----

----

|   | x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 |
|--------|-----------------------------------------------------------------------------------------------------------------|

|   | For the quarterly period ended:  January 31, 2011 |
|--------|-------------------------------------------------------------|

|   | o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------------------------|

| Delaware                                                       |   | 22-2369085                        |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification No.) |

----

----

| Part I.         | Financial Information                                       |   |   |   |
|----------------------|------------------------------------------------------------------|--------|--------|--------|
| Item 1.              | Financial Statements                                             |   |   |   |
|                 | Condensed Balance Sheets                                         |   |   | 4      |   |
|                 | Condensed Statements of Operations                               |   |   | 5      |   |
|                 | Condensed Statement of Stockholders’ Deficiency            |   |   | 6      |   |
|                 | Condensed Statements of Cash Flows                               |   |   | 7      |   |
|                 | Notes to Condensed Financial Statements                          |   |   | 10     |   |
| Item 2.              | Management’s Discussion and Analysis of Financial Conditon |   |   |   |   |
|                 | and Results of Operations                                        |   |   | 19     |   |
| Item 3.              | Quantitative and Qualitative Disclosures About Market Risk       |   |   | 24     |   |
| Item 4.              | Controls and Procedures                                          |   |   | 24     |   |
|                 |                                                             |   |   |   |   |
| Part II.   | Other Information                                                |   |   |   |   |
| Item 1.              | Legal Proceedings                                                |   |   | 24     |   |
| Item 1A.             | Risk Factors                                                     |   |   | 24     |   |
| Item 2.              | Unregistered Sales of Equity Securities and Use of Proceeds      |   |   | 25     |   |
| Item 3.              | Defaults Upon Senior Securities                                  |   |   | 25     |   |
| Item 4.              | Reserved                                                         |   |   | 25     |   |
| Item 5.              | Other Information                                                |   |   | 25     |   |
| Item 6.              | Exhibits                                                         |   |   | 25     |   |
| Signature Page       |                                                             |   | 26     |   |

----

CON

|                                                                                                                                                                                                       |   | January 31, 2011(Unaudited) |          |   | July 31, 2010(See Note 1) |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------------|--------|--------------------------------|--------|
| ASSETS                                                                                                                                                                                                     |   |
| Current assets:                                                                                                                                                                                            |   |                             |          |   |                           |   |
| Cash and cash equivalents                                                                                                                                                                                  |   | $                                | 710,329       |   |                           | $      | 321,253 |   |
| Prepaid clinical trial expenses                                                                                                                                                                            |   |                             | –       |   |                           |   | 372,216 |   |
| Prepaid expenses                                                                                                                                                                                           |   |                             | 95,873        |   |                           |   | 105,233 |   |
| Restricted cash                                                                                                                                                                                            |   |                             | 274,356       |   |                           |   | 1,228,236 |   |
| Total current assets                                                                                                                                                                                       |   |                             | 1,080,558     |   |                           |   | 2,026,938 |   |
| Property and equipment, net of accumulated depreciation and amortization of $371,195 in 2011 and $378,435 in 2010                                                                                          |   |                             | 16,056        |   |                           |   | 32,594 |   |
| Deferred financing costs                                                                                                                                                                                   |   |                             | 143,656       |   |                           |   | 182,063 |   |
| Total assets                                                                                                                                                                                               |   | $                                | 1,240,270     |   |                           | $      | 2,241,595 |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY                                                                                                                                                             |   |
| Current liabilities:                                                                                                                                                                                       |   |                             |          |   |                           |   |   |   |
| Accounts payable                                                                                                                                                                                           |   | $                                | 631,756       |   |                           | $      | 507,892 |   |
| Accrued clinical trial expenses                                                                                                                                                                            |   |                             | 221,150       |   |                           |   | 295,150 |   |
| Accrued professional service fees                                                                                                                                                                          |   |                             | 332,710       |   |                           |   | 374,361 |   |
| Accrued compensation expense                                                                                                                                                                               |   |                             | 53,860        |   |                           |   | 136,634 |   |
| Derivative liability                                                                                                                                                                                       |   |                             | 11,038,205    |   |                           |   | 15,479,366 |   |
| Current portion of obligations under capital lease                                                                                                                                                         |   |                             | 5,973         |   |                           |   | 5,353 |   |
| Other accrued expenses                                                                                                                                                                                     |   |                             | -             |   |                           |   | 200,152 |   |
| Total current liabilities                                                                                                                                                                                  |   |                             | 12,283,654    |   |                           |   | 16,998,908 |   |
| Other liabilities:                                                                                                                                                                                         |   |                             |          |   |                           |   |   |   |
| Accounts payable, net of current portion                                                                                                                                                                   |   |                             | 444,223       |   |                           |   | 444,223 |   |
| Obligations under capital lease, net of current portion                                                                                                                                                    |   |                             | 4,138         |   |                           |   | 7,288 |   |
| Accrued retirement benefits                                                                                                                                                                                |   |                             | 231,250       |   |                           |   | 231,250 |   |
| Deferred rent                                                                                                                                                                                              |   |                             | 9,289         |   |                           |   | 12,386 |   |
|      Convertible debt, less discount of $1,872,831 at January 31, 2011 (related party $413,151) and $2,413,014 at July 31, 2010     (related party, $251,093) |   |                             | 1,377,169     |   |                           |   | 836,986 |   |
| Accrued interest, convertible debt (related party, $61,973 at January 31, 2011 and $37,664 at July 31, 2010)                                                                                               |   |                             | 206,575       |   |                           |   | 125,548 |   |
| Deferred revenue                                                                                                                                                                                           |   |                             | 5,200,000     |   |                           |   | 5,200,000 |   |
| Total other liabilities                                                                                                                                                                                    |   |                             | 7,472,644     |   |                           |   | 6,857,681 |   |
| Total liabilities                                                                                                                                                                                          |   |                             | 19,756,298    |   |                           |   | 23,856,589 |   |
| Commitments and Contingencies                                                                                                                                                                              |   |                             |          |   |                           |   |   |   |
| Stockholders’ deficiency:                                                                                                                                                                            |   |                             |          |   |                           |   |   |   |
| Preferred stock, $.001 par value.  Authorized and unissued, 1,000,000 shares at January 31, 2011 and July 31, 2010                                                                               |   |                             | –       |   |                           |   | – |   |
| Common stock $.001 par value.  Authorized 250,000,000 shares at January 31, 2011 and July 31, 2010; issued and outstanding 47,323,880 at January 31, 2011 and 47,313,880 shares at July 31, 2010 |   |                             |   47,324 |   |                           |   |   47,314 |   |
| Common stock to be issued                                                                                                                                                                                  |   |                             | 500,000       |   |                           |   | – |   |
| Capital in excess of par value                                                                                                                                                                             |   |                             | 101,616,454   |   |                           |   | 101,456,909 |   |
| Deficit accumulated during development stage                                                                                                                                                               |   |                             | (120,679,806  | )      |                           |   | (123,119,217 | ) |
| Total stockholders’ deficiency                                                                                                                                                                       |   |                             | (18,516,028   | )      |                           |   | (21,614,994 | ) |
| Total liabilities and stockholders’ deficiency                                                                                                                                                       |   | $                                | 1,240,270     |   |                           | $      | 2,241,595 |   |

----

CO

|                                                                                 |   | Three Months EndedJanuary 31, |       |   | Six Months EndedJanuary 31, |   |       | August 24, 1981 (Date of Inception) to |   |
|--------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------|-----------------------------|--------|------------|--------------------------------------------------|--------|
|                                                                                 |   | 2011                          |       |   | 2010                        |   |       | 2011                                             |   |   | 2010 |   |   | January 31, 2011 |   |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales                                                                                |   | $                             | -          |   |                        | $      | -          |                                             |   | $ | - |   |   | $ | 18,750 |   |   | $ | 572,239 |   |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                  |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                                        |   |                          | -          |   |                        |   | -          |                                             |   |   | - |   |   |   | - |   |   |   | 336,495 |   |
| Research and development                                                             |   |                          | 424,975    |   |                        |   | 121,774    |                                             |   |   | 644,301 |   |   |   | 282,655 |   |   |   | 73,744,052 |   |
| General and administrative                                                           |   |                          | 283,368    |   |                        |   | 428,214    |                                             |   |   | 693,138 |   |   |   | 827,687 |   |   |   | 43,360,524 |   |
|      Total operating expenses                               |   |                          | 708,343    |   |                        |   | 549,988    |                                             |   |   | 1,337,439 |   |   |   | 1,110,342 |   |   |   | 117,441,071 |   |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                                 |   |                          | (708,343   | )      |                        |   | (549,988   | )                                                |   |   | (1,337,439 | ) |   |   | (1,091,592 | ) |   |   | (116,868,832 | ) |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment income                                                                    |   |                          | 82         |   |                        |   | 417        |                                             |   |   | 229 |   |   |   | 668 |   |   |   | 2,303,442 |   |
| Other income                                                                         |   |                          | -          |   |                        |   | -          |                                             |   |   | - |   |   |   | - |   |   |   | 99,939 |   |
| Interest:                                                                            |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Related parties, net                                                                 |   |                          | (18,369    | )      |                        |   | (10,725    | )                                                |   |   | (36,738 | ) |   |   | (17,451 | ) |   |   | (1,235,359 | ) |
| Debt discount and fair value adjustment –  derivative security       |   |                          | 12,029,172 |   |                        |   | 3,643,697  |                                             |   |   | 3,815,254 |   |   |   |  (5,795,386 | ) |   |   | (8,640,013 | ) |
| Others                                                                               |   |                          | (935       | )      |                        |   | (42,332    | )                                                |   |   | (1,895 | ) |   |   | (44,095 | ) |   |   | (3,010,888 | ) |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before state tax benefit                                               |   |                          | 11,301,607 |   |                        |   | 3,041,069  |                                             |   |   | 2,439,411 |   |   |   | (6,947,856 | ) |   |   | (127,351,711 | ) |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| State tax benefit                                                                    |   |                          | -          |   |                        |   | -          |                                             |   |   | - |   |   |   | - |   |   |   | 6,671,905 |   |
|                                                                                 |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                    |   | $                             | 11,301,607 |   |                        | $      | 3,041,069  |                                             |   | $ | 2,439,411 |   |   | $ | (6,947,856 | ) |   | $ | (120,679,806 | ) |
| Income (loss) per common share - basic                                               |   | $                             | 0.24       |   |                        | $      | 0.06       |                                             |   | $ | 0.05 |   |   | $ | (0.15 | ) |   |   |   |   |
| Loss per common share - diluted                                                      |   | $                             | ( 0.01     | )      |                        | $      | ( 0.01     | )                                                |   | $ | (0.02 | ) |   | $ | (0.15 | ) |   |   |   |   |
| Weighted average number of shares     outstanding - basic   |   |                          | 47,323,880 |   |                        |   | 47,313,880 |                                             |   |   | 47,320,728 |   |   |   | 47,313,880 |   |   |   |   |   |
| Weighted average number of shares     outstanding - diluted |   |                          | 82,185,891 |   |                        |   | 90,647,208 |                                             |   |   | 82,472,401 |   |   |   | 47,313,880 |   |   |   |   |   |
|  See accompanying notes to condensed financial statements.                      |   |                          |       |   |                        |   |       |                                             |   |   |   |   |   |

----

 STOCKHOLDERS' 

|                                                            |   | Common Stock                 |          |   |                     |   |    |                            |   |   |                               |   |   |                                     |        |
|-----------------------------------------------------------------|--------|------------------------------|---------------|--------|--------------------------|--------|---------|---------------------------------|--------|--------|------------------------------------|--------|--------|------------------------------------------|-------------|
|                                                            |   |   Number of Shares |          |   |    Amount |   |    |  Common Stock To Be Issued |   |   |  Capital InExcess of ParValue |   |   | DeficitAccumulatedDuringDevelopmentStage |        |   | Total Stockholders’Deficiency |   |
|                                                            |   |                         |          |   |                     |   |    |                            |   |   |                               |   |   |                                     |        |   |   |   |
| Balance at July 31, 2010                                        |   |                         | 47,313,880    |   |                     | $      | 47,314  |                            |   | $      | —                            |   |   | $                                        | 101,456,909 |   |   | $ | (123,119,217 | ) |   | $ | (21,614,994 | ) |
|                                                            |   |                         |          |   |                     |   |    |                            |   |   |                               |   |   |                                     |        |   |   |   |   |   |   |   |   |   |
| Common stock to be issued                                       |   |                         |          |   |                     |   |    |                            |   |   | 500,000                            |   |   |                                     |        |   |   |   |   |   |   |   | 500,000 |   |
| Stock option exercise                                           |   |                         | 10,000        |   |                     |   | 10      |                            |   |   | —                            |   |   |                                     | 2,590       |   |   |   | — |   |   |   | 2,600 |   |
| Stock-based compensation                                        |   |                         | —       |   |                     |   | — |                            |   |   | —                            |   |   |                                     | 156,955     |   |   |   | — |   |   |   | 156,955 |   |
| Net income                                                      |   |                         | —  |   |                     |   | — |                            |   |   | —                            |   |   |                                     | —     |   |   |   | 2,439,411 |   |   |   | 2,439,411 |   |
|  Balance at January 31, 2011                               |   |                         | 47,323,880    |   |                     | $      | 47,324  |                            |   | $      | 500,000                            |   |   | $                                        | 101,616,454 |   |   | $ | (120,679,806 | ) |   | $ | (18,516,028 | ) |
|                                                            |   |                         |          |   |                     |   |    |                            |   |   |                               |   |   |                                     |        |   |   |   |   |   |   |   |   |   |
|  See accompanying notes to condensed financial statements. |   |

----

EM

|                                                                                                |   | Six Months EndedJanuary 31, |        |   | August 24, 1981(Date of Inception)to |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|--------------------------------------|--------|
|                                                                                                |   | 2011                        |        |   | 2010                                 |   |   | January 31, 2011 |   |
| Cash flows used in operating activities:                                                            |   |                        |        |   |                                 |   |   |   |   |
|   Net income (loss)                                                                       |   | $                           | 2,439,411   |   |                                 | $      | (6,947,856 | ) |   | $ | (120,679,806 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities:                |   |                        |        |   |                                 |   |   |   |   |   |   |   |
|        Gain on sale of marketable equity securities              |   |                        | -           |   |                                 |   | - |   |   |   | (25,963 | ) |
|        Depreciation and amortization                             |   |                        | 16,538      |   |                                 |   | 70,372 |   |   |   | 1,840,304 |   |
|        Loss on disposal of property and equipment                |   |                        | -           |   |                                 |   | - |   |   |   | 18,926 |   |
|        Loss on lease termination                                 |   |                        | -           |   |                                 |   | - |   |   |   | 30,964 |   |
| Share-based compensation                                                                            |   |                        | 156,955     |   |                                 |   | 163,347 |   |   |   | 14,354,309 |   |
|        Decrease in deferred rent                                 |   |                        | (3,097      | )      |                                 |   | (268,652 | ) |   |   | (88,675 | ) |
|        Amortization of debt discount                             |   |                        | 540,183     |   |                                 |   | 305,708 |   |   |   | 1,971,388 |   |
|        Fair value of derivative liability                        |   |                        | ( 4,441,161 | )      |                                 |   | 5,489,678 |   |   |   | 7,177,120 |   |
|        Amortization of deferred financing cost                   |   |                        | 41,434      |   |                                 |   | - |   |   |   | 86,139 |   |
|        Amortization of deferred compensation                     |   |                        | -           |   |                                 |   | - |   |   |   | 11,442,000 |   |
| Changes in assets and liabilities:                                                                  |   |                        |        |   |                                 |   |   |   |   |   |   |   |
|        Decrease (increase)  in prepaid expenses        |   |                        | 381,576     |   |                                 |   | (83,528 | ) |   |   | (155,740 | ) |
|        Decrease in loan receivable, related party                |   |                        | -           |   |                                 |   | - |   |   |   | 96,051 |   |
|        Decrease (increase) in restricted cash                    |   |                        | 953,880     |   |                                 |   | (1,414,939 | ) |   |   | (274,356 | ) |
|        Increase in loans and interest payable, related party     |   |                        | 24,308      |   |                                 |   | 17,451 |   |   |   | 819,922 |   |
|        Increase in accounts payable                              |   |                        | 123,864     |   |                                 |   | 112,066 |   |   |   | 1,582,614 |   |
|        Increase in accrued payroll and expenses, related parties |   |                        | -           |   |                                 |   | - |   |   |   | 2,348,145 |   |
|        (Decrease) increase in accrued retirement benefits        |   |                        | (84,250     | )      |                                 |   | (104,442 | ) |   |   | 244,750 |   |
|        Increase (decrease) in accrued expenses                   |   |                        | (257,608    | )      |                                 |   | 86,454 |   |   |   | 1,444,295 |   |
|        Increase in deferred revenue                              |   |                        | -           |   |                                 |   | - |   |   |   | 5,200,000 |   |
|        Net cash used in operating activities                     |   |                        | (107,967    | )      |                                 |   | (2,574,341 | ) |   |   | (72,567,613 | ) |
| Cash flows used in investing activities:                                                            |   |                        |        |   |                                 |   |   |   |   |   |   |   |
|        Purchase of marketable equity securities                  |   |                        | -           |   |                                 |   | - |   |   |   | (290,420 | ) |
|        Purchase of short-term investments                        |   |                        | -           |   |                                 |   | - |   |   |   | (1,993,644 | ) |
|        Proceeds from sale of marketable equity securities        |   |                        | -           |   |                                 |   | - |   |   |   | 316,383 |   |
|        Proceeds from sale of short-term investments              |   |                        | -           |   |                                 |   | - |   |   |   | 1,993,644 |   |
|        Capital expenditures                                      |   |                        | -           |   |                                 |   | (2,250 | ) |   |   | (1,607,814 | ) |
|        Patent costs                                              |   |                        | -           |   |                                 |   | - |   |   |   | (97,841 | ) |
| Net cash used in investing activities                                                               |   |                        | -           |   |                                 |   | (2,250 | ) |   |   | (1,679,692 | ) |
|                                                                                                |   |                        |        |   |                                 |   |   |   |   |   |   |   |

----

|                                                                                               |   | Six Months EndedJanuary 31, |    |   | August 24, 1981(Date of Inception) to |   |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------------------|--------|
|                                                                                               |   | 2011                        |    |   | 2010                                  |   |   | January 31, 2011 |   |
| Cash flows from financing activities:                                                              |   |                        |    |   |                                  |   |   |   |   |
| Proceeds from short-term borrowings                                                                |   | $                           | -       |   |                                  | $      | - |   |   | $ | 874,500 |   |
| Payment of short-term borrowings                                                                   |   |                        | -       |   |                                  |   | - |   |   |   | (653,500 | ) |
| Increase in loans payable - related party, net                                                     |   |                        | -       |   |                                  |   | - |   |   |   | 2,628,868 |   |
| Proceeds from bank debt and other long-term debt, net ofcosts                                      |   |                        | -       |   |                                  |   | - |   |   |   | 3,667,460 |   |
| Reduction of bank debt and long-term debt                                                          |   |                        | -       |   |                                  |   | - |   |   |   | (2,966,568 | ) |
| Increase in deferred financing cost                                                                |   |                        | (3,027  | )      |                                  |   | (117,201 | ) |   |   | (229,795 | ) |
| Payment of capital lease obligation                                                                |   |                        | (2,530  | )      |                                  |   | (2,032 | ) |   |   | (13,667 | ) |
| Proceeds from issuance of common stock, net                                                        |   |                        | -       |   |                                  |   | - |   |   |   | 53,102,893 |   |
| Proceeds from common stock to be issued                                                            |   |                        | 500,000 |   |                                  |   | - |   |   |   | 500,000 |   |
| Proceeds from exercise of stock options and warrants, net                                          |   |                        | 2,600   |   |                                  |   | - |   |   |   | 14,083,450 |   |
| Proceeds from issuance of convertible debentures, related party                                    |   |                        | -       |   |                                  |   | 3,250,000 |   |   |   | 3,547,000 |   |
| Proceeds from issuance of convertible debentures, unrelated party                             |   |                        | -       |   |                                  |   | - |   |   |   | 416,993 |   |
| Net cash provided by financing activities                                                          |   |                        | 497,043 |   |                                  |   | 3,130,767 |   |   |   | 74,957,634 |   |
| Net increase in cash and cash equivalents                                                          |   |                        | 389,076 |   |                                  |   | 554,176 |   |   |   | 710,329 |   |
| Cash and cash equivalents at beginning of period                                                   |   |                        | 321,253 |   |                                  |   | 129,194 |   |   |   | - |   |
| Cash and cash equivalents at end of period                                                         |   | $                           | 710,329 |   |                                  | $      | 683,370 |   |   | $ | 710,329 |   |
| Supplemental disclosure of cash flow information – interest paid                             |   | $                           | 1,895   |   |                                  | $      | 3,374 |   |   | $ | 1,731,764 |   |
| Noncash financing activities:                                                                      |   |                        |    |   |                                  |   |   |   |   |   |   |   |
| Issuance of convertible subordinated debenture for loan payable to officer                         |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 2,725,000 |   |
| Issuance of common stock upon the conversion of convertible subordinated debentures, related party |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 3,242,000 |   |
| Conversion of short-term borrowings to common stock                                                |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 226,000 |   |
| Conversion of accrued interest, payroll and expenses by related parties to stock options           |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 3,194,969 |   |
| Repurchase of stock options from related party                                                     |   | $                           | -       |   |                                  | $      |  - |   |   | $ | (198,417 | ) |
| Conversion of accrued interest to stock options                                                    |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 142,441 |   |
| Conversion of accounts payable to common stock                                                     |   | $                           | -       |   |                                  | $      |  - |   |   | $ | 506,725 |   |

|   | See accompanying notes to condensed financial statements. |
|--------|-----------------------------------------------------------|

----

|                                                                                                                                                           |   | Six Months EndedJanuary 31, |   |   | August 24, 1981(Date of Inception) to |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------------------|--------|
|                                                                                                                                                           |   | 2011                        |   |   | 2010                                  |   |   | January 31, 2011 |   |
|                                                                                                                                                           |   |                        |   |   |                                  |   |   |   |   |   |   |   |
| Conversion of notes payable, bank and accrued interest to long-term debt                                                                                       |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 1,699,072 |   |
| Conversion of loans and interest payable, related party and accrued payroll and expenses, related parties to long-termaccrued payroll and other, related party |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 1,863,514 |   |
| Issuance of common stock upon the conversion of convertible subordinated debentures, other                                                                     |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 1,584,364 |   |
| Issuance of common stock for services rendered                                                                                                                 |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 2,460 |   |
| Lease incentive allowance                                                                                                                                      |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 67,000 |   |
| Derivative liability – warrant reclassification                                                                                                          |   | $                           | -      |   |                                  | $      | 747,235 |   |   | $ | 611,085 |   |
| Issuance of warrants with notes payable                                                                                                                        |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 594,219 |   |
| Acquisition of equipment through capital lease obligation                                                                                                      |   | $                           | -      |   |                                  | $      |  - |   |   | $ | 23,778 |   |
|  See accompanying notes to condensed financial statements.                                                                                                |   |

----

TES 

----

----

| Basic income (loss) per common share:                         |   | Three Months EndedJanuary 31, |       |   | Six Months EndedJanuary 31, |   |
|---------------------------------------------------------------|--------|-------------------------------|------------|--------|-----------------------------|--------|
|                                                          |   | 2011                          |       |   | 2010                        |   |   | 2011 |   |   | 2010 |   |
| Numerator:                                                    |   |                          |       |   |                        |   |   |   |   |   |   |   |
|      Net income (loss)               |   | $                             | 11,301,607 |   |                        | $      | 3,041,069 |   |   | $ | 2,439,411 |   |   | $ | (6,947,856 | ) |
| Denominator:                                                  |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic weighted average number of common shares outstanding    |   |                          | 47,323,880 |   |                        |   | 47,313,880 |   |   |   | 47,320,728 |   |   |   | 47,313,880 |   |
| Basic income (loss) per common share                          |   | $                             | 0.24       |   |                        | $      | 0.06 |   |   | $ | (0.05 | ) |   | $ | (0.15 | ) |
|                                                          |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Potentially dilutive securities:                              |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
|         Stock options |   |                          |       |   |                        |   |   |   |   |   | 3,424,867 |   |   |   | 3,624,267 |   |
|         Warrants      |   |                          |       |   |                        |   |   |   |   |   | 49,784,000 |   |   |   | 51,183,890 |   |
| Convertible debt and accrued interest                         |   |                          |       |   |                        |   |   | 23,043,833 |   |   |   | 21,666,664 |   |

----

| Diluted loss per common share:                                                                        |   | Three Months EndedJanuary 31, |        |   | Six Months EndedJanuary 31, |   |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|-----------------------------|--------|
|                                                                                                  |   | 2011                          |        |   | 2010                        |   |   | 2011 |   |
| Numerator:                                                                                            |   |                          |        |   |                        |   |   |   |   |
| Net income                                                                                            |   | $                             | 11,301,607  |   |                        | $      | 3,041,069 |   |   | $ | 2,439,411 |   |
|     Add:  Interest expense on convertible notes                         |   |                          | 61,231      |   |                        |   | 51,444 |   |   |   | 122,462 |   |
| Deduct:  Debt discount and fair value change on derivative security                         |   |                          | (12,072,034 | )      |                        |   | (3,643,697 | ) |   |   | (3,900,978 | ) |
| Adjusted net loss                                                                                     |   | $                             | (709,196    | )      |                        | $      | (551,184 | ) |   |   | (1,339,105 | ) |
| Denominator:                                                                                          |   |                          |        |   |                        |   |   |   |   |   |   |   |
| Basic weighted average number of common shares outstanding                                            |   |                          | 47,323,880  |   |                        |   | 47,313,880 |   |   |   | 47,320,728 |   |
| Add:  Potentially dilutive securities                                                       |   |                          |        |   |                        |   |   |   |   |   |   |   |
|               Warrants          |   |                          | 11,818,180  |   |                        |   | 21,666,664 |   |   |   | 12,107,842 |   |
|               Convertible notes |   |                          | 23,043,831  |   |                        |   | 21,666,664 |   |   |   | 23,043,831 |   |
| Diluted weighted average number of common shares                                                      |   |                          | 82,185,891  |   |                        |   | 90,647,208 |   |   |   | 82,472,401 |   |
| Diluted loss per common share                                                                         |   | $                             | (0.01       | )      |                        | $      | (0.01 | ) |   | $ | (0.02 | ) |

|                                    |   | Three Months EndedJanuary 31, |   |   | Six Months EndedJanuary 31, |   |
|-----------------------------------------|--------|-------------------------------|--------|--------|-----------------------------|--------|
|                                    |   | 2011                          |   |   | 2010                        |   |   | 2011 |   |   | 2010 |   |
| Research and development                |   | $                             | -      |   |                        | $      | 18,516 |   |   | $ | - |   |   | $ | 16,808 |   |
| General and administrative              |   |                          | 63,960 |   |                        |   | 69,946 |   |   |   | 156,955 |   |   |   | 146,539 |   |
| Total share-based compensation expense  |   | $                             | 63,960 |   |                        | $      | 88,462 |   |   | $ | 156,955 |   |   | $ | 163,347 |   |
| Basic and diluted loss per common share |   | $                             | 0.00   |   |                        | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |

----

|                                   |   | Three Months EndedJanuary 31, |   |   | Six Months EndedJanuary 31, |   |
|----------------------------------------|--------|-------------------------------|--------|--------|-----------------------------|--------|
|                                   |   | 2011                          |   |   | 2010                        |   |   | 2011 |   |   | 2010 |   |
|                                   |   |                          |   |   |                        |   |   |   |   |   |   |   |
| Expected dividend yield                |   |                          | -      |   |                        |   | - |   |   |   | 0 | % |   |   | 0 | % |
| Risk-free interest rate                |   |                          | -      |   |                        |   | - |   |   |   | 1.34 | % |   |   | 2.64 | % |
| Expected stock price volatility        |   |                          | -      |   |                        |   | - |   |   |   | 121.32 | % |   |   | 111.39 | % |
| Expected term (years)                  |   |                          | -      |   |                        |   | - |   |   |   | 5.0 |   |   |   | 5.89 |   |
| Weighted average grant date fair value |   |                          | -      |   |                        |   | - |   |   | $ | 0.34 |   |   | $ | 0.28 |   |

|                                    |   | Stock OptionsOutstanding |          |   | Weighted Average Exercise Price Per Share |   |   | Weighted Average Remaining Contractual Term (Years) |   |   |  AggregateIntrinsic Value |   |
|-----------------------------------------|--------|--------------------------|---------------|--------|------------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|--------------------------------|--------|
|  Balance August 1, 2010            |   |                     | 3,535,467     |   |                                           | $      | 1.45   |                                                |   |   | 6.03                           |   |   | $ | 25,000 |   |
|      Granted   |   |                     | 90,000        |   |                                           |   | 0.34   |                                                |   |   | 5.00                           |   |   |   |   |   |
|      Exercised |   |                     | (10,000       | )      |                                           |   | 0.26   |                                                |   |   |                           |   |   | $ | 1,200 |   |
|      Expired   |   |                     | (190,600      | )      |                                           |   | 2.85   |                                                |   |   |                           |   |   |   |   |   |
|      Forfeited |   |                     | —  |   |                                           |   | -      |                                                |   |   |                           |   |   |   |   |   |
| Balance January 31, 2011                |   |                     | 3,424,867     |   |                                           | $      | 1.35   |                                                |   |   | 5.83                           |   |   | $ | 0 |   |
| Exercisable as of January 31, 2011      |   |                     | 2,091,517     |   |                                           | $      | 1.20   |                                                |   |   | 4.70                           |   |   | $ | 0 |   |

----

|                               |   | October 19, 2009 |   |   | January 31, 2011 |   |
|------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                               |   |             |   |   |             |   |
| Volatility                         |   |             | 126    | %      |             |   | 120.07 | % |
| Risk-free interest rate            |   |             | 1.50   | %      |             |   | 0.58 | % |
| Remaining contractual life (years) |   |             | 3.0    |   |             |   | 1.72 |   |

----

|                               |   | Series A Warrants |   |   | Series B Warrants |   |
|------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                               |   | October 19, 2009  |   |   | January 31, 2011  |   |   | October 19, 2009 |   |   | January 31, 2011 |   |
|                               |   |              |   |   |              |   |   |   |   |   |   |   |
| Volatility                         |   |              | 126    | %      |              |   | 120.07 | % |   |   | 113.17 | % |   |   | 128.89 | % |
| Risk-free interest rate            |   |              | 1.50   | %      |              |   | 0.58 | % |   |   | 2.36 | % |   |   | 1.46 | % |
| Remaining contractual life (years) |   |              | 3.0    |   |              |   | 1.72 |   |   |   | 5.0 |   |   |   | 3.72 |   |

----

----

----

Manag

----

----

----

----

----

uantitat

 Procedures

| (a)   | Evaluation of disclosure controls and procedures. |
|-----------------|---------------------------------------------------|

| PART II. | OTHER INFORMATION |
|----------|-------------------|

edi

 Factors

----

ister

efa

Reserved

Other 

hib

| Exhibit No. | Item Title                                                                                                                                                                                                          |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1         | Certificate of Amendment to the Certificate of Incorporation of the Company, dated April 27, 2010 (incorporated by reference as an exhibit to the Company’s Current Report on Form 8-K, filed on April 30, 2010) * |
| 31.1        | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                   |
| 32.1        | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                   |

| * | Previously filed; incorporated herein by reference. |
|---|-----------------------------------------------------|

----

|           |   | TAMIR BIOTECHNOLOGY, INC. |
|----------------|--------|---------------------------|
|           |   |   (Registrant)       |
|           |   |                      |
| March 22, 2011 |   | By:                       | /s/Charles Muniz |
|           |   | Name:                     | Charles Muniz |
|           |   | Title:                    | Chief Executive Officer, President and Chief Financial Officer |
|           |   |                      | (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer) |

----