UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.
20549





FORM
10-Q


(Mark
One)




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


For
the quarterly period ended September 30, 2010




or




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from  to _____________




Commission
File No. 001-31326




SENESCO
TECHNOLOGIES, INC.


(Exact
name of registrant as specified in its charter)




Delaware
              
              84-1368850(State
      or other jurisdiction of incorporation or organization)
              
              (IRS
      Employer Identification No.)





303
George Street, Suite 420


New
Brunswick, New Jersey 08901


(Address
of principal executive offices)


(732)
296-8400


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.




Yes:
x                                                       No:
 ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).




Yes:
 ̈                                                       No:
 ̈




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




Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Smaller reporting companyx
              Non-accelerated
      filer  ̈




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




Yes: o                                                       No:
x




As of
October 31, 2010, 67,713,178 shares of the issuer’s common stock, par value
$0.01 per share, were outstanding.





SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY




TABLE OF
CONTENTS





PagePART
      I.                  FINANCIAL
      INFORMATION.Item
      1.               Financial
      Statements (Unaudited)
                                    
                                    1CONDENSED
      CONSOLIDATED BALANCE SHEETSas
      of September 30, 2010 and June 30, 2010
                                    
                                    2CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONSFor
      the Three Months Ended September 30, 2010 and 2009, and From
      Inception on July 1, 1998 through September 30, 2010
                                    
                                    3CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’EQUITYFor
      the three months ended September 30, 2010
                                    
                                    4CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWSFor
      the Three Months Ended September 30, 2010 and 2009, and From
      Inception on July 1, 1998 through September 30, 2010
                                    
                                    5NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    
                                    6Item
      2.               Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                    
                                    13Overview
                                    
                                    13Liquidity
      and Capital Resources
                                    
                                    24Changes
      to Critical Accounting Policies and Estimates
                                    
                                    25Results
      of Operations
                                    
                                    26Item
      3.               Quantitative
      and Qualitative Disclosures about Market Risk
                                    
                                    31Item
      4T.             Controls
      and Procedures
                                    
                                    31PART
      II.OTHER
      INFORMATION.Item
      1.               Legal
      Proceedings.
                                    
                                    32Item
      1A.            Risk
      Factors.
                                    
                                    32Item
      2.               Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                    
                                    47Item
      3.               Defaults
      Upon Senior Securities
                                    
                                    47Item
      4.               [REMOVED
      AND RESERVED]
                                    
                                    47Item
      5.               Other
      Information.
                                    
                                    47Item
      6.               Exhibits.
                                    
                                    47SIGNATURES
                                    
                                    48


i


PART I.  FINANCIAL
INFORMATION.




Item
      1.
            Financial
      Statements (Unaudited).




Certain
information and footnote disclosures required under United States generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission.  However, Senesco Technologies,
Inc., a Delaware corporation, and its wholly owned subsidiary, Senesco, Inc., a
New Jersey corporation (collectively, “Senesco” or the “Company”), believe that
the disclosures are adequate to assure that the information presented is not
misleading in any material respect.




The
results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal
year.


1





SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
BALANCE SHEETS


(unaudited)





September
      30,
                              
                              
                              June
      30,2010
                              
                              
                              2010ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                              
                              $
                              6,290,995
                              
                              
                              $
                              8,026,296Prepaid
      research supplies and expenses
                              
                              
                              990,696
                              
                              
                              
                              1,304,795Total
      Current Assets
                              
                              
                              7,281,691
                              
                              
                              
                              9,331,091Equipment,
      furniture and fixtures,  net
                              
                              
                              5,879
                              
                              
                              
                              4,554Intangibles,
      net
                              
                              
                              4,662,960
                              
                              
                              
                              4,568,895Deferred
      income tax assets, net
                              
                              
                              -
                              
                              
                              
                              -Security
      deposit
                              
                              
                              7,187
                              
                              
                              
                              7,187TOTAL
      ASSETS
                              
                              $
                              11,957,717
                              
                              
                              $
                              13,911,727LIABILITIES AND STOCKHOLDERS'
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                              
                              $
                              494,365
                              
                              
                              $
                              557,420Accrued
      expenses
                              
                              
                              744,497
                              
                              
                              
                              576,857Line
      of credit
                              
                              
                              2,194,844
                              
                              
                              
                              2,194,844Deferred
      rent
                              
                              
                              6,045
                              
                              
                              
                              -Total
      Current Liabilities
                              
                              
                              3,439,751
                              
                              
                              
                              3,329,121Warrant
      liabilities ($15,587 and $490,438 to related parties,
      respectively)
                              
                              
                              1,207,452
                              
                              
                              
                              2,493,794Grant
      payable
                              
                              
                              99,728
                              
                              
                              
                              99,728Deferred
      rent
                              
                              
                              -
                              
                              
                              
                              8,060TOTAL
      LIABILITIES
                              
                              
                              4,746,931
                              
                              
                              
                              5,930,703STOCKHOLDERS'
      EQUITY:Preferred
      stock, $0.01 par value, authorized 5,000,000 sharesSeries
      A 10,297 shares issued and 4,852 and 8,035 shares outstanding,
      respectively(liquidation
      preference of $5,094,600 and $8,235,875at
      September 30, 2010 and June 30, 2010, respectively)
                              
                              
                              49
                              
                              
                              
                              80Series
      B 1,200 shares issued and outstanding(liquidation
      preference of $1,240,000 and $1,210,000at
      September 30, 2010 and June 30, 2010, respectively)
                              
                              
                              12
                              
                              
                              
                              12Common
      stock, $0.01 par value, authorized 250,000,000 shares,issued
      and outstanding 64,302,322 and 50,092,204, respectively
                              
                              
                              643,022
                              
                              
                              
                              500,922Capital
      in excess of par
                              
                              
                              60,430,744
                              
                              
                              
                              58,321,169Deficit
      accumulated during the development stage
                              
                              
                              (53,863,041
                              )
                              
                              
                              (50,841,159
                              )Total
      Stockholders' Equity
                              
                              
                              7,210,786
                              
                              
                              
                              7,981,024TOTAL
      LIABILITIES AND STOCKHOLDERS'  EQUITY
                              
                              $
                              11,957,717
                              
                              
                              $
                              13,911,727





See Notes
to Condensed Consolidated Financial Statements


2





SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited)





CumulativeThree
      months ended September 30,
                  
                  
                  Amounts
      from2010
                  
                  
                  2009
                  
                  
                  InceptionRevenue
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  1,590,000Operating
      expenses:General
      and administrative
                  
                  
                  668,884
                  
                  
                  
                  494,955
                  
                  
                  
                  26,949,195Research
      and development
                  
                  
                  1,536,507
                  
                  
                  
                  488,759
                  
                  
                  
                  16,485,471Total
      operating expenses
                  
                  
                  2,205,391
                  
                  
                  
                  983,714
                  
                  
                  
                  43,434,666Loss
      from operations
                  
                  
                  (2,205,391
                  )
                  
                  
                  (983,714
                  )
                  
                  
                  (41,844,666
                  )Other
      non-operating income (expense)Fair
      value – warrant liability
                  
                  
                  319,476
                  
                  
                  
                  1,888,133
                  
                  
                  
                  7,567,904Sale
      of state income tax loss – net
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  586,442Other
      noncash (expense) income, net
                  
                  
                  (111,265
                  )
                  
                  
                  -
                  
                  
                  
                  209,994Loss 
      on extinguishment of debt
                  
                  
                  -
                  
                  
                  
                  (86,532
                  )
                  
                  
                  (361,877
                  )Amortization
      of debt discount and financing costs
                  
                  
                  -
                  
                  
                  
                  (807,914
                  )
                  
                  
                  (11,227,870
                  )Interest
      expense – convertible notes
                  
                  
                  -
                  
                  
                  
                  (199,616
                  )
                  
                  
                  (2,027,930
                  )Interest
      (expense) income - net
                  
                  
                  (18,296
                  )
                  
                  
                  347
                  
                  
                  
                  480,882Net
      loss
                  
                  
                  (2,015,476
                  )
                  
                  
                  (189,296
                  )
                  
                  
                  (46,617,121
                  )Preferred
      dividends
                  
                  
                  (1,006,406
                  )
                  
                  
                  -
                  
                  
                  
                  (7,245,920
                  )Loss
      applicable to common shares
                  
                  $
                  (3,021,882
                  )
                  
                  $
                  (189,296
                  )
                  
                  $
                  (53,863,041
                  )Basic
      and diluted net loss per common share
                  
                  $
                  (0.05
                  )
                  
                  $
                  (0.01
                  )Basic
      and diluted weighted-average numberof
      common shares outstanding
                  
                  
                  56,930,150
                  
                  
                  
                  22,046,718





See Notes
to Condensed Consolidated Financial Statements


3


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FOR THE THREE MONTHS
ENDEDSEPTEMBER
30, 2010


(unaudited)




DeficitAccumulatedDuring
      the
                              
                              
                              Stockholders'Capital
      in Excess
                              
                              
                              Development
                              
                              
                              EquityPreferred
      Stock
                              
                              
                              Common
      Stock
                              
                              
                              of
      Par Value
                              
                              
                              Stage
                              
                              
                              (Deficiency)Shares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              AmountBalance
      July 1, 1998 (inception) through June 30, 2010
                              
                              
                              9,235
                              
                              
                              $
                              92
                              
                              
                              
                              50,092,204
                              
                              
                              $
                              500,922
                              
                              
                              $
                              58,321,169
                              
                              
                              $
                              (50,841,159
                              )
                              
                              $
                              7,981,024Preferred
      stock converted into common stockduring
      the three months ended September 30, 2010
                              
                              
                              (3,183
                              )
                              
                              
                              (31
                              )
                              
                              
                              9,946,875
                              
                              
                              
                              99,468
                              
                              
                              
                              (99,437
                              )
                              
                              
                              -
                              
                              
                              
                              -Issuance
      of common stock in lieu of cash payment fordividends
      during the three months ended September 30, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,263,243
                              
                              
                              
                              42,632
                              
                              
                              
                              912,268
                              
                              
                              
                              (954,900
                              )
                              
                              
                              -Fair
      market value of options and warrants vestedduring
      the three months ended September 30, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              329,878
                              
                              
                              
                              -
                              
                              
                              
                              329,878Reclassification
      of warrant liability during the three monthsended
      September 30, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              966,866
                              
                              
                              
                              -
                              
                              
                              
                              966,866Dividends
      accrued for the period from July 1, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (51,506
                              )
                              
                              
                              (51,506
                              )through
      September 30, 2010Net
      loss for the three months ended September 30, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (2,015,476
                              )
                              
                              
                              (2,015,476
                              )Balance
      at September 30, 2010
                              
                              
                              6,052
                              
                              
                              $
                              61
                              
                              
                              
                              64,302,322
                              
                              
                              $
                              643,022
                              
                              
                              $
                              60,430,744
                              
                              
                              $
                              (53,863,041
                              )
                              
                              $
                              7,210,786





See Notes
to Condensed Consolidated Financial Statements


4


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS


(unaudited)





CumulativeThree months ended September
      30,
                                        
                                        
                                        Amounts
      from2010
                                        
                                        
                                        2009
                                        
                                        
                                        InceptionCash
      flows from operating activities:Net
      loss
                                        
                                        $
                                        (2,015,476
                                        )
                                        
                                        $
                                        (189,296
                                        )
                                        
                                        $
                                        (46,617,121
                                        )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Noncash
      capital contribution
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        85,179Noncash
      conversion of accrued expenses into equity
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        131,250Noncash
      income related to change in fair valueof
      warrant liability
                                        
                                        
                                        (319,476
                                        )
                                        
                                        
                                        (1,888,133
                                        )
                                        
                                        
                                        (7,889,163
                                        )Noncash
      charge for change in warrant terms
                                        
                                        
                                        111,265
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        111,265Issuance
      of common stock and warrants for interest
                                        
                                        
                                        -
                                        
                                        
                                        
                                        199,616
                                        
                                        
                                        
                                        2,003,386Issuance
      of common stock for services
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        53,800Stock-based
      compensation expense
                                        
                                        
                                        218,613
                                        
                                        
                                        
                                        34,527
                                        
                                        
                                        
                                        10,808,196Depreciation
      and amortization
                                        
                                        
                                        34,292
                                        
                                        
                                        
                                        27,853
                                        
                                        
                                        
                                        733,300Amortization
      of convertible note discount
                                        
                                        
                                        -
                                        
                                        
                                        
                                        663,637
                                        
                                        
                                        
                                        10,000,000Amortization
      of deferred financing costs
                                        
                                        
                                        -
                                        
                                        
                                        
                                        144,278
                                        
                                        
                                        
                                        1,227,869Loss
      on extinguishment of debt
                                        
                                        
                                        -
                                        
                                        
                                        
                                        86,532
                                        
                                        
                                        
                                        361,877(Increase)
      decrease in operating assets:Prepaid
      expenses and other current assets
                                        
                                        
                                        314,099
                                        
                                        
                                        
                                        44,832
                                        
                                        
                                        
                                        (990,696
                                        )Security
      deposit
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (7,187
                                        )Increase
      (decrease) in operating liabilities:Accounts
      payable
                                        
                                        
                                        (63,055
                                        )
                                        
                                        
                                        (375,592
                                        )
                                        
                                        
                                        494,365Accrued
      expenses
                                        
                                        
                                        116,134
                                        
                                        
                                        
                                        205,271
                                        
                                        
                                        
                                        637,117Other
      liability
                                        
                                        
                                        (2,015
                                        )
                                        
                                        
                                        (1,989
                                        )
                                        
                                        
                                        6,045Net
      cash used in operating activities
                                        
                                        
                                        (1,605,619
                                        )
                                        
                                        
                                        (1,048,464
                                        )
                                        
                                        
                                        (28,850,518
                                        )Cash
      flows from investing activities:Patent
      costs
                                        
                                        
                                        (127,656
                                        )
                                        
                                        
                                        (189,332
                                        )
                                        
                                        
                                        (5,221,934
                                        )Redemption
      of investments, net
                                        
                                        
                                        -
                                        
                                        
                                        
                                        250,000
                                        
                                        
                                        
                                        -Purchase
      of equipment, furniture and fixtures
                                        
                                        
                                        (2,026
                                        )
                                        
                                        
                                        (1,116
                                        )
                                        
                                        
                                        (180,205
                                        )Net
      cash (used in) provided by investing activities
                                        
                                        
                                        (129,682
                                        )
                                        
                                        
                                        59,552
                                        
                                        
                                        
                                        (5,402,139
                                        )Cash
      flows from financing activities:Proceeds
      from grant
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        99,728Proceeds
      from draw-down on line of credit
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2,194,844Proceeds
      from issuance of bridge notes
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        525,000Proceeds
      from issuance of preferred stock and warrants, net
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        10,754,841Redemption
      of convertible notes and warrants
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (2,160,986
                                        )Proceeds
      from issuance of convertible notes
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        9,340,000Deferred
      financing costs
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (651,781
                                        )Proceeds
      from issuance of common stock andwarrants,
      net and exercise of warrants and options
                                        
                                        
                                        -
                                        
                                        
                                        
                                        883,638
                                        
                                        
                                        
                                        20,442,006Net
      cash provided by financing activities
                                        
                                        
                                        -
                                        
                                        
                                        
                                        883,638
                                        
                                        
                                        
                                        40,543,652Net
      (decrease) increase in cash and cash equivalents
                                        
                                        
                                        (1,735,301
                                        )
                                        
                                        
                                        (105,274
                                        )
                                        
                                        
                                        6,290,995Cash
      and cash equivalents at beginning of period
                                        
                                        
                                        8,026,296
                                        
                                        
                                        
                                        380,569
                                        
                                        
                                        
                                        -Cash
      and cash equivalents at end of period
                                        
                                        $
                                        6,290,995
                                        
                                        
                                        $
                                        275,295
                                        
                                        
                                        $
                                        6,290,995Supplemental
      disclosure of non-cash transactions:Conversion
      of convertible note into common stock
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        653,400
                                        
                                        
                                        $
                                        10,000,000Conversion
      of bridge notes into common stock
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        534,316Conversion
      of preferred stock into common stock
                                        
                                        
                                        99,437
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        170,124Allocation
      of preferred stock proceeds to warrantsand
      beneficial conversion feature
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        7,089,047Allocation
      of convertible debt proceeds to warrantsand
      beneficial conversion feature
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        9,340,000Warrants
      issued for financing costs
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        690,984Issuance
      of common stock for interest payments onconvertible
      notes
                                        
                                        
                                        -
                                        
                                        
                                        
                                        199,616
                                        
                                        
                                        
                                        2,003,386Issuance
      of common stock for dividend payments onpreferred
      stock
                                        
                                        
                                        954,900
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,632,900Issuance
      of common stock in settlement of accounts payable
                                        
                                        
                                        -
                                        
                                        
                                        
                                        175,000
                                        
                                        
                                        
                                        175,000Dividends
      accrued on preferred stock
                                        
                                        
                                        51,506
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        282,381Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                                        
                                        
                                        26,671
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        117,619





See Notes
to Condensed Consolidated Financial Statements


5


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)




Note
1 - Basis of Presentation:




The
financial statements included herein have been prepared by Senesco Technologies,
Inc. (the “Company”), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission.  Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with United States generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.  These
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
June 30, 2010.




In the
opinion of the Company’s management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting solely of
those which are of a normal recurring nature, necessary to present fairly its
financial position as of September 30, 2010, the results of its operations for
the three-month periods ended September 30, 2010 and 2009, cash flows for the
three-month periods ended September 30, 2010 and 2009, and the results of its
operations and cash flows for the period from inception on July 1, 1998 through
September 30, 2010.




Interim
results are not necessarily indicative of results for the full fiscal
year.




Note
2 – Liquidity:




As shown
in the accompanying consolidated financial statements, the Company has a history
of losses with a deficit accumulated during the development stage from July 1,
1998 (inception) through September 30, 2010 of
$53,863,041.  Additionally, the Company has generated minimal revenues
by licensing its technology for certain crops to companies willing to share in
its development costs. In addition, the Company’s technology may not be ready
for commercialization for several years. The Company expects to continue to
incur losses for the next several years because it anticipates that its
expenditures on research and development, and administrative activities will
significantly exceed its revenues during that period. The Company cannot predict
when, if ever, it will become profitable.




As of
September 30, 2010, the Company had cash and cash equivalents in the amount of
$6,290,995, which consisted of checking accounts and money market
funds.  The Company estimates that such amount will cover its expenses
for at least the next twelve months from September 30, 2010.




The
Company will need additional capital and plans to raise additional capital
through the placement of debt instruments or equity or both.  However,
the Company may not be able to obtain adequate funds for its operations when
needed or on acceptable terms.  If the Company is unable to raise
additional funds, it will need to do one or more of the
following:


6


·
            delay,
      scale-back or eliminate some or all of its research and product
      development programs;


·
            license
      third parties to develop and commercialize products or technologies that
      it would otherwise seek to develop and commercialize
    itself;


·
            seek strategic alliances or
      business combinations;


·
            attempt
      to sell the Company;


·
            cease
      operations; or


·
            declare
      bankruptcy.




Note
3 – Intangible Assets:




The
Company conducts research and development activities, the cost of which is
expensed as incurred, in order to generate patents that can be licensed to third
parties in exchange for license fees and royalties.  Because the
patents are the basis of the Company’s future revenue, the patent costs are
capitalized.   The capitalized patent costs represent the outside
legal fees incurred by the Company to submit and undertake all necessary efforts
to have such patent applications issued as patents.




The
length of time that it takes for an initial patent application to be approved is
generally between four to six years.  However, due to the unique
nature of each patent application, the actual length of time may
vary.  If a patent application is denied, the associated cost of that
application would be written off.  However, the Company has not had
any patent applications denied as of September 30,
2010.  Additionally, should a patent application become impaired
during the application process, the Company would write down or write off the
associated cost of that patent application.




Issued
patents and agricultural patent applications pending are being amortized over a
period of 17 years, the expected economic life of the patent.  The
Company assesses the impairment in value of intangible assets whenever events or
circumstances indicate that their carrying value may not be
recoverable.  Factors the Company considers important which could
trigger an impairment review include the following:




·
            significant
      negative industry trends;




·
            significant
      underutilization of the assets;




·
            significant
      changes in how the Company uses the assets or its plans for their use;
      and




·
            changes
      in technology and the appearance of competing
  technology.




If the
Company's review determines that the future discounted cash flows related to
these assets will not be sufficient to recover their carrying value, the Company
will reduce the carrying values of these assets down to its estimate of fair
value and continue amortizing them over their remaining useful
lives.  To date, the Company has not recorded any impairment of
intangible assets.





Note
4 - Loss Per Share:




Net loss
per share is computed by dividing net loss available to common shareholders by
the weighted average number of common shares assumed to be outstanding during
the period of computation. Diluted earnings per share is computed similar to
basic earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.


7


For all
periods presented, basic and diluted loss per share are the same, as any
additional common stock equivalents would be anti-dilutive. Potentially dilutive
shares of common stock have been excluded from the calculation of the weighted
average number of dilutive common shares.





For the
three months ended September 30, 2010, there were 81,652,898 additional
potentially dilutive shares of common stock. These additional shares include
18,912,500 shares issuable upon conversion of the Preferred Stock, and
62,740,398 outstanding options and warrants.  For the three months
ended September 30, 2009, there were 42,008,301 additional potentially dilutive
shares of common stock. These additional shares included 15,528,096 shares
issuable upon conversion of 8% convertible notes and 26,480,205 outstanding
options and warrants at September 30, 2009.




Note
5 – Share-Based Transactions:




The terms
and vesting schedules for share-based awards vary by type of grant and the
employment status of the grantee.  Generally, the awards vest based
upon time-based conditions.




The fair
value of each stock option and warrant granted or vesting has been determined
using the Black-Scholes model.  During the three month period ended
September 30, 2010, the Company issued 300,000 warrants to purchase common stock
for services provided.  During the three month period ended September
30, 2009, the Company did not issue any warrants or options.  The
material factors incorporated in the Black-Scholes model in estimating the value
of the options and warrants include the following:





Three
      Months EndedSeptember
      30,2010
                  
                  
                  2009Estimated
      life in years
                  
                  
                  3.25-5.0
                  
                  
                  
                  3.5-5.5Risk-free
      interest rate (1)
                  
                  
                  0.6%–1.3
                  %
                  
                  
                  1.3%
      – 1.8
                  %Volatility
                  
                  
                  104
                  %
                  
                  
                  100
                  %Dividend
      paid
                  
                  None
                  
                  
                  None




(1)           Represents
the interest rate on a U.S. Treasury security with a maturity date corresponding
to that of the option or warrant term.




The
economic values of the options will depend on the future price of the Company's
common stock, par value $0.01 (the “Common Stock”), which cannot be forecast
with reasonable accuracy.




There
were no changes in the stock option plan during the three months period ended
September 30, 2010.





As of
September 30, 2010, the aggregate intrinsic value of stock options outstanding
was $9,608, with a weighted-average remaining term of 6.6 years.  The
aggregate intrinsic value of stock options exercisable at that same date was
$6,008, with a weighted-average remaining term of 5.8 years.  As of
September 30, 2010, the Company has 7,935,712 shares available for future stock
option grants.


8


As of
September 30, 2010, total compensation expense not yet recognized related to
stock option grants amounted to approximately $542,000, which will be recognized
over the next 45 months.




Long-Term
Incentive Program




On December 13, 2007, the Company
adopted a Long-Term Equity Incentive Program for the members of the executive
management team in which key employees will be awarded shares of the Company’s
Common Stock and options to acquire shares of the Company’s Common Stock if the
Company achieves certain target goals relating to its Multiple Myeloma research
project over the three fiscal year period from the date of
adoption.





As of September 30, 2010, the Company
determined that the achievement of the first target goal under the Long-Term
Equity Incentive Program is probable and, therefore, recognized $93,500 of
compensation.  The Company also determined that the second and third
target goals under the Long-Term Equity Incentive Program will not be
met.  As such, the eligible shares and options related thereto will
not vest and the remaining $374,000 of potential compensation expense will not
be recognized.





Note
6 –Loan Payable:




On
February 17, 2010, the Company entered into a credit agreement with JMP
Securities LLC.  The agreement provides the Company with, subject to
certain restrictions, including the existence of suitable collateral, up to a
$3.0 million line of credit upon which the Company may draw at any time (the
“Line of Credit”).  Any draws upon the Line of Credit accrue at a
monthly interest rate of (i) the broker rate in effect at the time of the draw
(which was 2.0% at September 30, 2010), plus (ii) 2.75%.  There are no
other conditions or fees associated with the Line of Credit.  The Line
of Credit is not secured by any assets of the Company, but it is secured by
certain assets of one of the Company’s directors, Harlan W. Waksal, M.D., which
are currently held by JMP Securities.  The balance outstanding as of
September 30, 2010 is $2,194,844.




Total
interest expense for the three month period ended September 30, 2010 amounted to
$26,671.




Note
7 – Income Taxes:




No
provision for income taxes has been made for the three month periods ended
September 30, 2010 and 2009 given the Company’s losses in 2010 and 2009 and
available net operating loss carryforwards.  A benefit has not been
recorded as the realization of the net operating losses is not assured and the
timing in which the Company can utilize its net operating loss carryforwards in
any year or in total may be limited by provisions of the Internal Revenue Code
regarding changes in ownership of corporations.


9


Note
8 - Fair Value Measurements:




The
following tables provide the assets and liabilities carried at fair value
measured on a recurring basis as of September 30, 2010 and June 30,
2010:




Fair
      Value Measurement atCarrying
                                
                                
                                September 30, 2010Value
                                
                                
                                Level 1
                                
                                
                                Level 2
                                
                                
                                Level 3Assets:Cash
      and cash equivalents
                                
                                $
                                6,290,995
                                
                                
                                $
                                6,290,995
                                
                                
                                $
                                -
                                
                                
                                $
                                -Liabilities:Warrant
      Liabilities
                                
                                $
                                1,207,452
                                
                                
                                $
                                -
                                
                                
                                $
                                1,207,452
                                
                                
                                $
                                -Fair
      Value Measurement atCarrying
                                
                                
                                June 30, 2010Value
                                
                                
                                Level 1
                                
                                
                                Level 2
                                
                                
                                Level 3Assets:Cash
      and cash equivalents
                                
                                $
                                8,026,296
                                
                                
                                $
                                8,026,296
                                
                                
                                $
                                -
                                
                                
                                $
                                -Liabilities:Warrant
      Liabilities
                                
                                $
                                2,493,794
                                
                                
                                $
                                -
                                
                                
                                $
                                2,493,794
                                
                                
                                $
                                -





Note
9 – Warrant Liabilities:





The warrant liabilities represent the
fair value of common stock purchase warrants, which have exercise price reset
features and cash settlement features.  At June 30, 2010, there were
an aggregate of 43,949,479 warrants included in the fair value of the warrant
liabilities.  During the three month period ended September 30, 2010,
the holders of an aggregate of 16,348,441 of such warrants amended the terms of
their warrants.  Accordingly, at September 30, 2010, there were an
aggregate of 27,601,038 warrants included in the fair value of the warrant
liabilities.




As of the dates of the amendments to
the warrants, the Black Scholes value in the amount of $966,866 was reclassified
from warrant liabilities to equity with the change in fair value from June 30,
2010 through the dates of the amendments being recorded in the statement of
operations.





Also, the Company recorded a charge of
$111,265 as a result of the amendment to certain of the warrants that had an
exercise price reset feature, whereby the exercise price of $0.50, subject to
future adjustments, was reset to $0.32 and would no longer be subject to future
adjustments.  The charge of $111,265 represents the difference in the
Black Scholes value of the warrants immediately prior to the amendment and the
Black Scholes value of the warrants immediately after the
amendment.


10


On
September 30, 2010, the Company revalued all of the remaining warrant
liabilities, using the Black Scholes model. A gain on the change in fair value
of the warrant liabilities amounting to $319,476, which includes the change in
fair value of the warrants from June 30, 2010 through the dates of amendments,
was recorded in the Condensed Consolidated Statement of Operations for the three
month period ended September 30, 2010.





The fair
value of the warrant liabilities at September 30, 2010 was
$1,207,452.




The
assumptions used to value the warrants were as follows:





September 30,
                      2010
                    
                    
                    June 30, 2010Warrants
      issued on December 20, 2007Estimated
      life in years
                    
                    
                    2.25
                    
                    
                    
                    2.5Risk-free
      interest rate (1)
                    
                    
                    0.53
                    %
                    
                    
                    0.80
                    %Volatility
                    
                    
                    104
                    %
                    
                    
                    106
                    %Dividend
      paid
                    
                    None
                    
                    
                    NoneWarrants
      issued on June 30, 2008Estimated
      life in years
                    
                    
                    2.75
                    
                    
                    
                    3.0Risk-free
      interest rate (1)
                    
                    
                    0.53
                    %
                    
                    
                    1.00
                    %Volatility
                    
                    
                    104
                    %
                    
                    
                    106
                    %Dividend
      paid
                    
                    None
                    
                    
                    NoneWarrants
      issued on April 1, 2010Estimated
      life in years
                    
                    
                    4.5
                    
                    
                    
                    4.75Risk-free
      interest rate (1)
                    
                    
                    1.27
                    %
                    
                    
                    1.79
                    %Volatility
                    
                    
                    104
                    %
                    
                    
                    106
                    %Dividend
      paid
                    
                    None
                    
                    
                    NoneWarrants
      issued on June 2, 2010Estimated
      life in years
                    
                    
                    -
                    
                    
                    
                    4.9Risk-free
      interest rate (1)
                    
                    
                    -
                    
                    
                    
                    1.79
                    %Volatility
                    
                    
                    -
                    
                    
                    
                    106
                    %Dividend
      paid
                    
                    
                    -
                    
                    
                    None





(1)
            Represents
      the interest rate on a U.S. Treasury security with a maturity date
      corresponding to that of the warrant
term.





Note
10 –Preferred Stock





On April 1, 2010 and June 2, 2010, the
Company issued 10,297 and 1,200 shares of 10% convertible preferred stock,
respectively.  Each share of Preferred Stock has a stated value of
$1,000 (the “Stated Value”) and is convertible into 3,125 shares of common stock
(a conversion price of $0.32). Each holder of shares of Preferred Stock is
entitled to receive semi-annually dividends at the rate of 10% per annum of the
Stated Value for each share of Preferred Stock held by such holder. Except in
limited circumstances, the Company can elect to pay the dividends in cash or
shares of Common Stock.  If the dividends are paid in shares of Common
Stock, such shares will be priced at the lower of 90% of the average VWAP for
the 20 days immediately preceding the payment date or $0.224.  The
dividends are subject to a 30% make whole provision.


11


During the three months ended September
30, 2010, 3,183 shares of convertible preferred stock were converted into
9,946,875 of common stock.  In connection with the conversions of
preferred stock into common stock, the Company issued an additional 4,263,243
shares of common stock for payment of dividends in the amount of $954,900 under
the 30% make whole provision, as defined.  Dividends accrued for the
three months ended September 30, 2010 amounted to $51,506.  Total
dividends payable on the outstanding 6,052 shares of convertible preferred stock
at September 30, 2010 amounted to $282,381.





Note
11 – Subsequent Event:





On
October 29, 2010, the Company was approved for a grant in the amount of $244,479
in connection with under the Qualified Therapeutic Discovery Project, which is
section 48D of the Internal Revenue Code.  The funds were granted in
connection with the Company’s program for the use of its lead therapeutic
candidate, SNS01-T, in Multiple Myeloma.


12


Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.




The
following discussion and analysis should be read in conjunction with our
condensed consolidated financial statements and the related notes thereto
included in this Quarterly Report on Form 10-Q.  The discussion and
analysis may contain forward-looking statements that are based upon current
expectations and entail various risks and uncertainties.  Our actual
results and the timing of events could differ materially from those anticipated
in the forward-looking statements as a result of various factors, including
those set forth under “Risk Factors” and elsewhere in this report.




Overview




Our
Business




The
primary business of Senesco Technologies, Inc., a Delaware corporation
incorporated in 1999, and its wholly-owned subsidiary, Senesco, Inc., a New
Jersey corporation incorporated in 1998, collectively referred to as “Senesco,”
“we,” “us” or “our,” is to utilize our patented and patent-pending genes,
primarily eucaryotic translation initiation Factor 5A, or Factor 5A, and
deoxyhypusine synthase, or DHS, and related technologies for human health
applications to develop novel approaches to treat cancer and inflammatory
diseases.




For
agricultural applications, we are developing and licensing applications of the
Factor 5A, DHS and Lipase platforms to enhance the quality, productivity and
stress resistance of fruits, flowers, vegetables, agronomic and biofuel
feedstock crops through the control of cell death, referred to herein as
senescence, and growth in plants.




Human
Health Applications




We
believe that our gene technology could have broad applicability in the human
health field, by either inducing or inhibiting programmed cell death, also known
as apoptosis, which is the natural process the human body goes through in order
to eliminate redundant or defective cells.  Inducing apoptosis is
useful in treating cancer where the cancerous cells have failed to undergo
apoptosis on their own due to a mutation or damage to their apoptotic
pathways.  Conversely, inhibiting apoptosis may be useful in
preventing or treating a wide range of inflammatory and ischemic diseases
attributable to premature apoptosis.




We are
pursuing preclinical in-vivo and in-vitro research to
determine the ability of Factor 5A modulation to regulate key execution genes,
pro-inflammatory cytokines, receptors, and transcription factors, which are
involved in multiple apoptotic pathways and mechanisms associated with human
diseases.


13


To date,
certain preclinical results related to human health include:




·
            Performing
      efficacy, toxicological and dose-finding studies in vitro in non-human
      and human cells and in-vivo in mice and
      dogs for our potential multiple myeloma drug candidate,
      SNS01-T.  SNS01-T is a potential treatment for cancer that
      consists of a nano-encapsulated combination of an siRNA against the Factor
      5A message and a DNA-plasmid for a closely related form of Factor
      5A.  Our efficacy studies in severe combined immune-deficient,
      or SCID, mice with subcutaneous human multiple myeloma tumors tested
      SNS01-T dose ranging from 0.15 mg/kg to 1.5 mg/kg.  In these
      studies, mice treated with a dose of either 0.75 mg/kg or 1.5 mg/kg both
      showed, compared to relevant controls, a 91% reduction in tumor volume and
      a decrease in tumor weight of 87% and 95%, respectively.  For
      mice that received smaller doses of either 0.38 mg/kg or 0.15 mg/kg, there
      was also a reduction in tumor volume (73% and 61%, respectively) and
      weight (74% and 36%, respectively).  All SNS01-T treated mice
      survived.  This therapeutic dose range study provided the basis
      for an 8-day maximum tolerated dose study in which normal mice received
      two intravenous doses of increasing amounts of SNS01-T (from 2.2
      mg/kg).  Body weight, organ weight and serum levels of liver
      enzymes were used as clinical indices to assess toxicity.  A
      dose between 2.2 mg/kg and 2.9 mg/kg was well tolerated with respect to
      these clinical indices, and the survival rate at 2.9 mg/kg was
      80%.  Those mice receiving above 2.9 mg/kg of SNS01-T showed
      evidence of morbidity and up to 80% mortality.  The 2.9 mg/kg
      threshold, twice the upper end of the proposed therapeutic dose range, was
      therefore determined to be the maximum tolerated dose in
    mice.




·
            demonstrating
      significant tumor regression and diminished rate of tumor growth of
      multiple myeloma tumors in SCID mice treated with Factor 5A technology
      encapsulated in nanoparticles;




·
            increasing
      median survival by approximately 250% in a tumor model of mice injected
      with melanoma cancer cells;




·
            inducing
      apoptosis in both human cancer cell lines derived from tumors and in lung
      tumors in mice;




·
            inducing
      apoptosis of cancer cells in a human multiple myeloma cell line in the
      presence of IL-6;




·
            observing
      a reduction in VEGF  levels in mouse lung tumors as a result of
      treatment with our genes;




·
            decreasing
      ICAM and activation of NFkB in cancer cells employing siRNA against Factor
      5A;




·
            increasing
      the survival rate in H1N1 mouse influenza survival studies from 14% in
      untreated mice to 52% in mice treated with our siRNA against Factor
      5A.  Additionally, the treated mice reversed the weight loss
      typically seen in infected mice and had other reduced indicators of
      disease severity as measured by blood glucose and liver
      enzymes;




·
            increasing
      the survival, while maintaining functionality, of mouse pancreatic islet
      cells isolated for transplantation, using intraperitaneal administration
      of our technology.  Initial animal studies have shown that our
      technology administered prior to harvesting beta islet cells from a mouse,
      has a significant impact not only on the survival of the beta islet cells,
      but also on the retention of the cells’ functionality when compared to the
      untreated beta islet cells.  Additional studies have shown that
      the treated beta islet cells survive a pro-inflammatory cytokine
      challenge, while maintaining their functionality with respect to insulin
      production.  These further studies also revealed Factor-5A’s
      involvement in the modulation of inducible nitric oxide synthase, or iNOS,
      an important indicator of inflammation;
and


14


·
            increasing
      the survival rate of mice in a lethal challenge sepsis
      model.  Additionally, a broad spectrum of systemic
      pro-inflammatory cytokines were down-regulated, while not effecting the
      anti-inflammatory cytokine IL-10.





Accelerating
Apoptosis




The
results from our pre-clinical studies indicate that the up-regulation of Factor
5A induces cell death in cancer cells through both the p53 (intrinsic) and cell
death receptor (extrinsic) apoptotic pathways. Tumors arise when abnormal cells
fail to undergo apoptosis due to an inability to activate their apoptotic
pathways. Similar to our previous findings in plants where the Factor 5A gene
appears to facilitate expression of the entire suite of genes required for
programmed cell death, the Factor 5A gene appears to regulate expression of a
suite of genes required for programmed cell death in human and non-human
mammalian cells. Because the Factor 5A gene appears to function at the
initiation point of the apoptotic pathways, both intrinsic and extrinsic, we
believe that our gene regulatory technology has potential application as a means
of combating a broad range of cancers.  Based on the results obtained
in our in-vitro
studies, we have found that up-regulating Factor 5A results in: (i) the
up-regulation of p53; (ii) increased inflammatory cytokine production; (iii)
increased cell death receptor formation; and (iv) increased caspase
activity.  These features, coupled with a simultaneous down-regulation
of Bcl-2, result in apoptosis of cancer cells.  In addition, our in-vitro studies have shown
that the up-regulation of Factor 5A also down-regulates VEGF, a growth
factor which allows tumors to develop additional vascularization needed for
sustained tumor growth beyond a small mass of cells.




Inhibiting
Apoptosis




Our
preclinical studies indicate that down-regulation of the Factor 5A gene may have
potential application as a means of controlling the effects of a broad range of
diseases that are attributable to premature cell death, ischemia, or
inflammation. Such inflammatory diseases include glaucoma, heart disease, and
other certain inflammatory diseases such as Crohn’s disease, sepsis and diabetic
retinopathy.  We have performed preclinical research on certain
inflammatory diseases. Using small inhibitory RNA’s, or siRNA’s, against Factor
5A mRNA to inhibit its expression, our studies have indicated a reduction in
pro-inflammatory cytokine formation and the formation of receptors for LPS,
interferon-gamma and TNF-alpha.  Our studies have also indicated that
by inhibiting Factor 5A, iNOS, MAPK, NFkB, JAK1 and ICAM are downregulated,
which decreases the inflammatory cytokines formed through these pathways.
Additionally, a mouse study has indicated that our siRNA is comparable in
effectiveness to a steroid and to an anti-TNF drug in its ability to reduce
cytokine response to LPS.  Other mouse studies have also indicated
that the siRNA against Factor 5A (i) protects thymocyte cells from apoptosis and
decreases formation of MPO, TNF-a, MIP-1alpha, and IL-1 in the lungs of mice
challenged with LPS and (ii) increases the survival rate when sepsis was induced
by an injection of LPS and (iii) reduces blood serum levels of inflammatory
proteins, such as IL-1, IL-2, IL-6, IL-12, TNF-a, IFNg and MIP-1alpha, while not
effecting IL-10, an anti-inflammatory cytokine.  Other experiments
utilizing siRNA to Factor 5A include inhibition of apoptosis during the
processing of mouse pancreatic beta islet cells for transplantation, and the
inhibition of early inflammatory changes associated with type-1 diabetes in an
in-vivo rat
model.


15




Proteins
involved in cell death include p53, interleukins, TNF-a and other cytokines and
caspases.  Expression of these cell death proteins is required for the
execution of apoptosis.  Based on our studies, we believe that
down-regulating Factor 5A by treatment with siRNA inhibits the expression of
p53, a major cell death transcription factor that in turn controls the formation
of a suite of other cell death proteins.




Human
Health Target Markets




We
believe that our gene regulatory technology may have broad applicability in the
human health field, by either inducing or inhibiting
apoptosis.  Inducing apoptosis may be useful in treating cancers that
have mutated and now have the ability to evade the body’s immune surveillance
system and avoid undergoing apoptosis.  Inhibiting apoptosis may be
useful in preventing or treating a wide range of inflammatory and ischemic
diseases attributable, at least in part, to premature apoptosis, including
diabetes, diabetic retinopathy and lung inflammation.




We are
advancing our research in multiple myeloma with the goal of initiating a Phase
1/2 clinical trial, and may select additional human health indications for
intervention with Factor 5A technology that may result in clinical trials. We
believe that the success of our future operations will likely depend on our
ability to transform our research and development activities into commercially
useful applications of our technology.




Human
Health Research Program




Our human
health research program, which has consisted of pre-clinical in-vitro and in-vivo experiments designed
to assess the role and method of action of the Factor 5A genes and proteins in
human diseases, is being performed by approximately eleven (11) third party
researchers, at our direction, at the University of Waterloo, Mayo Clinic, our
contract research organization, Cato Research and other
consultants.  Additionally, we currently outsource certain preclinical
research and development activities, such as our pivotal toxicity studies, to
other third party research organizations.  We plan to outsource
certain clinical development activities to other third party research
organizations.




Our
research and development expenses incurred on human health applications were
approximately 90% of our total research and development expenses for the three
months ended September 30, 2010.  Our research and development
expenses incurred on human health applications were approximately 75% of our
total research and development expenses for the three months ended September 30,
2009.  Since inception, the proportion of our research and development
expenses on human health applications has increased, as compared to our research
and development expenses on agricultural applications.  This change is
primarily due to the fact that our research focus on human health has increased
and some of our research costs for agricultural applications have shifted to our
license partners.


16


Our
planned future research and development initiatives for human health
include:




·
            Multiple
      Myeloma.  Our objective is to advance our technology for the
      potential treatment of multiple myeloma in order to initiate a Phase 1/2
      clinical trial.  In connection with the potential clinical
      trial, we have engaged a clinical research organization, or CRO, to assist
      us through the process.  We have also determined the delivery
      system for our technology, contracted for the supply of pharmaceutical
      grade materials to be used in toxicology and human studies, performed
      certain toxicology studies, and have contracted with a third party
      laboratory to conduct additional toxicology studies.  Together
      with the assistance of our CRO, we will have additional toxicology studies
      performed with the goal of filing an investigational new drug application,
      or IND application, with the U.S. Food and Drug Administration, or FDA,
      for their review and consideration in order to initiate a Phase 1/2
      clinical trial in multiple myeloma.  We estimate that it will
      take approximately three (3) months from September 30, 2010 to complete
      these objectives.




·
            Other.  We
      may consider other human diseases in order to determine the role of Factor
      5A.




In order
to pursue the above research initiatives, as well as other research initiatives
that may arise, we completed a private placement of convertible preferred stock
and warrants on April 1, 2010 and June 2, 2010.  However, it will be
necessary for us to raise a significant amount of additional working capital in
the future.  If we are unable to raise the necessary funds, we may be
required to significantly curtail the future development of some of our research
initiatives and we will be unable to pursue other possible research
initiatives.




We may
further expand our research and development program beyond the initiatives
listed above to include other research centers.




Human
Health Competition




Our
competitors in human health that are presently attempting to distribute their
technology have generally utilized one of the following distribution
channels:




·
            Entering
      into strategic alliances, including licensing technology to major
      marketing and distribution partners;
or




·
            Developing
      in-house production and marketing
capabilities.




In
addition, some competitors are established distribution companies, which
alleviates the need for strategic alliances, while others are attempting to
create their own distribution and marketing channels.




There are
many large companies and development stage companies working in the field of
apoptosis research including: Amgen Inc., Centocor, Inc., Genzyme Corporation,
OSI Pharmaceuticals, Inc., Novartis AG, Introgen Therapeutics, Inc., Genta
Incorporated, and Vertex Pharmaceuticals, Inc., amongst others.


17


We do not
currently have any commercialized products, and therefore, it is difficult to
assess our competitive position in the market.  However, we believe
that if we are able to develop and commercialize a product or products under our
patents to our Factor 5A platform technology, we will have a competitive
position in the markets in which we will operate.




Agricultural
Applications




Our agricultural
research focuses on the discovery and development of certain gene technologies,
which are designed to confer positive traits on fruits, flowers, vegetables,
forestry species and agronomic crops.  To date, we have isolated and
characterized the senescence-induced Lipase gene, DHS, and Factor 5A in certain
species of plants. Our goal is to modulate the expression of these genes in
order to achieve such traits as extended shelf life, increased biomass,
increased yield and increased resistance to environmental stresses and disease,
thereby demonstrating proof of concept in each category of crop.




Certain
agricultural results to date include:




·
            longer
      shelf life of perishable produce;




·
            increased
      biomass and seed yield;




·
            greater
      tolerance to environmental stresses, such as drought and soil
      salinity;




·
            greater
      tolerance to certain fungal and bacterial
  pathogens;




·
            more
      efficient use of fertilizer; and




·
            advancement
      to field trials in banana and
trees.




The
technology presently utilized by the industry for increasing the shelf life in
certain flowers, fruits and vegetables relies primarily on reducing ethylene
biosynthesis, and therefore only has application to the crops that are
ethylene-sensitive.  Because Factor 5A, DHS and Lipase are already
present in all plant cells, our technology may be incorporated into crops by
using either conventional breeding methods (non-genetically modified) or
biotechnology techniques.




We have
licensed this technology to various strategic partners and have entered into a
joint collaboration. We may continue to license this technology, as
opportunities present themselves, to additional strategic partners and/or enter
into additional joint collaborations or ventures.  Our commercial
partners have licensed our technology for use in turfgrass, canola, corn,
soybean, cotton, banana, alfalfa, rice and certain species of trees, and we have
obtained proof of concept for enhanced post harvest shelf life, seed yield,
biomass, and resistance to disease in several of these plant
species.




We have
ongoing field trials of certain trees and bananas with our respective
partners.  The initial field trials conducted with ArborGen over a
five year period in certain species of trees have concluded and the trees have
been harvested for wood quality assessment.  Preliminary data from our
joint field trials show significantly enhanced growth rates in some of the trees
relative to controls.  Selected trees from the field trials were
harvested and their wood chemistry and density was assessed.  There
were no differences in key economic characteristics of wood, such as lignin,
cellulose and specific gravity, between the trees with the enhanced growth
attributes and untreated control trees, which indicates that the faster growth
does not result in lower wood quality.  Additional field trials for
enhanced growth rates and other traits are currently being performed with
ArborGen.


18


To date,
banana field trials have indicated that our technology extends the shelf life of
banana fruit by 100%.  In addition to the post harvest shelf life
benefits, an additional field trial generated encouraging disease tolerance data
specific to Black Sigatoka (Black Leaf Streak Disease) for banana plants.
Additional field trials for banana plants are ongoing for the combined traits of
disease resistance and shelf life extension.




Commercialization
by our partners may require a combination of traits in a crop, such as both post
harvest shelf life and disease resistance, or other traits.  Our
near-term research and development initiatives include modulating the expression
of DHS and Factor 5A genes in these plants and then propagation and phenotype
testing of such plants.




Our
ongoing research and development initiatives for agriculture include assisting
our license and joint collaboration partners to:




·
            further
      develop and implement the DHS and Factor 5A gene technology in banana,
      canola, cotton, turfgrass, rice, alfalfa, corn, soybean and trees;
      and




·
            test
      the resultant crops for new beneficial traits such as increased yield,
      increased tolerance to environmental stress, disease resistance and more
      efficient use of fertilizer.




Agricultural
Target Markets




In order
to address the complexities associated with marketing and distribution in the
worldwide market, we have entered into, and may enter into additional, licensing
agreements or other collaborations with a variety of companies or other entities
on a crop-by-crop basis.  We anticipate revenues from these
relationships in the form of licensing fees, royalties, usage fees, or the
sharing of gross profits.  In addition, we anticipate payments from
certain of our partners upon their achievement of certain research and
development benchmarks.  This approach allows us to generate revenue
at various stages of product development, while ensuring that our technology is
incorporated into a wide variety of crops.  Our optimal collaborators
combine the technological expertise to incorporate our technology into their
product line and the ability to successfully market the enhanced final
product.




Because
the agricultural market is dominated by privately held companies or subsidiaries
of foreign owned companies, market size and market share data for the crops
under our license and development agreements is not readily
available.  Additionally, because we have entered into confidentiality
agreements with our license and development partners, we are unable to report
the specific financial terms of the agreements as well as any market size and
market share data that our partners may have disclosed to us regarding their
companies.


19


Agricultural
Development and License Agreements




Through
September 30, 2010, we have entered into eight (8) license agreements and one
(1) joint collaboration with established agricultural biotechnology companies
and an established ethanol company.





Agricultural
Research Program




Our
agricultural research and development is performed by four (4) researchers, at
our direction, at the University of Waterloo, where the technology was
developed.  Additional agricultural research and development is
performed by our license or joint collaboration partners.




The
discoverer of our technology, John E. Thompson, Ph.D., is the Associate Vice
President, Research and former Dean of Science at the University of Waterloo in
Ontario, Canada, and is our Executive Vice President and Chief Scientific
Officer.  Dr. Thompson is also one of our directors and owns 1.4% of
the outstanding shares of our common stock, $0.01 par value, as of September 30,
2010.




On
September 1, 1998, we entered into, and have extended through November 30, 2010,
a research and development agreement with the University of Waterloo and Dr.
Thompson as the principal inventor.  The Research and Development
Agreement provides that the University of Waterloo will perform research and
development under our direction, and we will pay for the cost of this work and
make certain payments to the University of Waterloo.  In return for
payments made under the Research and Development Agreements, we have all rights
to the intellectual property derived from the research.




Agricultural
Competition




Our competitors in both human health
and agriculture that are presently attempting to distribute their technology
have generally utilized one of the following distribution channels:




·
            licensing
      technology to major marketing and distribution
  partners;


·
            entering
      into strategic alliances; or


·
            developing
      in-house production and marketing
capabilities.




In
addition, some competitors have established distribution companies, which
alleviates the need for strategic alliances, while others are attempting to
create their own distribution and marketing channels.




Our competitors in the field of
delaying plant senescence are companies that develop and produce transformed
plants with a variety of enhanced traits.  Such companies include:
Mendel Biotechnology; Renessen LLC; Exelixis Plant Sciences, Inc.; and Syngenta
International AG; among others.




We do not currently have any
commercialized products, and therefore, it is difficult to assess our
competitive position in the market.  However, we believe that if we or
our licensee’s are able to develop and commercialize a product or products using
our technology, we will have a competitive position in the markets in which we
or our licensee’s operate.


20


Agricultural Development
Program





Generally,
projects with our licensees and joint venture partner begin by transforming seed
or germplasm to incorporate our technology.  Those seeds or germplasm
are then grown in our partners’ greenhouses.  After successful
greenhouse trials, our partners will transfer the plants to the field for field
trials.  After completion of successful field trials, our partners may
have to apply for and receive regulatory approval prior to initiation of any
commercialization activities.




Generally,
the approximate time to complete each sequential development step is as
follows:




Seed
      Transformation
                
                approximately
      1 to 2 yearsGreenhouse
                
                approximately
      1 to 2 yearsField
      Trials
                
                approximately
      2 to 5 years





The
actual amount of time spent on each development phase depends on the crop, its
growth cycle and the success of the transformation achieving the desired
results.  As such, the amount of time for each phase of development
could vary, or the time frames may change.




The
development of our technology with Poet is different than our other licenses in
that we are modifying certain production inputs for ethanol.  That
process involves modifying the inputs, testing such inputs in Poet’s production
process and if successful, implementing such inputs in Poet’s production process
on a plant by plant basis.




The
status of each of our projects with our partners is as follows:




Project
                  
                  Partner
                  
                  StatusBanana
                  
                  Rahan
      Meristem-
      Shelf Life
                  
                  
                  
                  Field
      trials-
      Disease Resistance
                  
                  
                  
                  Field
      trialsTrees
                  
                  Arborgen-
      Growth
                  
                  
                  
                  Field
      trialsAlfalfa
                  
                  Cal/West
                  
                  GreenhouseCorn
                  
                  Monsanto
                  
                  Proof
      of concept ongoingCotton
                  
                  Bayer
                  
                  Seed
      transformationCanola
                  
                  Bayer
                  
                  Seed
      transformationRice
                  
                  Bayer
                  
                  Proof
      of concept ongoingSoybean
                  
                  Monsanto
                  
                  Proof
      of concept ongoingTurfgrass
                  
                  The
      Scotts Company
                  
                  GreenhouseEthanol
                  
                  Poet
                  
                  Modify
      inputs




Commercialization
by our partners may require a combination of traits in a crop, such as both
shelf life and disease resistance, or other traits.




Based
upon our commercialization strategy, we anticipate that there may be a
significant period of time before plants enhanced using our technology reach
consumers.


21


Intellectual
Property




We have
twenty-one (21) issued patents from the United States Patent and Trademark
Office, or PTO, and fifty-seven (57) issued patents from foreign countries,
fifty-three (53) of which are for the use of our technology in agricultural
applications and twenty-five (25) of which relate to human health
applications.




In
addition to our seventy-eight (78) patents, we have a wide variety of patent
applications, including divisional applications and continuations-in-part, in
process with the PTO and internationally.  We intend to continue our
strategy of enhancing these new patent applications through the addition of data
as it is collected.




Our
agricultural patents are generally set to expire in 2019 in the United States
and 2025 outside the United States.  Our core human health technology
patents are set to expire in 2021 in the United States and 2025 outside the
United States, and our patents related to multiple myeloma are set to expire,
both in and outside the United States in 2026.  To the extent our
patents have different expiration dates abroad than in the United States, we are
currently developing a strategy to extend the United States expiration dates to
the foreign expiration dates.




Government Regulation





At
present, the U.S. federal government regulation of biotechnology is divided
among three agencies: (i) the U.S. Department of Agriculture regulates the
import, field-testing and interstate movement of specific types of genetic
engineering that may be used in the creation of transformed plants; (ii) the
Environmental Protection Agency regulates activity related to the invention of
plant pesticides and herbicides, which may include certain kinds of transformed
plants; and (iii) the FDA regulates foods derived from new plant
varieties.  The FDA requires that transformed plants meet the same
standards for safety that are required for all other plants and foods in
general.  Except in the case of additives that significantly alter a
food’s structure, the FDA does not require any additional standards or specific
approval for genetically engineered foods but expects transformed plant
developers to consult the FDA before introducing a new food into the market
place.




In
addition, our ongoing preclinical research with cell lines and lab animal models
of human disease is not currently subject to the FDA requirements that govern
clinical trials.  However, use of our technology, if developed for
human health applications, will also be subject to FDA
regulation.  Generally, the FDA must approve any drug or biologic
product before it can be marketed in the United States.  In addition,
prior to being sold outside of the U.S., any products resulting from the
application of our human health technology must be approved by the regulatory
agencies of foreign governments.  Prior to filing a new drug
application or biologics license application with the FDA, we would have to
perform extensive clinical trials, and prior to beginning any clinical trial, we
need to perform extensive preclinical testing which could take several years and
may require substantial expenditures.


22


We
believe that our current activities, which to date have been confined to
research and development efforts, do not require licensing or approval by any
government regulatory agency.  However, we are planning on performing
clinical trials, which would be subject to FDA
approval.  Additionally, federal, state and foreign regulations
relating to crop protection products and human health applications developed
through biotechnology are subject to public concerns and political
circumstances, and, as a result, regulations have changed and may change
substantially in the future.  Accordingly, we may become subject to
governmental regulations or approvals or become subject to licensing
requirements in connection with our research and development efforts. We may
also be required to obtain such licensing or approval from the governmental
regulatory agencies described above, or from state agencies, prior to the
commercialization of genetically transformed plants and human health
technology.  In addition, our marketing partners who utilize our
technology or sell products grown with our technology may be subject to
government regulations.  If unfavorable governmental regulations are
imposed on our technology or if we fail to obtain licenses or approvals in a
timely manner, we may not be able to continue our
operations.


23


Liquidity
and Capital Resources




Overview




As of
September 30, 2010, our cash balance totaled $6,290,995, and we had working
capital of $3,841,940.  As of September 30, 2010, we had a federal tax
loss carryforward of approximately $43,501,000 and a state tax loss
carry-forward of approximately $36,136,000 to offset future taxable income. We
cannot assure you that we will be able to take advantage of any or all of such
tax loss carryforwards, if at all, in future fiscal
years.  Additionally, the federal tax loss carryforward in total may
be limited by provisions of the Internal Revenue Code regarding changes in
ownership of corporations.




Contractual
Obligations




The
following table lists our cash contractual obligations as of September 30,
2010:




Payments Due by PeriodContractual Obligations
                            
                            Total
                            
                            
                            Less than
                              1 year
                            
                            
                            1 - 3 years
                            
                            
                            3 - 5 years
                            
                            
                            More than
                              5 yearsResearch
      and Development Agreements (1)
                            
                            $
                            697,242
                            
                            
                            $
                            697,242
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            —Facility,
      Rent and Operating Leases (2)
                            
                            $
                            53,504
                            
                            
                            $
                            53,504
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            —Employment,
      Consulting
                              and
      Scientific Advisory Board Agreements (3)
                            
                            $
                            194,250
                            
                            
                            $
                            189,250
                            
                            
                            $
                            5,000
                            
                            
                            $
                            —
                            
                            
                            $
                            —Total
      Contractual Cash Obligations
                            
                            $
                            944,996
                            
                            
                            $
                            939,996
                            
                            
                            $
                            5,000
                            
                            
                            $
                            —
                            
                            
                            $
                            —





(1)
            Certain
      of our research and development agreements disclosed herein provide that
      payment is to be made in Canadian dollars and, therefore, the contractual
      obligations are subject to fluctuations in the exchange
    rate.




(2)
            The
      lease for our office space in New Brunswick, New Jersey is subject to
      certain escalations for our proportionate share of increases in the
      building’s operating costs.




(3)
            Certain
      of our consulting agreements provide for automatic renewal, which is not
      reflected in the table, unless terminated earlier by the parties to the
      respective agreements.




We expect
our capital requirements to increase significantly over the next several years
as we commence new research and development efforts, increase our business and
administrative infrastructure and embark on developing in-house business
capabilities and facilities. Our future liquidity and capital funding
requirements will depend on numerous factors, including, but not limited to, the
levels and costs of our research and development initiatives and the cost and
timing of the expansion of our business development and administrative
staff.


24


Effective
September 1, 2010, we extended our research and development agreement with the
University of Waterloo for an additional three-month period through November 30,
2010, in the amount of CAD $164,200, or approximately USD $164,200.




Capital
Resources




Since
inception, we have generated revenues of $1,590,000 in connection with the
initial fees and milestone payments received under our license and development
agreements.  We have not been profitable since inception, we will
continue to incur additional operating losses in the future, and we will require
additional financing to continue the development and subsequent
commercialization of our technology.  While we do not expect to
generate significant revenues from the licensing of our technology for several
years, if ever, we may enter into additional licensing or other agreements with
marketing and distribution partners that may result in additional license fees,
revenues from contract research or other related revenue.




We
anticipate that, based upon our cash balance as of September 30, 2010 we will be
able to fund our operations for at least the next twelve months from September
30, 2010. Over the next twelve months, we plan to fund our research and
development and commercialization activities by:




·
            utilizing
      our current cash balance and
investments;




·
            the
      placement of additional equity or debt
  instruments;




·
            achieving
      some of the milestones set forth in our current licensing agreements;
      and




·
            the
      possible execution of additional licensing agreements for our
      technology.




We cannot
assure you that we will be able to raise money through any of the foregoing
transactions, or on favorable terms, if at all.




Changes
to Critical Accounting Policies and Estimates




There
have been no changes to our critical accounting policies and estimates as set
forth in our Annual Report on Form 10-K for the fiscal year ended June 30,
2010.


25


Results
of Operations




Three
Months Ended September 30, 2010 andThree
Months Ended September 30, 2009




The net
loss for the three month period ended September 30, 2010 was
$2,015,476.  The net loss for the three month period ended September
30, 2009 was $189,296.  Such a change represents an increase in net
loss of $1,826,180,or
964.7%.  This increase in net loss was primarily the result of a
decrease in other non-operating income and an increase in research and
development costs related to the development of our multiple myeloma drug
candidate, SNS01-T.




Revenue




There was
no revenue for the three month periods ended September 30, 2010 and September
30, 2009.




We
anticipate that we will receive future milestone payments in connection with our
current agricultural development and license
agreements.  Additionally, we anticipate that we will receive future
royalty payments from our license agreements when our partners commercialize
their crops containing our technology.  However, it is difficult for
us to determine our future revenue expectations because we are a development
stage biotechnology company with no history of receiving development milestone
payments and royalties.  As such, the timing and outcome of our
experiments, the timing of signing new partners and the timing of our partners
moving through the development process into commercialization is difficult to
accurately predict.




Operating
Expenses




Three
      Months Ended September 30,2010
                
                
                2009
                
                
                Change
                
                
                %(in
      thousands, except % values)General
      and administrative
                
                $
                669
                
                
                $
                495
                
                
                $
                174
                
                
                
                35.2
                %Research
      and development
                
                
                1,537
                
                
                
                489
                
                
                
                1,048
                
                
                
                214.3
                %Total
      operating expenses
                
                $
                2,206
                
                
                $
                984
                
                
                $
                1,222
                
                
                
                124.2
                %





We expect
operating expenses to increase over the next twelve months as we anticipate that
research and development expenses will increase as we continue to expand our
research and development activities as they relate to the potential clinical
development of SNS01-T.


26


General
and Administrative Expenses




Three
      Months Ended September 30,2010
                
                
                2009
                
                
                Change
                
                
                %(in
      thousands, except % values)Payroll
      and benefits
                
                $
                149
                
                
                $
                161
                
                
                $
                (12
                )
                
                
                (7.6
                )%Investor
      relations
                
                
                49
                
                
                
                46
                
                
                
                3
                
                
                
                6.5
                %Professional
      fees
                
                
                105
                
                
                
                122
                
                
                
                (17
                )
                
                
                (13.9
                )%Depreciation
      and amortization
                
                
                34
                
                
                
                28
                
                
                
                6
                
                
                
                21.4
                %Director
      fees
                
                
                39
                
                
                
                43
                
                
                
                (4
                )
                
                
                (9.3
                )%Other
      general and administrative
                
                
                90
                
                
                
                57
                
                
                
                33
                
                
                
                57.9
                %466
                
                
                
                457
                
                
                
                9
                
                
                
                2.0
                %Stock-based
      compensation
                
                
                203
                
                
                
                38
                
                
                
                165
                
                
                
                434.2
                %Total
      general and administrative
                
                $
                669
                
                
                $
                495
                
                
                $
                174
                
                
                
                35.2
                %





·
            Payroll
      and benefits for the three months ended September 30, 2010 was lower than
      the three months ended September 30, 2009 primarily due to the resignation
      of the former VP-Corporate Development during Fiscal 2010.  This
      was partially offset by a bonus granted to the Chief Financial
      Officer.




·
            Investor
      relations expense for the three months ended September 30, 2010 was lower
      than the three months ended September 30, 2009 primarily as a result of a
      decrease in investor relations consulting
costs.




·
            Professional
      fees for the three months ended September 30, 2010 was lower than the
      three months ended September 30, 2009 primarily as a result of an decrease
      in legal fees.  Legal fees decreased primarily due to discounts
      offered by the legal firm as well as lower fees in connection with the
      review of our regulatory filings.




·
            Depreciation
      and amortization for the three months ended September 30, 2010 was higher
      than the three months ended September 30, 2009 primarily as a result of an
      increase in amortization of patent
costs.




·
            Stock-based
      compensation for the three months ended September 30, 2010 and 2009
      consisted of the amortized portion of the Black-Sholes value of options,
      restricted stock units and warrants granted to directors, employees and
      consultants.  There were no options granted during the three
      month period ended September 30, 2010 and 2009. There were 300,000
      warrants granted to consultants during the three months ended September
      30, 2010 and no warrants granted during the three month period ended
      September 30, 2009.




Stock-based
compensation for the three months ended September 30, 2010 was higher than the
three months ended September 30, 2009 primarily due to the Black-Sholes value of
the 300,000 warrants granted to consultants.  Also, during the three
months ended September 30, 2010, we recognized $93,500 of stock-based
compensation in connection with the achievement of a milestone related to our
long-term incentive plan.


27


We expect
cash based general and administrative expenses to modestly increase over the
next twelve months primarily due to an increase in payroll and benefits and
insurance costs related to our multiple myeloma project.




Research
and Development Expenses




Three
      Months Ended September 30,2010
                
                
                2009
                
                
                Change
                
                
                %(in
      thousands, except % values)Stock-based
      compensation
                
                $
                15
                
                
                $
                (3
                )
                
                $
                18
                
                
                
                600.0
                %Payroll
                
                
                55
                
                
                
                40
                
                
                
                15
                
                
                
                37.5
                %Research
      contract with the University of Waterloo
                
                
                164
                
                
                
                160
                
                
                
                4
                
                
                
                2.5
                %Other
      research and development
                
                
                1,303
                
                
                
                292
                
                
                
                1,011
                
                
                
                346.2
                %Total
      research and development
                
                $
                1,537
                
                
                $
                489
                
                
                $
                1,048
                
                
                
                214.3
                %




·
            Stock-based
      compensation consists primarily of the amortized portion of Black-Scholes
      value of options and warrants granted to research and development
      consultants and employees.   Additionally, for the three
      months ended September 30, 2010, it consisted of the amount of our
      long-term incentive plan and for the three months ended September 30,
      2009, it also consisted of the amount of our short-term incentive
      plan.




·
            Payroll
      increased primarily due to a bonus grant to the VP-Research and
      Development.




·
            Other
      research and development costs increased primarily due to an increase in
      the costs incurred in connection with our development of SNS01-T for
      multiple myeloma.  Specifically, during the three month period
      ended September 30, 2010 we initiated our pivotal toxicology
      study.




The
breakdown of our research and development expenses between our agricultural and
human health research programs is as follows:




Three
      Months Ended September 30,2010
                
                
                %
                
                
                2009
                
                
                %(in
      thousands, except % values)Agricultural
                
                $
                146
                
                
                
                10
                %
                
                $
                143
                
                
                
                29
                %Human
      health
                
                
                1,391
                
                
                
                90
                %
                
                
                346
                
                
                
                71
                %Total
      research and development
                
                $
                1,537
                
                
                
                100
                %
                
                $
                489
                
                
                
                100
                %




·
            Agricultural
      research expenses did not materially change during the three month period
      ended September 30, 2010 as we have not materially changed the scope of
      our agricultural research.




·
            Human
      health research expenses increased during the three month period ended
      September 30, 2010 primarily as a result of the timing of certain aspects
      of the development of our potential drug candidate, SNS01-T, for treating
      multiple myeloma.




We expect
the percentage of our human health research program to continue to increase as a
percentage of the total research and development expenses as we continue our
current research projects and begin new human health initiatives, in particular
as they relate to the potential clinical development of our potential drug
candidate, SNS01-T, for treating multiple myeloma.


28


Other
non-operating income and expense




Fair
value – warrant liability




On
September 30, 2010, the amount of the warrant liability was adjusted to
$1,207,452 from $2,493,794 at June 30, 2010.  This decrease of
$1,286,342 was primarily due to a decrease in the number of warrants that are
accounted for as a liability as the terms that gave rise to liability accounting
for these warrants were modified by the holders during the three months ended
September 30, 2010.  Accordingly, $966,866 of the decrease was
recorded as an increase to capital in excess of par with the balance of the
decrease in the amount of $319,476 being recorded as income from the change in
the Black-Scholes value of the remaining warrants.




On
September 30, 2009, the amount of the warrant liability was adjusted to
$1,311,915 from $3,200,048 at June 30, 2009. This decrease of $1,888,133 was due
to a decrease in the Black-Scholes value of the underlying
warrants.




Other
noncash expense or income




During
the three months ended September 30, 2010, the exercise price of 3,901,566
warrants was adjusted from $0.50 to $0.32 in exchange for those warrant holders
giving up their right to future adjustments to the exercise
price.  This resulted in a charge to stock-based compensation of
$111,265




Amortization
of debt discount, financing costs and interest expense on convertible
notes




During
the year ended June 30, 2010, all of the convertible notes were either converted
into common stock or redeemed.  Accordingly, unamortized portion of
the convertible notes and deferred financing costs were fully amortized during
the year ended June 30, 2010.  Therefore, there are no charges for
amortization of debt discount and financing costs and interest expense during
the three months ended September 30, 2010.




Interest
(expense) income





Interest expense for the three months
ended September 30, 2010 was higher than the three months ended September 30,
2009 due to the interest incurred on the $3,000,000 line of credit opened in
February 2010, of which approximately $2,200,000 was utilized during the three
months ended September 30, 2010.





From Inception on July 1,
1998 through September 30, 2010





From
inception of operations on July 1, 1998 through September 30, 2010, we earned
revenues in the amount of $1,590,000, which consisted of the initial license
fees and milestone payments in connection with our various development and
license agreements.  We do not expect to generate significant revenues
for several years, during which time we will engage in significant research and
development efforts.


29


We have
incurred losses each year since inception and have an accumulated deficit of
$53,863,041 at September 30, 2010.  We expect to continue to incur
losses as a result of expenditures on research, product development and
administrative activities.


30


Item
3.   Quantitative and Qualitative
Disclosures about Market Risk.




Foreign
Currency Risk




Our financial statements are
denominated in United States dollars and, except for our agreement with the
University of Waterloo, which is denominated in Canadian dollars, all of our
contracts are denominated in United States dollars.  Therefore, we
believe that fluctuations in foreign currency exchange rates will not result in
any material adverse effect on our financial condition or results of
operations.  In the event we derive a greater portion of our revenues
from international operations or in the event a greater portion of our expenses
are incurred internationally and denominated in a foreign currency, then changes
in foreign currency exchange rates could effect our results of operations and
financial condition.




Interest
Rate Risk




We invest in high-quality financial
instruments, primarily money market funds, with an effective duration of the
portfolio of less than one year which we believe are subject to limited credit
risk.  We currently do not hedge our interest rate
exposure.  Due to the short-term nature of our investments, which we
plan to hold until maturity, we do not believe that we have any material
exposure to interest rate risk arising from our investments.




Item
      4T.
            Controls
      and Procedures.




(a)
            Evaluation
      of disclosure controls and
procedures.




The
principal executive officer and principal financial officer have evaluated our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of September 30, 2010.  Based on this
evaluation, they have concluded that our disclosure controls and procedures were
effective to ensure that the information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, and to ensure that information required to
be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is accumulated and communicated to our management,
including our principal executive and principal financial officers, to allow
timely decisions regarding required disclosure.




(b)
            Changes
      in internal controls.




No change
in our internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) occurred during the three month period
ended September 30, 2010 that has materially affected, or is reasonably likely
to materially affect, our internal controls over financial
reporting.


31


PART II. OTHER
INFORMATION.




Item
1. Legal Proceedings.




None




Item
1A.  Risk Factors.




The more
prominent risks and uncertainties inherent in our business are described below.
However, additional risks and uncertainties may also impair our business
operations.  If any of the following risks actually occur, our
business, financial condition or results of operations may suffer.




Risks Related to Our
Business




We have a limited operating history
and have incurred substantial losses and expect to incur future
losses.




We are a
development stage biotechnology company with a limited operating history and
limited assets and capital. We have incurred losses each year since inception
and had an accumulated deficit of $53,863,041 at September 30, 2010. We
have generated minimal revenues by licensing our technology for certain crops to
companies willing to share in our development costs. In addition, our technology
may not be ready for commercialization for several years. We expect to continue
to incur losses for the next several years because we anticipate that our
expenditures on research and development and administrative activities will
significantly exceed our revenues during that period. We cannot predict when, if
ever, we will become profitable.




We
may need additional capital to fund our operations until we are able to generate
a profit.




Our
operations to date have required significant cash expenditures.  Our
future capital requirements will depend on the results of our research and
development activities, preclinical and clinical studies, and competitive and
technological advances.




We will
need to obtain more funding in the future through collaborations or other
arrangements with research institutions and corporate partners, or public and
private offerings of our securities, including debt or equity
financing.  We may not be able to obtain adequate funds for our
operations from these sources when needed or on acceptable terms. Future
collaborations or similar arrangements may require us to license valuable
intellectual property to, or to share substantial economic benefits with, our
collaborators.  If we raise additional capital by issuing additional
equity or securities convertible into equity, our stockholders may experience
dilution and our share price may decline.  Any debt financing may
result in restrictions on our spending.




If we are
unable to raise additional funds, we will need to do one or more of the
following:




·
            delay,
      scale-back or eliminate some or all of our research and product
      development programs;


·
            provide
      licenses to third parties to develop and commercialize products or
      technologies that we would otherwise seek to develop and commercialize
      ourselves;


·
            seek
      strategic alliances or business
combinations;


32


·
            attempt
      to sell our company;


·
            cease
      operations; or


·
            declare
      bankruptcy.




We
believe that at the projected rate of spending we should have sufficient cash to
maintain our present operations for at least the next twelve (12) months from
September 30, 2010.




We
may be adversely affected by the current economic environment.




Our
ability to obtain financing, invest in and grow our business, and meet our
financial obligations depends on our operating and financial performance, which
in turn is subject to numerous factors.  In addition to factors
specific to our business, prevailing economic conditions and financial, business
and other factors beyond our control can also affect our business and ability to
raise capital.  We cannot anticipate all of the ways in which the
current economic climate and financial market conditions could adversely impact
our business.




We depend on a single principal
technology and, if our technology is not commercially successful, we will have
no alternative source of revenue.




Our
primary business is the development and licensing of technology to identify,
isolate, characterize and promote or silence genes which control the death of
cells in humans and plants. Our future revenue and profitability critically
depend upon our ability, or our licensees’ ability, to successfully develop
apoptosis and senescence gene technology and later license or market such
technology.  We have conducted experiments on certain crops with
favorable results and have conducted certain preliminary cell-line and animal
experiments, which have provided us with data upon which we have designed
additional research programs. However, we cannot give any assurance that our
technology will be commercially successful or economically viable for any crops
or human health applications.




In
addition, no assurance can be given that adverse consequences might not result
from the use of our technology such as the development of negative effects on
humans or plants or reduced benefits in terms of crop yield or
protection.  Our failure to obtain market acceptance of our technology
or of our current or potential licensees to successfully commercialize such
technology would have a material adverse effect on our business.




We
outsource all of our research and development activities and, if we are
unsuccessful in maintaining our alliances with these third parties, our research
and development efforts may be delayed or curtailed.




We rely
on third parties to perform all of our research and development
activities.  Our research and development efforts take place at the
University of Waterloo in Ontario, Canada, where our technology was discovered,
at the Mayo Clinic, at other commercial research facilities and with our
commercial partners.  At this time, we do not have the internal
capabilities to perform our own research and development activities.
Accordingly, the failure of third-party research partners to perform under
agreements entered into with us, or our failure to renew important research
agreements with these third parties, may delay or curtail our research and
development efforts.


33


We
have significant future capital needs and may be unable to raise capital when
needed, which could force us to delay or reduce our research and development
efforts.




As of
September 30, 2010, we had cash of $6,290,995 and working capital of
$3,841,940.  Using our available reserves as of September 30, 2010, we
believe that we can operate according to our current business plan for at least
the next twelve (12) months from September 30, 2010.  To date, we have
generated minimal revenues and anticipate that our operating costs will exceed
any revenues generated over the next several years.  Therefore, we
will be required to raise additional capital in the future in order to operate
in accordance with our current business plan, and this funding may not be
available on favorable terms, if at all.  If we are unable to raise
additional funds, we will need to do one or more of the following:




·
            delay,
      scale back or eliminate some or all of our research and development
      programs;


·
            provide
      a license to third parties to develop and commercialize our technology
      that we would otherwise seek to develop and commercialize
      ourselves;


·
            seek
      strategic alliances or business
combinations;


·
            attempt
      to sell our company;


·
            cease
      operations; or


·
            declare
      bankruptcy.




In
addition, in connection with any funding, if we need to issue more equity
securities than our certificate of incorporation currently authorizes, or more
than 20% of the shares of our common stock outstanding, we may need stockholder
approval.  If stockholder approval is not obtained or if adequate
funds are not available, we may be required to curtail operations significantly
or to obtain funds through arrangements with collaborative partners or others
that may require us to relinquish rights to certain of our technologies, product
candidates, products or potential markets.  Investors may experience
dilution in their investment from future offerings of our common
stock.  For example, if we raise additional capital by issuing equity
securities, such an issuance would reduce the percentage ownership of existing
stockholders.  In addition, assuming the exercise of all options and
warrants outstanding and the conversion of the preferred stock into common
stock, as of September 30, 2010, we had 68,746,396 shares of common stock
authorized but unissued and unreserved, which may be issued from time to time by
our board of directors without stockholder approval.  Furthermore, we
may need to issue securities that have rights, preferences and privileges senior
to our common stock.  Failure to obtain financing on acceptable terms
would have a material adverse effect on our liquidity.




Since our
inception, we have financed all of our operations through private equity and
debt financings. Our future capital requirements depend on numerous factors,
including:




·
            the
      scope of our research and
development;


·
            our
      ability to attract business partners willing to share in our development
      costs;


·
            our
      ability to successfully commercialize our
  technology;


·
            competing
      technological and market
developments;


·
            our
      ability to enter into collaborative arrangements for the development,
      regulatory approval and commercialization of other products;
      and


·
            the
      cost of filing, prosecuting, defending and enforcing patent claims and
      other intellectual property
rights.


34


Our
business depends upon our patents and proprietary rights and the enforcement of
these rights.  Our failure to obtain and maintain patent protection
may increase competition and reduce demand for our technology.




As a
result of the substantial length of time and expense associated with developing
products and bringing them to the marketplace in the biotechnology and
agricultural industries, obtaining and maintaining patent and trade secret
protection for technologies, products and processes is of vital
importance.  Our success will depend in part on several factors,
including, without limitation:




·
            our
      ability to obtain patent protection for our technologies and
      processes;


·
            our
      ability to preserve our trade secrets;
and


·
            our
      ability to operate without infringing the proprietary rights of other
      parties both in the United States and in foreign
  countries.




As of
September 30, 2010, we have been issued twenty one (21) patents by the PTO and
fifty-seven (57) patents from foreign countries.  We have also filed
numerous patent applications for our technology in the United States and in
several foreign countries, which technology is vital to our primary business, as
well as several continuations in part on these patent
applications.  Our success depends in part upon the grant of patents
from our pending patent applications.




Although
we believe that our technology is unique and that it will not violate or
infringe upon the proprietary rights of any third party, we cannot assure you
that these claims will not be made or if made, could be successfully defended
against.  If we do not obtain and maintain patent protection, we may
face increased competition in the United States and internationally, which would
have a material adverse effect on our business.




Since
patent applications in the United States are maintained in secrecy until patents
are issued, and since publication of discoveries in the scientific and patent
literature tend to lag behind actual discoveries by several months, we cannot be
certain that we were the first creator of the inventions covered by our pending
patent applications or that we were the first to file patent applications for
these inventions.




In
addition, among other things, we cannot assure you that:




·
            our
      patent applications will result in the issuance of
  patents;


·
            any
      patents issued or licensed to us will be free from challenge and if
      challenged, would be held to be
valid;


·
            any
      patents issued or licensed to us will provide commercially significant
      protection for our technology, products and
  processes;


·
            other
      companies will not independently develop substantially equivalent
      proprietary information which is not covered by our patent
      rights;


·
            other
      companies will not obtain access to our
  know-how;


·
            other
      companies will not be granted patents that may prevent the
      commercialization of our technology;
or


35


·
            we
      will not incur licensing fees and the payment of significant other fees or
      royalties to third parties for the use of their intellectual property in
      order to enable us to conduct our
business.




Our
competitors may allege that we are infringing upon their intellectual property
rights, forcing us to incur substantial costs and expenses in resulting
litigation, the outcome of which would be uncertain.




Patent
law is still evolving relative to the scope and enforceability of claims in the
fields in which we operate.  We are like most biotechnology companies
in that our patent protection is highly uncertain and involves complex legal and
technical questions for which legal principles are not yet firmly
established.  In addition, if issued, our patents may not contain
claims sufficiently broad to protect us against third parties with similar
technologies or products, or provide us with any competitive
advantage.




The PTO
and the courts have not established a consistent policy regarding the breadth of
claims allowed in biotechnology patents.  The allowance of broader
claims may increase the incidence and cost of patent interference proceedings
and the risk of infringement litigation.  On the other hand, the
allowance of narrower claims may limit the scope and value of our proprietary
rights.




The laws
of some foreign countries do not protect proprietary rights to the same extent
as the laws of the United States, and many companies have encountered
significant problems and costs in protecting their proprietary rights in these
foreign countries.




We could
become involved in infringement actions to enforce and/or protect our
patents.  Regardless of the outcome, patent litigation is expensive
and time consuming and would distract our management from other
activities.  Some of our competitors may be able to sustain the costs
of complex patent litigation more effectively than we could because they have
substantially greater resources.  Uncertainties resulting from the
initiation and continuation of any patent litigation could limit our ability to
continue our operations.




If
our technology infringes the intellectual property of our competitors or other
third parties, we may be required to pay license fees or damages.




If any
relevant claims of third-party patents that are adverse to us are upheld as
valid and enforceable, we could be prevented from commercializing our technology
or could be required to obtain licenses from the owners of such
patents.  We cannot assure you that such licenses would be available
or, if available, would be on acceptable terms.  Some licenses may be
non-exclusive and, therefore, our competitors may have access to the same
technology licensed to us.  In addition, if any parties successfully
claim that the creation or use of our technology infringes upon their
intellectual property rights, we may be forced to pay damages, including treble
damages.


36


Our
security measures may not adequately protect our unpatented technology and, if
we are unable to protect the confidentiality of our proprietary information and
know-how, the value of our technology may be adversely affected.




Our
success depends upon know-how, unpatentable trade secrets, and the skills,
knowledge and experience of our scientific and technical
personnel.  As a result, all employees agreed to a confidentiality
provision in their employment agreement that prohibited the disclosure of
confidential information to anyone outside of our company, during the term of
employment and for 5 years thereafter.  The employment agreements have
since been terminated, but the period of confidentiality is still in
effect.  We also require all employees to disclose and assign to us
the rights to their ideas, developments, discoveries and
inventions.  We also attempt to enter into similar agreements with our
consultants, advisors and research collaborators.  We cannot assure
you that adequate protection for our trade secrets, know-how or other
proprietary information against unauthorized use or disclosure will be
available.




We
occasionally provide information to research collaborators in academic
institutions and request that the collaborators conduct certain
tests.  We cannot assure you that the academic institutions will not
assert intellectual property rights in the results of the tests conducted by the
research collaborators, or that the academic institutions will grant licenses
under such intellectual property rights to us on acceptable terms, if at
all.  If the assertion of intellectual property rights by an academic
institution is substantiated, and the academic institution does not grant
intellectual property rights to us, these events could limit our ability to
commercialize our technology.




As
we evolve from a company primarily involved in the research and development of
our technology into one that is also involved in the commercialization of our
technology, we may have difficulty managing our growth and expanding our
operations.




As our
business grows, we may need to add employees and enhance our management, systems
and procedures.  We may need to successfully integrate our internal
operations with the operations of our marketing partners, manufacturers,
distributors and suppliers to produce and market commercially viable
products.  We may also need to manage additional relationships with
various collaborative partners, suppliers and other
organizations.  Although we do not presently conduct research and
development activities in-house, we may undertake those activities in the
future.  Expanding our business may place a significant burden on our
management and operations.  We may not be able to implement
improvements to our management information and control systems in an efficient
and timely manner and we may discover deficiencies in our existing systems and
controls.  Our failure to effectively respond to such changes may make
it difficult for us to manage our growth and expand our operations.




We
have no marketing or sales history and depend on third-party marketing
partners.  Any failure of these parties to perform would delay or
limit our commercialization efforts.




We have
no history of marketing, distributing or selling biotechnology products and we
are relying on our ability to successfully establish marketing partners or other
arrangements with third parties to market, distribute and sell a commercially
viable product both here and abroad.  Our business plan envisions
creating strategic alliances to access needed commercialization and marketing
expertise.  We may not be able to attract qualified sub-licensees,
distributors or marketing partners, and even if qualified, these marketing
partners may not be able to successfully market agricultural products or human
health applications developed with our technology.  If our current or
potential future marketing partners fail to provide adequate levels of sales,
our commercialization efforts will be delayed or limited and we may not be able
to generate revenue.


37


We
will depend on joint ventures and strategic alliances to develop and market our
technology and, if these arrangements are not successful, our technology may not
be developed and the expenses to commercialize our technology will
increase.




In its
current state of development, our technology is not ready to be marketed to
consumers.  We intend to follow a multi-faceted commercialization
strategy that involves the licensing of our technology to business partners for
the purpose of further technological development, marketing and
distribution.  We have and are seeking business partners who will
share the burden of our development costs while our technology is still being
developed, and who will pay us royalties when they market and distribute
products incorporating our technology upon commercialization.  The
establishment of joint ventures and strategic alliances may create future
competitors, especially in certain regions abroad where we do not pursue patent
protection.  If we fail to establish beneficial business partners and
strategic alliances, our growth will suffer and the continued development of our
technology may be harmed.




Competition
in the human health and agricultural biotechnology industries is intense and
technology is changing rapidly.  If our competitors market their
technology faster than we do, we may not be able to generate revenues from the
commercialization of our technology.




Many
human health and agricultural biotechnology companies are engaged in research
and development activities relating to apoptosis and senescence.  The
market for plant protection and yield enhancement products is intensely
competitive, rapidly changing and undergoing consolidation.  We may be
unable to compete successfully against our current and future competitors, which
may result in price reductions, reduced margins and the inability to achieve
market acceptance for products containing our technology.  Our
competitors in the field of plant senescence gene technology are companies that
develop and produce transgenic plants and include major international
agricultural companies, specialized biotechnology companies, research and
academic institutions and, potentially, our joint venture and strategic alliance
partners.  These companies include: Mendel Biotechnology, Inc.,
Renessen LLC, Exelixis Plant Sciences, Inc., and Syngenta International AG,
among others.  Some of our competitors that are involved in apoptosis
research include:  Amgen Inc.; Centocor, Inc.; Genzyme Corporation;
OSI Pharmaceuticals, Inc.; Novartis AG; Introgen Therapeutics, Inc.; Genta
Incorporated; and Vertex Pharmaceuticals, Inc.  Many of these
competitors have substantially greater financial, marketing, sales, distribution
and technical resources than us and have more experience in research and
development, clinical trials, regulatory matters, manufacturing and
marketing.  We anticipate increased competition in the future as new
companies enter the market and new technologies become available.  Our
technology may be rendered obsolete or uneconomical by technological advances or
entirely different approaches developed by one or more of our competitors, which
will prevent or limit our ability to generate revenues from the
commercialization of our technology.


38


Our
business is subject to various government regulations and, if we or our
licensees are unable to obtain regulatory approval, we may not be able to
continue our operations.




At
present, the U.S. federal government regulation of biotechnology is divided
among three agencies:




·
            the
      USDA regulates the import, field testing and interstate movement of
      specific types of genetic engineering that may be used in the creation of
      transgenic plants;


·
            the
      EPA regulates activity related to the invention of plant pesticides and
      herbicides, which may include certain kinds of transgenic plants;
      and


·
            the
      FDA regulates foods derived from new plant
  varieties.




The FDA
requires that transgenic plants meet the same standards for safety that are
required for all other plants and foods in general.  Except in the
case of additives that significantly alter a food’s structure, the FDA does not
require any additional standards or specific approval for genetically engineered
foods, but expects transgenic plant developers to consult the FDA before
introducing a new food into the marketplace.




Use of
our technology, if developed for human health applications, will also be subject
to FDA regulation.  The FDA must approve any drug or biologic product
before it can be marketed in the United States.  In addition, prior to
being sold outside of the U.S., any products resulting from the application of
our human health technology must be approved by the regulatory agencies of
foreign governments.  Prior to filing a new drug application or
biologics license application with the FDA, we would have to perform extensive
clinical trials, and prior to beginning any clinical trial, we would need to
perform extensive preclinical testing which could take several years and may
require substantial expenditures.




We
believe that our current activities, which to date have been confined to
research and development efforts, do not require licensing or approval by any
governmental regulatory agency. However, we are planning on performing clinical
trials, which would be subject to FDA approval.  Additionally,
federal, state and foreign regulations relating to crop protection products and
human health applications developed through biotechnology are subject to public
concerns and political circumstances, and, as a result, regulations have changed
and may change substantially in the future.  Accordingly, we may
become subject to governmental regulations or approvals or become subject to
licensing requirements in connection with our research and development efforts.
We may also be required to obtain such licensing or approval from the
governmental regulatory agencies described above, or from state agencies, prior
to the commercialization of our genetically transformed plants and human health
technology.  In addition, our marketing partners who utilize our
technology or sell products grown with our technology may be subject to
government regulations.  If unfavorable governmental regulations are
imposed on our technology or if we fail to obtain licenses or approvals in a
timely manner, we may not be able to continue our operations.


39


Preclinical
studies of our human health applications may be unsuccessful, which could delay
or prevent regulatory approval.




Preclinical
studies may reveal that our human health technology is ineffective or harmful,
and/or may be unsuccessful in demonstrating efficacy and safety of our human
health technology, which would significantly limit the possibility of obtaining
regulatory approval for any drug or biologic product manufactured with our
technology.  The FDA requires submission of extensive preclinical,
clinical and manufacturing data to assess the efficacy and safety of potential
products. We are currently in the process of conducting preclinical toxicology
studies for our multiple myeloma product candidate.  Any delay in this
toxicology study, or any potential negative findings in this toxicology study,
will delay our ability to file an IND for our multiple myeloma product
candidate.  Furthermore, the success of preliminary studies does not
ensure commercial success, and later-stage clinical trials may fail to confirm
the results of the preliminary studies.




Our
success will depend on the success of our clinical trials that have not yet
begun.




It may take several years to complete
the clinical trials of a product, and failure of one or more of our clinical
trials can occur at any stage of testing.  We believe that the
development of our product candidate involves significant risks at each stage of
testing.  If clinical trial difficulties and failures arise, our
product candidate may never be approved for sale or become commercially
viable.




There are a number of difficulties and
risks associated with clinical trials.  These difficulties and risks
may result in the failure to receive regulatory approval to sell our product
candidate or the inability to commercialize our product
candidate.  The possibility exists that:




·
            we
      may discover that the product candidate does not exhibit the expected
      therapeutic results in humans, may cause harmful side effects or have
      other unexpected characteristics that may delay or preclude regulatory
      approval or limit commercial use if
approved;




·
            the
      results from early clinical trials may not be statistically significant or
      predictive of results that will be obtained from expanded advanced
      clinical trials;




·
            institutional
      review boards or regulators, including the FDA, may hold, suspend or
      terminate our clinical research or the clinical trials of our product
      candidate for various reasons, including noncompliance with regulatory
      requirements or if, in their opinion, the participating subjects are being
      exposed to unacceptable health
risks;




·
            subjects
      may drop out of our clinical
trials;




·
            our
      preclinical studies or clinical trials may produce negative, inconsistent
      or inconclusive results, and we may decide, or regulators may require us,
      to conduct additional preclinical studies or clinical trials;
      and




·
            the
      cost of our clinical trials may be greater than we currently
      anticipate.


40


Clinical
trials for our human health technology will be lengthy and expensive and their
outcome is uncertain.




Before
obtaining regulatory approval for the commercial sales of any product containing
our technology, we must demonstrate through clinical testing that our technology
and any product containing our technology is safe and effective for use in
humans.  Conducting clinical trials is a time-consuming, expensive and
uncertain process and typically requires years to complete.  In our
industry, the results from preclinical studies and early clinical trials often
are not predictive of results obtained in later-stage clinical
trials.  Some products and technologies that have shown promising
results in preclinical studies or early clinical trials subsequently fail to
establish sufficient safety and efficacy data necessary to obtain regulatory
approval.  At any time during clinical trials, we or the FDA might
delay or halt any clinical trial for various reasons, including:




·
            occurrence
      of unacceptable toxicities or side
effects;


·
            ineffectiveness
      of the product candidate;


·
            negative
      or inconclusive results from the clinical trials, or results that
      necessitate additional studies or clinical
  trials;


·
            delays
      in obtaining or maintaining required approvals from institutions, review
      boards or other reviewing entities at clinical
  sites;


·
            delays
      in patient enrollment; or


·
            insufficient
      funding or a reprioritization of financial or other
    resources.




Any
failure or substantial delay in successfully completing clinical trials and
obtaining regulatory approval for our product candidates could severely harm our
business.




If
our clinical trials for our product candidates are delayed, we would be unable
to commercialize our product candidates on a timely basis, which would
materially harm our business.




Planned clinical trials may not begin
on time or may need to be restructured after they have
begun.  Clinical trials can be delayed for a variety of reasons,
including delays related to:




·
            obtaining
      an effective investigational new drug application, or IND, or regulatory
      approval to commence a clinical
trial;


·
            negotiating
      acceptable clinical trial agreement terms with prospective trial
      sites;


·
            obtaining
      institutional review board approval to conduct a clinical trial at a
      prospective site;


·
            recruiting
      qualified subjects to participate in clinical
  trials;


·
            competition
      in recruiting clinical
investigators;


·
            shortage
      or lack of availability of supplies of drugs for clinical
      trials;


·
            the
      need to repeat clinical trials as a result of inconclusive results or
      poorly executed testing;


·
            the
      placement of a clinical hold on a
study;


·
            the
      failure of third parties conducting and overseeing the operations of our
      clinical trials to perform their contractual or regulatory obligations in
      a timely fashion; and


·
            exposure
      of clinical trial subjects to unexpected and unacceptable health risks or
      noncompliance with regulatory requirements, which may result in suspension
      of the trial.


41


We
believe that our product candidate has significant milestone to reach, including
the successful completion of clinical trials, before
commercialization.  If we have significant delays in or termination of
clinical trials, our financial results and the commercial prospects for our
product candidates or any other products that we may develop will be adversely
impacted.  In addition, our product development costs would increase
and our ability to generate revenue could be impaired.





Any
inability to license from third parties their proprietary technologies or
processes which we use in connection with the development of our technology may
impair our business.




Other
companies, universities and research institutions have or may obtain patents
that could limit our ability to use our technology in a product candidate or
impair our competitive position.  As a result, we would have to obtain
licenses from other parties before we could continue using our technology in a
product candidate.  Any necessary licenses may not be available on
commercially acceptable terms, if at all.  If we do not obtain
required licenses, we may not be able to develop our technology into a product
candidate or we may encounter significant delays in development while we
redesign methods that are found to infringe on the patents held by
others.




Even
if we receive regulatory approval, consumers may not accept products containing
our technology, which will prevent us from being profitable since we have no
other source of revenue.




We cannot
guarantee that consumers will accept products containing our
technology.  Recently, there has been consumer concern and consumer
advocate activism with respect to genetically-engineered agricultural consumer
products.  The adverse consequences from heightened consumer concern
in this regard could affect the markets for agricultural products developed with
our technology and could also result in increased government regulation in
response to that concern. If the public or potential customers perceive our
technology to be genetic modification or genetic engineering, agricultural
products grown with our technology may not gain market acceptance.




We
depend on our key personnel and, if we are not able to attract and retain
qualified scientific and business personnel, we may not be able to grow our
business or develop and commercialize our technology.




We are
highly dependent on our scientific advisors, consultants and third-party
research partners.  Our success will also depend in part on the
continued service of our key employees and our ability to identify, hire and
retain additional qualified personnel in an intensely competitive
market.  Although we have a research agreement with Dr. John Thompson,
this agreement may be terminated upon short or no
notice.  Additionally, we do not have employment agreements with our
key employees.  We do not maintain key person life insurance on any
member of management.  The failure to attract and retain key personnel
could limit our growth and hinder our research and development
efforts.


42


Certain
provisions of our charter, by-laws and Delaware law could make a takeover
difficult.




Certain
provisions of our certificate of incorporation and by-laws could make it more
difficult for a third party to acquire control of us, even if the change in
control would be beneficial to stockholders.  Our certificate of
incorporation authorizes our board of directors to issue, without stockholder
approval, except as may be required by the rules of the NYSE Amex Exchange,
5,000,000 shares of preferred stock with voting, conversion and other rights and
preferences that could adversely affect the voting power or other rights of the
holders of our common stock.  Similarly, our by-laws do not restrict
our board of directors from issuing preferred stock without stockholder
approval.




In
addition, we are subject to the Business Combination Act of the Delaware General
Corporation Law which, subject to certain exceptions, restricts certain
transactions and business combinations between a corporation and a stockholder
owning 15% or more of the corporation’s outstanding voting stock for a period of
three years from the date such stockholder becomes a 15% owner.  These
provisions may have the effect of delaying or preventing a change of control of
us without action by our stockholders and, therefore, could adversely affect the
value of our common stock.




Furthermore,
in the event of our merger or consolidation with or into another corporation, or
the sale of all or substantially all of our assets in which the successor
corporation does not assume our outstanding equity awards or issue equivalent
equity awards, our current equity plans require the accelerated vesting of such
outstanding equity awards.


43


Risks Related to Our Common
Stock




We
currently meet the NYSE Amex Exchange continued listing
standards.  However, if our common stock is delisted from the NYSE
Amex Exchange, we may not be able to list on any other stock exchange, and our
common stock may be subject to the “penny stock” regulations which may affect
the ability of our stockholders to sell their shares.




The NYSE
Amex Exchange requires us to meet minimum financial requirements in order to
maintain our listing.  Although we have met the $6,000,000 minimum net
worth continued listing requirement of the NYSE Amex Exchange and have received
notice from the NYSE that we are back in compliance with their continued listing
requirement, we previously did not meet the $6,000,000 minimum net worth
continued listing requirement of the NYSE Amex Exchange. However, we remain
subject to periodic review by NYSE Staff. Failure to remain in compliance with
the continued listing standards could result in our company being delisted from
the NYSE Amex Exchange.  If we are delisted from the NYSE Amex
Exchange, our common stock likely will become a “penny stock.”  In
general, regulations of the SEC define a “penny stock” to be an equity security
that is not listed on a national securities exchange and that has a market price
of less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions.  If our common stock becomes a
penny stock, additional sales practice requirements would be imposed on
broker-dealers that sell such securities to persons other than certain qualified
investors.  For transactions involving a penny stock, unless exempt, a
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser’s written consent to the transaction prior to the
sale.  In addition, the rules on penny stocks require delivery, prior
to and after any penny stock transaction, of disclosures required by the
SEC.




If our
stock is not accepted for listing on the NYSE Amex Exchange, we will make every
possible effort to have it listed on the Over the Counter Bulletin Board, or the
OTC Bulletin Board.  If our common stock were to be traded on the OTC
Bulletin Board, the Securities Exchange Act of 1934, as amended, and related
Securities and Exchange Commission (SEC) rules would impose additional sales
practice requirements on broker-dealers that sell our
securities.  These rules may adversely affect the ability of
stockholders to sell our common stock and otherwise negatively affect the
liquidity, trading market and price of our common stock.




We
believe that the listing of our common stock on a recognized national trading
market, such as the NYSE Amex Exchange, is an important part of our business and
strategy.  Such a listing helps our stockholders by providing a
readily available trading market with current quotations.  Without
that, stockholders may have a difficult time getting a quote for the sale or
purchase of our stock, the sale or purchase of our stock would likely be made
more difficult and the trading volume and liquidity of our stock would likely
decline.  The absence of such a listing may adversely affect the
acceptance of our common stock as currency or the value accorded it by other
parties.  In that regard, the absence of a listing on a recognized
national trading market will also affect our ability to benefit from the use of
our operations and expansion plans, including for use in licensing agreements,
joint ventures, the development of strategic relationships and acquisitions,
which are critical to our business and strategy and none of which is currently
the subject of any agreement, arrangement or understanding, with respect to any
future financing or strategic relationship we may undertake.  A
delisting from the NYSE Amex Exchange could result in negative publicity and
could negatively impact our ability to raise capital in the
future.


44


Our
management and other affiliates have significant control of our common stock and
could significantly influence our actions in a manner that conflicts with our
interests and the interests of other stockholders.




As of
September 30, 2010, our executive officers, directors and affiliated entities
together beneficially own approximately 45.0% of the outstanding shares of our
common stock, assuming the exercise of options and warrants which are currently
exercisable or will become exercisable within 60 days of September 30, 2010,
held by these stockholders.  As a result, these stockholders, acting
together, will be able to exercise significant influence over matters requiring
approval by our stockholders, including the election of directors, and may not
always act in the best interests of other stockholders.  Such a
concentration of ownership may have the effect of delaying or preventing a
change in control of us, including transactions in which our stockholders might
otherwise receive a premium for their shares over then current market
prices.




A
significant portion of our total outstanding shares of common stock may be sold
in the market in the near future, which could cause the market price of our
common stock to drop significantly.




As of
September 30, 2010, we had 64,302,322 shares of our common stock issued and
outstanding and 6,052 shares of convertible preferred stock outstanding which
can convert into 18,912,500 shares of common stock.  Approximately
34,164,431 shares of such shares are registered pursuant to registration
statements on Form S-3 and 49,050,391 of which are either eligible to be sold
under SEC Rule 144 or are in the public float.  In addition, we have
registered 35,890,007 shares of our common stock underlying warrants previously
issued on Form S-3 registration statements and we registered 11,137,200 shares
of our common stock underlying options granted or to be granted under our stock
option plan.  Consequently, sales of substantial amounts of our common
stock in the public market, or the perception that such sales could occur, may
have a material adverse effect on our stock price.




Our
common stock has a limited trading market, which could limit your ability to
resell your shares of common stock at or above your purchase price.




Our
common stock is quoted on the NYSE Amex Exchange and currently has a limited
trading market.  The NYSE Amex Exchange requires us to meet minimum
financial requirements in order to maintain our listing.  Currently,
we meet the continued listing requirements of the NYSE Amex
Exchange.  However, if we do not continue to meet the continued
listing standards, we could be delisted.  We cannot assure you that an
active trading market will develop or, if developed, will be
maintained.  As a result, our stockholders may find it difficult to
dispose of shares of our common stock and, as a result, may suffer a loss of all
or a substantial portion of their investment.


45


The
market price of our common stock may fluctuate and may drop below the price you
paid.




We cannot
assure you that you will be able to resell the shares of our common stock at or
above your purchase price.  The market price of our common stock may
fluctuate significantly in response to a number of factors, some of which are
beyond our control.  These factors include:




·
            quarterly
      variations in operating results;


·
            the
      progress or perceived progress of our research and development
      efforts;


·
            changes
      in accounting treatments or
principles;


·
            announcements
      by us or our competitors of new technology, product and service offerings,
      significant contracts, acquisitions or strategic
      relationships;


·
            additions
      or departures of key personnel;


·
            future
      offerings or resales of our common stock or other
    securities;


·
            stock
      market price and volume fluctuations of publicly-traded companies in
      general and development companies in particular;
  and


·
            general
      political, economic and market
conditions.




For
example, during the year ended June 30, 2010, our common stock traded between
$0.25 per share and $0.83 per share.




Because
we do not intend to pay, and have not paid, any cash dividends on our shares of
common stock, our stockholders will not be able to receive a return on their
shares unless the value of our common stock appreciates and they sell their
shares.




We have
never paid or declared any cash dividends on our common stock, and we intend to
retain any future earnings to finance the development and expansion of our
business.  We do not anticipate paying any cash dividends on our
common stock in the foreseeable future.  Therefore, our stockholders
will not be able to receive a return on their investment unless the value of our
common stock appreciates and they sell their shares.




Our
stockholders may experience substantial dilution as a result of the conversion
of convertible preferred stock, the exercise of options and warrants to purchase
our common stock, or due to anti-dilution provisions relating to any on the
foregoing.




As of
September 30, 2010, we have outstanding 6,052 shares of convertible preferred
stock which may convert into 18,912,500 shares of our common stock and warrants
to purchase 55,471,226 shares of our common stock.  In addition, as of
September 30, 2010, we have reserved 15,204,884 shares of our common stock for
issuance upon the exercise of options granted or available to be granted
pursuant to our stock option plan, all of which may be granted in the
future.  The conversion of the convertible preferred stock and the exercise
of these options and warrants will result in dilution to our existing
stockholders and could have a material adverse effect on our stock price. The
conversion price of the convertible preferred stock and certain warrants are
also subject to certain anti-dilution adjustments.


46




Item
      2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





None




Item
      3.
            Defaults
      Upon Senior Securities




None




Item
      4.
            [REMOVED
      AND RESERVED]




Item
      5.
            Other
      Information




None




Item
      6.
            Exhibits.




Exhibits.




Exhibit
      No.
              
              Description31.1
              
              Certification
      of principal executive officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002. (filed herewith)31.2
              
              Certification
      of principal financial and accounting officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002. (filed herewith)32.1
              
              Certification
      of principal executive officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. (furnished
      herewith)32.2
              
              Certification
      of principal financial and accounting officer pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350. (furnished
      herewith)


47


SIGNATURES




In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




SENESCO
      TECHNOLOGIES, INC.DATE:  November
      15, 2010
              By:
              /s/ Leslie J. BrowneLeslie
      J. Browne, Presidentand
      Chief Executive Officer(Principal
      Executive Officer)DATE:  November
      15, 2010
              By:
              /s/ Joel BrooksJoel
      Brooks, Chief Financial Officerand
      Treasurer(Principal
      Financial and Accounting
Officer)


48