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 March
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
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.




Yes:x                                                                  No: ̈




Indicate
by check mark whether the registrant 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




As of May
15, 2010, 33,584,121 shares of the issuer’s common stock, par value $0.01 per
share, were outstanding.





SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY




TABLE OF
CONTENTS





PagePART
      I.         FINANCIAL
      INFORMATION.Item
      1.
                              Financial
      Statements (Unaudited)
                              1CONDENSED
      CONSOLIDATED BALANCE SHEETSas
      of March 31, 2010 and June 30, 2009
                              2CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONSFor
      the Three Months Ended March 31, 2010 and 2009,For
      the Nine Months Ended March 31, 2010 and 2009and
      From Inception on July 1, 1998 through March 31, 2010
                              3CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITYFrom
      Inception on July 1, 1998 through March 31, 2010
                              4CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWSFor
      the Nine Months Ended March 31, 2010 and 2009,and
      From Inception on July 1, 1998 through March 31, 2010
                              9NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              10Item
      2.
                              Management’s
      Discussion and Analysis of FinancialCondition
      and Results of Operations
                              25Overview
                              25Liquidity
      and Capital Resources
                              35Changes
      to Critical Accounting Policies and Estimates
                              37Results
      of Operations
                              38Item
      3.
                              Quantitative
      and Qualitative Disclosures about Market Risk
                              46Item
      4T.
                              Controls
      and Procedures
                              46PART
      II.          OTHER
      INFORMATION.Item
      1A.
                              Risk
      Factors.
                              47Item
      2.
                              Unregistered
      Sales of Equity Securities and Use of Proceeds.
                              63Item
      3.
                              Defaults
      Upon Senior Securities
                              65Item
      4.
                              [RESERVED]
                              65Item
      5.
                              Other
      Information.
                              66Item
      6.
                              Exhibits.
                              66SIGNATURES
                              68


-i-


PART I.  FINANCIAL
INFORMATION.




Item
      1.
            Financial
      Statements.




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





March 31,
                          
                          
                          June 30,2010
                          
                          
                          2009(unaudited)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                          
                          $
                          39,707
                          
                          
                          $
                          380,569Short-term
      investments
                          
                          
                          -
                          
                          
                          
                          1,050,000Deferred
      financing costs
                          
                          
                          177,279
                          
                          
                          
                          -Prepaid
      expenses and other current assets
                          
                          
                          1,269,488
                          
                          
                          
                          1,161,348Total
      Current Assets
                          
                          
                          1,486,474
                          
                          
                          
                          2,591,917Property
      and equipment, net
                          
                          
                          5,581
                          
                          
                          
                          5,986Intangibles,
      net
                          
                          
                          4,483,750
                          
                          
                          
                          3,884,999Deferred
      financing costs
                          
                          
                          -
                          
                          
                          
                          632,324Security
      deposit
                          
                          
                          7,187
                          
                          
                          
                          7,187TOTAL
      ASSETS
                          
                          $
                          5,982,992
                          
                          
                          $
                          7,122,413LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                          
                          $
                          1,401,135
                          
                          
                          $
                          976,680Accrued
      expenses
                          
                          
                          621,614
                          
                          
                          
                          355,937Line
      of credit
                          
                          
                          2,198,609
                          
                          
                          
                          -Convertible
      note, net of discount
                          
                          
                          82,047
                          
                          
                          
                          -Total
      Current Liabilities
                          
                          
                          4,303,405
                          
                          
                          
                          1,332,617Convertible
      note, net of discount
                          
                          
                          -
                          
                          
                          
                          6,217Warrant
      liability ($416,667 to related parties)
                          
                          
                          1,388,333
                          
                          
                          
                          -Grant
      payable
                          
                          
                          99,728
                          
                          
                          
                          99,728Other
      liability
                          
                          
                          10,049
                          
                          
                          
                          16,017TOTAL
      LIABILITIES
                          
                          
                          5,801,515
                          
                          
                          
                          1,454,579STOCKHOLDERS’
      EQUITY:Preferred
      stock, $0.01 par value; authorized 5,000,000 shares, no shares
      issued
                          
                          
                          —
                          
                          
                          
                          —Common
      stock, $0.01 par value; authorized 120,000,000 shares, issued and
      outstanding 33,584,121 and 19,812,043, respectively
                          
                          
                          335,841
                          
                          
                          
                          198,120Capital
      in excess of par,
                          
                          
                          38,240,964
                          
                          
                          
                          36,687,846Deficit
      accumulated during the development stage
                          
                          
                          (38,395,328
                          )
                          
                          
                          (31,218,132
                          )TOTAL
      STOCKHOLDERS’ EQUITY
                          
                          
                          181,477
                          
                          
                          
                          5,667,834TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                          
                          $
                          5,982,992
                          
                          
                          $
                          7,122,413





See Notes
to Condensed Consolidated Financial Statements.


-2-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited)




For the Three
                    Months Ended
                    March 31,
                  
                  
                  For the Three
                    Months Ended
                    March 31,
                  
                  
                  For the Nine
                    Months Ended
                    March 31,
                  
                  
                  For the Nine
                    Months Ended
                    March 31,
                  
                  
                  From Inception on
                    July 1, 1998
                    through
                    March 31,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009
                  
                  
                  2010Revenue
                  
                  $
                  —
                  
                  
                  $
                  75,000
                  
                  
                  $
                  140,000
                  
                  
                  $
                  275,000
                  
                  
                  $
                  1,590,000Operating
      Expenses:General
      and administrative
                  
                  
                  554,953
                  
                  
                  
                  532,245
                  
                  
                  
                  1,735,317
                  
                  
                  
                  1,711,166
                  
                  
                  
                  25,666,510Research
      and development
                  
                  
                  566,307
                  
                  
                  
                  540,494
                  
                  
                  
                  1,522,610
                  
                  
                  
                  1,624,166
                  
                  
                  
                  13,834,169Total
      Operating Expenses
                  
                  
                  1,121,260
                  
                  
                  
                  1,072,739
                  
                  
                  
                  3,257,927
                  
                  
                  
                  3,335,332
                  
                  
                  
                  39,500,679Loss
      From Operations
                  
                  
                  (1,121,260
                  )
                  
                  
                  (997,739
                  )
                  
                  
                  (3,117,927
                  )
                  
                  
                  (3,060,332
                  )
                  
                  
                  (37,910,679
                  )Sale
      of state income tax loss, net
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  586,442Loss
      on extinguishment of debt
                  
                  
                  (275,345
                  )
                  
                  
                  —
                  
                  
                  
                  (361,877
                  )
                  
                  
                  —
                  
                  
                  
                  (361,877
                  )Fair
      value – warrant liability
                  
                  
                  (527,566
                  )
                  
                  
                  —
                  
                  
                  
                  1,811,775
                  
                  
                  
                  —
                  
                  
                  
                  6,543,542Other
      noncash income
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  321,259Interest
      income (expense), net
                  
                  
                  (7,375
                  )
                  
                  
                  737
                  
                  
                  
                  (6,349
                  )
                  
                  
                  41,788
                  
                  
                  
                  516,964Amortization
      of debt discount and financing costs
                  
                  
                  (3,206,049
                  )
                  
                  
                  (107,240
                  )
                  
                  
                  (4,973,909
                  )
                  
                  
                  (319,637
                  )
                  
                  
                  (6,120,672
                  )Interest
      expense on convertible notes
                  
                  
                  (146,640
                  )
                  
                  
                  (227,235
                  )
                  
                  
                  (528,909
                  )
                  
                  
                  (799,043
                  )
                  
                  
                  (1,970,307
                  )Net
      Loss
                  
                  $
                  (5,284,235
                  )
                  
                  $
                  (1,331,477
                  )
                  
                  $
                  (7,177,196
                  )
                  
                  $
                  (4,137,224
                  )
                  
                  $
                  (38,395,328
                  )Basic
      and Diluted Net Loss Per Common Share
                  
                  $
                  (0.17
                  )
                  
                  $
                  (0.07
                  )
                  
                  $
                  (0.27
                  )
                  
                  $
                  (0.22
                  )Basic
      and Diluted Weighted Average Number of CommonShares
      Outstanding
                  
                  
                  31,650,371
                  
                  
                  
                  19,033,091
                  
                  
                  
                  26,610,925
                  
                  
                  
                  18,678,109





See Notes
to Condensed Consolidated Financial Statements.


-3-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FROM INCEPTION ON JULY 1,
1998 THROUGHMARCH 31, 2010


(unaudited)


Common Stock
              
              
              Capital in
                  Excess of
                  Par Value
              
              
              Deficit
                  Accumulated
                  During the
                  Development
                  Stage
              
              
              TotalShares
              
              
              AmountCommon
      stock outstanding
              
              
              2,000,462
              
              
              $
              20,005
              
              
              $
              (20,005
              )
              
              
              —
              
              
              
              —Contribution
      of capital
              
              
              —
              
              
              
              —
              
              
              
              85,179
              
              
              
              —
              
              
              $
              85,179Issuance
      of common stock in reverse merger on January 22, 1999 at $0.01 per
      share
              
              
              3,400,000
              
              
              
              34,000
              
              
              
              (34,000
              )
              
              
              —
              
              
              
              —Issuance
      of common stock for cash on May 21, 1999 at $2.63437 per
    share
              
              
              759,194
              
              
              
              7,592
              
              
              
              1,988,390
              
              
              
              —
              
              
              
              1,995,982Issuance
      of common stock for placement fees on May 21, 1999 at $0.01 per
      share
              
              
              53,144
              
              
              
              531
              
              
              
              (531
              )
              
              
              —
              
              
              
              —Issuance
      of common stock for cash on January 26, 2000 at $2.867647 per
      share
              
              
              17,436
              
              
              
              174
              
              
              
              49,826
              
              
              
              —
              
              
              
              50,000Issuance
      of common stock for cash on January 31, 2000 at $2.87875 per
      share
              
              
              34,737
              
              
              
              347
              
              
              
              99,653
              
              
              
              —
              
              
              
              100,000Issuance
      of common stock for cash on February 4, 2000 at $2.934582 per
      share
              
              
              85,191
              
              
              
              852
              
              
              
              249,148
              
              
              
              —
              
              
              
              250,000Issuance
      of common stock for cash on March 15, 2000 at $2.527875 per
      share
              
              
              51,428
              
              
              
              514
              
              
              
              129,486
              
              
              
              —
              
              
              
              130,000Issuance
      of common stock for cash on June 22, 2000 at $1.50 per
    share
              
              
              1,471,700
              
              
              
              14,718
              
              
              
              2,192,833
              
              
              
              —
              
              
              
              2,207,551Commissions,
      legal and bank fees associated with issuances for the year ended June 30,
      2000
              
              
              —
              
              
              
              —
              
              
              
              (260,595
              )
              
              
              —
              
              
              
              (260,595
              )Fair
      market value of options and warrants vested during the year ended June 30,
      2000
              
              
              —
              
              
              
              —
              
              
              
              1,475,927
              
              
              
              —
              
              
              
              1,475,927Fair
      market value of options and warrants vesting during the year ended June
      30, 2001
              
              
              —
              
              
              
              —
              
              
              
              308,619
              
              
              
              —
              
              
              
              308,619


(continued)


See Notes
to Condensed Consolidated Financial Statements.


-4-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FROM INCEPTION ON JULY 1,
1998 THROUGHMARCH 31, 2010


(unaudited)




Common Stock
                
                
                Capital in
                    Excess of
                    Par Value
                
                
                Deficit
                    Accumulated
                    During the
                    Development
                    Stage
                
                
                TotalShares
                
                
                AmountIssuance
      of common stock and warrants for cash from November 30, 2001 through April
      17, 2002 at $1.75 per unit
                
                
                3,701,430
                
                
                $
                37,014
                
                
                $
                6,440,486
                
                
                
                —
                
                
                $
                6,477,500Issuance
      of common stock and warrants associated with bridge loan conversion on
      December 3, 2001
                
                
                305,323
                
                
                
                3,053
                
                
                
                531,263
                
                
                
                —
                
                
                
                534,316Commissions,
      legal and bank fees associated with issuances for the year ended June 30,
      2002
                
                
                —
                
                
                
                —
                
                
                
                (846,444
                )
                
                
                —
                
                
                
                (846,444
                )Fair
      market value of options and warrants vested during the year ended June 30,
      2002
                
                
                —
                
                
                
                —
                
                
                
                1,848,726
                
                
                
                —
                
                
                
                1,848,726Fair
      market value of options and warrants vested during the year ended June 30,
      2003
                
                
                —
                
                
                
                —
                
                
                
                848,842
                
                
                
                —
                
                
                
                848,842Issuance
      of common stock and warrants for cash from January 15, 2004 through
      February 12, 2004 at $2.37 per unit
                
                
                1,536,922
                
                
                
                15,369
                
                
                
                3,627,131
                
                
                
                —
                
                
                
                3,642,500Allocation
      of proceeds to warrants
                
                
                —
                
                
                
                —
                
                
                
                (2,099,090
                )
                
                
                —
                
                
                
                (2,099,090
                )Reclassification
      of warrants
                
                
                —
                
                
                
                
                
                
                
                1,913,463
                
                
                
                —
                
                
                
                1,913,463Commissions,
      legal and bank fees associated with issuances for the year ended June 30,
      2004
                
                
                —
                
                
                
                
                
                
                
                (378,624
                )
                
                
                —
                
                
                
                (378,624
                )Fair
      market value of options and warrants vested during the year ended June 30,
      2004
                
                
                -
                
                
                
                —
                
                
                
                1,826,514
                
                
                
                —
                
                
                
                1,826,514Options
      and warrants exercised during the year ended June 30, 2004 at exercise
      prices ranging from $1.00 - $3.25
                
                
                370,283
                
                
                $
                3,704
                
                
                
                692,945
                
                
                
                —
                
                
                
                696,649Issuance
      of common stock and warrants for cash on May 9, 2005 at $2.11 per
      unit
                
                
                1,595,651
                
                
                
                15,957
                
                
                
                3,350,872
                
                
                
                —
                
                
                
                3,366,829


(continued)





See Notes
to Condensed Consolidated Financial Statements.


-5-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FROM INCEPTION ON JULY 1,
1998 THROUGHMARCH 31, 2010


(unaudited)


Common Stock
                  
                  
                  Capital in
                    Excess of Par
                    Value
                  
                  
                  Deficit
                    Accumulated
                    During the
                    Development
                    Stage
                  
                  
                  TotalShares
                  
                  
                  AmountIssuance
      of common stock and warrants for cash on May 9, 2005 at $2.11 per
      unit
                  
                  
                  1,595,651
                  
                  
                  $
                  15,957
                  
                  
                  $
                  3,350,872
                  
                  
                  
                  —
                  
                  
                  $
                  3,366,829Allocation
      of proceeds to warrants
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,715,347
                  )
                  
                  
                  —
                  
                  
                  
                  (1,715,347
                  )Reclassification
      of warrants
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,579,715
                  
                  
                  
                  —
                  
                  
                  
                  1,579,715Commissions,
      legal and bank fees associated with issuance on May 9,
      2005
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (428,863
                  )
                  
                  
                  —
                  
                  
                  
                  (428,863
                  )Options
      and warrants exercised during the year ended June 30, 2005 at exercise
      prices ranging from $1.50 to $3.25
                  
                  
                  84,487
                  
                  
                  
                  844
                  
                  
                  
                  60,281
                  
                  
                  
                  —
                  
                  
                  
                  61,125Fair
      market value of options and warrants vested during the year ended June 30,
      2005
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  974,235
                  
                  
                  
                  —
                  
                  
                  
                  974,235Fair
      market value of options and Warrants granted and vested During the year
      ended June 30,2006
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  677,000
                  
                  
                  
                  —
                  
                  
                  
                  677,000Warrants
      exercised during the year ended June 30, 2006 at an exercise price of
      $0.01
                  
                  
                  10,000
                  
                  
                  
                  100
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  100Issuance
      of common stock and warrants for cash on October 11, 2006 at $1.135 per
      unit
                  
                  
                  1,986,306
                  
                  
                  
                  19,863
                  
                  
                  
                  2,229,628
                  
                  
                  
                  —
                  
                  
                  
                  2,249,491Commissions,
      legal and bank  fees associated with issuance on October 11,
      2006
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (230,483
                  )
                  
                  
                  —
                  
                  
                  
                  (230,483
                  )Fair
      market value of options and warrants vested during the year ended June 30,
      2007
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  970,162
                  
                  
                  
                  —
                  
                  
                  
                  970,162Warrants
      exercised during the year ended June 30, 2007 at an exercise price of
      $0.01
                  
                  
                  10,000
                  
                  
                  
                  100
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  100


(continued)


See Notes
to Condensed Consolidated Financial Statements


-6-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FROM INCEPTION ON JULY 1,
1998 THROUGHMARCH 31, 2010


(unaudited)


Common
      Stock
              
              
              Capital
      in
                  Excess
      of
                  Par
      Value
              
              
              Deficit
                  Accumulated
                  During
      the
                  Development
                  Stage
              
              
              TotalShares
              
              
              AmountFair
      market value of options and warrants vested during the year ended June 30,
      2008
              
              
              —
              
              
              
              —
              
              
              $
              1,536,968
              
              
              
              —
              
              
              $
              1,536,968Allocation
      of proceeds from issuance of convertible notes and warrants from September
      21, 2007 through June 30, 2008
              
              
              —
              
              
              
              —
              
              
              
              9,340,000
              
              
              
              —
              
              
              
              9,340,000Issuance
      of common stock in lieu of cash payment for interest during the year ended
      June 30, 2008
              
              
              345,867
              
              
              $
              3,458
              
              
              
              430,696
              
              
              
              —
              
              
              
              434,154Convertible
      notes converted into common stock during the year ended June 30,
      2008
              
              
              555,556
              
              
              
              5,556
              
              
              
              430,952
              
              
              
              —
              
              
              
              436,508Fair
      market value of options and warrants vested during the
      year  ended June 30, 2009
              
              
              —
              
              
              
              —
              
              
              
              506,847
              
              
              
              —
              
              
              
              506,847Cashless
      exercise of warrants during the year ended June 30, 2009 at an exercise
      price of $0.74
              
              
              2,395
              
              
              
              24
              
              
              
              (24
              )
              
              
              —
              
              
              
              —Issuance
      of common stock in lieu of cash payment for interest during the year ended
      June 30,2009
              
              
              1,271,831
              
              
              
              12,718
              
              
              
              994,526
              
              
              
              —
              
              
              
              1,007,244Convertible
      notes converted into common stock during the year ended June 30,
      2009
              
              
              50,000
              
              
              
              500
              
              
              
              44,433
              
              
              
              —
              
              
              
              44,933Issuance
      of common stock in connection with the Company’s short term incentive plan
      during the year ended June 30, 2009
              
              
              112,700
              
              
              
              1,127
              
              
              
              (1,127
              )
              
              
              —
              
              
              
              —Cumulative
      net loss from inception through June 30, 2009
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              $
              (35,949,899
              )
              
              
              (35,949,899
              )Cumulative
      effect of change in accounting principle –implementation of FASB ASC
      815.40
              
              
              —
              
              
              
              —
              
              
              
              (7,931,875
              )
              
              
              4,731,767
              
              
              
              (3,200,108
              )





(continued)





See Notes
to Condensed Consolidated Financial Statements


-7-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FROM INCEPTION ON JULY 1,
1998 THROUGHMARCH 31, 2010


(unaudited)


Common Stock
                        
                        
                        Capital in
                          Excess of
                          Par Value
                        
                        
                        Deficit
                          Accumulated
                          During the
                          Development
                          Stage
                        
                        
                        TotalShares
                        
                        
                        AmountIssuance
      of common stock and warrants for cash during the nine months ended March
      31, 2010 at $0.90 per unit
                        
                        
                        1,700,000
                        
                        
                        $
                        17,000
                        
                        
                        $
                        1,513,000
                        
                        
                        
                        —
                        
                        
                        $
                        1,530,000Issuance
      of common stock and warrants for satisfaction of accounts payable during
      the nine months ended March 31, 2010
                        
                        
                        194,444
                        
                        
                        
                        1,944
                        
                        
                        
                        259,588
                        
                        
                        
                        —
                        
                        
                        
                        261,532Warrants
      exercised for cash during the nine months ended March 31, 2010 at an
      exercise price of $0.01
                        
                        
                        1,003,000
                        
                        
                        
                        10,030
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        10,030Legal
      and regulatory  fees associated with issuances during the nine
      months ended March 31, 2010
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (175,862
                        )
                        
                        
                        —
                        
                        
                        
                        (175,862
                        )Issuance
      of common stock in lieu of cash payment for interest during the nine
      months ended March 31, 2010
                        
                        
                        969,360
                        
                        
                        
                        9,694
                        
                        
                        
                        372,575
                        
                        
                        
                        —
                        
                        
                        
                        382,269Convertible
      notes converted into common stock during the nine months ended March 31,
      2010
                        
                        
                        9,635,090
                        
                        
                        
                        96,351
                        
                        
                        
                        2,511,043
                        
                        
                        
                        —
                        
                        
                        
                        2,607,394Issuance
      of common stock in connection with the Company’s short term incentive plan
      during the nine months ended March 31, 2010
                        
                        
                        116,000
                        
                        
                        
                        1,160
                        
                        
                        
                        (1,160
                        )
                        
                        
                        —
                        
                        
                        
                        —Issuance
      of common stock for services during the nine months ended March 31,
      2010
                        
                        
                        154,184
                        
                        
                        
                        1,542
                        
                        
                        
                        52,258
                        
                        
                        
                        —
                        
                        
                        
                        53,800Fair
      market value of options and warrants vested during the nine months ended
      March 31, 2010
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        271,784
                        
                        
                        
                        —
                        
                        
                        
                        271,784Warrants
      repurchased during the nine months ended March 31, 2010
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (50,000
                        )
                        
                        
                        —
                        
                        
                        
                        (50,000
                        )Net
      loss for the nine months ended March 31, 2010
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        (7,177,196
                        )
                        
                        
                        (7,177,196
                        )Balance
      at March  31, 2010
                        
                        
                        33,584,121
                        
                        
                        $
                        335,841
                        
                        
                        $
                        38,240,964
                        
                        
                        $
                        (38,395,328
                        )
                        
                        $
                        181,477


See Notes
to Condensed Consolidated Financial Statements.


-8-


SENESCO TECHNOLOGIES, INC.
AND SUBSIDIARY


(A DEVELOPMENT STAGE
COMPANY)


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS


(unaudited)


For
      the Nine Months Ended
                  March
      31,
                
                
                From
      Inception on
                  July
      1, 1998 through
                  March
      31,2010
                
                
                2009
                
                
                2010Cash
      flows from operating activities:Net
      loss
                
                $
                (7,177,196
                )
                
                $
                (4,137,224
                )
                
                $
                (38,395,328
                )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
                
                
                (1,811,775
                )
                
                
                —
                
                
                
                (6,864,801
                )Issuance
      of common stock and warrants for interest
                
                
                382,269
                
                
                
                799,043
                
                
                
                1,832,982Issuance
      of common stock for services
                
                
                53,800
                
                
                
                —
                
                
                
                53,800Share-based
      compensation expense
                
                
                271,784
                
                
                
                358,347
                
                
                
                10,474,728Depreciation
      and amortization
                
                
                92,613
                
                
                
                81,054
                
                
                
                665,053Amortization
      of convertible note discount
                
                
                4,518,864
                
                
                
                1,869
                
                
                
                5,070,081Amortization
      of deferred financing costs
                
                
                455,045
                
                
                
                317,768
                
                
                
                1,050,591Loss
      on extinguishment of debt
                
                
                361,877
                
                
                
                —
                
                
                
                361,877(Increase)
      decrease in operating assets:Prepaid
      expense and other current assets
                
                
                (108,140
                )
                
                
                (709,266
                )
                
                
                (1,269,488
                )Security
      deposit
                
                
                —
                
                
                
                —
                
                
                
                (7,187
                )Increase
      (decrease) in operating liabilities:Accounts
      payable
                
                
                599,455
                
                
                
                102,208
                
                
                
                1,576,135Accrued
      expenses
                
                
                265,677
                
                
                
                186,505
                
                
                
                621,614Other
      liability
                
                
                (5,968
                )
                
                
                (5,284
                )
                
                
                10,049Net
      cash used in operating activities
                
                
                (2,101,695
                )
                
                
                (3,004,980
                )
                
                
                (24,603,465
                )Cash
      flows from investing activities:Patent
      costs
                
                
                (689,843
                )
                
                
                (490,251
                )
                
                
                (4,976,206
                )Redemptions
      (Purchases) of investments, net
                
                
                1,050,000
                
                
                
                (1,799,388
                )
                
                
                —Purchase
      of property and equipment
                
                
                (1,116
                )
                
                
                (4,173
                )
                
                
                (178,179
                )Net
      cash provided by (used in) investing activities
                
                
                359,041
                
                
                
                (2,293,812
                )
                
                
                (5,154,385
                )Cash
      flows from financing activities:Proceeds
      from grant
                
                
                —
                
                
                
                —
                
                
                
                99,728Proceeds
      from issuance of loan payable
                
                
                2,198,609
                
                
                
                —
                
                
                
                2,198,609Proceeds
      from issuance of bridge notes
                
                
                —
                
                
                
                —
                
                
                
                525,000Proceeds
      from issuance of common stock, net and exercise of options and
      warrants
                
                
                1,364,169
                
                
                
                —
                
                
                
                20,446,987Proceeds
      from issuance of convertible notes and warrants, net
                
                
                —
                
                
                
                —
                
                
                
                9,340,000Redemption
      of convertible notes and warrants
                
                
                (2,160,986
                )
                
                
                —
                
                
                
                (2,160,986
                )Deferred
      financing costs
                
                
                —
                
                
                
                —
                
                
                
                (651,781
                )Net
      cash provided by financing activities
                
                
                1,401,792
                
                
                
                —
                
                
                
                29,787,557Net
      increase (decrease) in cash and cash equivalents
                
                
                (340,862
                )
                
                
                (5,298,792
                )
                
                
                39,707Cash
      and cash equivalents at beginning of period
                
                
                380,569
                
                
                
                5,676,985
                
                
                
                —Cash
      and cash equivalents at end of period
                
                $
                39,707
                
                
                $
                378,193
                
                
                $
                39,707Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                
                $
                33,859
                
                
                $
                —
                
                
                $
                56,176Supplemental
      schedule of noncash financing activity:Conversion
      of convertible notes into common stock, net
                
                $
                2,619,360
                
                
                $
                —
                
                
                $
                3,164,360Conversion
      of bridge notes into stock
                
                $
                —
                
                
                $
                —
                
                
                $
                534,316Allocation
      of convertible debt proceeds to warrants and beneficial conversion
      feature
                
                $
                —
                
                
                $
                —
                
                
                $
                9,340,000Warrants
      issued for financing costs
                
                $
                —
                
                
                $
                —
                
                
                $
                639,645Issuance
      of common stock for interest on convertible notes
                
                $
                382,269
                
                
                $
                799,043
                
                
                $
                1,832,982Issuance
      of common stock in settlement of accounts payable
                
                $
                175,000
                
                
                $
                —
                
                
                $
                175,000


See Notes
to Condensed Consolidated Financial Statements.


-9-


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, 2009.




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 March 31, 2010, the results of its operations for the
three-month and nine-month periods ended March 31, 2010 and 2009, cash flows for
the nine-month periods ended March 31, 2010 and 2009, and the results of its
operations and cash flows for the period from inception on July 1, 1998 through
March 31, 2010.




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




Note
2 – Liquidity:




As shown
in the accompanying consolidated financial statements, the Company has a history
of losses with a deficit accumulated during the development stage from July 1,
1998 (inception) through March 31, 2010 of $38,395,328.  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
March 31, 2010, the Company had cash in the amount of $39,707.  On
April 1, 2010, the Company received net proceeds of approximately $9,600,000 in
connection with a private placement of convertible preferred stock and
warrants.  The Company estimates that the cash on hand as of March 31,
2010 and the net proceeds from the private placement of convertible preferred
stock and warrants will cover its expenses for at least the next twelve
months.




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


-10-


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


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


·
            seek
      strategic alliances or business
combinations;


·
            attempt
      to sell the Company;


·
            cease
      operations; or


·
            declare
      bankruptcy.




Note
3 – Intangible Assets:




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




The
length of time that it takes for an initial patent application to be approved is
generally between four to six years.  However, due to the unique
nature of each patent application, the actual length of time may
vary.  If a patent application is denied, the associated cost of that
application would be written off.  However, the Company has not had
any patent applications denied as of March 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.


-11-


Note
4 - Loss Per Share:




Net loss
per common share is computed by dividing the loss by the weighted-average number
of common shares outstanding during the period.  Shares to be issued
upon the exercise of the outstanding options and warrants aggregating 25,196,604
and 23,151,963 as of March 31, 2010 and 2009, respectively, are not included in
the computation of net loss per share, as their effect is
anti-dilutive.  Additionally, based upon the closing share price as of
March 31, 2010, 16,417,126 shares that may be issued upon the conversion of
convertible notes, subject to a maximum of 22,259,650 shares, are not included
in the computation of diluted net loss per share, as their effect is
anti-dilutive.




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
                  
                  
                  Nine Months EndedMarch 31,
                  
                  
                  March 31,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Estimated
      life in years  (1)
                  
                  
                  5-5.7
                  
                  
                  
                  3.5-5.5
                  
                  
                  
                  3.5-5.7
                  
                  
                  
                  3.5-5.5Risk-free
      interest rate (2)
                  
                  
                  2.5%–3.9
                  %
                  
                  
                  1.3%
      – 1.8
                  %
                  
                  
                  2.2%-3.9
                  %
                  
                  
                  1.1%-3.9
                  %Volatility
                  
                  
                  100
                  %
                  
                  
                  100
                  %
                  
                  
                  100
                  %
                  
                  
                  100
                  %Dividend
      paid
                  
                  None
                  
                  
                  None
                  
                  
                  None
                  
                  
                  None




(1)           Expected
life was estimated using the “simplified” method, as allowed under the
provisions of the Securities and Exchange Commission Staff Bulletin No. 110,
since there was no prior history of similar stock option grants.




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




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




A summary
of changes in the stock option plan for the nine month period ended March 31,
2010 is as follows:




Number of Options
                
                
                Weighted-Average
                    Exercise PriceOutstanding
      at July 1, 2009
                
                
                4,550,412
                
                
                $
                1.70Granted
                
                
                1,748,399
                
                
                
                0.33Exercised
                
                
                —
                
                
                
                —Expired
                
                
                (233,000
                )
                
                
                3.50Outstanding
      at March 31, 2010
                
                
                6,065,811
                
                
                $
                1.24Exercisable
      at March 31, 2010
                
                
                4,823,310
                
                
                $
                1.40


-12-


A summary
of changes to the non-vested stock options for the nine month period ended March
31, 2010 is as follows:




Weighted-AverageNumber of Options
                  
                  
                  Grant-Date
                      Fair ValueNon-vested
      stock options at July 1, 2009
                  
                  
                  883,000
                  
                  
                  $
                  0.66Granted
                  
                  
                  1,748,399
                  
                  
                  
                  0.25Vested
                  
                  
                  (1,384,898
                  )
                  
                  
                  (0.31
                  )Expired
                  
                  
                  (4,000
                  )
                  
                  
                  (0.46
                  )Non-vested
      stock options at March 31, 2010
                  
                  
                  1,242,501
                  
                  
                  $
                  0.48





As of
March 31, 2010, the aggregate intrinsic value of stock options outstanding was
$149,665, with a weighted-average remaining term of 6.6 years.  The
aggregate intrinsic value of stock options exercisable at that same date was
$81,715, with a weighted-average remaining term of 6.0 years.  As of
March 31, 2010, the Company has 4,139,073 shares available for future stock
option grants.




As of
March 31, 2010, total compensation expense not yet recognized related to stock
option grants and restricted stock units amounted to approximately $215,000, which will be recognized
over the next 51 months, and an additional $467,400 which may be recognized as
achievement of certain target goals under the Company’s Long-Term Incentive
Program become probable over the next 9 months.




During
the nine month period ended March 31, 2010, the Company issued 80,000 and 74,184
shares of common stock for services provided.  The closing price of
the common stock on the dates of issuance was $0.36 and $0.34, respectively,
resulting in aggregate stock-based compensation of $53,800.




Short-Term
Incentive Program




On
November 19, 2008, upon recommendation of the Company’s Compensation Committee,
the Board adopted a Short-Term Equity Incentive Program for each of Bruce C.
Galton, John E. Thompson, Ph.D., Joel Brooks, Richard Dondero and Sascha
Fedyszyn.  The Programs are intended to ensure the achievement of
certain goals of the Company, continuity of the Company’s executive management,
and to align the interests of the executive management with those of the
shareholders.




Pursuant
to and as defined in the Short-Term Equity Incentive Program, each executive
would be awarded shares of the Company’s Common Stock, or options to acquire
shares of the Company’s Common Stock, if the Company achieves certain target
goals relating to research, financing, licensing, investor relations and other
administrative items during the fiscal year ending June 30, 2009.




The
number of eligible shares and options that could have been awarded to the
executive was based upon the following weightings:




1.
            25%
      of eligible shares and options for contributions relating to the Company’s
      Human Health Objectives;


-13-


2.
            15%
      of eligible shares and options for contributions relating to the Company’s
      Finance Objectives;




3.
            20%
      of eligible shares and options for contributions relating to the Company’s
      Agricultural Licensing Objectives;




4.
            25%
      of eligible shares and options for contributions relating to the Company’s
      Investor Relations, Intellectual Property and Website Administration;
      and




5.
            15%
      of the eligible shares and options relating to the Company’s
      Organizational Objectives.




If the
target goals were achieved by the Company, the executive officers would have
been awarded the following number of shares and options for the fiscal year
ended June 30, 2009:




NumberofShares
                  
                  
                  NumberofOptions(1)Bruce
      C. Galton
                  
                  
                  66,000
                  
                  
                  
                  —John
      E. Thompson, Ph.D.
                  
                  
                  —
                  
                  
                  
                  48,000Joel
      Brooks
                  
                  
                  28,000
                  
                  
                  
                  —Richard
      Dondero
                  
                  
                  —
                  
                  
                  
                  80,000Sascha
      P. Fedyszyn
                  
                  
                  42,000
                  
                  
                  
                  —Total
                  
                  
                  136,000
                  
                  
                  
                  128,000


_____


(1)
            Such
      options are exercisable at a strike price of $0.60, which represents the
      closing price of the common stock on November 18,
  2008.




As of
September 30, 2009, the Company had determined that the achievement of the
target goals was probable.  The total amount of compensation expense
in connection with the short-term incentive program in the amount of $140,480
had been recorded ratably over the seven and one-half month period from November
19, 2008 through June 30, 2009.




In
October 2009, after a review of each of the factors that comprise the short-term
award program, the compensation committee determined that the executive officers
had partially achieved the previously granted short-term performance milestones,
and accordingly, determined to vest the foregoing RSUs/options as
follows:




Mr. Galton
received shares of common stock underlying his 49,500 RSUs;


Mr. Brooks
received shares of common stock underlying his 26,600 RSUs;


Mr. Fedyszyn
received shares of common stock underlying his 39,900 RSU’s;


Dr. Thompson
received 48,000 options; and


Mr. Dondero
received 76,000 options.





As a
result of the reduction in the amount of RSU’s/options that vested, a reduction
in the amount of $13,840 was recorded during the nine months ended March 31,
2010.


-14-


Long-Term
Incentive Program




On
December 13, 2007, upon recommendation of the Company’s Compensation Committee,
the Board adopted a Long-Term Equity Incentive Program for the members of the
executive management team.  The Long-Term Equity Incentive Program is
intended to ensure the achievement of certain goals of the Company, continuity
of the Company’s executive management, and to align the interests of the
executive management with those of the shareholders.




Pursuant
to and as defined in the Long-Term Equity Incentive Program, each executive
would be awarded shares of the Company’s Common Stock and options to acquire
shares of the Company’s Common Stock if the Company achieves certain target
goals relating to its Multiple Myeloma research project over the three fiscal
year period from the date of adoption.




The
number of eligible shares and options to be awarded to the executives is based
upon the following weightings:




1.
            20%
      of the eligible shares upon the execution of a research agreement to
      conduct a phase I/II clinical trial at a research
  facility;




2.
            20%
      of the eligible shares upon the filing and acceptance by the FDA of an
      investigational new drug application;
and




3.
            60%
      of the eligible shares upon the successful completion of a FDA approved
      phase I/II clinical trial.




If the
target goals are achieved by the Company, the executive officers would be
awarded the following number of shares and options:




Goal 1
              
              
              Goal 2
              
              
              Goal 3Number
      of SharesJoel
      Brooks
              
              
              10,000
              
              
              
              10,000
              
              
              
              30,000Number of
      Options (1)John
      E. Thompson, Ph.D.
              
              
              50,000
              
              
              
              50,000
              
              
              
              150,000Richard
      Dondero
              
              
              60,000
              
              
              
              60,000
              
              
              
              180,000Total
      number of options
              
              
              110,000
              
              
              
              110,000
              
              
              
              330,000


_____


(1)
            Such
      options are exercisable at a strike price of $0.99, which represents the
      closing price of the common stock on December 12,
  2007.




As of
March 31, 2010, the Company is not able to determine if the achievement of the
target goals under the Long-Term Equity Incentive Program are probable and,
therefore, has not yet begun to recognize any of the $467,500, as adjusted for
the resignation of certain employees, of compensation expense that was computed
on the date of adoption of the Long-Term Equity Incentive
Program.  The Company will begin recognizing such compensation expense
ratably over the remaining term of the Long-Term Equity Incentive Program at
such time that the Company is able to determine that the achievement of the
target goals are probable.


-15-


Note 6 – Revenue
Recognition:




The
Company receives certain nonrefundable upfront fees in exchange for the transfer
of its technology to licensees.  Upon delivery of the technology, the
Company has no further obligations to the licensee with respect to the basic
technology transferred and, accordingly, recognizes revenue at that
time.  The Company may, however, receive additional payments from its
licensees in the event such licensees achieve certain development or
commercialization milestones in their particular field of use.  Other
nonrefundable upfront fees and milestone payments, where the milestone payments
are a function of time as opposed to achievement of specific achievement-based
milestones, are deferred and amortized ratably over the estimated research
period of the license.  Milestone payments, which are contingent upon
the achievement of certain research goals, are recognized as revenue when the
milestones, as defined in the particular agreement, are achieved.




Note
7 –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 March 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 the one of the Company’s Board of Directors, Harlan W. Waksal,
M.D., which are currently held by JMP Securities.  The balance
outstanding as of March 31, 2010 is $2,198,609.




Note
8 –Convertible Notes and Stockholders Equity:




Convertible
Notes





During
the year ended June 30, 2008, the Company issued $5,000,000 of convertible notes
and warrants to YA Global Investments L.P. (“YA Global”) and $5,000,000 of
convertible notes and warrants to Stanford Venture Capital Holdings, Inc.
(“Stanford”), for aggregate gross proceeds in the amount of
$10,000,000.  The convertible notes were convertible into the
Company’s Common Stock at a fixed price of $0.90 per share, subject to certain
adjustments (the “Fixed Conversion Price”), through August 1, 2009 and December
20, 2009, respectively, at which time the convertible notes may convert into
shares of the Company’s Common Stock at the lower of the fixed conversion price
or 80% of the lowest daily volume-weighted average price (the “VWAP”) of the
common stock during the five trading days prior to the conversion date. In July
and September 2009, the fixed conversion price was adjusted to $0.85 and $0.83,
respectively, due to the issuance of common stock and
warrants.   The maturity date of each of the convertible notes
for YA Global and Stanford is December 30, 2010 and December 31, 2010,
respectively.




The
convertible notes accrue interest on their outstanding principal balances at an
annual rate of 8%.  The Company has the option to pay interest in cash
or, upon certain conditions, common stock.  If the Company pays
interest in Common Stock, the stock will be valued at a 10% discount to the
average daily VWAP for the five day trading period prior to the interest payment
date (the “Interest Shares”).


-16-


At the
Company’s option, it can redeem a portion of, or all of, the principal owed
under the convertible notes by providing the investors with at least 30 business
days’ written notice, provided that, at the time of receipt of the notice,
either: (A)(i) the VWAP of the Common Stock exceeds 130% of the Fixed Conversion
Price for at least 20 of 30 prior trading days, and (ii) there is an
effective registration statement for the resale of the Common Stock that will be
issued under the redemption or (B) it redeems a portion, or all, of the
principal owed at a 20% premium above the principal then outstanding and any
accrued interest thereupon.  If the Company redeems all or any of the
principal outstanding under the convertible notes, it will pay an amount equal
to the principal being redeemed plus accrued interest.




The
Company has the option to force the investors to convert 50% and 100% of its
then-outstanding convertible notes if its Common Stock price exceeds 150% and
175% of the Fixed Conversion Price, respectively, for any 20 out of 30 trading
days; provided that such forced conversion meets certain conditions (the “Call
Option”).  If the Company exercises its Call Option prior to the third
anniversary of the signing date, it will issue additional warrants to the
investor equal to 50% of the number of shares underlying the convertible note
subject to the forced conversion.  These warrants will be exercisable
at the fixed conversion price and will have the same maturity as the other
warrants issued under the financing.




The
Company’s obligations under the convertible notes are secured by all of its and
its subsidiary’s assets and intellectual property, as evidenced by certain
security agreements and certain patent security agreements by and between the
Company and each of YA Global and Stanford.  Pursuant to a
subordination agreement, YA Global is the senior secured creditor.




The
conversion rate of each convertible note is subject to adjustment for certain
events, including dividends, stock splits, combinations and the sale of the
Company’s Common Stock or securities convertible into or exercisable for the
Company’s Common Stock at a price less than the then applicable conversion or
exercise price.




The
investors have a right of first refusal on any future funding that involves the
issuance of the Company’s capital stock for so long as a portion of the
convertible notes are outstanding.




The
convertible notes and warrants issued to YA Global were subject to a maximum cap
of 30,500,000 on the number of shares of common stock that can be issued upon
the conversion of the convertible notes, the exercise of the warrants and the
issuance of interest shares.




The
convertible notes and warrants issued to Stanford are subject to a maximum cap
of 31,888,888 on the number of shares of common stock that can be issued upon
the conversion of the convertible notes, the exercise of the warrants and the
issuance of interest shares.  In February 2010, certain members of the
Company’s board of directors purchased all of the convertible notes issued to
Stanford and all of the warrants held by Stanford.




During
the nine months ended March 31, 2010, YA Global converted $2,619,360 of their
convertible notes into 9,635,093 shares of common stock.  From the
inception of the convertible notes, YA Global converted $3,164,360 of the
convertible notes into 10,250,648 shares of common stock.  On March 3,
2010, YA Global and Senesco entered into a letter agreement pursuant to which
the Company purchased from YA Global all of its remaining outstanding
convertible notes, which in the aggregate totaled $1,835,640, for an aggregate
purchase price of $ 2,144,844, including accrued interest of $33,859 on the
convertible notes..  As a result of this transaction, the Company
recorded a loss on the extinguishment of debt in the amount of
$275,345.  In addition, the Company purchased from YA Global warrants
to purchase 2,775,000 shares of the Company’s common stock at an exercise price
of $1.01 per share, for a purchase price of $50,000.


-17-


As of
March, 2010, the number of shares of common stock potentially issuable upon
conversion of the remaining $5,000,000 of convertible notes outstanding held by
certain directors of the Company, approximated 16,417,126 shares, plus an
estimated additional 2,100,000 shares (based upon the stock price at March 31,
2010) for the payment of interest in stock under the convertible
notes.  However, the holders of the notes have agreed, subject to
shareholder approval, to convert all of the $5,000,000 of convertible notes into
6,024,096 shares of common stock at a conversion price of $0.83.




As of
March 31, 2010, the outstanding balance of the convertible notes was $82,047,
which is comprised of notes with an aggregate face amount of $5,000,000 less
unamortized debt discount of $4,917,953.  Debt discount associated
with the convertible notes is amortized to interest expense, using the effective
yield method, over the remaining life of the convertible notes.  Upon
conversion of the convertible notes into Common Stock, any unamortized debt
discount relating to the portion converted is charged to
interest.  Total charges to interest for amortization of debt discount
were $3,022,271 and $4,518,864 for the three month and nine month periods ended
March 31, 2010.




The costs
associated with the issuances in the amount of $1,291,427 have been recorded as
deferred financing costs and are being amortized ratably over the term of the
convertible notes.  The balance of deferred financing costs as of
March 31, 2010 amounted to $177,279.




Effective
July 1, 2009, the Company adopted the provisions of FASB ASC 815.40,
"Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity's Own Stock”.  FASB ASC 815.40 applies to any freestanding
financial instruments or embedded features that have the characteristics of a
derivative, and to any freestanding financial instruments that are potentially
settled in an entity’s own common stock.  As a result of adopting FASB
ASC 815.40, as of July 1, 2009, 6,941,666 of the Company’s issued and
outstanding common stock warrants previously accounted for as equity pursuant to
the derivative treatment exemption should no longer be accounted for as
equity.  As such, effective July 1, 2009, the Company reclassified the
fair value of these common stock purchase warrants, which have exercise price
reset features, from equity to a liability.  On July 1, 2009, using
the black sholes valuation model, the Company reclassified, as a cumulative
effect adjustment, the difference in fair value of $4,731,767, which represents
the difference between the fair value on the dates of issuance of $7,931,875 and
the fair value on July 1, 2009 of $3,200,108 from additional paid in capital to
deficit accumulated during the development stage.  Additionally, the
Company recorded a warrant liability in the amount of $3,200,108 to recognize
the fair value of such warrants at July 1, 2009.  On March 31, 2010,
the Company revalued the warrants, using the black scholes valuation model, and
the resulting liability amounted to  $1,388,333.




The
change in value of the liability of $527,566 for the three month period ended
March 31, 2010 was recorded as an expense, which increased the basic and diluted
net loss per share by $0.02.  The change in value of the liability of
$1,811,775 for the nine month period ended March 31, 2010 was recorded as
income, which reduced the basis and diluted net loss per share by
$0.07.


-18-


The
effect on the net loss for the three month and nine month period ending March
31, 2009 would have been a reduction of $2,415,700 and $8,593,782, respectively,
which would have resulted in net income of $1,084,223 and $4,456,558,
respectively.  The effect on the basic net loss per common share would
have been a reduction of $0.13 and $0.32, respectively, which would have
resulted in basic net income per common share of $0.06 and $0.05,
respectively.




The
assumptions used to value the warrants were as follows:




July 1,
                    2009
                
                
                March 31, 2010Estimated
      life in years
                
                
                3
                
                
                
                3Risk-free
      interest rate (1)
                
                
                1.57
                %
                
                
                1.60
                %Volatility
                
                
                100
                %
                
                
                100
                %Dividend
      paid
                
                None
                
                
                None


_____


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




Common
Stock




Transaction with Partlet
Holdings




On July
9, 2009, the Company entered into a Securities Purchase Agreement (the “Partlet
Securities Purchase Agreement”) with Partlet Holdings Ltd., which is an
accredited investor, pursuant to which the Company issued an aggregate of
1,111,111 shares (the “Shares”) of the Company’s common stock at $0.90 per share
and each of a Series A warrant (the “Partlet Series A Warrant”) and a Series B
warrant (the “Partlet Series B Warrant”) (collectively the Partlet Series A
Warrant and Partlet Series B Warrant shall be referred to herein as the “Partlet
Warrants”).




The
Partlet Series A Warrant entitled the holder to purchase 1,000,000 shares of the
Company’s common stock at $0.01 per warrant share.  The Partlet Series A
Warrant has a term of seven years and was exercisable immediately after the date
of grant.  The Partlet Series B Warrant entitles the holder to
purchase 2,055,555 shares of the Company’s common stock at $0.60 per warrant
share.  The Partlet Series B Warrant has a term of seven years and was not
exercisable until after the six-month anniversary from the date of
grant.




On July 9, 2009, the Company closed
on $950,000 of aggregate proceeds of the private placement and, on that date,
issued (i) a total of 1,055,555 Shares (ii) a Partlet Series A Warrant to
purchase 950,000 shares of the Company’s common stock, which was exercised on
July 14, 2009, and (iii) a Partlet Series B Warrant to purchase 1,952,778 shares
of the Company’s common stock.  On September 30, 2009, the
Company closed on the remaining $50,000 in proceeds upon the Company receiving
approval from the Company’s stockholders and the NYSE Amex Exchange for certain
aspects of the transaction.


-19-


Transaction with Each of
Robert and Tim Forbes


On July
29, 2009, the Company entered into a Securities Purchase Agreement, (the “Forbes
Securities Purchase Agreement”) with each of Robert Forbes and Timothy Forbes,
each of whom is an accredited investor, pursuant to which the Company issued an
aggregate of 444,444 shares of common stock at $0.90 per share and each of a
Series A warrant, (the “Forbes Series A Warrants”), and a Series B warrant (the
“Forbes Series B Warrants”).  Each of Robert Forbes and Timothy Forbes
are the brothers of Christopher Forbes who is a director of
Senesco.  Mr. Christopher Forbes will not be deemed to be the
beneficial owner of, nor will he have a pecuniary interest in the Shares or
Warrants issued to his brothers.




The
Forbes Series A Warrants entitle the holders to purchase, in the aggregate, up
to 400,000 shares of the Company’s common stock at $0.01 per warrant
share.  The Forbes Series A Warrants have a term of seven years and were
exercisable immediately after the date of grant.




The
Forbes Series B Warrants entitle the holders to purchase, in the aggregate, up
to 405,556 shares of the Company’s common stock at $0.60 per warrant
share.  The Forbes Series B Warrants have a term of seven years and were
not exercisable until after the six-month anniversary from the date of
grant.




Transaction with Insiders
and Affiliates


On July
29, 2009, the Company entered into a Securities Purchase Agreement, (the
“Affiliate’s Securities Purchase Agreement”) with each of Harlan W. Waksal,
M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van
Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation (the
“Affiliate Investors”) each of whom is an accredited investor, pursuant to which
the Company issued an aggregate of 144,444 Shares of the Company’s common stock
at $0.90 per share and each of a Series A warrant, (the “Affiliate’s Series A
Warrants”), and a Series B warrant (the “Affiliate’s Series B
Warrants”).  Each of Harlan W. Waksal, M.D., Rudolf Stalder,
Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst and Warren
Isabelle serve on the Company’s board.  The Thomas C. Quick Charitable
Foundation is an affiliate of our board member Thomas C. Quick.




The
Affiliate’s Series A Warrants entitle the holders to purchase in the aggregate,
up to 130,000 shares of the Company’s common stock at $0.01 per warrant
share.  The Affiliates Series A Warrants have a term of seven years and
were exercisable immediately after the date of grant.




The
Affiliate’s Series B Warrants entitle the holders to purchase, in the aggregate,
up to 131,807 shares of the Company’s common stock at $0.60 per warrant
share.  The Affiliate’s Series B Warrants have a term of seven years and
were not exercisable until after the six-month anniversary from the date of
grant.




Transaction with Cato
Research Ltd.


On July
29, 2009, the Company entered into a Securities Agreement with Cato Holding
Company (“Cato”), who is an accredited investor, pursuant to which the Company
issued an aggregate of 194,444 Shares of the Company’s common stock at $0.90 per
share and each of a Series A warrant (the “Cato Series A Warrant”) and a Series
B warrant (the “Cato Series B Warrant”).  The Shares were issued to
Cato in exchange for debt that was owed by us to Cato Research Ltd. in the
amount of $175,000.  Cato Research Ltd. is an affiliate of
Cato.


-20-


The Cato
Series A Warrant entitles the holder to purchase in the aggregate, up to 175,000
shares of the Company’s common stock at $0.01 per warrant share.  The Cato
Series A Warrant has a term of seven years and was exercisable immediately after
the date of grant.




The Cato
Series B Warrant entitles the holder to purchase, in the aggregate, up to
177,431 shares of the Company’s common stock at $0.60 per warrant share. 
The Cato Series B Warrant has a term of seven years and was not exercisable
until after the six-month anniversary from the date of grant.




The
foregoing transactions were closed upon the Company receiving approval from the
Company’s stockholders and the NYSE Amex Exchange for certain aspects of the
transactions on September 30, 2009.




As a
result of the transaction with Cato, the Company valued the common stock and
warrants issued to Cato in the amount of $261,532 and recorded a loss on the
extinguishment of debt in the amount of $86,532 during the nine month period
ended March 31, 2010.




Note
9 – Income Taxes:




No
provision for income taxes has been made for the three month and nine month
periods ended March 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
10 – Effects of New Accounting Pronouncements Applicable to the
Company




In April
2010, the FASB issue ASU 2010-17, Revenue Recognition – Milestone Method (“ASU
2010-17”).  ASU 2010-17 provides guidance on the criteria that should be
met for determining whether the milestone method of revenue recognition is
appropriate.  A vendor can recognize consideration that is contingent upon
achievement of a milestone in its entirety as revenue in the period in which the
milestone is achieved only if the milestone meets all criteria to be considered
substantive.  The following criteria must be met for a milestone to be
considered substantive.  The consideration earned by achieving the
milestone should 1.  Be commensurate with either the level of effort
required to achieve the milestone or the enhancement of the value of the item
delivered as a result of a specific outcome resulting from the vendor’s
performance to achieve the milestone.  2, Related solely to past
performance.  3.  Be reasonable relative to all deliverables and
payment terms in the arrangement.  No bifurcation of an individual
milestone is allowed and there can be more than one milestone in an
arrangement.  Accordingly, an arrangement may contain both substantive and
nonsubstantive milestones.   ASU 2010-17 is effective on a prospective
basis for milestones achieved in fiscal years, and interim periods within those
years, beginning on or after June 15, 2010.  Management is currently
evaluating the potential impact of ASU 2010-17 on our financial
statements.


-21-


Note
11 – Subsequent Events:




Private Placement of
Convertible Preferred Stock and Warrants




Preferred
Stock




On March
26, 2010, the Company entered into two Purchase Agreements (the “Non-Affiliate
Purchase Agreements”) between the Company and certain non-affiliated investors
who are a party thereto (the “Non-Affiliated Investors”).  On March
26, 2010, the Company also entered into a third Purchase Agreement (the
“Affiliate Purchase Agreement”) between the Company and certain affiliated
investors who are a party thereto (the “Affiliated
Investors”).  Collectively the Non-Affiliate Purchase Agreements and
Affiliate Purchase Agreement shall be referred to herein as the “Purchase
Agreements” and collectively the Non-Affiliated Investors and Affiliated
Investors shall be referred to herein as the “Investors”.  The
respective Purchase Agreements contain substantially similar
terms.  It is anticipated that the offering will bring gross proceeds
to the Company in the amount of approximately $11,497,000 and net proceeds to
the Company in the amount of approximately $10,800,000.  On April 1,
2010, the Company closed on the aggregate gross proceeds of
$10,297,000.  The remaining $1,200,000 of gross proceeds cannot be
closed upon until the Company receives stockholder approval for the
transaction.




Pursuant
to the Non-Affiliate Purchase Agreements, on April 1, 2010, the Company closed
and issued to the Non-Affiliated Purchasers, in a private placement, an
aggregate of 10,297 shares of the Company’s 10% Series A Convertible Preferred
Stock, par value $0.01 per share (the “Series A Preferred Stock”), initially
convertible into approximately 32,178,125 shares of the Company’s common stock,
par value $0.01 per share (the “Common Stock”), and (ii) immediately
exercisable warrants to purchase up to approximately 32,178,125 shares of Common
Stock for an aggregate gross proceeds of $10,297,000.




Pursuant
to the Affiliate Purchase Agreement, the Company agreed to issue to the
Affiliate Purchasers, in a private placement, an aggregate of approximately
1,200 shares of the Company’s 10% Series B Convertible Preferred Stock, par
value $0.01 per share (the “Series B Preferred Stock”), initially convertible
into approximately 3,750,000 shares of Common Stock, and (ii) immediately
exercisable warrants to purchase up to approximately 3,750,000 shares of Common
Stock for an aggregate offering price of approximately
$1,200,000.  The Series B Preferred Stock will only be issued after
the Company receives stockholder approval.  Collectively, the Series A
Preferred Stock and Series B Preferred Stock shall be referred to herein as the
“Preferred Stock”.




Each
share of Preferred Stock has a stated value of $1,000 (the “Stated Value”). Each
holder of shares of Preferred Stock is entitled to receive semi-annually
dividends at the rate of 10% per annum of the Stated Value for each share
of Preferred Stock held by such holder. Except in limited circumstances, the
Company can elect to pay the dividends in cash or shares of Common
Stock.  If the dividends are paid in shares of Common Stock, such
shares will be priced at the lower of 90% of the average VWAP for the 20 days
immediately preceding the payment date or $0.224.  The dividends are
subject to a 30% make whole provision.


-22-


The
shares of Preferred Stock are convertible into shares of Common Stock at an
initial conversion price of $0.32 per share and are convertible at any time,
provided that the conversion of shares of Series A Preferred Stock into shares
of Common Stock is subject to a 19.99% blocker provision, which provision will
expire if the stockholders approve the offering at the Stockholders’
Meeting.  The conversion price is subject to adjustment if the Company
sells or grants any common stock or common stock equivalents, subject to certain
exclusions, at an effective price per share that is lower than the conversion
price of the Preferred Stock.  After 18 months from the date of
issuance of the Preferred Stock, if the Company’s Common Stock trades above
$0.80 for 20 out of 30 consecutive trading days, the Preferred Stock will no
longer be subject to adjustment.




The
Company may force conversion of the Preferred Stock if the Company’s Common
Stock trades above $0.80 for 20 out of 30 consecutive trading days and there is
an effective registration statement for the underlying Common Stock or such
underlying Common Stock is freely tradable under rule 144.




In
connection with the offering, the Company has agreed to solicit shareholder
approval of (i) the ability of the Investors to convert the Securities into
common stock, which in the aggregate exceed 20% of our currently outstanding
shares of common stock and (ii) the issuance of the Securities to the Affiliated
Investors pursuant to the terms and conditions of the Affiliate Purchase
Agreement at a stockholders’ meeting to be held on May 25, 2010 (the
“Stockholders’ Meeting”).




The
Company anticipates that it will close on the offering with the Affiliate
Purchasers as soon as reasonably possible after the receipt of stockholder
approval at the Shareholders’ Meeting.




Warrants




Pursuant
to the Purchase Agreements, the Company delivered a Series A Warrant to the
Non-Affiliate Investors and will deliver, upon shareholder approval, a Series B
Warrant to the Affiliate Investors (the “Warrants”).  Each Warrant has
an initial exercise price of $0.35 per share of Common Stock. The Warrants are
immediately exercisable and have a five year term. The Series A Warrants are
subject to a 19.99% blocker provision to comply with NYSE Amex Rules, which
provisions will expire if the stockholders approve the offering at the
Stockholders’ Meeting. The Series B Warrants do not contain a blocker, as they
will be issued only after the Company receives stockholder approval to issue
such warrants.  The Series A Warrants also contain an provision which
limits the holders beneficial ownership to a maximum of 4.99% (which percentage
may be increased to 9.99% upon 60 days notice to the Company).




Registration Rights
Agreement




The
Company also entered into a Registration Rights Agreement by and among the
Company and the Non-Affiliate Investors only (the “Registration Rights
Agreement”).   The Affiliate Investors are not a party to the
Registration Rights Agreement.  Pursuant to the Registration Rights
Agreement, the Company has agreed to file a registration statement (the
“Registration Statement”) with the Securities and Exchange Commission within,
except for certain limited exceptions, 30 days of closing the offering (the
“Filing Deadline”) to register the shares of Common Stock issuable upon
conversion or exercise of the shares of Series A Preferred Stock and the
Warrants, as the case may be (collectively, the “Underlying Shares”). In the
event the Company did not file the Registration Statement on or before the
Filing Deadline, the Company would have been required to pay liquidated damages
in an amount equal to 1% of the aggregate amount purchase price paid by the
holder for any unregistered securities then held by such Investor up to a
maximum of 3%. The Company filed such registration statement on April 23,
2010.  The Company must file additional registration statements until
all of the securities may be sold pursuant to an effective registration
statement or the securities become eligible for sale under Rule 144 of the
Securities Act of 1933, as amended.


-23-


Placement Agent
Warrants




In
connection with the Non-Affiliate Purchase Agreement and as partial compensation
for its placement agent services related to such Non-Affiliate Purchase
Agreement, the Company issued to Ladenburg Thalmann & Co.
(which acted as exclusive placement agent for a portion of the offering
represented by such Non-Affiliate Purchase Agreement) a warrant initially
exercisable to purchase up to approximately 929,688 shares of Common Stock at an
exercise price of $0.35 per share of Common Stock ( the “Placement Agent
Warrant”).




Additional
Warrant




The
Company will also issued a warrant initially exercisable to purchase up to
approximately 150,000 shares of Common Stock at an exercise price of $0.35 per
share of Common Stock to Midtown Partners & Co. LLC as part of a tail
coverage fee in connection with the offering.


-24-


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 “Factors That May Affect Our Business, Future Operating
Results and Financial Condition” and elsewhere in this report.




Overview




Our
Business




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


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




Human
Health Applications




We
believe that our gene technology could have broad applicability in the human
health field, by either inducing or inhibiting apoptosis.  Inducing
apoptosis may be useful in treating certain forms of cancer because the
cancerous cells have failed to initiate apoptosis on their own due to damaged or
inhibited apoptotic pathways.  Inhibiting apoptosis may be useful in
preventing or treating a wide range of inflammatory and ischemic diseases
attributed to premature apoptosis.




We have
commenced preclinical in-vivo and in-vitro research to
determine the ability of Factor 5A to regulate key execution genes,
pro-inflammatory cytokines, receptors, and transcription factors, which are
implicated in numerous apoptotic diseases.


-25-


Certain
preclinical human health results to date include:




·
            Performing
      efficacy, toxicological and dose-finding studies in mice for our potential
      multiple myeloma drug candidate, SNS-01.  SNS-01 is a
      nano-encapsulated combination therapy of Factor 5A and an siRNA against
      Factor 5A.  Our efficacy study in severe combined
      immune-deficient (“SCID”) mice with subcutaneous human multiple myeloma
      tumors tested SNS-01 dosages 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 a 91% reduction in tumor volume and a
      decrease in tumor weight of 87% and 95%, respectively.  For mice
      that received smaller doses of either 0.38 mg/kg or 0.15 mg/kg, there was
      also a reduction in tumor volume (73% and 61%, respectively) and weight
      (74% and 36%, respectively).  All of the treated mice,
      regardless of dose, survived.  This therapeutic dose range study
      provided the basis for an 8-day maximum tolerated dose study in which
      normal mice received two intravenous doses of increasing amounts of SNS-01
      (from 2.2 mg/kg).  Body weight, organ weight and serum levels of
      liver enzymes were used as clinical indices to assess
      toxicity.  A dose between 2.2 mg/kg and 2.9 mg/kg was well
      tolerated with respect to these clinical indices, and the survival rate at
      2.9 mg/kg was 80%.  Those mice receiving above 2.9 mg/kg of
      SNS-01 showed evidence of morbidity and up to 80%
      mortality.  The 2.9 mg/kg threshold, twice the upper end of the
      proposed therapeutic dose range, was therefore determined to be the
      maximum tolerated dose in mice.




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




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




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




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




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




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




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




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


-26-


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





Accelerating
Apoptosis




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




Inhibiting
Apoptosis




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


-27-




Proteins
required for cell death include p53, interleukins, TNF-a and other cytokines and
caspases.  Expression of these cell death proteins is required for the
execution of apoptosis.  Based on our studies, we believe that
down-regulating Factor 5A by treatment with siRNA inhibits the expression of
p53, a major cell death transcription factor that in turn controls the formation
of a suite of other cell death proteins.  In addition, we believe that
the down-regulation of Factor 5A up-regulates Bcl-2, a suppressor of
apoptosis.




Human
Health Target Markets




We
believe that our gene technology may have broad applicability in the human
health field, by either accelerating or inhibiting
apoptosis.  Accelerating apoptosis may be useful in treating certain
forms of cancer because the body’s immune system is not able to force cancerous
cells to undergo apoptosis.  Inhibiting apoptosis may be useful in
preventing or treating a wide range of inflammatory and ischemic diseases
attributed to premature apoptosis, including diabetes, diabetic retinopathy and
lung inflammation, among others.




, We are
advancing our research in multiple myeloma with the goal of initiating a Phase I
clinical trial, and may select additional human health indications to bring into
clinical trials. We believe that the success of our future operations will
likely depend on our ability to transform our research and development
activities into a commercially feasible technology.




Human
Health Research Program




Our human
health research program, which has consisted of pre-clinical in-vitro and in-vivo experiments designed
to assess the role and method of action of the Factor 5A genes in human
diseases, is being performed by approximately five (5) third party researchers,
at our direction, at Mayo Clinic and the University of
Waterloo.  Additionally, we outsource certain projects to other third
party research organizations.




Our
research and development expenses incurred on human health applications were
approximately 73% of our total research and development expenses for the nine
months ended March 31, 2010.  Our research and development expenses
incurred on human health applications were approximately 72% of our total
research and development expenses for the nine months ended March 31,
2009.  Since inception, the proportion of our research and development
expenses on human health applications has increased, as compared to our research
and development expenses on agricultural applications.  This change is
primarily due to the fact that our research focus on human health has increased
and some of our research costs for plant applications have shifted to our
license partners.




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




·
            Multiple
      Myeloma.  Our objective is to advance our technology for the
      potential treatment of multiple myeloma with the goal of initiating a
      clinical trial.  In connection with the potential clinical
      trial, we have engaged a clinical research organization, or CRO, to assist
      us through the process.  We have also determined the delivery
      system for our technology, contracted for the supply of pharmaceutical
      grade materials to be used in toxicology and human studies, performed
      certain toxicology studies, and have contracted with a third party
      laboratory to conduct additional toxicology studies.  Together
      with the assistance of our CRO, we will have additional toxicology studies
      performed with the goal of filing an investigational new drug application,
      or IND application, with the U.S. Food and Drug Administration, or FDA,
      for their review and consideration in order to initiate a clinical
      trial.  We estimate that it will take approximately nine (9)
      months from March 31, 2010 to complete these
  objectives.


-28-


·
            Other.  We
      may continue to look at other disease states in order to determine the
      role of Factor 5A.




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




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




Human
Health Competition




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




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




·
            developing
      in-house production and marketing
capabilities.




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




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




Agricultural
Applications




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


-29-


Certain
agricultural results to date include:




·
            longer
      shelf life of perishable produce;




·
            increased
      biomass and seed yield;




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




·
            greater
      tolerance to certain fungal and bacterial
  pathogens;




·
            more
      efficient use of fertilizer; and




·
            advancement
      to field trials in banana, and
trees.




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




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




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





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




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


-30-


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, bedding plants, rice, alfalfa, corn, soybean
      and trees; and




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




Agricultural
Target Markets




In order
to address the complexities associated with marketing and distribution in the
worldwide market, we have adopted a multi-faceted commercialization strategy, in
which we have entered into and plan to enter into, as the opportunities present
themselves, additional licensing agreements or other strategic relationships
with a variety of companies or other entities on a crop-by-crop
basis.  We anticipate revenues from these relationships in the form of
licensing fees, royalties, usage fees, or the sharing of gross
profits.  In addition, we anticipate payments from certain of our
partners, our achievement of certain research and development
benchmarks.  This commercialization strategy allows us to generate
revenue at various stages of product development, while ensuring that our
technology is incorporated into a wide variety of crops.  Our optimal
partners combine the technological expertise to incorporate our technology into
their product line along with the ability to successfully market the enhanced
final product, thereby eliminating the need for us to develop and maintain a
sales force.




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





Agricultural
Development and License Agreements




Through
March 31, 2010, we have entered into eight (8) license agreements and one (1)
joint collaboration with established agricultural biotechnology companies or, in
the case of Poet, an established ethanol company:




Agricultural
Research Program




Our
agricultural research and development is performed by three (3) researchers, at
our direction, at the University of Waterloo, where the technology was
developed.  Additional agricultural research and development is
performed by our license or joint collaboration partners.




The
discoverer of our technology, John E. Thompson, Ph.D., is the Associate Vice
President, Research and former Dean of Science at the University of Waterloo in
Ontario, Canada, and is our Executive Vice President and Chief Scientific
Officer.  Dr. Thompson is also one of our directors and owns 1.7% of
the outstanding shares of our common stock, $0.01 par value, as of March 31,
2010.


-31-


On
September 1, 1998, we entered into, and have extended through August 31, 2010, a
research and development agreement with the University of Waterloo and Dr.
Thompson as the principal inventor.  The Research and Development
Agreement provides that the University of Waterloo will perform research and
development under our direction, and we will pay for the cost of this work and
make certain payments to the University of Waterloo.  In return for
payments made under the Research and Development Agreements, we have all rights
to the intellectual property derived from the research.




Agricultural
Competition




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




·
            licensing
      technology to major marketing and distribution
  partners;




·
            entering
      into strategic alliances; or




·
            developing
      in-house production and marketing
capabilities.




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




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




Agricultural Development
Program





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




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




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





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




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


-32-


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




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




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




Based
upon our commercialization strategy, we anticipate that there may be a
significant period of time before plants enhanced using our technology reach
consumers.  Thus, we have not begun to actively market our technology
directly to consumers, but rather, we have sought to establish ourselves within
the industry through presentations at industry conferences, our website and
direct communication with prospective licensees.




Consistent
with our commercialization strategy, we intend to attract other companies
interested in strategic partnerships or licensing our technology, which may
result in additional license fees, revenues from contract research and other
related revenues.  Successful future operations will depend on our
ability to transform our research and development activities into a commercially
feasible technology.




Intellectual
Property




We have
twenty two (22) issued patents from the United States Patent and Trademark
Office, or PTO, and thirty-nine (39) issued patents from foreign countries,
forty-eight (48) of which are for the use of our technology in agricultural
applications and thirteen (13) of which relate to human health
applications.




In
addition to our sixty one (61) 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.


-33-


Government
Regulation





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




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




We
believe that our current activities, which to date have been confined to
research and development efforts, do not require licensing or approval by any
governmental regulatory agency. However, we, or our licensees, may be required
to obtain such licensing or approval from governmental regulatory agencies prior
to the commercialization of our genetically transformed plants and the
application of our human health technology.




-34-




Liquidity
and Capital Resources




Overview




As of
March 31, 2010, our cash balance totaled $39,707, and we had working capital
deficit of $2,816,931.  On April 1, 2010, we received net proceeds
from a private placement of preferred stock and warrants in the aggregate amount
of approximately $9,600,000.  As of March 31, 2010, we had a federal
tax loss carryforward of approximately $30,542,000 and a state tax loss
carry-forward of approximately $23,179,000 to offset future taxable income. We
cannot assure you that we will be able to take advantage of any or all of such
tax loss carryforwards, if at all, in future fiscal
years.  Additionally, the federal tax loss carryforward in total may
be limited by provisions of the Internal Revenue Code regarding changes in
ownership of corporations.




Contractual
Obligations




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




Payments Due by PeriodContractual Obligations
                                
                                Total
                                
                                
                                Less than
                                  1 year
                                
                                
                                1 - 3 years
                                
                                
                                4 - 5 years
                                
                                
                                More than
                                  5 yearsResearch
      and Development Agreements (1)
                                
                                $
                                480,049
                                
                                
                                $
                                480,049
                                
                                
                                $
                                —
                                
                                
                                $
                                —
                                
                                
                                $
                                —Facility,
      Rent and Operating Leases (2)
                                
                                $
                                93,480
                                
                                
                                $
                                80,104
                                
                                
                                $
                                13,376
                                
                                
                                $
                                —
                                
                                
                                $
                                —Employment,
      Consulting and Scientific Advisory Board Agreements (3)
                                
                                $
                                221,842
                                
                                
                                $
                                211,842
                                
                                
                                $
                                10,000
                                
                                
                                $
                                —
                                
                                
                                $
                                —Total
      Contractual Cash Obligations
                                
                                $
                                795,371
                                
                                
                                $
                                771,995
                                
                                
                                $
                                23,376
                                
                                
                                $
                                —
                                
                                
                                $
                                —


_____




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




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




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




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


-35-


Effective
September 1, 2009, we extended our research and development agreement with the
University of Waterloo for an additional one-year period through August 31,
2010, in the amount of approximately $650,400.  Research and
development expenses under this agreement aggregated $164,206 and $479,206 for
the three month and nine month periods ended March 31, 2010, respectively, and
$139,740 and $489,258 for the three month and nine month periods ended March 31,
2009, respectively, and $5,599,574 for the cumulative period from inception
through March 31, 2010.




Capital
Resources




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




Private Placement of
Convertible Preferred Stock and Warrants




On March
26, 2010, we entered into two Purchase Agreements, also referred to herein as
the Non-Affiliate Purchase Agreements, between us and certain non-affiliated
investors who are a party thereto, also referred to herein as the Non-Affiliated
Investors.  On March 26, 2010, we also entered into a third Purchase
Agreement, also referred to herein as the Affiliate Purchase Agreement, between
us and certain affiliated investors.  Collectively the Non-Affiliate
Purchase Agreements and Affiliate Purchase Agreement shall be referred to herein
as the “Purchase Agreements” and collectively the Non-Affiliated Investors and
Affiliated Investors shall be referred to herein as the
“Investors”.  The respective Purchase Agreements contain substantially
similar terms.  It is anticipated that the offering will bring gross
proceeds to us in the amount of approximately $11,497,000 and net proceeds to us
in the amount of approximately $10,800,000.  On April 1, 2010, we
closed on the aggregate gross proceeds of $10,297,000.  The remaining
$1,200,000 of gross proceeds cannot be closed upon until we receive stockholder
approval for the transaction.




We
anticipate that, based upon our cash balance as of March 31, 2010 and the net
proceeds from the private placement that closed on April 1, 2010, we will be
able to fund our operations for at least the next twelve months from March 31,
2010. Over the next twelve months, we plan to fund our research and development
and commercialization activities by:




·
            utilizing
      our current cash balance and
investments;




·
            the
      placement of additional equity or debt
  instruments;




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


-36-


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




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




Changes
to Critical Accounting Policies and Estimates




We
adopted FASB ASC 815.40, "Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entity's Own Stock" for the fiscal year beginning July
1, 2009.




Except
for the adoption of FASB ASC 815.40, 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, 2009.


-37-


Results
of Operations




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




The net
loss for the three month period ended March 31, 2010 was
$5,284,235.  The net loss for the three month period ended March 31,
2009 was $1,331,477.  Such a change represents an increase in net loss
of $3,952,758,or
296.9%.  This increase in net loss was primarily the result of an
increase in non-cash expenses associated with the outstanding and redeemed
convertible notes and change in fair value of a warrant liability.




Revenue




There was
no revenue for the three month period ended March 31, 2010.  Total
revenue of $75,000 for the three month period ended March 31, 2009 consisted of
a milestone payment in connection with an agricultural license
agreement.




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




Operating
Expenses




Three Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)General
      and administrative
                
                $
                555
                
                
                $
                532
                
                
                $
                23
                
                
                
                4.3
                %Research
      and development
                
                
                566
                
                
                
                541
                
                
                
                25
                
                
                
                4.6
                %Total
      operating expenses
                
                $
                1,121
                
                
                $
                1,073
                
                
                $
                48
                
                
                
                4.5
                %





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


-38-


General
and Administrative Expenses




Three Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)Share-based
      compensation
                
                $
                141
                
                
                $
                120
                
                
                $
                21
                
                
                
                17.5
                %Payroll
      and benefits
                
                
                142
                
                
                
                177
                
                
                
                (35
                )
                
                
                (19.8
                )%Investor
      relations
                
                
                34
                
                
                
                45
                
                
                
                (11
                )
                
                
                (24.4
                )%Professional
      fees
                
                
                122
                
                
                
                74
                
                
                
                48
                
                
                
                64.9
                %Depreciation
      and amortization
                
                
                32
                
                
                
                27
                
                
                
                5
                
                
                
                18.5
                %Director
      fees
                
                
                9
                
                
                
                14
                
                
                
                (5
                )
                
                
                (35.7
                )%Other
      general and administrative
                
                
                75
                
                
                
                75
                
                
                
                —
                
                
                
                —
                %Total
      general and administrative
                
                $
                555
                
                
                $
                532
                
                
                $
                23
                
                
                
                4.3
                %





·
            Share-based
      compensation for the three months ended March 31, 2010 consisted primarily
      of the amortized portion of the Black-Scholes value of options granted to
      directors, employees and consultants and the value of 74,184 shares of
      common stock issued to consultants.  Share based compensation
      for the three months ended March 31, 2009 consisted primarily of the
      amortized portion of the Black-Scholes value of options granted to
      directors, employees and consultants and the amount of our short-term
      incentive program for the year ended June 30, 2009.  During the
      three month periods ended March 31, 2010 and 2009, there were 1,015,000
      and 127,836 options granted,
respectively.




·
            Payroll
      and benefits decreased primarily due to a reduction in the amount of
      compensation for our President and CEO, which was partially offset by the
      costs associated with severance agreement with our former Vice-President
      of Corporate Development.




·
            Investor
      relations decreased primarily due to a reduction in the amount of fees
      being paid to our previous investor relations
  firm.




·
            Professional
      fees increased primarily due to legal fees in connection with the
      redemption of the YA Global convertible notes, the purchase of the
      Stanford convertible notes and warrants by certain of our board members
      and the execution of the severance agreement with our former
      Vice-President of Corporate
Development.




We expect
general and administrative expenses to modestly increase over the next twelve
months primarily due to an increase in payroll and benefits and legal and
accounting fees as we continue to expand our research and development program
for human health applications of our technology.


-39-




Research
and Development Expenses




Three Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)Share-based
      compensation
                
                $
                2
                
                
                $
                23
                
                
                $
                (21
                )
                
                
                (91.3
                )%Other
      research and development
                
                
                564
                
                
                
                518
                
                
                
                46
                
                
                
                8.8
                %Total
      research and development
                
                $
                566
                
                
                $
                541
                
                
                $
                25
                
                
                
                4.6
                %




·
            Share-based
      compensation consists primarily of the amortized portion of Black-Scholes
      value of options and warrants granted to research and development
      consultants and employees.   Additionally, for the three
      months ended March 31, 2009, it also consisted of the amount of our
      short-term incentive plan for the year ended June 30,
  2009.




·
            Other
      research and development costs increased primarily due to an increase in
      the costs incurred in connection with our development of SNS01 for
      multiple myeloma due to the timing of certain aspects of the development
      and the cost of the research performed at the University of Waterloo as a
      result of a negative exchange rate variance during the three months ended
      March 31, 2010.




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




Three Months Ended March 31,2010
                
                
                %
                
                
                2009
                
                
                %(in thousands, except % values)Agricultural
                
                $
                138
                
                
                
                24
                %
                
                $
                146
                
                
                
                27
                %Human
      health
                
                
                428
                
                
                
                76
                %
                
                
                395
                
                
                
                73
                %Total
      research and development
                
                $
                566
                
                
                
                100
                %
                
                $
                541
                
                
                
                100
                %




·
            Agricultural
      research expenses decreased during the three month period ended March 31,
      2010 primarily due to a decrease in the amount of share- based
      compensation.




·
            Human
      health research expenses increased during the three month period ended
      March 31, 2010 primarily as a result of the timing of certain aspects of
      the development of SNS01 for multiple
myeloma.




We expect
the percentage of human health research programs 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 SNS01.


-40-




Other
noncash income




On July
1, 2009, we adopted FASB ASC 815.40  and recorded a warrant liability
in the amount of $3,200,108 on such date.  At each reporting period,
we are required to revalue the amount of the warrant liability.  On
December 31, 2009, the amount of the warrant liability was adjusted to
$860,767.  On March 31, 2010, the amount of the warrant liability was
adjusted to $1,388,333. The difference between December 31, 2009 and March 31,
2010 of $527,566 was recorded as other noncash loss.




Amortization
of debt discount, financing costs and interest expense and loss on
extinguishment of debt




During
the year ended June 30, 2008, we issued $10,000,000 in convertible notes and
warrants.  The net proceeds of those convertible notes and warrants
were recorded as equity.  The discount on the convertible notes is
being amortized, using the effective yield method, over the term of the
convertible notes.  The related costs of issuance were recorded as
deferred financing costs and are being amortized on a straight line basis over
the term of the convertible notes.




The
increase in the amortization of the debt discount is primarily due to
convertible notes in the amount of $1,161,900 being converted into common stock
and convertible notes in the amount of $1,835,640 being redeemed during the
three month period ended March 31, 2010.  The unamortized portion of
such notes was amortized to interest expense.




As a
result of the redemption of convertible notes in the amount of $1,835,640, we
recorded a loss on extinguishment of debt in the amount of
$275,345.




None of
the convertible notes were converted into common stock or redeemed during the
three month period ended March 31, 2009.




At March
31, 2010 and May 17, 2010, convertible notes in the amount of $5,000,000 were
outstanding, which are held by certain members of our board of
directors.





Interest (Expense) Income,
net





During
the three month period ended March 31, 2010, we incurred interest in connection
with a loan facility entered into in February 2010.  Furthermore,
interest income during the three month period ended March 31, 2010 was lower
than interest income during the three month period ended March 31, 2009 as a
result of a lower cash balance.


-41-





Nine Months
Ended March 31, 2010 andNine Months
Ended March 31, 2009




The net
loss for the nine month period ended March 31, 2010 was
$7,177,196.  The net loss for the nine month period ended March 31,
2009 was $4,137,224.  Such a change represents an increase in net loss
of $3,039,972,or
73.5%.  This increase in net loss was primarily the result of an
increase in non-cash expenses associated with the outstanding and redeemed
convertible notes, which was partially offset by a change in fair value of a
warrant liability




Revenue




Total
revenue of $140,000 and $275,000 for the nine month periods ended March 31, 2010
and 2009, respectively, consisted of milestone payments in connection with
certain agricultural license agreements.




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




Operating
Expenses




Nine Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)General
      and administrative
                
                $
                1,735
                
                
                $
                1,711
                
                
                $
                24
                
                
                
                1.4
                %Research
      and development
                
                
                1,523
                
                
                
                1,624
                
                
                
                (101
                )
                
                
                (6.2
                )%Total
      operating expenses
                
                $
                3,258
                
                
                $
                3,335
                
                
                $
                (77
                )
                
                
                (2.3
                )%





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




General
and Administrative Expenses




Nine Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)Share-based
      compensation
                
                $
                324
                
                
                $
                323
                
                
                $
                1
                
                
                
                0.3
                %Payroll
      and benefits
                
                
                542
                
                
                
                522
                
                
                
                20
                
                
                
                3.8
                %Investor
      relations
                
                
                125
                
                
                
                200
                
                
                
                (75
                )
                
                
                (37.5
                )%Professional
      fees
                
                
                384
                
                
                
                349
                
                
                
                35
                
                
                
                10.0
                %Depreciation
      and amortization
                
                
                93
                
                
                
                81
                
                
                
                12
                
                
                
                14.8
                %Director
      fees
                
                
                62
                
                
                
                58
                
                
                
                4
                
                
                
                6.9
                %Other
      general and administrative
                
                
                205
                
                
                
                178
                
                
                
                27
                
                
                
                15.2
                %Total
      general and administrative
                
                $
                1,735
                
                
                $
                1,711
                
                
                $
                24
                
                
                
                1.4
                %


-42-





·
            Share-based
      compensation for the nine months ended March 31, 2010 consisted primarily
      of the amortized portion of the Black-Scholes value of options granted to
      directors, employees and consultants and the value of 154,184 shares of
      common stock issued to consultants.  Share based compensation
      for the nine months ended March 31, 2009 consisted primarily of the
      amortized portion of the Black-Scholes value of options granted to
      directors, employees and consultants and the amount of our short-term
      incentive program for the year ended June 30,
      2009.    During the nine month periods ended March 31,
      2010 and 2009, there were 1,748,399 and 849,420 options granted,
      respectively.




·
            Payroll
      and benefits increased primarily due to the severance agreement with our
      former Vice-President of Corporate
Development.




·
            Investor
      relations decreased primarily because we have not yet incurred the costs
      of holding our annual meeting for the current year.  Our annual
      meeting was held in December 2008 in the previous year and incurred such
      costs during the nine month period ended March 31,
      2009. Additionally, there was a reduction in the amount of fees being
      paid to our previous investor relations firm beginning on December 1,
      2009.




·
            Professional
      fees increased primarily due to legal fees in connection with our
      redemption of the YA Global convertible notes, the purchase of the
      Stanford convertible notes and warrants by certain of our board members
      and the execution of the severance agreements with our former President
      and CEO and Vice-President of Corporate Development.  Such
      increase was partially offset by a decrease in accounting
      fees.




We expect
general and administrative expenses to modestly increase over the next twelve
months primarily due to an increase in payroll and benefits and legal and
accounting fees as we continue to expand our research and development program
for human health applications of our technology.




Research
and Development Expenses




Nine Months Ended March 31,2010
                
                
                2009
                
                
                Change
                
                
                %(in thousands, except % values)Share-based
      compensation
                
                $
                2
                
                
                $
                35
                
                
                $
                (33
                )
                
                
                (94.3
                )%Other
      research and development
                
                
                1,521
                
                
                
                1,589
                
                
                
                (68
                )
                
                
                (4.3
                )%Total
      research and development
                
                $
                1,523
                
                
                $
                1,624
                
                
                $
                (101
                )
                
                
                (6.2
                )%




·
            Share-based
      compensation consists primarily of the amortized portion of Black-Scholes
      value of options and warrants granted to research and development
      consultants and employees.   Additionally, for the three
      months ended March 31, 2009, it also consisted of the amount of our
      short-term incentive plan for the year ended June 30,
  2009.


-43-




·
            Other
      research and development costs decreased primarily due to a decrease in
      the costs incurred in connection with our development of SNS01 for
      multiple myeloma due to the timing of certain aspects of the development
      and the cost of the research performed at the University of Waterloo as a
      result of a decrease in the annual budget that began on September 1,
      2009.




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




Nine Months Ended March 31,2010
                
                
                %
                
                
                2009
                
                
                %(in thousands, except % values)Agricultural
                
                $
                404
                
                
                
                27
                %
                
                $
                457
                
                
                
                28
                %Human
      health
                
                
                1,119
                
                
                
                73
                %
                
                
                1,167
                
                
                
                72
                %Total
      research and development
                
                $
                1,523
                
                
                
                100
                %
                
                $
                1,624
                
                
                
                100
                %




·
            Agricultural
      research expenses decreased during the nine month period ended March 31,
      2010 primarily due to a decrease in the cost of the research performed at
      the University of Waterloo as a result of a decrease in the annual budget
      beginning on September 1, 2009 .




·
            Human
      health research expenses decreased during the nine month period ended
      March 31, 2010 primarily as a result of the timing of certain projects
      related to the development of SNS01 for multiple
  myeloma.




We expect
the percentage of human health research programs 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 SNS01.




Other
noncash income




On July
1, 2009, we adopted FASB ASC 815.40  and recorded a warrant liability
in the amount of $3,200,108 on such date.  At each reporting period,
we are required to revalue the amount of the warrant liability.  On
March 31, 2010, the amount of the warrant liability was adjusted to $1,388,333
and the difference of $1,811,775 was recorded as other noncash
income.




Amortization
of debt discount, financing costs and interest expense and loss on
extinguishment of debt




During
the year ended June 30, 2008, we issued $10,000,000 in convertible notes and
warrants.  The net proceeds of those convertible notes and warrants
were recorded as equity.  The discount on the convertible notes is
being amortized, using the effective yield method, over the term of the
convertible notes.  The related costs of issuance were recorded as
deferred financing costs and are being amortized on a straight line basis over
the term of the convertible notes.




The
increase in the amortization of the debt discount is primarily due to
convertible notes in the amount of $2,619,360 being converted into common
stock and convertible notes in the amount of $1,835,640 being redeemed
during the nine month period ended March 31, 2010.  The unamortized
portion of such notes was amortized to interest expense.  None of the
convertible notes were converted into common stock during the nine month period
ended March 31, 2009.


-44-




As a
result of the redemption of the convertible notes in the amount of $1,835,640,
we recorded a loss on extinguishment of debt in the amount of
$275,345.  Additionally, in July 2009 we issued common stock and
warrants, valued at $261,532, to Cato Holding Company in exchange for debt
that was owed by us to its affiliate, Cato Research Ltd., in the amount of
$175,000.  As a result of that transaction, we recorded a loss on
extinguishment of debt in the amount of $86,532.




At March
31, 2010, there were $5,000,000 of convertible notes outstanding held by certain
members of our board of directors.




Interest
(Expense) Income, net




During
the nine month period ended March 31, 2010, we incurred interest in connection
with a loan facility entered into in February 2010.  Furthermore,
interest income during the nine month period ended March 31, 2010 was lower than
interest income during the nine month period ended March 31, 2009 as a result of
a lower interest rates and a lower cash balance.




Period From Inception on
July 1, 1998 through March 31, 2010




From
inception of operations on July 1, 1998 through March 31, 2010, we have had
revenues 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, if ever, during which time we will continue to engage in
significant research and development efforts.




We have
incurred losses each year since inception and have an accumulated deficit
of$38,395,328 at March 31, 2010.  We expect to continue to incur
losses as a result of expenditures on research and development and
administrative activities.




-45-




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 and United States treasury notes, with
an effective duration of the portfolio of less than one year which we believe
are subject to limited credit risk.  We currently do not hedge our
interest rate exposure.  Due to the short-term nature of our
investments, which we plan to hold until maturity, we do not believe that we
have any material exposure to interest rate risk arising from our
investments.




Item
      4T.
            Controls
      and Procedures.




(a)           Evaluation
of disclosure controls and procedures.




The
principal executive officer and principal financial officer have evaluated our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of March 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 Commission’s rules and forms, and to ensure that information required to
be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is accumulated and communicated to our management,
including our principal executive and principal financial officers, to allow
timely decisions regarding required disclosure.




(b)           Changes
in internal controls.




No change
in our internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) occurred during the nine month period
ended March 31, 2010 that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial
reporting.


-46-


PART II. OTHER
INFORMATION.




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 $38,395,328 at March 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.




Our
independent auditors have expressed substantial doubt about our ability to
continue as a going concern.




In their
audit opinion issued in connection with our consolidated balance sheet as of
June 30, 2009 and our related consolidated statements of operations,
stockholders’ equity, and cash flows for the year then ended, our auditors have
expressed substantial doubt about our ability to continue as a going concern
given our recurring net losses, negative cash flows from operations, planned
spending levels and the limited amount of funds on our balance
sheet.  We have prepared our financial statements on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business.  The
consolidated financial statements do not include any adjustments that might be
necessary should we be unable to continue in existence.




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




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




In
addition, the financing with Stanford Venture Capital Holdings, Inc., referred
to herein as Stanford, are secured by all of our assets.  Certain
members of our board of directors have acquired all of the convertible notes
issued to Stanford.  If we default under the convertible notes, the
investors may foreclose on our assets and our business.  As a result,
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.


-47-




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;




·
            license
      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;




·
            attempt
      to sell our company;




·
            cease
      operations; or




·
            declare
      bankruptcy.




We
believe that at the projected rate of spending and with the proceeds we received
from a private placement of convertible preferred stock and warrants on April 1,
2010, we should have sufficient cash to maintain our present operations for at
least the next twelve (12) months.




We
may be adversely affected by the current economic environment.




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




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




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


-48-




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




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




We rely
on third parties to perform all of our research and development
activities.  Our research and development efforts take place at the
University of Waterloo in Ontario, Canada, where our technology was discovered,
at the Mayo Clinic and with our commercial partners.  At this time, we
do not have the internal capabilities to perform our 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
March 31, 2010, we had cash of $39,707 and a working capital deficit of
$2,816,931.  On April 1, 2010, we received net proceeds of
approximately $9,600,000 from the private placement of convertible preferred
stock and warrants.  Using our available reserves as of March 31, 2010
and the net proceeds from the private placement of convertible preferred stock
and warrants, we believe that we can operate according to our current business
plan for at least the next twelve(12) months.  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.


-49-


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 notes into common stock, as of
March 31, 2010, we had 34,587,552 shares of common stock authorized but unissued
and unreserved, which may be issued from time to time by our board of directors
without stockholder approval.  On April 1, 2010, we closed on a
private placement of convertible preferred stock and warrants.  After
giving effect for this private placement, there were no unreserved shares
remaining for future issuance.  We have asked our shareholders to
approve this financing and to increase our authorized shares of common stock
from 120,000,000 to 250,000,000.  If the shareholders do not approve
this increase in authorized shares of common stock, we will not have any shares
available for future financings.  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;


-50-




·
            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
March 31, 2010, we have been issued twenty two (22) patents by the PTO and
thirty-nine (39) patents from foreign countries.  We have also filed
numerous patent applications for our technology in the United States and in
several foreign countries, which technology is vital to our primary business, as
well as several Continuations in Part on these patent
applications.  Our success depends in part upon the grant of patents
from our pending patent applications.




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




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




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




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




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




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




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




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




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




·
            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.


-51-




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




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




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




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




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




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




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




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 prohibits the disclosure of
confidential information to anyone outside of our company, during the term of
employment and for 5 years thereafter.  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.


-52-


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




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




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




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




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


-53-




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




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




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




Many
human health and agricultural biotechnology companies are engaged in research
and development activities relating to apoptosis and senescence.  The
market for plant protection and yield enhancement products is intensely
competitive, rapidly changing and undergoing consolidation.  We may be
unable to compete successfully against our current and future competitors, which
may result in price reductions, reduced margins and the inability to achieve
market acceptance for products containing our technology.  Our
competitors in the field of plant senescence gene technology are companies that
develop and produce transgenic plants and include major international
agricultural companies, specialized biotechnology companies, research and
academic institutions and, potentially, our joint venture and strategic alliance
partners.  These companies include: Mendel Biotechnology, Inc.,
Renessen LLC, Exelixis Plant Sciences, Inc., and Syngenta International AG,
among others.  Some of our competitors that are involved in apoptosis
research include:  Amgen Inc.; Centocor, Inc.; Genzyme Corporation;
OSI Pharmaceuticals, Inc.; Novartis AG; Introgen Therapeutics, Inc.; Genta,
Inc.; 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.


-54-




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




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




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




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




·
            the
      FDA regulates foods derived from new plant
  varieties.




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




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




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


-55-




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




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




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





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





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





•
            
            we
      may discover that the product candidate does not exhibit the expected
      therapeutic results in humans, may cause harmful side effects or have
      other unexpected characteristics that may delay or preclude regulatory
      approval or limit commercial use if approved;•
            
            the
      results from early clinical trials may not be statistically significant or
      predictive of results that will be obtained from expanded, advanced
      clinical trials;•
            
            institutional
      review boards or regulators, including the FDA, may hold, suspend or
      terminate our clinical research or the clinical trials of our product
      candidate for various reasons, including noncompliance with regulatory
      requirements or if, in their opinion, the participating subjects are being
      exposed to unacceptable health risks;•
            
            subjects
      may drop out of our clinical trials;•
            
            our
      preclinical studies or clinical trials may produce negative, inconsistent
      or inconclusive results, and we may decide, or regulators may require us,
      to conduct additional preclinical studies or clinical trials;
      and•
            
            the
      cost of our clinical trials may be greater than we currently
      anticipate.


-56-





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





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





•
            
            obtaining
      an effective investigational new drug application, or IND, or regulatory
      approval to commence a clinical trial;•
            
            negotiating
      acceptable clinical trial agreement terms with prospective trial
      sites;•
            
            obtaining
      institutional review board approval to conduct a clinical trial at a
      prospective site;•
            
            recruiting
      qualified subjects to participate in clinical trials;•
            
            competition
      in recruiting clinical investigators;•
            
            shortage
      or lack of availability of supplies of drugs for clinical
      trials;•
            
            the
      need to repeat clinical trials as a result of inconclusive results or
      poorly executed testing;•
            
            the
      placement of a clinical hold on a study;•
            
            the
      failure of third parties conducting and overseeing the operations of our
      clinical trials to perform their contractual or regulatory obligations in
      a timely fashion; and•
            
            exposure
      of clinical trial subjects to unexpected and unacceptable health risks or
      noncompliance with regulatory requirements, which may result in suspension
      of the trial





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.


-57-




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




·
            occurrence
      of unacceptable toxicities or side
effects;




·
            ineffectiveness
      of the product candidate;




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




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




·
            delays
      in patient enrollment; or




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




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




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.


-58-




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




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




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




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




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




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




Risks Related to Our Common
Stock




We
currently do not meet the NYSE Amex Exchange continued listing
standards.  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.


-59-




The NYSE
Amex Exchange requires us to meet minimum financial requirements in order to
maintain our listing.  Currently, we do not meet the $6,000,000
minimum net worth continued listing requirement of the NYSE Amex
Exchange and have received a notice of noncompliance from the NYSE Amex
Exchange.  We submitted a plan of compliance to the NYSE Amex Exchange
discussing how we intend to regain compliance with the continued listing
requirements.  The NYSE Amex Exchange has accepted our plan of
compliance and granted us an extension until April 29, 2011 to regain compliance
with the NYSE's continued listing standards.  During the extension
period, we remain subject to periodic review by NYSE Staff. Failure to make
progress consistent with the plan or to regain compliance with the continued
listing standards by the end of the extension period could result in our company
being delisted from the NYSE.  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 or the NASDAQ Stock Market
and that has a market price of less than $5.00 per share or with an exercise
price of less than $5.00 per share, subject to certain exceptions.  If
our common stock becomes a penny stock, additional sales practice requirements
would be imposed on broker-dealers that sell such securities to persons other
than certain qualified investors.  For transactions involving a penny
stock, unless exempt, a broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser’s written consent to
the transaction prior to the sale.  In addition, the rules on penny
stocks require delivery, prior to and after any penny stock transaction, of
disclosures required by the SEC.




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




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




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.


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As of
March 31, 2010, our executive officers, directors and affiliated entities
together beneficially own approximately 41.6% 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 March 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.  Stanford is
one such major stockholder of Senesco.




In
February 2009, the SEC filed a civil lawsuit accusing certain executives of
Stanford of fraud and Stanford’s assets were subsequently placed in
receivership.  It is unclear at this point, what impact, if any, the
ongoing investigation of Stanford may have on us.




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
March 31, 2010, we had 33,584,121 shares of our common stock issued and
outstanding, of which approximately 1,986,306 shares are registered pursuant to
a registration statement on Form S-3 and 31,597,815 of which are either eligible
to be sold under SEC Rule 144 or are in the public float.  In
addition, we have registered 2,632,194 shares of our common stock underlying
warrants previously issued on the Form S-3 registration statement and we
registered 6,137,200 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 do not meet the continued listing requirements of the NYSE Amex
Exchange.  As we do not 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.




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;


-61-




·
            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 quarter ended March 31, 2010, our common stock traded
between $0.25 per share and $0.51 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 outstanding convertible debentures, the conversion of 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
March 31, 2010, we have outstanding warrants to purchase 19,130,793 shares of
our common stock.  In addition, as of March 31, 2010, we have reserved
10,212,884 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 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. In addition, any shares issued in
connection with the Stanford financing and recent private placement of
convertible preferred stock, as further discussed elsewhere in this Form 10-Q,
can also have a dilutive effect and a possible material adverse effect on our
stock price.  The conversion price of certain warrants are also
subject to certain anti-dilution adjustments.  The agreement with
Stanford, which is now held by certain members of our board of directors,
provides for the potential issuance of up to a total of 31,888,888 shares of our
common stock, of which 8,333,333 shares are included in outstanding warrants
noted above.  We may also need to issue additional shares as a result
of anti-dilution provisions related to the convertible preferred
stock.


-62-


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





Private Placement of
Convertible Preferred Stock and Warrants




Preferred
Stock




On March
26, 2010, we entered into two Purchase Agreements, also referred to herein as
the Non-Affiliate Purchase Agreements, between us and certain non-affiliated
investors who are a party thereto, also referred to herein as the Non-Affiliated
Investors.  On March 26, 2010, we also entered into a third Purchase
Agreement, also referred to herein as the Affiliate Purchase Agreement, between
us and certain affiliated investors.  Collectively the Non-Affiliate
Purchase Agreements and Affiliate Purchase Agreement shall be referred to herein
as the “Purchase Agreements” and collectively the Non-Affiliated Investors and
Affiliated Investors shall be referred to herein as the
“Investors”.  The respective Purchase Agreements contain substantially
similar terms.  It is anticipated that the offering will bring gross
proceeds to us in the amount of approximately $11,497,000 and net proceeds to us
in the amount of approximately $10,800,000.  On April 1, 2010, we
closed on the aggregate gross proceeds of $10,297,000.  The remaining
$1,200,000 of gross proceeds cannot be closed upon until we receive stockholder
approval for the transaction.




Pursuant
to the Non-Affiliate Purchase Agreements, on April 1, 2010, we closed and issued
to the Non-Affiliated Purchasers, in a private placement, an aggregate of 10,297
shares of our 10% Series A Convertible Preferred Stock, par value $0.01 per
share, also referred to herein as the Series A Preferred Stock, initially
convertible into approximately 32,178,125 shares of our common stock, also
referred to herein as the Common Stock, and (ii) immediately exercisable
warrants to purchase up to approximately 32,178,125 shares of Common Stock for
an aggregate gross proceeds of $10,297,000.




Pursuant
to the Affiliate Purchase Agreement, we agreed to issue to the Affiliate
Purchasers, in a private placement, an aggregate of approximately 1,200 shares
of our 10% Series B Convertible Preferred Stock, par value $0.01 per share, also
referred to herein as the Series B Preferred Stock, initially convertible into
approximately 3,750,000 shares of our common stock, and (ii) immediately
exercisable warrants to purchase up to approximately 3,750,000 shares of Common
Stock for an aggregate offering price of approximately
$1,200,000.  The Series B Preferred Stock will only be issued after we
receive stockholder approval.  Collectively, the Series A Preferred
Stock and Series B Preferred Stock shall be referred to herein as the “Preferred
Stock”.




Each
share of Preferred Stock has a stated value of $1,000, also referred to herein
as the Stated Value. Each holder of shares of Preferred Stock is entitled to
receive semi-annually dividends at the rate of 10% per annum of the Stated
Value for each share of Preferred Stock held by such holder. Except in limited
circumstances, we can elect to pay the dividends in cash or shares of Common
Stock.  If the dividends are paid in shares of Common Stock, such
shares will be priced at the lower of 90% of the average VWAP for the 20 days
immediately preceding the payment date or $0.224.  The dividends are
subject to a 30% make whole provision.


-63-


The
shares of Preferred Stock are convertible into shares of Common Stock at an
initial conversion price of $0.32 per share and are convertible at any time,
provided that the conversion of shares of Series A Preferred Stock into shares
of Common Stock is subject to a 19.99% blocker provision, which provision will
expire if the stockholders approve the offering at the Stockholders’
Meeting.  The conversion price is subject to adjustment if we sell or
grant any common stock or common stock equivalents, subject to certain
exclusions, at an effective price per share that is lower than the conversion
price of the Preferred Stock.  After 18 months from the date of
issuance of the Preferred Stock, if our Common Stock trades above $0.80 for 20
out of 30 consecutive trading days, the Preferred Stock will no longer be
subject to adjustment.




We may
force conversion of the Preferred Stock if our Common Stock trades above $0.80
for 20 out of 30 consecutive trading days and there is an effective registration
statement for the underlying Common Stock or such underlying Common Stock is
freely tradable under rule 144.




In
connection with the offering, we have agreed to solicit shareholder approval of
(i) the ability of the Investors to convert the Securities into common stock,
which in the aggregate exceed 20% of our currently outstanding shares of common
stock and (ii) the issuance of the Securities to the Affiliated Investors
pursuant to the terms and conditions of the Affiliate Purchase Agreement at a
stockholders’ meeting to be held on May 25, 2010, also referred to herein as the
Stockholders’ Meeting.




We
anticipate that we will close on the offering with the Affiliate Purchasers as
soon as reasonably possible after the receipt of stockholder approval at the
Shareholders’ Meeting.




Warrants




Pursuant
to the Purchase Agreements, we delivered a Series A Warrant to the Non-Affiliate
Investors and will deliver, upon shareholder approval, a Series B Warrant to the
Affiliate Investors, also referred to herein as the Warrants.  Each
Warrant has an initial exercise price of $0.35 per share of Common Stock. The
Warrants are immediately exercisable and have a five year term. The Series A
Warrants are subject to a 19.99% blocker provision to comply with NYSE Amex
Rules, which provisions will expire if the stockholders approve the offering at
the Stockholders’ Meeting. The Series B Warrants do not contain a blocker, as
they will be issued only after we receive stockholder approval to issue such
warrants.  The Series A Warrants also contain an provision which
limits the holders beneficial ownership to a maximum of 4.99% (which percentage
may be increased to 9.99% upon 60 days notice to us).




Registration Rights
Agreement




We also
entered into a Registration Rights Agreement by and among us and the
Non-Affiliate Investors only, also referred to herein as the Registration Rights
Agreement.  The Affiliate Investors are not a party to the
Registration Rights Agreement.  Pursuant to the Registration Rights
Agreement, we agreed to file a registration statement, also referred to herein
as the Registration Statement, with the Securities and Exchange Commission
within, except for certain limited exceptions, 30 days of closing the offering,
also referred to herein as the Filing Deadline, to register the shares of Common
Stock issuable upon conversion or exercise of the shares of Series A Preferred
Stock and the Warrants, as the case may be, also referred to herein
collectively, as the Underlying Shares. In the event we did not file the
Registration Statement on or before the Filing Deadline, we would have been
required to pay liquidated damages in an amount equal to 1% of the aggregate
amount purchase price paid by the holder for any unregistered securities then
held by such Investor up to a maximum of 3%. We filed such registration
statement on April 23, 2010.  We must file additional registration
statements until all of the securities may be sold pursuant to an effective
registration statement or the securities become eligible for sale under Rule 144
of the Securities Act of 1933, as amended.


-64-




Placement Agent
Warrants




In
connection with the Non-Affiliate Purchase Agreement and as partial compensation
for its placement agent services related to such Non-Affiliate Purchase
Agreement, we issued to Ladenburg
Thalmann & Co. (which acted as exclusive placement agent for a
portion of the offering represented by such Non-Affiliate Purchase Agreement) a
warrant initially exercisable to purchase up to approximately 929,688 shares of
Common Stock at an exercise price of $0.35 per share of Common
Stock.




Additional
Warrant




We also
issued a warrant initially exercisable to purchase up to approximately 150,000
shares of Common Stock at an exercise price of $0.35 per share of Common Stock
to Midtown Partners & Co. LLC as part of a tail coverage fee in connection
with the offering.




We expect
to use the net proceeds from the offering for general corporate
purposes.




Item
      3.
            Defaults
      Upon Senior Securities




None




Item
      4.
            [RESERVED]


-65-




Item
      5.
            Other
      Information




None




Item
      6.
            Exhibits.




Exhibits.




Exhibit No.
              
              Description3.1
              
              
              Certificate
      of Designations to the Company’s Certificate of Incorporation (Series A)
      (Filed as exhibit 3.1 to Form 8-K filed on March 29,
  2010)3.2
              
              
              Certificate
      of Designations to the Company’s Certificate of Incorporation (Series B)
      (Filed as exhibit 3.2 to Form 8-K filed on March 29,
  2010)4.1
              
              
              Form
      of Series A Common Stock Purchase Warrant (Filed as exhibit 4.1 to Form
      8-K filed on March 29, 2010)4.2
              
              
              Form
      of Series B Common Stock Purchase Warrant (Filed as exhibit 4.2 to Form
      8-K filed on March 29, 2010)10.1
              
              
              Credit
      Agreement dated as of February 17, 2010 by and between  Senesco
      Technologies, Inc. and JMP Securities (filed herewith)10.2
              
              
              Letter
      Agreement dated as of March 3, 2010 by and between the Company and YA
      Global Investments L.P. (Filed as exhibit 10.1 to Form 8-K filed on March
      4, 201010.3
              
              
              Letter
      dated as of March 4, 2010 sent to the Company by certain of its insiders
      relating to the conversion of convertible debentures (Filed as exhibit
      10.1 to Form 8-K filed on March 5, 2010)10.4
              
              
              Registration
      Rights Agreement dated March 26, 2010 by and between the Company and
      certain investors (Filed as exhibit 10.1 to Form 8-K filed on March 29,
      2010)10.5
              
              
              Securities
      Purchase Agreement dated March 26, 2010 by and between the Company and
      certain investors (Non-Affiliates) (Filed as exhibit 10.2 to Form 8-K
      filed on March 29, 2010)10.6
              
              
              Securities
      Purchase Agreement dated March 26, 2010 by and between the Company and
      certain investors (Non-Affiliates) (Filed as exhibit 10.3 to Form 8-K
      filed on March 29, 2010)10.7
              
              
              Securities
      Purchase Agreement dated March 26, 2010 by and between the Company and
      certain investors thereto (Affiliates) (Filed as exhibit 10.4 to Form 8-K
      filed on March 29, 2010)


-66-





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


-67-


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:  May
      17, 2010
              By:
              /s/ Jack Van HulstJack
      Van Hulst, Presidentand
      Chief Executive Officer(Principal
      Executive Officer)DATE:  May
      17, 2010
              By:
              /s/ Joel BrooksJoel
      Brooks, Chief Financial Officerand
      Treasurer(Principal
      Financial and Accounting
Officer)


-68-