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 December 31, 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:
       ̈
            No:
      x




74,766,237
shares of the issuer’s common stock, par value $0.01 per share, were outstanding
as of January 31, 2011.





SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY




TABLE OF
CONTENTS





PagePART
      I.          FINANCIAL
      INFORMATION.Item
      1.
                              Financial
      Statements (Unaudited)
                              1CONDENSED
      CONSOLIDATED BALANCE SHEETS
                                as
      of December 31, 2010 and June 30, 2010
                              2CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS
                                For
      the Three Months and Six Months Ended December 31, 2010 and 2009, and
      From Inception on July 1, 1998 through December 31, 2010
                              3CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
                                For
      the Six Months Ended December 31, 2010
                              4CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                For
      the Six Months Ended December 31, 2010 and 2009, and From Inception
      on July 1, 1998 through December 31, 2010
                              5NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              6Item
      2.
                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                              14Overview
                              14Liquidity
      and Capital Resources
                              18Changes
      to Critical Accounting Policies and Estimates
                              20Results
      of Operations
                              21Item
      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.
                              48Item
      3.
                              Defaults
      Upon Senior Securities
                              48Item
      4.
                              [REMOVED
      AND RESERVED]
                              48Item
      5.
                              Other
      Information.
                              48Item
      6.
                              Exhibits.
                              48SIGNATURES
                              49


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)
 
 December 31,
                                          
                                          
                                          June 30,2010
                                          
                                          
                                          2010ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                                          
                                          $
                                          4,837,477
                                          
                                          
                                          $
                                          8,026,296Prepaid
      research supplies and expenses
                                          
                                          
                                          1,307,976
                                          
                                          
                                          
                                          1,304,795Total
      Current Assets
                                          
                                          
                                          6,145,453
                                          
                                          
                                          
                                          9,331,091Equipment,
      furniture and fixtures, net
                                          
                                          
                                          5,179
                                          
                                          
                                          
                                          4,554Intangibles,
      net
                                          
                                          
                                          4,759,268
                                          
                                          
                                          
                                          4,568,895Deferred
      income tax assets, net
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Security
      deposit
                                          
                                          
                                          7,187
                                          
                                          
                                          
                                          7,187TOTAL
      ASSETS
                                          
                                          $
                                          10,917,087
                                          
                                          
                                          $
                                          13,911,727LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                                          
                                          $
                                          625,995
                                          
                                          
                                          $
                                          557,420Accrued
      expenses
                                          
                                          
                                          371,467
                                          
                                          
                                          
                                          576,857Line
      of credit
                                          
                                          
                                          2,194,844
                                          
                                          
                                          
                                          2,194,844Deferred
      rent
                                          
                                          
                                          4,030
                                          
                                          
                                          
                                          -Total
      Current Liabilities
                                          
                                          
                                          3,196,336
                                          
                                          
                                          
                                          3,329,121Warrant
      liabilities ($0 and $490,438 to related parties,
    respectively)
                                          
                                          
                                          902,675
                                          
                                          
                                          
                                          2,493,794Deferred
      rent
                                          
                                          
                                          -
                                          
                                          
                                          
                                          8,060Grant
      payable
                                          
                                          
                                          99,728
                                          
                                          
                                          
                                          99,728TOTAL
      LIABILITIES
                                          
                                          
                                          4,198,739
                                          
                                          
                                          
                                          5,930,703STOCKHOLDERS'
      EQUITY:Preferred
      stock, $0.01 par value, authorized 5,000,000 sharesSeries
      A 10,297 shares issued and 4,125 and 8,035 shares outstanding,
      respectively (liquidation preference of $4,228,125 and $8,235,875 at
      December 31, 2010 and June 30, 2010, respectively)
                                          
                                          
                                          41
                                          
                                          
                                          
                                          80Series
      B 1,200 shares issued and outstanding (liquidation preference of
      $1,230,000 and $1,210,000 at December 31, 2010 and June 30, 2010,
      respectively)
                                          
                                          
                                          12
                                          
                                          
                                          
                                          12Common
      stock, $0.01 par value, authorized 250,000,000 shares, issued and
      outstanding 69,255,399 and 50,092,204, at December 31, 2010 and June 30,
      2010, respectively
                                          
                                          
                                          692,554
                                          
                                          
                                          
                                          500,922Capital
      in excess of par
                                          
                                          
                                          61,700,953
                                          
                                          
                                          
                                          58,321,169Deficit
      accumulated during the development stage
                                          
                                          
                                          (55,675,212
                                          )
                                          
                                          
                                          (50,841,159
                                          )Total
      Stockholders' Equity
                                          
                                          
                                          6,718,348
                                          
                                          
                                          
                                          7,981,024TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                          
                                          $
                                          10,917,087
                                          
                                          
                                          $
                                          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 December 31,
                                          
                                          
                                          Six months ended December 31,
                                          
                                          
                                          Amounts from2010
                                          
                                          
                                          2009
                                          
                                          
                                          2010
                                          
                                          
                                          2009
                                          
                                          
                                          InceptionRevenue
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          140,000
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          140,000
                                          
                                          
                                          $
                                          1,590,000Operating
      expenses:General
      and administrative
                                          
                                          
                                          706,685
                                          
                                          
                                          
                                          685,409
                                          
                                          
                                          
                                          1,375,569
                                          
                                          
                                          
                                          1,180,364
                                          
                                          
                                          
                                          27,655,880Research
      and development
                                          
                                          
                                          798,352
                                          
                                          
                                          
                                          467,544
                                          
                                          
                                          
                                          2,334,859
                                          
                                          
                                          
                                          956,303
                                          
                                          
                                          
                                          17,283,823Total
      operating expenses
                                          
                                          
                                          1,505,037
                                          
                                          
                                          
                                          1,152,953
                                          
                                          
                                          
                                          3,710,428
                                          
                                          
                                          
                                          2,136,667
                                          
                                          
                                          
                                          44,939,703Loss
      from operations
                                          
                                          
                                          (1,505,037
                                          )
                                          
                                          
                                          (1,012,953
                                          )
                                          
                                          
                                          (3,710,428
                                          )
                                          
                                          
                                          (1,996,667
                                          )
                                          
                                          
                                          (43,349,703
                                          )Other
      non-operating income (expense)Grant
      income
                                          
                                          
                                          244,479
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          244,479
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          244,479Fair
      value – warrant liability
                                          
                                          
                                          149,910
                                          
                                          
                                          
                                          451,208
                                          
                                          
                                          
                                          469,386
                                          
                                          
                                          
                                          2,339,341
                                          
                                          
                                          
                                          7,717,814Sale
      of state income tax loss – net
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          586,442Other
      noncash (expense) income, net
                                          
                                          
                                          (4,604
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (115,869
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          205,390Loss
      on extinguishment of debt
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (86,532
                                          )
                                          
                                          
                                          (361,877
                                          )Amortization
      of debt discount and financing costs
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (959,946
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,767,860
                                          )
                                          
                                          
                                          (11,227,870
                                          )Interest
      expense – convertible notes
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (182,653
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (382,269
                                          )
                                          
                                          
                                          (2,027,930
                                          )Interest
      (expense) income - net
                                          
                                          
                                          (21,311
                                          )
                                          
                                          
                                          679
                                          
                                          
                                          
                                          (39,607
                                          )
                                          
                                          
                                          1,026
                                          
                                          
                                          
                                          459,571Net
      loss
                                          
                                          
                                          (1,136,563
                                          )
                                          
                                          
                                          (1,703,665
                                          )
                                          
                                          
                                          (3,152,039
                                          )
                                          
                                          
                                          (1,892,961
                                          )
                                          
                                          
                                          (47,753,684
                                          )Preferred
      dividends
                                          
                                          
                                          (675,608
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,682,014
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (7,921,528
                                          )Loss
      applicable to common shares
                                          
                                          $
                                          (1,812,171
                                          )
                                          
                                          $
                                          (1,703,665
                                          )
                                          
                                          $
                                          (4,834,053
                                          )
                                          
                                          $
                                          (1,892,961
                                          )
                                          
                                          $
                                          (55,675,212
                                          )Basic
      and diluted net loss per common share
                                          
                                          $
                                          (0.03
                                          )
                                          
                                          $
                                          (0.06
                                          )
                                          
                                          $
                                          (0.08
                                          )
                                          
                                          $
                                          (0.08
                                          )Basic
      and diluted weighted-average number of common shares
      outstanding
                                          
                                          
                                          67,978,776
                                          
                                          
                                          
                                          26,250,566
                                          
                                          
                                          
                                          62,733,481
                                          
                                          
                                          
                                          24,146,382
 
 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 SIX MONTHS ENDED DECEMBER 31, 2010
 (unaudited)
 
 DeficitAccumulatedDuring the
                              
                              
                              Stockholders'Preferred Stock
                              
                              
                              Common Stock
                              
                              
                              Capital in Excess
                              
                              
                              Development
                              
                              
                              EquityShares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              of Par Value
                              
                              
                              Stage
                              
                              
                              (Deficiency)Balance
      July 1, 1998 (inception) through June 30, 2010
                              
                              
                              9,235
                              
                              
                              $
                              92
                              
                              
                              
                              50,092,204
                              
                              
                              $
                              500,922
                              
                              
                              $
                              58,321,169
                              
                              
                              $
                              (50,841,159
                              )
                              
                              $
                              7,981,024Issuance
      of common stock at $0.30 per share
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              599,185
                              
                              
                              
                              5,992
                              
                              
                              
                              174,722
                              
                              
                              
                              -
                              
                              
                              
                              180,714Commissions
      and other fees related to the issuance of common stock
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (31,437
                              )
                              
                              
                              -
                              
                              
                              
                              (31,437
                              )Preferred
      stock converted into common stock
                              
                              
                              (3,910
                              )
                              
                              
                              (39
                              )
                              
                              
                              12,218,750
                              
                              
                              
                              122,187
                              
                              
                              
                              (122,148
                              )
                              
                              
                              -
                              
                              
                              
                              -Issuance
      of common stock in lieu of cash payment for dividends
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              6,335,260
                              
                              
                              
                              63,353
                              
                              
                              
                              1,355,678
                              
                              
                              
                              (1,188,156
                              )
                              
                              
                              230,875Fair
      market value of options and warrants vested and amended
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              520,603
                              
                              
                              
                              -
                              
                              
                              
                              520,603Reclassification
      of warrant liability
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,121,733
                              
                              
                              
                              -
                              
                              
                              
                              1,121,733Issuance
      of common stock under the Company's the Company's long-term incentive
      plan
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              10,000
                              
                              
                              
                              100
                              
                              
                              
                              (100
                              )
                              
                              
                              -
                              
                              
                              
                              -Deemed
      dividend - Preferred Stock
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              360,733
                              
                              
                              
                              (360,733
                              )
                              
                              
                              -Dividends
      accrued and unpaid at December 31, 2010
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (133,125
                              )
                              
                              
                              (133,125
                              )Net
      loss
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,152,039
                              )
                              
                              
                              (3,152,039
                              )Balance
      at December 31, 2010
                              
                              
                              5,325
                              
                              
                              $
                              53
                              
                              
                              
                              69,255,399
                              
                              
                              $
                              692,554
                              
                              
                              $
                              61,700,953
                              
                              
                              $
                              (55,675,212
                              )
                              
                              $
                              6,718,348
 
 See Notes
to Condensed Consolidated Financial Statements




4


SENESCO TECHNOLOGIES, INC. AND
SUBSIDIARY (A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS


(unaudited)





CumulativeSix months ended December 31,
                      
                      
                      Amounts from2010
                      
                      
                      2009
                      
                      
                      InceptionCash
      flows from operating activities:Net
      loss
                      
                      $
                      (3,152,039
                      )
                      
                      $
                      (1,892,961
                      )
                      
                      $
                      (47,753,684
                      )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Noncash
      capital contribution
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      85,179Noncash
      conversion of accrued expenses into equity
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      131,250Noncash
      income related to change in fair value of warrant
liability
                      
                      
                      (469,386
                      )
                      
                      
                      (2,339,341
                      )
                      
                      
                      (8,039,073
                      )Noncash
      charge for change in warrant terms
                      
                      
                      115,869
                      
                      
                      
                      -
                      
                      
                      
                      115,869Issuance
      of common stock and warrants for interest
                      
                      
                      -
                      
                      
                      
                      382,269
                      
                      
                      
                      2,003,386Issuance
      of common stock for services
                      
                      
                      -
                      
                      
                      
                      28,800
                      
                      
                      
                      53,800Stock-based
      compensation expense
                      
                      
                      404,734
                      
                      
                      
                      153,542
                      
                      
                      
                      10,994,317Depreciation
      and amortization
                      
                      
                      69,304
                      
                      
                      
                      60,535
                      
                      
                      
                      768,312Deferred
      rent
                      
                      
                      (4,030
                      )
                      
                      
                      (3,979
                      )
                      
                      
                      4,030Amortization
      of convertible note discount
                      
                      
                      -
                      
                      
                      
                      1,496,593
                      
                      
                      
                      10,000,000Amortization
      of deferred financing costs
                      
                      
                      -
                      
                      
                      
                      271,267
                      
                      
                      
                      1,227,869Loss
      on extinguishment of debt
                      
                      
                      -
                      
                      
                      
                      86,532
                      
                      
                      
                      361,877(Increase)
      decrease in operating assets:Accounts
      receivable
                      
                      
                      -
                      
                      
                      
                      (140,000
                      )
                      
                      
                      -Prepaid
      expenses and other current assets
                      
                      
                      (3,181
                      )
                      
                      
                      29,344
                      
                      
                      
                      (1,307,976
                      )Security
      deposit
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (7,187
                      )Increase
      (decrease) in operating liabilities:Accounts
      payable
                      
                      
                      68,575
                      
                      
                      
                      196,512
                      
                      
                      
                      625,995Accrued
      expenses
                      
                      
                      (107,640
                      )
                      
                      
                      96,434
                      
                      
                      
                      413,343Net
      cash used in operating activities
                      
                      
                      (3,077,794
                      )
                      
                      
                      (1,574,453
                      )
                      
                      
                      (30,322,693
                      )Cash
      flows from investing activities:Patent
      costs
                      
                      
                      (258,276
                      )
                      
                      
                      (467,382
                      )
                      
                      
                      (5,352,554
                      )Redemption
      of investments, net
                      
                      
                      -
                      
                      
                      
                      1,050,000
                      
                      
                      
                      -Purchase
      of equipment, furniture and fixtures
                      
                      
                      (2,026
                      )
                      
                      
                      (1,116
                      )
                      
                      
                      (180,205
                      )Net
      cash (used in) provided by investing activities
                      
                      
                      (260,302
                      )
                      
                      
                      581,502
                      
                      
                      
                      (5,532,759
                      )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 and warrants, net and exercise of warrants
      and options
                      
                      
                      149,277
                      
                      
                      
                      1,364,169
                      
                      
                      
                      20,591,283Net
      cash provided by financing activities
                      
                      
                      149,277
                      
                      
                      
                      1,364,169
                      
                      
                      
                      40,692,929Net
      (decrease) increase in cash and cash equivalents
                      
                      
                      (3,188,819
                      )
                      
                      
                      371,218
                      
                      
                      
                      4,837,477Cash
      and cash equivalents at beginning of period
                      
                      
                      8,026,296
                      
                      
                      
                      380,569
                      
                      
                      
                      -Cash
      and cash equivalents at end of period
                      
                      $
                      4,837,477
                      
                      
                      $
                      751,787
                      
                      
                      $
                      4,837,477Supplemental
      disclosure of non-cash transactions:Conversion
      of convertible note into common stock
                      
                      $
                      -
                      
                      
                      $
                      1,457,460
                      
                      
                      $
                      10,000,000Conversion
      of bridge notes into common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      534,316Conversion
      of preferred stock into common stock
                      
                      
                      122,148
                      
                      
                      
                      -
                      
                      
                      
                      308,111Allocation
      of preferred stock proceeds to warrantsand beneficial conversion
      feature
                      
                      
                      360,733
                      
                      
                      
                      -
                      
                      
                      
                      7,449,780Allocation
      of convertible debt proceeds to warrants and beneficial conversion
      feature
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      9,340,000Warrants
      issued for financing costs
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      690,984Issuance
      of common stock for interest payments on convertible notes
                      
                      
                      -
                      
                      
                      
                      382,269
                      
                      
                      
                      2,003,386Issuance
      of common stock for dividend payments on preferred stock
                      
                      
                      1,188,156
                      
                      
                      
                      -
                      
                      
                      
                      2,607,187Issuance
      of common stock in settlement of accounts payable
                      
                      
                      -
                      
                      
                      
                      175,000
                      
                      
                      
                      175,000Dividends
      accrued on preferred stock
                      
                      
                      133,125
                      
                      
                      
                      -
                      
                      
                      
                      133,125Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                      
                      
                      53,387
                      
                      
                      
                      -
                      
                      
                      
                      179,872




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 December 31, 2010, the results of its operations for
the six months and three-months ended December 31, 2010 and 2009, cash flows for
the six months ended December 31, 2010 and 2009, and the results of its
operations and cash flows for the period from inception on July 1, 1998 through
December 31, 2010.




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




Note
2 – Liquidity:




As shown
in the accompanying condensed consolidated financial statements, the Company has
a history of losses with a deficit accumulated during the development stage from
July 1, 1998 (inception) through December 31, 2010 of
$55,675,212.  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
December 31, 2010, the Company had cash and cash equivalents in the amount of
$4,837,477, which consisted of checking accounts and money market
funds.  From January 1, 2011 through February 4, 2011, the Company has
received net proceeds from the issuance of the Company’s common stock, par value
$0.01 (the “Common Stock”) in the amount of approximately
$1,360,000.  The Company estimates its cash and cash equivalents and
the net proceeds from the issuance of Common Stock from January 1, 2011 through
February 4, 2011 will cover its expenses for at least the next twelve months
from December 31, 2010.




The
Company will need additional capital and plans to raise additional capital
through the placement of debt instruments or equity or both.  In
December 2010, the Company entered into an At Market Issuance Sales Agreement
(“ATM”) whereby it may issue up to $5,500,000 of Common Stock under this
facility.  Through February 4, 2011, the Company has received gross
proceeds from the ATM facility in the amount of $1,655,150. 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 and 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 December 31, 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.


7


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.




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.




As of
December 31, 2010, there were 84,111,290 additional potentially dilutive shares
of Common Stock. These additional shares include 17,750,000 shares issuable upon
conversion of the Preferred Stock, and 66,361,290 shares issuable upon the
exercise of outstanding options and warrants.  As of December 31,
2009, there were 57,002,123 additional potentially dilutive shares of Common
Stock. These additional shares included 29,620,519 shares issuable upon
conversion of 8% convertible notes and 27,381,604 shares issuable upon the
exercise of outstanding options and warrants.




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.  The material factors incorporated in
the Black-Scholes model in estimating the value of the options and warrants
include the following:





Three
      Months Ended
                    
                    
                    Six
      Months EndedDecember
      31,
                    
                    
                    December
      31,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009Warrants
      granted
                    
                    
                    5,000
                    
                    
                    None
                    
                    
                    
                    305,000
                    
                    
                    NoneOptions
      granted
                    
                    
                    4,115,892
                    
                    
                    
                    733,399
                    
                    
                    
                    4,115,892
                    
                    
                    
                    733,399Estimated
      life in years
                    
                    
                    5.0-10.0
                    
                    
                    
                    3.5-5.5
                    
                    
                    
                    5.0-10.0
                    
                    
                    
                    3.5-5.5Risk-free
      interest rate (1)
                    
                    
                    1.5%-2.9
                    %
                    
                    
                    1.9%-3.9
                    %
                    
                    
                    1.3%-2.9
                    %
                    
                    
                    1.3% – 1.8
                    %Volatility
                    
                    
                    104
                    %
                    
                    
                    100
                    %
                    
                    
                    104
                    %
                    
                    
                    100
                    %Dividend
      paid
                    
                    None
                    
                    
                    None
                    
                    
                    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, which cannot be forecast with reasonable
accuracy.


8


A summary
of changes in the stock option plan for the six months ended December 31, 2010
is as follows:




Number of Options
                
                
                Weighted-Average
                    Exercise PriceOutstanding
      at July 1, 2010
                
                
                7,269,172
                
                
                $
                1.13Granted
                
                
                4,115,892
                
                
                
                0.26Exercised
                
                
                —
                
                
                
                —Expired
                
                
                (500,000
                )
                
                
                1.14Outstanding
      at December 31, 2010
                
                
                10,885,064
                
                
                $
                0.80Exercisable
      at December 31, 2010
                
                
                6,413,394
                
                
                $
                1.13Not
      Exercisable at December 31, 2010
                
                
                4,471,670
                
                
                $
                0.26




As of
December 31, 2010, the aggregate intrinsic value of stock options outstanding
was $39,236, with a weighted-average remaining term of 7.7 years.  The
aggregate intrinsic value of stock options exercisable at that same date was
$8,869, with a weighted-average remaining term of 6.3 years.  As of
December 31, 2010, the Company has 3,819,820 shares available for future stock
option grants.




As of
December 31, 2010, total compensation expense not yet recognized related to
stock option grants amounted to approximately $1,207,000, which will be recognized
over the next 47 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 pursuant to which key employees could be awarded shares of
Common Stock and options to acquire shares of Common Stock if the Company
achieved certain target goals relating to its multiple myeloma research project
over the three fiscal year period from the date of adoption.




As of December 31, 2010, the Company
determined that the first target goal under the Long-Term Equity Incentive
Program had been met 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 December 31, 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
December 31, 2010 is $2,194,844.




9


Total
interest expense for the three and six months ended December 31, 2010 amounted
to $26,715 and $53,387, respectively.




Note
7 – Income Taxes:




No
provision for income taxes has been made for the three and six months ended
December 31, 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.




Note
8 - Fair Value Measurements:




The
following tables provide the assets and liabilities carried at fair value
measured on a recurring basis as of December 31, 2010 and June 30,
2010:




Fair
      Value Measurement atCarrying
                  
                  
                  December 31, 2010.Value
                  
                  
                  Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3Assets:Cash
      and cash equivalents
                  
                  $
                  4,837,477
                  
                  
                  $
                  4,837,477
                  
                  
                  $
                  -
                  
                  
                  $
                  -Liabilities:Warrant
      Liabilities
                  
                  $
                  902,675
                  
                  
                  $
                  -
                  
                  
                  $
                  902,675
                  
                  
                  $
                  -





Fair
      Value Measurement atCarrying
                  
                  
                  June 30, 2010.Value
                  
                  
                  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.




The fair
value of the warrants that have exercise price reset features is estimated using
an adjusted Black-Scholes model.  The Company computes valuations,
each quarter, using the Black-Scholes model for such warrants to account for the
various possibilities that could occur due to changes in the inputs to the
Black-Scholes model as a result of contractually-obligated
changes.  The Company effectively weights each calculation based on
the likelihood of occurrence to determine the value of the derivative at the
reporting date.  The fair value of the warrants that have cash
settlement features is estimated using the Black-Scholes model.




During
the six months ended December 31, 2010, the holders of an aggregate of
21,079,165 warrants amended the terms of their warrants.  At December
31, 2010, there were an aggregate of 22,870,314 warrants included in the fair
value of the warrant liabilities.




10




As of the dates of the amendments to
the warrants, the Black-Scholes value in the amount of $1,121,733 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
$115,869 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 $115,869 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.




On
December 31, 2010, the Company revalued all of the remaining warrant
liabilities, using the adjusted Black-Scholes model.  A gain on the
change in fair value of the warrant liabilities in the amount of $469,386, which
includes the change in fair value of the warrants from June 30, 2010 through the
dates of amendment, was recorded in the Condensed Consolidated Statement of
Operations for the six months ended December 31, 2010.




The
assumptions used to value the warrants were as follows:




December 31,2010
                      
                      
                      June 30, 2010Warrants
      issued on December 20, 2007Estimated
      life in years
                      
                      
                      2.00
                      
                      
                      
                      2.50Risk-free interest
      rate (1)
                      
                      
                      0.61
                      %
                      
                      
                      0.80
                      %Volatility
                      
                      
                      104
                      %
                      
                      
                      106
                      %Dividend
      paid
                      
                      None
                      
                      
                      NoneWarrants
      issued on June 30, 2008Estimated
      life in years
                      
                      
                      2.50
                      
                      
                      
                      3.00Risk-free interest
      rate (1)
                      
                      
                      1.02
                      %
                      
                      
                      1.00
                      %Volatility
                      
                      
                      104
                      %
                      
                      
                      106
                      %Dividend
      paid
                      
                      None
                      
                      
                      NoneWarrants
      issued on April 1, 2010Estimated
      life in years
                      
                      
                      4.25
                      
                      
                      
                      4.75Risk-free interest
      rate (1)
                      
                      
                      1.52
                      %
                      
                      
                      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.




11


Note
10- At Market Issuance Sales Agreement




On
December 22, 2010, the Company entered into an At Market Issuance Sales
Agreement (the “ATM”) under which the Company, from time to time, may issue and
sell shares of its Common Stock, par value $0.01 per share, with an aggregate
offering price of up to $5,500,000.  Such Common Stock will be offered
and sold pursuant to a prospectus supplement filed with the Securities and
Exchange Commission in connection with the Company’s shelf registration
statement on Form S-3 (File No. 333-170140), which became effective on November
9, 2010.





Upon
delivery of a placement notice by the Company, if any, the placement agent may
sell the Common Stock in any method permitted by law deemed to be an “at the
market” offering as defined in Rule 415 promulgated under the Securities Act of
1933, as amended, at prices prevailing at the time of sale or at prices related
to such prevailing market prices, including sales made directly on the NYSE
Amex, or sales made through a market maker other than on an
exchange.  The placement agent will make all sales using commercially
reasonable efforts consistent with its normal sales and trading practices on
mutually agreed upon terms between the placement agent and the Company. The
Company will pay the placement agent a commission of up to 6% of the gross
proceeds from the sale of shares of the Common Stock, depending on the per share
sales price.  The Company has agreed to reimburse a portion of the
placement agent’s expenses in connection with the offering, up to an aggregate
amount of $25,000. In addition, the Company granted customary indemnification
rights to the placement agent.





The ATM
will terminate upon the earlier of (1) the sale of all of the Common Stock
subject to the ATM, or (2) upon termination by the Company or the placement
agent.  The placement agent may terminate the ATM in certain
circumstances, including the occurrence of a material adverse change that, in
the placement agent’s reasonable judgment, may impair its ability to sell the
Common Stock, the Company’s failure to satisfy any condition
under  the ATM or a suspension or limitation of trading of the Common
Stock on the NYSE Amex. In addition, either the Company or the placement agent
may terminate the ATM at any time and for any reason upon 10 days prior notice
to the other party.





During the period ended December 31,
2010, the Company issued 599,185 shares of Common Stock under the ATM for gross
proceeds in the amount of $180,714.  From January 1, 2011 through
February 4, 2011, the Company issued an additional 4,652,430 shares of Common
Stock under the ATM for gross proceeds in the amount of $1,474,436.





Note
11 –Preferred Stock




On April 1, 2010 and June 2, 2010, the
Company issued 10,297 and 1,200 shares of 10% convertible preferred stock (the
“Preferred Stock”), respectively.  Each share of Preferred Stock has a
stated value of $1,000 (the “Stated Value”). On December 27, 2010, in connection
with the Company’s ATM facility discussed above, the conversion price on the
then outstanding 5,325 shares of Preferred Stock was adjusted from $0.32 to
$0.30, resulting in an additional 1,109,375 shares of Common Stock that will be
issued upon conversion of the then outstanding Preferred
Stock.   In connection with the adjustment of the conversion
price, due to a beneficial conversion feature, an additional dividend in the
amount of $360,733 was recorded as an increase to both additional paid-in
capital and accumulated deficit. As a result of the reset of the
conversion price, each share of Preferred Stock is convertible into 3,333 shares
of Common Stock (a conversion price of $0.30).




12


Each
holder of shares of Preferred Stock is entitled to receive semi-annual 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 (i) 90% of the volume weighted average price (“ VWAP”) for the 20
trading days immediately preceding the payment date or (ii)
$0.224.  The dividends are subject to a 30% make whole
provision.




During the six months ended December
31, 2010, 3,910 shares of Preferred Stock were converted into 12,218,750 shares
of Common Stock.  During the six months ended December 31, 2010, the
Company issued an additional 6,335,260 shares of Common Stock for the payment of
dividends in the amount of $1,419,031.  Total dividends payable on the
outstanding 5,325 shares of Preferred Stock at December 31, 2010 amounted to
$133,125.




Note
12 – Grant Income:




On
October 29, 2010, the Company was approved for a grant in the amount of $244,479
in connection with 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.




13


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 technology
related to certain genes, primarily eukaryotic 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 Factor 5A gene regulatory 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
defective cancer cells have failed to respond to the body’s natural apoptotic
signals.  Conversely, inhibiting apoptosis may be useful in preventing
or treating a wide range of inflammatory and ischemic diseases attributable to
or aggravated by premature apoptosis.




SNS01-T
for Multiple Myeloma




We have
developed a therapeutic candidate, SNS01-T, a slightly modified formulation of
SNS01, for the potential treatment of multiple myeloma.  SNS01-T
utilizes our Factor 5A technology by incorporating a short interfering RNA, or
siRNA, a DNA plasmid and polyethylenimine, or PEI.  SNS01-T modulates
two proteins at amino acid 50 in the protein, (i) a lysine amino acid-containing
protein, which regulates apoptosis, and (ii) a hypusine-containing protein,
which promotes cell survival.  The two proteins are otherwise the
same.  SNS01-T’s DNA plasmid up-regulates the apoptotic pathways
within cancer cells.  Under the control of a plasma cell promoter, the
DNA plasmid selectively expresses the stable arginine form of the Factor 5A
death message in target cells of B-cell origin.  The siRNA down
regulates Factor 5A expression including the survival message contained in the
hypusine form of Factor 5A.  The siRNA also down-regulates
anti-apoptotic proteins, such as NFkB, ICAM and pro-inflammatory cytokines,
which are proliferation factors for multiple myeloma.  The PEI, a
cationic polymer, promotes self-assembly of a nanoparticle with the other two
components for intravenous delivery and protects the combination from
degradation in the bloodstream until it is taken up by the tumor cell, where the
siRNA and DNA plasmid are released.




14


We have
performed efficacy, toxicological and dose-finding studies in vitro in non-human and
human cells and in-vivo
in mice for SNS01.  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 of 73% and 61%, respectively, and weight of 74% and 36%,
respectively.  All SNS01 treated mice survived.  This
therapeutic dose range study provided the basis for a non-GLP 8-day maximum
tolerated dose study in which normal mice received two intravenous doses of
increasing amounts of SNS01 (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%.  Mice receiving above 2.9 mg/kg of SNS01 showed evidence of
morbidity and up to 80% mortality.  The 2.9 mg/kg threshold was
therefore determined to be the maximum tolerated dose in mice in this
study.  We have also completed our pivotal GLP toxicology studies in
mice and dogs, employing SNS01-T, a slightly modified formulation of SNS01, and
have submitted an investigational new drug application, or IND, to the United
States Food and Drug Administration, or FDA.  We have been granted
orphan drug status for SNS01-T by the FDA for the potential treatment of
multiple myeloma.




Upon
approval of our IND, we plan on initiating a Phase 1b/2a clinical study with
SNS01-T in multiple myeloma patients.  We anticipate that the Phase
1b/2a study will be a sequential dose escalating study comprising three (3) to
four (4) cohorts of four (4) to five (5) patients each.  Each cohort
will receive SNS01-T over a six (6) week period.  During the treatment
period, we will be assessing primarily safety and secondarily efficacy by
measuring M protein, a surrogate marker that circulates in the blood of multiple
myeloma patients, as well as other markers to determine if there is an effect on
the disease.  We have selected Mayo Clinic as a clinical site and are
considering adding one or two other sites.  We hope to begin our
clinical trial before the end of the quarter ended June 30, 2011.




We may
consider other human diseases in order to determine the role of Factor 5A and
SNS01-T.




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.  In December 2010, we
entered into the ATM facility for the issuance of up to $5,500,000 of common
stock.  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.




15


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




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.




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
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 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.




16


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
                          
                          Discontinued




The
license agreement with Poet called for modifying certain inputs in the
production of ethanol in order to increase the yield of ethanol in Poet’s
optimized production system.  While we have been able to modify those
inputs, to date, we have not been successful in increasing the yield from Poets
optimized production system.  As such, we have discontinued our
efforts to modify those 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.




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.  Of our seventy-eight (78) domestic and foreign issued
patents, fifty-three (53) are for the use of our technology in agricultural
applications and twenty-five (25) 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.




17


Liquidity
and Capital Resources




Overview




For the
six months ended December 31, 2010, net cash of $3,077,794 was used in operating
activities primarily due to a net loss of $3,152,039, which was partially
reduced by non-cash expenses, net of non-cash income, of $120,521 and changes in
operating assets and liabilities of $46,276.




Non-cash
expenses consisted of stock-based compensation, depreciation and amortization
and a charge arising from a change in terms of certain
warrants.  Non-cash income arose from a reduction in the amount of
warrant liabilities recorded at December 31, 2010.




The
$46,276 change in operating assets and liabilities was primarily the result of a
net decrease in accounts payable and accrued expenses of $39,065, a decrease in
other liabilities of $4,030 and an increase in prepaid expenses of
$3,181.




During
the six months ended December 31, 2010, cash used for investing activities
amounted to $260,302, which was related to patent costs incurred and fixed
assets purchased.




Cash
provided by financing activities during the six months ended December 31, 2010
amounted to $149,277, which was related to the placement of common stock through
our $5,500,000 ATM facility.  Additionally, from January 1, 2011
through February 4, 2011, we have received net proceeds of approximately
$1,360,000 from our ATM facility.




As of
December 31, 2010, our cash balance totaled $4,837,477, and we had working
capital of $2,949,117.  As of December 31, 2010, we had a federal tax
loss carryforward of approximately $44,743,000 and a state tax loss
carry-forward of approximately $37,378,000 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 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.




18




Contractual
Obligations




The
following table lists our cash contractual obligations as of December 31,
2010:




Payments Due by PeriodLess than
                            
                            
                            
                            
                            
                            
                            
                            
                            More thanContractual Obligations
                            
                            Total
                            
                            
                            1 year
                            
                            
                            1 - 3 years
                            
                            
                            3 - 5 years
                            
                            
                            5 yearsResearch
      and Development Agreements (1)
                            
                            $
                            738,257
                            
                            
                            $
                            738,257
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            —Facility,
      Rent and Operating Leases (2)
                            
                            $
                            33,440
                            
                            
                            $
                            33,440
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            —Employment,
      Consulting and Scientific Advisory Board Agreements (3)
                            
                            $
                            184,000
                            
                            
                            $
                            181,500
                            
                            
                            $
                            2,500
                            
                            
                            $
                            —
                            
                            
                            $
                            —Total
      Contractual Cash Obligations
                            
                            $
                            955,697
                            
                            
                            $
                            953,197
                            
                            
                            $
                            2,500
                            
                            
                            $
                            —
                            
                            
                            $
                            —







(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.




Effective
December 1, 2010, we extended our research and development agreement with the
University of Waterloo for an additional nine-month period through August 31,
2011, in the amount of CAD $434,687, or approximately USD $434,687 as of
December 31, 2010.




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.




19




We
anticipate that, based upon our cash balance as of December 31, 2010 and with
the proceeds from the ATM facility through February 4, 2011, we will be able to
fund our operations for at least the next twelve months from December 31, 2010.
Over such period, 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 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.




20




Results
of Operations




Three
Months Ended December 31, 2010 andThree
Months Ended December 31, 2009




The net
loss for the three months ended December 31, 2010 was $1,136,563.  The
net loss for the three months ended December 31, 2009 was
$1,703,665.  Such a change represents a decrease in net loss of
$567,102,or
33.3%.  This decrease in net loss was primarily the result of a
decrease in other non-operating expenses which was partially offset by an
increase in research and development costs related to the development of our
multiple myeloma drug candidate, SNS01-T.




Revenue




There was
no revenue during the three month period ended December 31, 2010.




Total
revenue in the amount of $140,000 for the three months  ended December
31, 2009 consisted of a milestone payment in connection with an agricultural
license agreement.




We
anticipate that we will receive future milestone payments in connection with our
current agricultural development and license
agreements.  Additionally, we anticipate that we may 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 or royalties and the timing and outcome of our experiments, the timing
of signing new partner agreements and the timing of our partners moving through
the development process into commercialization is difficult to accurately
predict.




General
and Administrative Expenses




Three Months Ended December 31,2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  %(in thousands, except % values)Payroll
      and benefits
                  
                  $
                  136
                  
                  
                  $
                  239
                  
                  
                  $
                  (103
                  )
                  
                  
                  (43.1
                  )%Investor
      relations
                  
                  
                  57
                  
                  
                  
                  45
                  
                  
                  
                  12
                  
                  
                  
                  26.7
                  %Professional
      fees
                  
                  
                  160
                  
                  
                  
                  141
                  
                  
                  
                  19
                  
                  
                  
                  13.5
                  %Depreciation
      and amortization
                  
                  
                  35
                  
                  
                  
                  33
                  
                  
                  
                  2
                  
                  
                  
                  6.1
                  %Director
      fees
                  
                  
                  (14
                  )
                  
                  
                  10
                  
                  
                  
                  (24
                  )
                  
                  
                  (240.0
                  )%Other
      general and administrative
                  
                  
                  163
                  
                  
                  
                  69
                  
                  
                  
                  94
                  
                  
                  
                  136.2
                  %537
                  
                  
                  
                  537
                  
                  
                  
                  -
                  
                  
                  
                  -Stock-based
      compensation
                  
                  
                  170
                  
                  
                  
                  148
                  
                  
                  
                  22
                  
                  
                  
                  14.9
                  %Total
      general and administrative
                  
                  $
                  707
                  
                  
                  $
                  685
                  
                  
                  $
                  22
                  
                  
                  
                  3.2
                  %




21




·
            Payroll
      and benefits for the three months ended December 31, 2010 was lower than
      for the three months ended December 31, 2009, primarily due to the
      severance package recorded for the former President and CEO during Fiscal
      2010.  This was partially offset by a bonus granted to the Chief
      Financial Officer during Fiscal
2011.




·
            Investor
      relations expense for the three months ended December 31, 2010 was higher
      than for the three months ended December 31, 2009, primarily as a result
      of an increase in investor relations consulting
  costs.




·
            Professional
      fees for the three months ended December 31, 2010 was higher than for the
      three months ended December 31, 2009, primarily as a result of an increase
      in accounting fees.  Accounting fees increased primarily due to
      the use of a consultant to assist with the preparation of our quarterly
      filings.




·
            Depreciation
      and amortization for the three months ended December 31, 2010 was higher
      than for the three months ended December 31, 2009, primarily as a result
      of an increase in amortization of patent
costs.




·
            Director
      fees for the three months ended December 31, 2010 was lower than for the
      three months ended December 31, 2009 primarily due to the termination of
      the Finance Committee that was in place from November 2009 through May
      2010 and fewer board meetings being held during the three months ended
      December 31, 2010 than during the three months ended December 31,
      2009.




·
            Other
      general and administration expenses for the three months ended December
      31, 2010 was higher than for the three months ended December 31, 2009
      primarily due to an increase in attendance at various financial and
      industry conferences and certain consulting
  costs.




·
            Stock-based
      compensation for the three months ended December 31, 2010 and 2009
      consisted of the amortized portion of the Black-Scholes value of options,
      restricted stock units and warrants granted to directors, employees and
      consultants.  There were 4,115,892 and 733,399 options granted
      during the three months ended December 31, 2010 and 2009, respectively.
      There were 5,000 warrants granted to consultants during the three months
      ended December 31, 2010 and no warrants granted during the three months
      ended December 31, 2009.




Stock-based
compensation for the three months ended December 31, 2010 was higher than for
the three months ended December 31, 2009, primarily due to the increase in the
number of options granted during the three months ended December 31, 2010 as
compared to the number of options granted during the three months ended December
31, 2009.




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.




22




Research
and Development Expenses




Three Months Ended December 31,2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  %(in thousands, except % values)Payroll
                  
                  $
                  40
                  
                  
                  $
                  40
                  
                  
                  $
                  -
                  
                  
                  
                  -Research
      contract with the University of Waterloo
                  
                  
                  150
                  
                  
                  
                  155
                  
                  
                  
                  (5
                  )
                  
                  
                  (3.2
                  )%Other
      research and development
                  
                  
                  592
                  
                  
                  
                  270
                  
                  
                  
                  322
                  
                  
                  
                  119.3
                  %782
                  
                  
                  
                  465
                  
                  
                  
                  317
                  
                  
                  
                  68.2
                  %Stock-based
      compensation
                  
                  
                  16
                  
                  
                  
                  3
                  
                  
                  
                  13
                  
                  
                  
                  433.3
                  %Total
      research and development
                  
                  $
                  798
                  
                  
                  $
                  468
                  
                  
                  $
                  330
                  
                  
                  
                  70.5
                  %





·
            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 months ended
      December 31, 2010, we were conducting our pivotal toxicology study and
      preparing for the filing of an IND for the treatment of multiple myeloma
      with SNS01-T.




·
            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.   Stock-based compensation for
      the three months ended December 31, 2010 was higher than for the three
      months ended December 31, 2009, primarily due to an increase in the number
      of options granted during the three months ended December 31, 2010 as
      compared to the number of options granted during the three months ended
      December 31, 2009.




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




Three Months Ended December 31,2010
                
                
                %
                
                
                2009
                
                
                %(in thousands, except % values)Agricultural
                
                $
                139
                
                
                
                17
                %
                
                $
                127
                
                
                
                27
                %Human
      health
                
                
                659
                
                
                
                83
                %
                
                
                341
                
                
                
                73
                %Total
      research and development
                
                $
                798
                
                
                
                100
                %
                
                $
                468
                
                
                
                100
                %




·
            Agricultural
      research expenses did not materially change during the three months ended
      December 31, 2010 from the three months ended December 31, 2009, as we
      have not materially changed the scope of our agricultural
      research.




·
            Human
      health research expenses increased during the three months ended December
      31, 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.  Specifically, during the three months ended
      December 31, 2010, we incurred costs related to the performance of our
      pivotal toxicology studies and the preparation of an
  IND.




23




We expect
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 and other cancers.




Other
non-operating income and expense




Grant
income




We
received grant income under the Qualified Therapeutic Discovery Project in the
amount of $244,479 for the three months ended December 31, 2010.  The
funds were granted in connection with the Company’s program for the use of its
lead therapeutic candidate, SNS01-T, in multiple myeloma.




There was
no grant income during the three months ended December 31, 2009.




Fair
value – warrant liability




On
December 31, 2010, the amount of the warrant liability was adjusted to $902,675
from $1,207,452 at September 30, 2010.  This decrease of $304,777 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 December 31,
2010.  Accordingly, $154,867 of the decrease was recorded as an
increase to capital in excess of par with the balance of the decrease in the
amount of $149,910 being recorded as income from the change in the Black-Scholes
value of the remaining warrants.




On
December 31, 2009, the amount of the warrant liability was adjusted to $860,767
from $1,311,975 at September 30, 2009. This decrease of $451,208 was due to a
decrease in the Black-Scholes value of the underlying warrants.




Other
noncash expense or income




During
the three months ended December 31, 2010, the exercise price of 186,974 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 $4,604.




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




During
the fiscal year ended June 30, 2010, all of the convertible notes were either
converted into common stock or redeemed.  Accordingly, the 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 or interest
expense during the three months ended December 31, 2010.




24




Interest
(expense) income





Interest expense for the three months
ended December 31, 2010 was higher than for the three months ended December 31,
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 December 31, 2010.




25




Six Months
Ended December 31, 2010 andSix Months
Ended December 31, 2009




The net
loss for the six months ended December 31, 2010 was $3,152,039.  The
net loss for the six months ended December 31, 2009 was
$1,892,961.  Such a change represents an increase in net loss of
$1,259,078,or
66.5%.  This increase in net loss was primarily the result of an
increase in research and development costs related to the development of our
multiple myeloma drug candidate, SNS01-T, and general and administrative
expenses, which was partially offset by an increase in revenue and non-operating
income.




Revenue




There was
no revenue during the six months ended December 31, 2010. Total revenue in
the amount of $140,000 for the six months ended December 31, 2009 consisted of a
milestone payment in connection with an agricultural license
agreement.




We
anticipate that we will receive future milestone payments in connection with our
current agricultural development and license
agreements.  Additionally, we anticipate that we may 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 or royalties, and 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.




General
and Administrative Expenses




Six Months Ended December 31,2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  %(in thousands, except % values)Payroll
      and benefits
                  
                  $
                  286
                  
                  
                  $
                  400
                  
                  
                  $
                  (114
                  )
                  
                  
                  (28.5
                  )%Investor
      relations
                  
                  
                  106
                  
                  
                  
                  91
                  
                  
                  
                  15
                  
                  
                  
                  16.5
                  %Professional
      fees
                  
                  
                  265
                  
                  
                  
                  263
                  
                  
                  
                  2
                  
                  
                  
                  0.8
                  %Depreciation
      and amortization
                  
                  
                  69
                  
                  
                  
                  61
                  
                  
                  
                  8
                  
                  
                  
                  13.1
                  %Director
      fees
                  
                  
                  24
                  
                  
                  
                  53
                  
                  
                  
                  (29
                  )
                  
                  
                  (54.7
                  )%Other
      general and administrative
                  
                  
                  251
                  
                  
                  
                  130
                  
                  
                  
                  121
                  
                  
                  
                  93.1
                  %1,001
                  
                  
                  
                  998
                  
                  
                  
                  3
                  
                  
                  
                  0.3
                  %Stock-based
      compensation
                  
                  
                  374
                  
                  
                  
                  182
                  
                  
                  
                  192
                  
                  
                  
                  105.5
                  %Total
      general and administrative
                  
                  $
                  1,375
                  
                  
                  $
                  1,180
                  
                  
                  $
                  195
                  
                  
                  
                  16.5
                  %




26




·
            Payroll
      and benefits for the six months ended December 31, 2010 was lower than for
      the six months ended December 31, 2009, primarily due to the severance
      package recorded for the former President and CEO during Fiscal
      2010.  This was partially offset by a bonus granted to the Chief
      Financial Officer during Fiscal 2011.




·
            Investor
      relations expense for the six months ended December 31, 2010 was higher
      than for the six months ended December 31, 2009, primarily as a result of
      an increase in investor relations consulting
  costs.




·
            Depreciation
      and amortization for the six months ended December 31, 2010 was higher
      than for the six months ended December 31, 2009, primarily as a result of
      an increase in amortization of patent
costs.




·
            Director
      fees for the six months ended December 31, 2010 was lower than for the six
      months ended December 31, 2009, primarily due to the termination of the
      Finance Committee that was in place from November 2009 through May 2010
      and fewer board meetings being held during the six months ended December
      31, 2010 than during the six months ended December 31,
    2009.




·
            Other
      general and administration expenses for the six months ended December 31,
      2010 was higher than for the six months ended December 31, 2009, primarily
      due to an increase in attendance at various financial and industry
      conferences and certain consulting
costs.




·
            Stock-based
      compensation for the six months ended December 31, 2010 and 2009 consisted
      of the amortized portion of the Black-Scholes value of options, restricted
      stock units and warrants granted to directors, employees and
      consultants.  There were 4,115,892 and 733,399 options granted
      during the six months ended December 31, 2010 and 2009, respectively.
      There were 305,000 warrants granted to consultants during the six months
      ended December 31, 2010 and no warrants granted during the six months
      ended December 31, 2009.




Stock-based
compensation for the six months ended December 31, 2010 was higher than for the
six months ended December 31, 2009, primarily due to the increase in the number
of options granted during the six months ended December 31, 2010 as compared to
the number of options granted during the six months ended December 31,
2009.  Additionally, stock-based compensation for the six months ended
December 31, 2010 includes the Black-Scholes value of the 300,000 warrants
granted to consultants.  Also, during the six months ended December
31, 2010, we recognized $93,500 of stock-based compensation in connection with
the achievement of a milestone related to our long-term incentive
plan.




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.




27




Research
and Development Expenses




Six Months Ended December 31,2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  %(in thousands, except % values)Payroll
                  
                  $
                  95
                  
                  
                  $
                  80
                  
                  
                  $
                  15
                  
                  
                  
                  18.8
                  %Research
      contract with the University of Waterloo
                  
                  
                  315
                  
                  
                  
                  315
                  
                  
                  
                  -
                  
                  
                  
                  -Other
      research and development
                  
                  
                  1,894
                  
                  
                  
                  562
                  
                  
                  
                  1,332
                  
                  
                  
                  237.0
                  %2,304
                  
                  
                  
                  957
                  
                  
                  
                  1,347
                  
                  
                  
                  140.8
                  %Stock-based
      compensation
                  
                  
                  31
                  
                  
                  
                  -
                  
                  
                  
                  31
                  
                  
                  
                  -Total
      research and development
                  
                  $
                  2,335
                  
                  
                  $
                  957
                  
                  
                  $
                  1,378
                  
                  
                  
                  144.0
                  %





·
            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 six months ended
      December 31, 2010, we incurred costs related to the performance of our
      pivotal toxicology studies and the preparation of an
  IND.




·
            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.   Stock-based compensation for
      the six months ended December 31, 2010 was higher than for the six months
      ended December 31, 2009, primarily due to an increase in the number of
      options granted during the six months ended December 31, 2010 as compared
      to the number of options granted during the three months ended December
      31, 2009. Additionally, for the six months ended December 31, 2010,
      stock-based compensation consisted of the amount of awards under our
      long-term incentive plan and for the six months ended December 31, 2009,
      stock-based compensation also consisted of the amount of awards under our
      short-term incentive plan.




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




Six Months Ended December 31,2010
                
                
                %
                
                
                2009
                
                
                %(in thousands, except % values)Agricultural
                
                $
                285
                
                
                
                12
                %
                
                $
                247
                
                
                
                26
                %Human
      health
                
                
                2,050
                
                
                
                88
                %
                
                
                710
                
                
                
                74
                %Total
      research and development
                
                $
                2,335
                
                
                
                100
                %
                
                $
                957
                
                
                
                100
                %




·
            Agricultural
      research expenses did not materially change during the six months ended
      December 31, 2010 from the six months ended December 31, 2009, as we have
      not materially changed the scope of our agricultural
    research.




·
            Human
      health research expenses increased during the six months ended December
      31, 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.  Specifically, during the three months ended
      December 31, 2010, we incurred costs related to the performance of our
      pivotal toxicology studies and the preparation of an
  IND.




28




We expect
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 and other cancers.




Other
non-operating income and expense




Grant
income




We
received grant income under the Qualified Therapeutic Discovery Project in the
amount of $244,479 for the six months ended December 31, 2010.  The
funds were granted in connection with the Company’s program for the use of its
lead therapeutic candidate, SNS01-T, in Multiple Myeloma.




There was
no grant income during the six months ended December 31, 2009.




Fair
value – warrant liability




On
December 31, 2010, the amount of the warrant liability was adjusted to $902,675
from $2,493,794 at June 30, 2010.  This decrease of $1,591,119 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 six months ended December 31,
2010.  Accordingly, $1,121,733 of the decrease was recorded as an
increase to capital in excess of par with the balance of the decrease in the
amount of $469,386 being recorded as income from the change in the Black-Scholes
value of the remaining warrants.




On
December 31, 2009, the amount of the warrant liability was adjusted to $860,767
from $1,311,975 at June 30, 2009. This decrease of $451,208 was due to a
decrease in the Black-Scholes value of the underlying warrants.




Other
noncash expense or income




During
the six months ended December 31, 2010, the exercise price of 4,013,751 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 $115,869.




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




During
the fiscal year ended June 30, 2010, all of the convertible notes were either
converted into common stock or redeemed.  Accordingly, the 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 or interest
expense during the six months ended December 31, 2010.




29




Interest
(expense) income





Interest expense for the six months
ended December 31, 2010 was higher than the six months ended December 31, 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 six months ended
December 31, 2010.





From Inception on July 1,
1998 through December 31, 2010





From
inception of operations on July 1, 1998 through December 31, 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.





We have
incurred losses each year since inception and have an accumulated deficit of
$55,675,212 at December 31, 2010.  We expect to continue to incur
losses as a result of expenditures on research, product development and
administrative activities.




Off
Balance-Sheet Arrangements




We do not
have any off balance-sheet arrangements.




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 Securities Exchange Act of 1934) as of December 31,
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 Securities and Exchange Commission’s,
or SEC, 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 Securities Exchange Act of 1934) occurred during the six
month period ended December 31, 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 $55,675,212 at December 31, 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
will 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
December 31, 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.




Materials
necessary to manufacture some of our compounds currently under development may
not be available on commercially reasonable terms, or at all, which may delay
our development and commercialization of these compounds.





Some of
the materials necessary for the manufacture of our compounds under development
may, from time to time, be available either in limited quantities, or from a
limited number of manufacturers, or both. Our contract manufacturers need to
obtain these materials for our clinical trials and, potentially, for commercial
distribution when and if we obtain marketing approval for these compounds.
Suppliers may not sell us these materials at the time we need them or on
commercially reasonable terms. If we are unable to obtain the materials needed
to conduct our clinical trials, product testing and potential regulatory
approval could be delayed, adversely affecting our ability to develop the
product candidates. Similarly, if we are unable to obtain critical manufacturing
materials after regulatory approval has been obtained for a product candidate,
the commercial launch of that product candidate could be delayed or there could
be a shortage in supply, which could materially affect our ability to generate
revenues from that product candidate. If suppliers increase the price of
manufacturing materials, the price for one or more of our products may increase,
which may make our products less competitive in the marketplace. If it becomes
necessary to change suppliers for any of these materials or if any of our
suppliers experience a shutdown or disruption at the facilities used to produce
these materials, due to technical, regulatory or other reasons, it could harm
our ability to manufacture our products.





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.




33




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 the failure 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.




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
December 31, 2010, we had cash of $4,837,477 and working capital of
$2,949,117.  Using our available reserves as of December 31, 2010, and
the net proceeds from the ATM facility in the amount of approximately $1,360,000
from January 1, 2011 through February 4, 2011, we believe that we can operate
according to our current business plan for at least the next twelve (12) months
from December 31, 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.




34


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 December 31, 2010, we had 68,506,223 shares of common stock
authorized but unissued and unreserved, which may be issued from time to time by
our board of directors.  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.




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
December 31, 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.




35




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


·
            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.




36




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.




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.




37




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.




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.




38


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.




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
      United States Department of Agriculture, or 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
      United States Environmental Protection Agency, or 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.


39




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 United States, 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 agricultural 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.




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 have conducted preclinical toxicology studies for our multiple
myeloma product candidate and have submitted an IND to the FDA.  Any
delay in receiving approval for our IND from the FDA would result in a delay in
the commencement of our clinical trial.  Additionally, we may be
required to perform additional preclinical studies prior to the FDA approving
our IND. 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 of our human health
applications 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.


40




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.




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.


41




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 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.




We
believe that our product candidate has significant milestones 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.


42




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
face potential product liability exposure far in excess of our limited insurance
coverage.





We
may be held liable if any product we or our collaborators develop causes injury
or is found otherwise unsuitable during product testing, manufacturing,
marketing or sale. Regardless of merit or eventual outcome, product liability
claims could result in decreased demand for our product candidates, injury to
our reputation, withdrawal of patients from our clinical trials, substantial
monetary awards to trial participants and the inability to commercialize any
products that we may develop. These claims might be made directly by consumers,
health care providers, pharmaceutical companies or others selling or testing our
products. We have obtained limited product liability insurance coverage for our
clinical trials; however, our insurance may not reimburse us or may not be
sufficient to reimburse us for expenses or losses we may suffer. Moreover, if
insurance coverage becomes more expensive, we may not be able to maintain
insurance coverage at a reasonable cost or in sufficient amounts to protect us
against losses due to liability. If we obtain marketing approval for any of our
product candidates, we intend to expand our insurance coverage to include the
sale of commercial products, but we may be unable to obtain commercially
reasonable product liability insurance for any products approved for marketing.
On occasion, juries have awarded large judgments in class action lawsuits for
claims based on drugs that had unanticipated side effects. In addition, the
pharmaceutical and biotechnology industries, in general, have been subject to
significant medical malpractice litigation. A successful product liability claim
or series of claims brought against us could harm our reputation and business
and would decrease our cash reserves.




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, except for Dr. Browne, our President and Chief
Executive Officer, 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.


43




Certain
provisions of our charter, by-laws, Delaware law and stock plans 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.




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.


44


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 and 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 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.


45




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
December 31, 2010, our executive officers, directors and affiliated entities
together beneficially own approximately 43.3% 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 December 31, 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
December 31, 2010, we had 69,255,399 shares of our common stock issued and
outstanding and 5,325 shares of convertible preferred stock outstanding which
can convert into 17,750,000 shares of common stock.  Approximately
34,164,431 shares of such shares are registered pursuant to registration
statements on Form S-3 and 52,840,968 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.


46




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 fiscal 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
December 31, 2010, we have outstanding 5,325 shares of convertible preferred
stock which may convert into 17,750,000 shares of our common stock and warrants
to purchase 55,476,226 shares of our common stock.  In addition, as of
December 31, 2010, we have reserved 14,704,884 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.


47


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.
                
                Description10.1
                
                Amendment
      to Research Agreement by and among the University of Waterloo, Senesco,
      Inc. and Dr. John E. Thompson, Ph.D., dated December 1, 2010. (filed
      herewith)10.2
                
                At
      Market Issuance Sales Agreement by and between Senesco Technologies Inc.
      and McNicoll, Lewis & Vlak LLC dated December 22, 2010. (Incorporated
      by reference to Exhibit 10.1 of Senesco Technologies, Inc. Form 8-K filed
      on December 22, 2010.)31.1
                
                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)


48


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:  February
      10, 2011
                By:
                /s/
      Leslie J. BrowneLeslie
      J. Browne, Ph.D., Presidentand
      Chief Executive Officer(Principal
      Executive Officer)DATE:  February
      10, 2011
                By:
                /s/
      Joel BrooksJoel
      Brooks, Chief Financial Officer,
                  Secretary
      and Treasurer(Principal
      Financial and Accounting
Officer)


49