) to common shareholders                   | $      |  (3,532 | )      | $      |  (1,192 | )      |
|   | Weighted average of common shares      outstanding         |   | 11,112,498   |   |   | 3,414,509    |   |
|   |            Stock Options (1) |   | -            |   |   | -            |   |
|   |                 Warrants (2) |   | -            |   |   | -            |   |
|   | Diluted weighted average common shares                     |   |         |   |   |         |   |
|   | outstanding                                                |   | 11,112,498   |   |   | 3,414,509    |   |
|   | Diluted net income (loss) per share                        | $      |  (0.32  | )      | $      |  (0.35  | )      |

| (1) | At December 31, 2008, there were common stock      equivalents attributable to outstanding stock options of to 1,795,621      common shares and 882,948 common shares at December 31, 2007. The stock      options are anti-dilutive at December 31, 2008 and 2007 and therefore have      been excluded from diluted earnings per share.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | At December 31, 2008, there were common stock      equivalents attributable to warrants of 237,495 common shares and 293,626      common shares at December 31, 2007. The warrants expire five years      from their 2007 date of issuance and have an exercise price of $1.50 per      share. The warrants are anti- dilutive for the years-ended December 31,      2008 and 2007 and therefore have been excluded from diluted earnings per      share.  |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                  Name |   | Age |   |                                                    Position Held with the      Company |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Dwight A. Sangrey                                                                                                                                         |   | 68  |   | Chairman of the Board of      Directors                                                                                                                                                         |
| Mark Philip                                                                                                                                               |   | 53  |   | Director, President and Chief Executive Officer                                                                                                                                                 |
| Roger D. Cone                                                                                                                                             |   | 51  |   | Director                                                                                                                                                                                        |
| Stephen E. Kurtz                                                                                                                                          |   | 52  |   | Director, Secretary, Director of Operations                                                                                                                                                     |
| Richard A. Sessions                                                                                                                                       |   | 69  |   | Director                                                                                                                                                                                        |
| Bruce A. Beutel                                                                                                                                           |   | 45  |   | Chief Scientific Officer                                                                                                                                                                        |
| Kerry D. Rea                                                                                                                                              |   | 50  |   | Chief Financial Officer                                                                                                                                                                         |

----

----

Item

|     SUMMARY COMPENSATION      TABLE    |   |
|---------------------------------------------------------------------------|--------|
| Name and principal position (a)                                           |   | Year (b) |   |   | Salary($) (c) |   |   | Bonus($) (d) |   |   | Stock Awards($) (e) |   |   | Option Awards($) (1) (f) |   |   | Non-Equity Incentive Plan Compensation($)      (g) |   |   | Nonqualified Deferred Compensation($)      (h) |   |   | All other Compensation($)(i) |   |   | Total($) (j) |   |
| Mark                                                                      |   | 2008 |   | $ |  98,125 |   |   |   |   |   |   |   | $ |  15,297 |   |   |   |   |   |   |   | $ |  9,357 |   | $ |  376,119 |   |
| Philip(2)                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| President                                                                 |   | 2007 |   | $ |  - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and Chief                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Executive                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Officer                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Richard                                                                   |   | 2008 |   | $ |  49,542 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ |  1,486 |   | $ |  51,028 |   |
| Sessions(3)                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Former                                                                    |   | 2007 |   | $ |  - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ |  12,000 |   | $ |  12,000 |   |
| Chief                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Executive                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Officer                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bruce                                                                     |   | 2008 |   | $ |  93,109 |   |   |   |   |   |   |   | $ |  4,130 |   |   |   |   |   |   |   | $ |  20,339 |   | $ |  169,078 |   |
| Beutel(4)                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Chief                                                                     |   | 2007 |   | $ |  - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Science                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Officer                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kerry                                                                     |   | 2008 |   | $ |  147,112 |   |   |   |   |   |   |   | $ | 13,295 |   |   |   |   |   |   |   | $ |  4,413 |   | $ |  151,525 |   |
| Rea(5)                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Chief                                                                     |   | 2007 |   | $ |  21,288 |   |   |   |   |   |   |   | $ |  745 |   |   |   |   |   |   |   |   |   |   | $ |  101,274 |   |
| Financial                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Officer                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stephen                                                                   |   | 2008 |   | $ |  86,635 |   |   |   |   |   |   |   | $ |  20,898 |   |   |   |   |   |   |   | $ |  2,599 |   | $ |  219,611 |   |
| Kurtz(6)                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Secretary                                                                 |   | 2007 |   | $ |  21,700 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ |  21,700 |   |
| and                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Director of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operations                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)    | Amounts reflect the expense recognized for accounting      purposes calculated in accordance with SFAS 123R.                                                                                                                                                                                                                                   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        | Assumptions used in calculating expense as required by      SFAS 123R are described in Note L to our Financial Statements included      elsewhere in this report. Additional details regarding the terms of awards      under the Stock Option Plan are described in the following table      "Outstanding Equity Awards at Fiscal Year-End."  |
| (2)    | Dr. Philip was hired as our president and chief      executive officer on August 14, 2008, “All other Compensation” for Dr.      Philip consist of $8,794 for relocation expenses and $563 for company      match to the 401(k) in 2008.                                                                                           |
| (3)    | Mr. Sessions resigned as our chief executive officer on      August 14, 2008. “All other Compensation” for Mr. Sessions consisted of      company match to the 401(k) of$1,486 for 2008 and $12,000 in consulting      fees for 2007.                                                                                              |
| (4)    | Mr, Beutel was hired as our chief scientific officer on      June 4, 2008. “All other Compensation” for Mr. Beutel consisted of company      match to the 401(k) Plan of $1,063 and $19,276 for relocation expenses in      2008..                                                                                                 |
| (5)    | “All other Compensation” for Mr. Rea consisted of      company match to the 401(k) Plan $4,413 for 2008.                                                                                                                                                                                                                           |
| (6)    | “All other Compensation” for Mr. Kurtz consisted of      company match to the 401(k) Plan $2,599 for 2008.                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                |

----

----

----

----

|   OUTSTANDING EQUITY AWARDS AT      FISCAL YEAR-END    |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   | Option Awards |   |   | Stock Awards |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Equity |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Incentive |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Plan |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Equity |   |   | Awards: |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Incentive |   |   | Market      or |   |
|                                                                            |   |   |   |   |   |   |   | Equity |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Plan |   |   | Payout |   |
|                                                                            |   |   |   |   |   |   |   | Incentive |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Awards: |   |   | Value      of |   |
|                                                                            |   |   |   |   |   |   |   | Plan |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Number      of |   |   | Unearned |   |
|                                                                            |   |   |   |   |   |   |   | Awards: |   |   |   |   |   |   |   |   |   |   |   | Market |   |   | Unearned |   |   | Shares, |   |
|                                                                            |   | Number      of |   |   | Number      of |   |   | Number      of |   |   |   |   |   |   |   |   | Number      of |   |   | Value      of |   |   | Shares, |   |   | Units      or |   |
|                                                                            |   | Securities |   |   | Securities |   |   | Securities |   |   |   |   |   |   |   |   | Shares      or |   |   | Shares      or |   |   | Units      or |   |   | Other |   |
|                                                                            |   | Underlying |   |   | Underlying |   |   | Underlying |   |   |   |   |   |   |   |   | Units      of |   |   | Units      of |   |   | Other |   |   | Rights |   |
|                                                                            |   | Unexercised |   |   | Unexercised |   |   | Unexercised |   |   | Option |   |   | Option |   |   | Stock      that |   |   | Stock      that |   |   | Rights      that |   |   | that      have |   |
|                                                                            |   | Options      (#) |   |   | Options      (#) |   |   | Unearned |   |   | Exercise |   |   | Expiration |   |   | have      Not |   |   | have      Not |   |   | have      Not |   |   | Not |   |
| Name                                                                            |   | Exercisable |   |   | Unexercisable |   |   | Options      (#) |   |   | Price      ($) |   |   | Date |   |   | Vested      (#) |   |   | Vested      ($) |   |   | Vested      (#) |   |   | Vested      ($) |   |
| (a)                                                                             |   | (b) |   |   | (c) |   |   | (d) |   |   | (e) |   |   | (f) |   |   | (g) |   |   | (h) |   |   | (i) |   |   | (j) |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Richard                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sessions                                                                        |   | 73,218 |   |   |   |   |   |   |   | $ |  0.82 |   |   | 7/2/2015 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Richard                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sessions                                                                        |   | 48,812 |   |   |   |   |   |   |   | $ |  0.92 |   |   | 7/3/2015 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stephen                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kurtz                                                                           |   | 24,406 |   |   |   |   |   |   |   | $ |  0.82 |   |   | 7/01/2014 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stephen                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kurtz                                                                           |   |   |   |   | 80,000 | (1) |   |   |   | $ |  2.45 |   |   | 03/01/2018 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kerry Rea                                                                       |   | 20,000 |   |   | 80,000 | (2) |   |   |   | $ |  2.75 |   |   | 12/14/2017 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mark Philip                                                                     |   |   |   |   | 500,000 | (3) |   |   |   | $ |  0.92 |   |   | 09/30/2018 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BruceBeutel                                                                     |   |   |   |   | 135,000 | (3) |   |   |   | $ |  0.92 |   |   | 09/30/2018 |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1) | The shares underlying the option granted to Mr. Kurtz      vest 20% per year on each anniversary of the grant date, or March 01,      2009, 2010, 2011, 2012 and 2013.                                                                                                                       |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Twenty percent of the shares underlying the option      granted to Mr. Rea vested on December 14, 2008. The remaining shares      underlying the option granted to Mr. Rea vest 20% per year on each      anniversary of the grant date, or December 14, 2009, 2010, 2011and 2012.      (3)  |

----

|            |   | Fees       |   |   |      |   |   |         |   |   |                |   |   |         |   |   |         |   |   |     |   |
|-----------------|--------|------------|--------|--------|-----------|--------|--------|--------------|--------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|----------|--------|
|            |   | Earned or  |   |   |      |   |   |         |   |   |                |   |   | Nonqualified |   |   |         |   |   |     |   |
|            |   | paid       |   |   |      |   |   |         |   |   | Non-Equity          |   |   | Deferred     |   |   | All other    |   |   |     |   |
|            |   | in cash($) |   |   | Stock     |   |   | Option       |   |   | Incentive      Plan |   |   | Compensation |   |   | Compensation |   |   |     |   |
| Name            |   | (1)        |   |   | Awards($) |   |   | Awards($)    |   |   | Compensation($)     |   |   | ($)          |   |   | ($)          |   |   | Total($) |   |
| (a)             |   | (b)        |   |   | (c)       |   |   | (d)          |   |   | (e)                 |   |   | (f)          |   |   | (g)          |   |   | (h)      |   |
|            |   |       |   |   |      |   |   |         |   |   |                |   |   |         |   |   |         |   |   |     |   |
| Dwight Sangrey  |   | —    |   |   |      |   | $      |  37,952 |   |   |                |   |   |         |   | $      |         |   |   | 37,952   |   |
| Charles Blitzer |   | —    |   |   |      |   |   |         |   |   |                |   |   |         |   |   |         |   |   | —  |   |
| Roger Cone      |   | —    |   |   |      |   |   |         |   |   |                |   |   |         |   |   |         |   |   | —  |   |

Item 

|                                                                             |   |     |   | Amount      and |   |                  |   |
|----------------------------------------------------------------------------------|--------|----------|--------|-----------------|--------|-----------------------|--------|
|                                                                             |   |     |   | Nature of       |   |                  |   |
|                                                                             |   | Title of |   | Beneficial      |   | Percent      of Class |   |
| Name and Address of Beneficial      Owner                                        |   | Class    |   | Ownership (1)   |   | (2)                   |        |
| Richard Sessions (3) 2611 SW Third Ave.,      Suite 200, Portland, OR 97201 |   | Common   |   | 899,566         |   | 7.9%                  |   |
| Roger Cone 2611 SW Third Ave., Suite 200, Portland, OR      97201                |   | Common   |   | 898,678         |   | 7.9%                  |   |
| Stephen Kurtz (4) 2611 SW Third Ave., Suite      200, Portland, OR 97201         |   | Common   |   | 788,145         |   | 6.9%                  |   |
| Dwight Sangrey (5) 2611 SW Third Ave., Suite 200, Portland,      OR 97201        |   | Common   |   | 788,090         |   | 6.9%                  |   |
| Kerry Rea (6) 2611 SW Third Ave., Suite      200, Portland, OR 97201             |   | Common   |   | 26,250          |   | 0.2%                  |   |
| Mark Philip 2611 SW Third Ave., Suite 200, Portland, OR      97201               |   | Common   |   | 6,250           |   | 0.1%                  |   |
| Bruce Beutel 2611 SW Third Ave., Suite 200,      Portland, OR 97201              |   | Common   |   | 6,250           |   | 0.1%                  |   |
| All officers and directors as a group (seven persons)                            |   | Common   |   | 3,413,229       |   | 30.0%                 |   |

| (1) | Options and warrants exercisable within 30 days of      February 28, 2009, are deemed outstanding for the purposes of computing      the shares held by that person, but not any other person.  |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | Based on 11,370,060 common shares issued and      outstanding as of February 28, 2009.                            |
|-----|------------------------------------------------------------------------------------------------------------------------|
| (3) | Includes options to purchase 73,218 shares of common      stock exercisable within 60 days of February 28, 2009.  |
| (4) | Includes options to purchase 40,405 shares common stock      exercisable within 60 days of February 28, 2009.     |
| (5) | Includes options to purchase 25,000 shares of common      stock exercisable within 60 days of February 28, 2009.  |
| (6) | Includes options to purchase 20,000 shares of common      stock exercisable within 60 days of February 28, 2009.  |

Item 

| Financial      Statements |   |               |   |   |          |   |   |          |   |   |          |   |
|---------------------------|--------|--------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
| for the Year      Ended   |   | Audit Related Fees |   |
| December 31               |   | Services           |   |   | Fees          |   |   | Tax Fees      |   |   | Other Fees    |   |
|                      |   |               |   |   |          |   |   |          |   |   |          |   |
| 2008 (1)                  | $      |  43,500       |   | $      |  — |   | $      |  — |   | $      |  — |   |
| 2007 (2)                  |   | 11,500             |   |   | —       |   |   | —       |   | $      |  — |   |

| (1) | 2008 Includes $36,500 billed by Carver, Moquist &      O’Connor, LLC, our current independent registered public accountant, for      third quarter 2008 and annual attest work and $7,000 billed by Moore &      Associates, our former independent registered chartered accountants, for      first and second quarter 2008.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | 2007 audit services billed by Moore & Associates,      our former independent registered chartered accountants.                                                                                                                                                                                                                          |

----

|    |                                                                                                                                           |   | Incorporation by      Reference Herein                                                                         |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| Exhibit |                                                                                                                                           |   |                                                                                                           |   |   |
| Number  | Description                                                                                                                                    |   | Form                                                                                                           |   | Date |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 2.1     | Agreement of Merger and Plan of      Merger, by and among Pacific Syndicated Resources, Inc. Znomics      Acquisition, Inc., and Znomics, Inc. |        | Current Report on Form 8-K, as amended      (File No. 333-107300)                                              |  | November 8, 2007 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 3.1     | Articles of Incorporation, as      amended.                                                                                                    |        | Registration Statement on Form SB- 2, as amended (File      No. 333- 136372)                                   |  | August 7, 2006 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 3.2     | Articles of Merger between      Pacific Syndicated Resources, Inc. and Znomics Acquisition, Inc. dated      November 6, 2007                   |        | Current Report on Form 8-K, as amended (File No.      333-107300)                                              |  | November 8, 2007 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 3.3     | Bylaws, as amended.                                                                                                                            |        | Registration Statement on Form S-2, as amended (File      No. 333-136372)                                      |  | August 7, 2006 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.1    | Znomics, Inc. Stock Option Plan                                                                                                                |        | Current Report on Form 8-K, as amended (File No.      333-107300)                                              |  | November 8, 2007 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.2    | Placement Agent Agreement                                                                                                                      |        | Current Report on Form 8-K, as amended (File No.      333-107300)                                              |  | November 8, 2007 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.3    | Research and License Agreement, dated      November 15, 2005                                                                                   |        | Annual Report on Form 10-K for the fiscal year ended      December 31, 2007, as amended (File No. 333- 136372) |  | July 25, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.4    | Lease Agreement                                                                                                                                |        | Registration Statement on Form S-1, as amended (File      No. 333-148220)                                      |  | April 17, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.5    | Washington Mutual Loan Agreements                                                                                                              |        | Registration Statement on Form S-1, as amended (File      No. 333-148220)                                      |  | April 17, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.6    | Exclusive License Agreement, dated March      2008                                                                                             |        | Registration Statement on Form S-1, as amended (File      No. 333-148220)                                      |  | July 16, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.7    | Research Agreement, dated May 6, 2008                                                                                                          |        | Registration Statement on Form S-1, as amended (File      No. 333-148220)                                      |  | July 16, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.8    | Research and License Agreement, dated July      1, 2008                                                                                        |        | Registration Statement on Form S-1, as amended (File      No. 333-148220)                                      |  | July 16, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.9    | Employment Agreement, dated as of August      14, 2008, by and between Znomics, Inc. and Dr. Mark Philip, Ph.D.                                |        | Current Report on Form 8-K (File No. 333-136372)                                                               |  | August 20, 2008 |
|    |                                                                                                                                           |   |                                                                                                           |   |   |
| 10.10   | Form of Stock Option Agreement                                                                                                                 |        | Current Report on Form 8-K (File No. 333-136372)                                                               |  | September 23, 2008 |

----

|    |                                                                                                                                                                                     |   | Incorporation by      Reference Herein           |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|    |                                                                                                                                                                                     |   |                                             |   |   |
| Exhibit |                                                                                                                                                                                     |   |                                             |   |   |
| Number  | Description                                                                                                                                                                              |   | Form                                        |   | Date |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.11   | Form Indemnification Agreement                                                                                                                                                           |   | Current Report on Form 8-K (File No. 333-136372) |   | September 23, 2008 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.12   | Common Stock Purchase Agreement, dated October 10, 2008                                                                                                                                  |   | Current Report on Form 8-K (File No. 333-136372) |   | October 14, 2008 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.13   | Compensation agreement - President and Chief Executive      Officer                                                                                                                      |   | Current Report on Form 8-K (File No. 333-136372) |   | December 5, 2008 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.14   | Compensation agreement - Chief Scientific Officer                                                                                                                                        |   | Current Report on Form 8-K (File No. 333-136372) |   | December 5, 2008 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.15   | Compensation agreement - Chief Financial Officer                                                                                                                                         |   | Current Report on Form 8-K (File No. 333-136372) |   | December 5, 2008 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.16   | Biological Material Agreement dated as of      January 5, 2009, by and between Znomics, Inc. and the President and      Fellows of Harvard College.                                      |   | Current Report on Form 8-K (File No. 333-136372) |   | January 8, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.17   | Secured Promissory Note, dated as of March 13, 2009, by and      between Znomics, Inc. and Triangle Holdings VI, LLC                                                                     |   | Current Report on Form 8-K (File No. 333-136372) |   | March 19, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.18   | Security Agreement, dated as of March 13, 2009, by and      between Znomics, Inc. and Triangle Holdings VI, LLC, as collateral agent                                                     |   | Current Report on Form 8-K (File No. 333-136372) |   | March 19, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 10.19   | Secured Subordinated Promissory Note, dated as of March 18,      2009, by and between Znomics, Inc. and Wilson Sonsini Goodrich &      Rosati, P.C.                                  |   | Current Report on Form 8-K (File No. 333-136372) |   | March 19, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 14.1*   | Code of Conduct[link]                                                                                                                                                                    |   |                                             |   | March 31, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 23.1*   | [link]Consent of Moore & Associates, Chartered      Independent Registered Public Accounting Firm.                                                                                   |   |                                                  |   | March 31, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 23.2*   | [link]Consent of Carver Moquist & O’Connor, LLC, an      independent registered public accounting firm.                                                                        |   |                                                  |   | March 31, 2009 |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 31.1*   | Certification of Chief Executive      Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as      adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.  |   |                                                  |   |  |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 31.2*   | Certification of Chief Financial      Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as      adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.  |   |                                                  |   |  |
|    |                                                                                                                                                                                     |   |                                             |   |   |
| 32.1*   | Certification of Chief Executive      Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |   |                                                  |   |  |

----

| Signature                    |   | Title                                                 |   | Date           |
|------------------------------|--------|-------------------------------------------------------|--------|----------------|
|                         |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Mark      A. Philip |   | President and Chief Executive Officer      (Principal |   | March 30, 2009 |
| Mark A. Philip          |   | Executive Officer)                                    |   |           |
|                         |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Kerry D. Rea             |   | Chief Financial Officer (Principal Financial      and |   | March 30, 2009 |
| Kerry D. Rea                 |   | Accounting Officer)                                   |   |           |
|                         |   |                                                  |   |           |
| /s/ Stephen E.      Kurtz    |   | Director of Operations and Director                   |   | March 25, 2009 |
| Stephen E. Kurtz             |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Bruce Beutel             |   | Chief Scientific Officer                              |   | March 25, 2009 |
| Bruce Beutel                 |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Dwight Sangrey           |   | Chairman of the Board of Directors                    |   | March 30, 2009 |
| Dwight Sangrey               |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Roger D. Cone            |   | Director                                              |   | March 30, 2009 |
| Roger D. Cone                |   |                                                  |   |           |
|                         |   |                                                  |   |           |
| /s/ Richard A.      Sessions |   | Director                                              |   | March 30, 2009 |
| Richard A. Sessions          |   |                                                  |   |           |

----

|   | (a)    | Except to the extent that the materials enumerated in      (1) and/or (2) below are specifically incorporated into this Form by      reference (in which case see Rule 12b-23(d)),      every registrant which files an annual report on this Form pursuant to      Section 15(d) of the Act shall furnish to the Commission for its      information, at the time of filing its report on this Form, four copies of      the following:  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|   |        | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                            | Any annual report to security holders covering the      registrant's last fiscal year; and  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|   |        | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                            | Every proxy statement, form of proxy or other proxy      soliciting material sent to more than ten of the registrant's security      holders with respect to any annual or other meeting of security      holders.  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (b) | The foregoing material shall not be deemed to be      "filed" with the Commission or otherwise subject to the liabilities of      Section 18 of the Act, except to the extent that the registrant      specifically incorporates it in its annual report on this Form by      reference.  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|   | (c)    | As of the date of this report, no annual report or      proxy material has been sent to security holders.                                                                                                                                                                                                                                                                                                                                 |

----