`SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


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


FOR THE FISCAL PERIOD JUNE 1, 2005 (INCEPTION) TO DECEMBER 31, 2005


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


         FOR THE TRANSITION PERIOD FROM ______________TO ______________


                        COMMISSION FILE NUMBER 000-51518


                           PARAMOUNT ACQUISITION CORP.
                 (Name of Small Business Issuer in Its Charter)


            DELAWARE                                   20-2938469
    (State of Incorporation)                     (Small Business Issuer
                                               I.R.S. Employer I.D. Number)


 787 7TH AVENUE, 48TH FLOOR, NEW YORK, NEW YORK            10019
    (Address of principal executive offices)             (zip code)


                                 (212) 554-4300
                (Issuer's Telephone Number, Including Area Code)


           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      None


           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 Units consisting of one share of Common Stock, par value $.0001 per share, and
             two Warrants Common Stock, $.0001 par value per share
                  Warrants to purchase shares of Common Stock


Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 requirement for the past 90 days.  Yes X  No
                                                                      ---   ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes X   No
                                   ---    ---

Issuer's revenue for the fiscal period June 1, 2005 (inception) to December 31,
2005 was $0.

As of March 27, 2006, the aggregate market value of the common stock held by
non-affiliates of the Registrant was approximately $54,460,000.

As of March 29, 2006, there were 11,900,000 shares of Common Stock, $.0001 par
value per share, outstanding.

Transitional Small Business Disclosure Format (check one): Yes    No X
                                                              ---   ---





                                     PART I
ITEM 1. DESCRIPTION OF BUSINESS

         Paramount Acquisition Corp. is a blank check company formed on June 1,
2005 to effect a merger, capital stock exchange, asset acquisition or other
similar business combination with an operating business in the healthcare
industry.

         On October 27, 2005, we closed our initial public offering of 8,500,000
units with each unit consisting of one share of our common stock and two
warrants, each to purchase one share of our common stock at an exercise price of
$5.00 per share. On October 31, 2005 and November 1, 2005, we consummated the
closing of an aggregate of 1,275,000 units which were subject to the
over-allotment option. The units were sold at an offering price of $6.00 per
unit, generating total gross proceeds of $58,650,000. After deducting the
underwriting discounts and commissions and the offering expenses, the total net
proceeds to us from the offering were $53,473,366, of which $52,164,500 was
deposited into the trust account and the remaining proceeds of $1,308,866 became
available to be used to provide for business, legal and accounting due diligence
on prospective business combinations and continuing general and administrative
expenses. Through December 31, 2005, we have used $263,767 of the net proceeds
that were not deposited into the trust fund to pay general and administrative
expenses. The net proceeds deposited into the trust fund remain on deposit in
the trust fund earning interest. As of December 31, 2005, there was $52,523,235
held in the trust fund.

         We are not presently engaged in, and we will not engage in, any
substantive commercial business until we consummate a business combination. We
intend to utilize our cash, including the funds held in the trust fund, capital
stock, debt or a combination of the foregoing in effecting a business
combination. A business combination may involve the acquisition of, or merger
with, a company which does not need substantial additional capital but which
desires to establish a public trading market for its shares, while avoiding what
it may deem to be adverse consequences of undertaking a public offering itself.
These consequences include time delays, significant expense, loss of voting
control and compliance with various Federal and state securities laws. In the
alternative, we may seek to consummate a business combination with a company
that may be financially unstable or in its early stages of development or
growth.

OPPORTUNITIES FOR A BUSINESS COMBINATION IN THE HEALTHCARE INDUSTRY

         We believe the sustained demand for improved medicine, including new
drugs, medical devices, diagnostic tools and other healthcare products, is being
driven by aging populations and advances in technology and therapeutic options.
In response to these practical and economic stimuli, private biomedical and
biotechnology companies regularly are being formed in order to develop improved
therapeutic and diagnostic products. At the same time, we believe that emerging
companies developing such innovations face a challenging financing climate. At
least currently, the traditional initial public offering market is relatively
weak and largely unavailable to these businesses. According to Dow Jones'
VentureSource, 2,142 venture-backed healthcare companies raised venture capital
financing rounds from 2001 through 2004. During the same period, however, only
66 venture-backed healthcare companies went public and another 194 were acquired
through mergers and acquisitions.

         We believe that a well-capitalized, publicly-traded company, such as
our company, will be perceived by emerging companies as an attractive business
combination candidate for several reasons, including the following:

         o    Limited alternative financing. In the past few years,
              institutional venture and angel investors have provided
              substantial funding for new drug candidates, devices, diagnostic
              tools and other healthcare technologies and services. We believe
              such investments have





              created numerous emerging companies with substantial funding
              needs that exceed traditional venture capital capacity and with a
              stockholder base interested in paths to liquidity. We therefore
              believe that there are numerous companies in the healthcare
              industry that have outgrown their venture backing but cannot
              currently access public-market capital.

         o    Availability of acquisition candidates. We believe that recent
              expansion in the healthcare industry has spawned numerous
              potential companies that we may acquire. To the same effect, as
              more established pharmaceutical and healthcare products companies
              continue to re-engineer their operating platforms and strategies,
              the technologies they divest or spin-off may give rise to
              acquisition candidates as well.

         o    Access to United States public markets. We are not restricted to
              target businesses in the United States and may acquire a target
              business in the healthcare industry in any geographic location.
              Accordingly, we may identify promising companies outside the
              United States which strategies require both obtaining a United
              States presence and raising their visibility through a public
              listing in the United States markets. As a United States public
              company, we will offer those advantages to potential foreign
              targets.

ATTRACTIVE SUBSECTORS WITHIN THE HEALTHCARE INDUSTRY

         While we may seek to effect a business combination with any company in
the healthcare industry, we believe that the following segments offer especially
attractive opportunities for a business combination:

         Medical Device and Diagnostic Sector. Medical device companies develop
innovative products often with cardiovascular or orthopedic applications,
including artificial limbs, novel surgical devices and processes, drug-eluting
vascular stents, and implantable cardiac defibrillators. Medical diagnostic
companies develop products for their diagnostic capabilities, such as PET and
CAT scanners, pap smears and blood testing devices. Benefits of this sector
include less imposing obstacles for clinical testing and approval by the Food
and Drug Administration ("FDA"), the potential for expedited generation of
revenues and an enhanced opportunity to exploit possible inefficiencies in niche
markets through the roll-up of private companies.

         Specialty Pharmaceutical Sector - Next-Generation Technologies. Rather
than develop proprietary pharmaceutical products, specialty pharmaceutical
companies in-license products or develop and produce generic versions of already
marketed pharmaceuticals. These companies often have a platform drug delivery
technology that they apply to currently marketed drugs to improve their
pharmacokinetic profile or ease the means or frequency of administration. As an
example, many sustained or extended-release versions of older drugs have been
developed by specialty pharmaceutical companies. We believe companies in this
space also face fewer drug development and other clinical challenges and may be
able to generate revenues relatively quickly, thus carrying lower risk.

         Biotechnology Sector - Novel Therapeutic Technologies. Traditional
biotechnology companies seek to develop novel therapies targeting diseases
affecting patient populations with unsatisfied medical needs, including
oncology, heart disease, diabetes, arthritis and infectious disease. Companies
in this sector develop first-in-class drugs by conducting extensive research,
pre-clinical and human clinical trials with the aim of producing safe and
effective treatments, and eventually obtaining FDA and foreign regulatory
approval and market penetration. Treatments that have emerged from biotechnology
companies include monoclonal antibodies to treat cancer, recombinant growth
hormones to treat developmental deficiencies, and nucleoside analogs to treat
HIV.



                                       3




         Tools and Genomics Sector - Aiding the Drug Discovery Effort. Tools
and genomics companies aid the pharmaceutical and biotechnology industries as
well as academia in drug discovery efforts. For example, the microarray gene
chip is used to monitor the entire genome on a single chip, thereby automating
the process of identifying expressed mRNA and determining which genes are turned
on or off in diseases. By combining technologies such as gene chips with
increased computing power, the cost and throughput time for research and
development is shortened, leading to more rapid product development cycles.
Genomics companies use genetic code databases to help drug companies discover
novel targets. This platform can be used to identify many different
disease-causing mutations.

         Healthcare Services Sector. This sector consists of HMO's, hospitals,
hospices, long-term care and nursing facilities, distributors of drugs and
medical supplies, specialty treatment centers and clinical research
organizations. This sector has expanded consistent with the aging of the
population and the growth of healthcare spending and offers distinct
opportunities with respect to the use of cash to create efficiencies and
generate accretive returns.

SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS COMBINATION

         Various members of our management team have regular access to
substantial deal flow across the healthcare industry as a result of their
current business activities. As healthcare, asset management and merchant
banking professionals, members of the management team have been, and are likely
in the future to continue to be, presented with proposals and offers of many
varieties with respect to prospective investments and transactions. These
individuals may also become aware of potential transaction opportunities by
attending healthcare conferences or conventions. In addition, we anticipate that
target business candidates may be brought to our attention by various
unaffiliated sources, including investment bankers, venture capital funds,
private equity funds, leveraged buyout funds, management buyout funds and other
members of the financial community. Target businesses may be brought to our
attention by such unaffiliated sources as a result of being solicited by us
through calls or mailings. These sources may also introduce us to target
businesses they think we may be interested in on an unsolicited basis, since
many of these sources will have read this report and know what types of
businesses we are targeting. While we do not currently have any agreements or
plans to engage professional firms that specialize in business acquisitions to
assist us in our search for a target business, we may do so in the future. If we
do, we may be required to pay such firm a finder's fee or other compensation. In
no event, however, will we pay any of our initial officers, directors or
stockholders (collectively, our "Founders") or any entity with which they are
affiliated any finder's fee or other compensation prior to, or for any services
they render in order to effectuate, the consummation of a business combination.

         Subject to the requirement that our initial business combination must
be with a target business in the healthcare industry and have a fair market
value of at least 80% of our net assets at the time of the business combination,
our management has virtually unrestricted flexibility in identifying and
selecting a prospective target business. In evaluating a prospective target
business, our management considers, among other factors, the following:

         o    financial condition and results of operation;

         o    growth potential;

         o    the ability of the target business to benefit from the existing
              healthcare reimbursement regime and possible reform with respect
              to cost containment;

         o    experience and skill of management and availability of additional
              personnel;




                                       4




         o    capital requirements;

         o    competitive position;

         o    barriers to entry;

         o    stage of development of the products, processes or services;

         o    degree of current or potential market acceptance of the products,
              processes or services;

         o    proprietary features and degree of intellectual property or other
              protection of the products, processes or services;

         o    regulatory environment of the industry; and

         o    costs associated with effecting the business combination.

         These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular business combination will be based, in
addition to the above factors, on any other considerations deemed relevant by
our management in effecting a business combination consistent with our business
objective. In evaluating a prospective target business, we will conduct an
extensive due diligence review which will encompass, among other things,
meetings with incumbent management and inspection of facilities, as well as
review of financial and other information which is made available to us. This
due diligence review will be conducted either by our management or by
unaffiliated third parties we may engage, although we have no current intention
to engage any such third parties.

FAIR MARKET VALUE OF TARGET BUSINESS

         The initial target business that we acquire must have a fair market
value equal to at least 80% of our net assets at the time of such acquisition.
The fair market value of such business will be determined by our board of
directors based upon standards generally accepted by the financial community,
such as actual and potential sales, earnings and cash flow and book value. If
our board is not able to independently determine that the target business has a
sufficient fair market value, we will obtain an opinion from an unaffiliated,
independent investment banking firm with respect to the satisfaction of such
criteria. We will not be required to obtain an opinion from an investment
banking firm as to the fair market value if our board of directors independently
determines that the target business has sufficient fair market value.

OPPORTUNITY FOR STOCKHOLDER APPROVAL OF BUSINESS COMBINATION

         Prior to the completion of a business combination, we will submit the
transaction to our stockholders for approval, even if the nature of the
acquisition is such as would not ordinarily require stockholder approval under
applicable state law. In connection with seeking stockholder approval of a
business combination, we will furnish our stockholders with proxy solicitation
materials prepared in accordance with the Securities Exchange Act of 1934,
which, among other matters, will include a description of the operations of the
target business and audited historical financial statements of the business.

         In connection with the vote required for any business combination, our
Founders have agreed to vote their respective shares of common stock owned by
them immediately prior to our initial public offering ("Founder Shares") in
accordance with the vote of the majority of the shares of our common stock sold
in such offering ("IPO Shares"). This voting arrangement shall not apply to any
shares included in units purchased by our Founders in our initial public
offering or purchased by them after such offering in the open




                                       5




market. We will proceed with the business combination only if a majority of the
IPO Shares cast at the meeting to approve the business combination are voted for
the approval of such business combination and stockholders holding less than 20%
of the IPO Shares exercise their conversion rights.

CONVERSION RIGHTS

         At the time we seek stockholder approval of any business combination,
we will offer the holders of IPO Shares (but not any of our Founders to the
extent they purchased IPO Shares) the right to have such shares converted to
cash if the stockholder votes against the business combination and the business
combination is approved and completed. The actual per-share conversion price
will be equal to the amount in the trust fund, inclusive of any interest, as of
two business days prior to the consummation of the business combination, divided
by the total number of IPO Shares. As of December 31, 2005, the per-share
conversion price would have been $5.37. An eligible stockholder may request
conversion at any time after the mailing to our stockholders of the proxy
statement and prior to the vote taken with respect to a proposed business
combination at a meeting held for that purpose, but the request will not be
granted unless the stockholder votes against the business combination and the
business combination is approved and completed. Any request for conversion, once
made, may be withdrawn at any time up to the date of the meeting. It is
anticipated that the funds to be distributed to stockholders entitled to convert
their shares who elect conversion will be distributed promptly after completion
of a business combination. We will not complete any business combination if
stockholders owning 20% or more of the IPO Shares exercise their conversion
rights. Holders of IPO Shares who convert their stock into their share of the
trust fund still have the right to exercise any warrants they continue to hold
that they purchased as part of the units. LIQUIDATION IF NO BUSINESS COMBINATION

         If we do not complete a business combination by April 27, 2007, or by
October 27, 2007 if the extension criteria described below have been satisfied,
we will be dissolved and will distribute to all holders of IPO Shares, in
proportion to the number of IPO Shares held by them, an aggregate sum equal to
the amount in the trust fund, inclusive of any interest, plus any remaining net
assets. The Founders have waived their rights to participate in any liquidation
distribution with respect to their Founder Shares. There will be no distribution
from the trust fund with respect to our warrants.

         If we enter into either a letter of intent, an agreement in principle
or a definitive agreement to complete a business combination prior to April 27,
2007, but are unable to complete the business combination prior to this date,
then we will have an additional six months in which to complete the business
combination contemplated by the letter of intent, agreement in principle or
definitive agreement. If we are unable to do so by October 27, 2007, we will
then liquidate. Upon notice from us, the trustee of the trust fund will commence
liquidating the investments constituting the trust fund and will turn over the
proceeds to our transfer agent for distribution to our stockholders. We
anticipate that our instruction to the trustee would be given promptly after the
expiration of the applicable time periods.

         If we were to expend all of the net proceeds of our initial public
offering, other than the proceeds deposited in the trust fund, the per-share
liquidation price as of December 31, 2005 would have been $5.37. However, the
proceeds deposited in the trust fund could become subject to the claims of our
creditors which could be prior to the claims of our public stockholders. Lindsay
A. Rosenwald, our chairman of the board, has agreed that, if we liquidate prior
to the consummation of a business combination, he will be personally liable to
pay debts and obligations to target businesses or vendors or other entities that
are owed money by us for services rendered or contracted for or for products
sold to us to the extent they have claims against the funds in our trust
account.



                                       6




COMPETITION

        In identifying, evaluating and selecting a target business, we expect to
encounter intense competition from other entities having a business objective
similar to ours. There are numerous blank check companies that have completed
initial public offerings that are seeking to carry out a business plan similar
to our business plan. Additionally, we may be subject to competition from other
companies looking to expand their operations through the acquisition of a target
business. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other
resources than us and our financial resources will be relatively limited when
contrasted with those of many of these competitors. While we believe there are
numerous potential target businesses that we could acquire, our ability to
compete in acquiring certain sizable target businesses will be limited by our
available financial resources. This inherent competitive limitation gives others
an advantage in pursuing the acquisition of a target business. Further:

         o    our obligation to seek stockholder approval of a business
              combination may delay the completion of a transaction;

         o    our obligation to convert into cash shares of common stock held by
              our public stockholders in certain instances may reduce the
              resources available to us for a business combination; and

         o    our outstanding warrants and options, and the future dilution they
              potentially represent, may not be viewed favorably by certain
              target businesses.

Any of these factors may place us at a competitive disadvantage in successfully
negotiating a business combination. Our management believes, however, that our
status as a public entity and potential access to the United States public
equity markets may give us a competitive advantage over privately-held entities
having a similar business objective as us in acquiring a target business on
favorable terms.

         If we succeed in effecting a business combination, there will be, in
all likelihood, intense competition from competitors of the target business.
Numerous companies, most of which have substantially greater financial resources
available to them than we do, are already engaged in the industry segments we
intend to focus on. We cannot assure you that, subsequent to a business
combination, we will have the resources or ability to compete effectively.

GOVERNMENT REGULATION

         The healthcare industry is highly regulated, and the federal and state
laws that may affect our business following a business combination could be
significant. Federal and state governments regulate the healthcare industry
extensively including through the Medicare and Medicaid payment programs, each
of which is financed, at least in part, with federal funds. State jurisdiction
is based upon the state's authority to license certain categories of healthcare
professionals and providers, and the state's interest in regulating the quality
of healthcare in the state, regardless of the source of payment.

         Significant areas of federal and state regulatory laws that could
affect our ability to conduct our business following a business combination
include the following:

         o    False and other improper claims for payment. The government may
              fine a provider if it knowingly submits, or participates in
              submitting, any claim for payment to the federal government that
              is false or fraudulent, or that contains false or misleading
              information.



                                       7




         o    Health Insurance Portability and Accountability Act. Laws designed
              to combat fraud against any healthcare benefit program for theft
              or embezzlement involving healthcare, as well as providing various
              privacy rights to patients and customers.

         o    Anti-kickback laws. Federal and state anti-kickback laws make it a
              felony to knowingly or willfully offer, pay, solicit or receive
              any form of remuneration in exchange for referrals or
              recommendations regarding services or products.

         o    The Stark Self-Referral Law and other laws prohibiting
              self-referral and financial inducements. Laws that limit the
              circumstances under which physicians who have a financial
              relationship with a company may refer patients to such company for
              the provision of certain services.

         o    Corporate practice of medicine. Many states have laws that
              prohibit business corporations from practicing medicine, employing
              physicians to practice medicine, exercising control over medical
              decisions by physicians, or engaging in certain arrangements with
              physicians, such as fee-splitting.

         o    Antitrust laws. Wide range of laws that prohibit anticompetitive
              conduct among separate legal entities in the healthcare industry.

         A violation of any of these laws could result in civil and criminal
penalties, the requirement to refund monies paid by government and/or private
payers, exclusion from participation in Medicare and Medicaid programs and/or
the loss of licensure. Following a business combination, we intend to exercise
care in structuring our arrangements and our practices to comply with applicable
federal and state laws. However, there can be no assurance that we will be
successful in ensuring compliance with all applicable laws and regulations. If
we will be found to have violated any rules or regulations that could adversely
affect our business and operations, the violations may delay or impair our
ability to complete a business combination. Additionally, laws in the healthcare
industry are subject to change, interpretation and amendment, which could
adversely affect our ability to conduct our business following a business
combination.


EMPLOYEES

         We have four executive officers. These individuals are not obligated to
contribute any specific number of hours to our matters and intend to devote only
as much time as they deem necessary to our affairs. The amount of time they
devote in any time period will vary based on the availability of suitable target
businesses to investigate. We do not intend to have any full time employees
prior to the consummation of a business combination.

RISKS ASSOCIATED WITH OUR BUSINESS

         In addition to other information included in this report, the following
factors should be considered in evaluating our business and future prospects.

WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY AND VERY LIMITED
RESOURCES.

         We are a recently incorporated development stage company with no
operating results to date. Since we do not have an operating history, you will
have no basis upon which to evaluate our ability to achieve our business
objective, which is to acquire an operating business in the healthcare industry.
We will not generate any revenues until, at the earliest, after the consummation
of a business combination.



                                       8



IF THIRD PARTIES BRING CLAIMS AGAINST US, THE PROCEEDS HELD IN TRUST COULD BE
REDUCED AND THE PER-SHARE LIQUIDATION PRICE RECEIVED BY STOCKHOLDERS WILL BE
LESS THAN $5.37 PER SHARE.

         Our placing of funds in trust may not protect those funds from third
party claims against us. The proceeds held in trust could be subject to claims
which could take priority over the claims of our public stockholders. We cannot
assure you that the per-share liquidation price will not be less than the $5.37
per share held in trust as of December 31, 2005 due to claims of creditors. If
we liquidate before the completion of a business combination, Lindsay A.
Rosenwald has agreed that he will be personally liable to ensure that the
proceeds in the trust fund are not reduced by the claims of target businesses or
vendors or other entities that are owed money by us for services rendered or
contracted for or products sold to us. However, we cannot assure you that he
will be able to satisfy those obligations. Furthermore, even after our
liquidation (including the distribution of the monies then held in the trust
fund), under the Delaware General Corporation Law, stockholders may be held
liable for claims by third parties against a corporation to the extent of
distributions received by them in a dissolution. Accordingly, we cannot assure
you that third parties will not seek to recover from our stockholders amounts
owed to them by us.

BECAUSE THERE ARE NUMEROUS COMPANIES WITH A BUSINESS PLAN SIMILAR TO OURS
SEEKING TO EFFECTUATE A BUSINESS COMBINATION, IT MAY BE MORE DIFFICULT FOR US TO
DO SO.

         There are numerous similarly structured blank check companies have
completed initial public offerings in the United States with business plans
similar to ours and there are a number of additional offerings for blank check
companies that are still in the registration process but have not completed
initial public offerings. While some of those companies must complete a business
combination in specific industries, a number of them may consummate a business
combination in any industry they choose. Therefore, we may be subject to
competition from these and other companies seeking to consummate a business plan
similar to ours. Because of this competition, we cannot assure you that we will
be able to effectuate a business combination within the required time periods.

SINCE WE HAVE NOT CURRENTLY SELECTED ANY TARGET BUSINESS WITH WHICH TO COMPLETE
A BUSINESS COMBINATION, WE ARE UNABLE TO CURRENTLY ASCERTAIN THE MERITS OR RISKS
OF THE BUSINESS' OPERATIONS.

         Since we have not yet identified a prospective target business, there
is no basis for investors to evaluate the possible merits or risks of the target
business' operations. To the extent we complete a business combination with a
financially unstable company or an entity in its development stage, we may be
affected by numerous risks inherent in the business operations of those
entities. Although our management will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors. We also cannot assure
you that an investment in our securities will not ultimately prove to be less
favorable than a direct investment, if an opportunity were available, in a
target business.

IF WE EFFECT A BUSINESS COMBINATION WITH A COMPANY LOCATED OUTSIDE OF THE UNITED
STATES, WE WOULD BE SUBJECT TO A VARIETY OF ADDITIONAL RISKS THAT MAY NEGATIVELY
IMPACT OUR OPERATIONS.

         We may effect a business combination with a company located outside of
the United States. If we did, we would be subject to any special considerations
or risks associated with companies operating in the target business' home
jurisdiction, including any of the following:

         o    tariffs and trade barriers;

         o    regulations related to customs and import/export matters;

         o    longer payment cycles;



                                       9




         o    tax issues, such as tax law changes and variations in tax laws as
              compared to the United States;

         o    currency fluctuations;

         o    challenges in collecting accounts receivable;

         o    cultural and language differences; and

         o    employment regulations.

We cannot assure you that we would be able to adequately address these
additional risks. If we were unable to do so, our operations might suffer.

IF WE EFFECT A BUSINESS COMBINATION WITH A COMPANY LOCATED OUTSIDE OF THE UNITED
STATES, THE LAWS APPLICABLE TO SUCH COMPANY WILL LIKELY GOVERN ALL OF OUR
MATERIAL AGREEMENTS AND WE MAY NOT BE ABLE TO ENFORCE OUR LEGAL RIGHTS.

         If we effect a business combination with a company located outside of
the United States, the laws applicable to such company will govern almost all of
our material agreements relating to its operations. We cannot assure you that
the target business will be able to enforce any of its material agreements or
that remedies will be available outside of the new jurisdiction. The system of
laws and the enforcement of existing laws in such jurisdiction may not be as
certain in implementation and interpretation as in the United States. The
inability to enforce or obtain a remedy under any of our future agreements could
result in a significant loss of business, business opportunities or capital.
Additionally, it is likely that substantially all of our assets would be located
outside of the United States and some of our officers and directors might reside
outside of the United States. As a result, it may not be possible for investors
in the United States to enforce their legal rights, to effect service of process
upon our directors or officers or to enforce judgments of United States courts
predicated upon civil liabilities and criminal penalties of our directors and
officers under Federal securities laws.

WE MAY ISSUE SHARES OF OUR COMMON STOCK AND PREFERRED STOCK TO COMPLETE A
BUSINESS COMBINATION, WHICH WOULD REDUCE THE EQUITY INTEREST OF OUR STOCKHOLDERS
AND LIKELY CAUSE A CHANGE IN CONTROL OF OUR OWNERSHIP.

         Our certificate of incorporation authorizes the issuance of up to
40,000,000 shares of common stock, par value $.0001 per share, and 1,000,000
shares of preferred stock, par value $.0001 per share. We currently have
7,275,000 authorized but unissued shares of our common stock available for
issuance (after appropriate reservation for the issuance of shares upon full
exercise of our outstanding warrants and options) and all of the 1,000,000
shares of preferred stock available for issuance. Although we currently have no
commitments to issue our securities, we will, in all likelihood, issue a
substantial number of additional shares of our common stock or preferred stock,
or a combination of common and preferred stock, to complete a business
combination. The issuance of additional shares of our common stock or any number
of shares of our preferred stock:

         o    may significantly reduce the equity interest of stockholders;

         o    may subordinate the rights of holders of common stock if preferred
              stock is issued with rights senior to those afforded to our common
              stock;



                                       10




         o    will likely cause a change in control if a substantial number of
              our shares of common stock are issued, which may affect, among
              other things, our ability to use our net operating loss carry
              forwards, if any, and most likely also result in the resignation
              or removal of our present officers and directors; and

         o    may adversely affect prevailing market prices for our common
              stock.

Similarly, if we issue debt securities, it could result in:

         o    default and foreclosure on our assets if our operating revenues
              after a business combination were insufficient to pay our debt
              obligations;

         o    acceleration of our obligations to repay the indebtedness even if
              we have made all principal and interest payments when due if the
              debt security contains covenants that require the maintenance of
              certain financial ratios or reserves and any such covenant is
              breached without a waiver or renegotiation of that covenant;

         o    our immediate payment of all principal and accrued interest, if
              any, if the debt security is payable on demand; and

         o    our inability to obtain additional financing, if necessary, if the
              debt security contains covenants restricting our ability to obtain
              additional financing while such security is outstanding.

OUR ABILITY TO SUCCESSFULLY EFFECT A BUSINESS COMBINATION AND TO BE SUCCESSFUL
THEREAFTER WILL BE TOTALLY DEPENDENT UPON THE EFFORTS OF OUR KEY PERSONNEL, SOME
OF WHOM MAY JOIN US FOLLOWING A BUSINESS COMBINATION.

         Our ability to successfully effect a business combination will be
totally dependent upon the efforts of our key personnel. The future role of our
key personnel in the target business, however, cannot presently be ascertained.
Although it is possible that some of our key personnel will remain associated in
various capacities with the target business following a business combination, it
is likely that the management of the target business at the time of the business
combination will remain in place. Moreover, our key personnel will be able to
remain with the company after the consummation of a business combination only if
they are able to negotiate employment or consulting agreements in connection
with the business combination, the terms of which, including the compensation to
be paid to such individuals, would be determined at such time between the
respective parties. However, the ability of our key personnel to remain with the
company after the consummation of a business combination will not be the
determining factor in our decision as to whether or not we will proceed with any
potential business combination. While we intend to closely scrutinize the
management of a prospective target business in connection with evaluating the
desirability of effecting a business combination, we cannot assure you that our
assessment of management will prove to be correct. These individuals may be
unfamiliar with the requirements of operating a public company which could cause
us to have to expend time and resources helping them become familiar with such
requirements. This could be expensive and time-consuming and could lead to
various regulatory issues which may adversely affect our operations.

OUR OFFICERS AND DIRECTORS ALLOCATE THEIR TIME TO OTHER BUSINESSES THEREBY
CAUSING CONFLICTS OF INTEREST IN THEIR DETERMINATION AS TO HOW MUCH TIME TO
DEVOTE TO OUR AFFAIRS. THIS COULD HAVE A NEGATIVE IMPACT ON OUR ABILITY TO
CONSUMMATE A BUSINESS COMBINATION.

         Our officers and directors are not required to commit their full time
to our affairs, which may



                                       11




result in a conflict of interest in allocating their time between our operations
and other businesses. We do not intend to have any full time employees prior to
the consummation of a business combination. All of our executive officers are
engaged in several other business endeavors and are not obligated to contribute
any specific number of hours to our affairs. If our executive officers' other
business affairs require them to devote more substantial amounts of time to such
affairs, it could limit their ability to devote time to our affairs and could
have a negative impact on our ability to consummate a business combination.

ONE OF OUR DIRECTORS IS NOW, AND OUR OTHER OFFICERS, DIRECTORS AND THEIR
AFFILIATES MAY IN THE FUTURE BECOME, AFFILIATED WITH ENTITIES ENGAGED IN
BUSINESS ACTIVITIES SIMILAR TO THOSE INTENDED TO BE CONDUCTED BY US AND,
ACCORDINGLY, MAY HAVE CONFLICTS OF INTEREST IN DETERMINING TO WHICH ENTITY A
PARTICULAR BUSINESS OPPORTUNITY SHOULD BE PRESENTED.

         Isaac Kier, one of our directors, has contractual and fiduciary
obligations that require him to present appropriate business opportunities to
other entities prior to presenting them to us for our consideration. Mr. Kier
has pre-existing contractual and fiduciary obligations to Tremisis Energy
Acquisition Corporation and Rand Acquisition Corporation, two blank check
companies with business plans similar to ours. Tremisis Energy Acquisition
Corporation is seeking to acquire an operating business in either the energy or
environmental industries and their related infrastructures. Rand Acquisition
Corporation is also seeking to acquire an operating business, focusing initially
on various industries including logistics and distribution, infrastructure and
manufacturing. Each of Tremisis Energy Acquisition Corporation and Rand
Acquisition Corporation has entered into definitive agreements for business
combinations but have not yet completed such business combinations.
Additionally, Mr. Kier has pre-existing fiduciary obligations to MPLC, Inc., a
public "shell" company that is seeking to locate and consummate a merger or
acquisition with a private company. Accordingly, to the extent that Mr. Kier
identifies business opportunities that may be suitable for such entities, he
must honor his pre-existing obligations to such entities and offer those
opportunities to them prior to offering them to us. Additionally, our other
officers, directors and their affiliates may in the future become affiliated
with entities, including other "blank check" companies, engaged in business
activities similar to those intended to be conducted by us. Furthermore, in
light of our officers and directors existing affiliations with other entities,
they may have fiduciary obligations to present potential business opportunities
to those entities in addition to presenting them to us which could cause
additional conflicts of interest. Accordingly, while we do not believe that,
aside from Mr. Kier, any of our officers or directors currently has a conflict
of interest in terms of presenting to entities other than us business
opportunities that may be suitable for us, conflicts of interest may arise in
the future in determining to which entity a particular business opportunity
should be presented. We cannot assure you that these conflicts will be resolved
in our favor.

ALL OF OUR OFFICERS AND DIRECTORS OWN SHARES OF OUR COMMON STOCK AND WARRANTS
WHICH WILL NOT PARTICIPATE IN LIQUIDATION DISTRIBUTIONS AND THEREFORE THEY MAY
HAVE A CONFLICT OF INTEREST IN DETERMINING WHETHER A PARTICULAR TARGET BUSINESS
IS APPROPRIATE FOR A BUSINESS COMBINATION.

         All of our officers and directors own stock in our company, but have
waived their right to receive distributions upon our liquidation with respect to
their Founder Shares, and own warrants to purchase additional shares of our
common stock. The shares and warrants owned by our directors and officers will
be worthless if we do not consummate a business combination. The personal and
financial interests of our directors and officers may influence their motivation
in identifying and selecting a target business and completing a business
combination timely. Consequently, our directors' and officers' discretion in
identifying and selecting a suitable target business may result in a conflict of
interest when determining whether the terms, conditions and timing of a
particular business combination are appropriate and in our stockholders' best
interest.


IT IS PROBABLE THAT WE WILL ONLY BE ABLE TO COMPLETE ONE BUSINESS COMBINATION,
WHICH WILL CAUSE US TO BE



                                       12




SOLELY DEPENDENT ON A SINGLE BUSINESS AND A LIMITED NUMBER OF PRODUCTS OR
SERVICES.

         As of December 31, 2005, we had $52,523,235 on deposit in a trust fund
that we may use to complete a business combination. Our initial business
combination must be with a business with a fair market value of at least 80% of
our net assets at the time of such acquisition, although this may entail the
simultaneous acquisitions of several operating businesses at the same time. By
consummating a business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive and regulatory
developments. Further, we would not be able to diversify our operations or
benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:

         o    solely dependent upon the performance of a single business, or

         o    dependent upon the development or market acceptance of a single or
              limited number of products, processes or services.

         Alternatively, if our business combination entails the simultaneous
acquisitions of several operating businesses at the same time from different
sellers, we would face additional risks, including difficulties and expenses
incurred in connection with the subsequent assimilation into a single operating
business of the operations and services or products of the acquired companies.
If we are unable to adequately address these risks, it could negatively impact
our profitability and results of operations.

THE ABILITY OF OUR STOCKHOLDERS TO EXERCISE THEIR CONVERSION RIGHTS MAY NOT
ALLOW US TO EFFECTUATE THE MOST DESIRABLE BUSINESS COMBINATION OR OPTIMIZE OUR
CAPITAL STRUCTURE.

         When we seek stockholder approval of any business combination, we will
offer each public stockholder the right to have his, her or its shares of common
stock converted to cash if the stockholder votes against the business
combination and the business combination is approved and completed. Such holder
must both vote against such business combination and then exercise his, her or
its conversion rights to receive a pro rata portion of the trust account.
Accordingly, if our business combination requires us to use substantially all of
our cash to pay the purchase price, because we will not know how many
stockholders may exercise such conversion rights, we may either need to reserve
part of the trust account for possible payment upon such conversion, or we may
need to arrange third party financing to help fund our business combination in
case a larger percentage of stockholders exercise their conversion rights than
we expect. Therefore, we may not be able to consummate a business combination
that requires us to use all of the funds held in the trust account as part of
the purchase price, or we may end up having a leverage ratio that is not optimal
for our business combination. This may limit our ability to effectuate the most
attractive business combination available to us.

BECAUSE OF OUR LIMITED RESOURCES AND STRUCTURE, WE MAY NOT BE ABLE TO CONSUMMATE
A BUSINESS COMBINATION WITH GROWTH POTENTIAL.

         We expect to encounter intense competition from other entities having a
business objective similar to ours, including venture capital funds, leveraged
buyout funds and operating businesses competing for acquisitions. Many of these
entities are well established and have extensive experience in identifying and
effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do and
our financial resources will be relatively limited when contrasted with those of
many of these competitors. While we believe that there are numerous potential
target businesses that we could acquire, our ability to compete in acquiring
certain sizable target businesses will be limited by our available financial
resources. This inherent competitive




                                       13




limitation gives others an advantage in pursuing the acquisition of certain
target businesses. Further, the obligation we have to seek stockholder approval
of a business combination may delay the consummation of a transaction, and our
obligation to convert into cash the shares of common stock held by public
stockholders in certain instances may reduce the resources available for a
business combination. Additionally, our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain
target businesses. Any of these obligations may place us at a competitive
disadvantage in successfully negotiating a business combination. Additionally,
because of our structure, there may be fewer attractive target businesses
available to acquire or privately held target businesses may not be not inclined
to enter into a transaction with a publicly held blank check companies like us.

WE MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING, IF REQUIRED, TO COMPLETE A
BUSINESS COMBINATION OR TO FUND THE OPERATIONS AND GROWTH OF THE TARGET
BUSINESS, WHICH COULD COMPEL US TO RESTRUCTURE THE TRANSACTION OR ABANDON A
PARTICULAR BUSINESS COMBINATION.

         Although we believe our current assets will be sufficient to allow us
to consummate a business combination, in as much as we have not yet identified
any prospective target business, we cannot ascertain the capital requirements
for any particular transaction. If we require further funds, either because of
the size of the business combination or the depletion of our available cash in
search of a target business, or because we become obligated to convert into cash
a significant number of shares from dissenting stockholders, we will be required
to seek additional financing. We cannot assure you that such financing would be
available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to consummate a particular
business combination, we would be compelled to restructure the transaction or
abandon that particular business combination and seek an alternative target
business candidate. In addition, if we consummate a business combination, we may
require additional financing to fund the operations or growth of the target
business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business.
None of our officers, directors or stockholders is required to provide any
financing to us in connection with or after a business combination.

OUR EXISTING STOCKHOLDERS, INCLUDING OUR OFFICERS AND DIRECTORS, CONTROL A
SUBSTANTIAL INTEREST IN US AND THUS MAY INFLUENCE CERTAIN ACTIONS REQUIRING
STOCKHOLDER VOTE.

         Our board of directors is divided into three classes, each of which
will generally serve for a term of three years with only one class of directors
being elected in each year. It is unlikely that there will be an annual meeting
of stockholders to elect new directors prior to the consummation of a business
combination, in which case all of the current directors will continue in office
at least until the consummation of the business combination. If there is an
annual meeting, as a consequence of our "staggered" board of directors, only a
minority of the board of directors will be considered for election and our
existing stockholders, because of their ownership position, will have
considerable influence regarding the outcome. Accordingly, our existing
stockholders will continue to exert control at least until the consummation of a
business combination.

OUR OUTSTANDING WARRANTS MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF
COMMON STOCK AND MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS COMBINATION.

         We currently have outstanding warrants to purchase 19,550,000 shares of
common stock and options to purchase 425,000 shares of common stock and warrants
to purchase an additional 850,000 shares of common stock. To the extent we issue
shares of common stock to effect a business combination, the potential for the
issuance of substantial numbers of additional shares upon exercise of these
warrants and options could make us a less attractive acquisition vehicle in the
eyes of a target business as such securities, when exercised, will increase the
number of issued and outstanding shares of




                                       14




our common stock and reduce the value of the shares issued to complete the
business combination. Accordingly, our warrants and options may make it more
difficult to effectuate a business combination or increase the cost of the
target business. Additionally, the sale, or even the possibility of sale, of the
shares underlying the warrants and options could have an adverse effect on the
market price for our securities or on our ability to obtain future public
financing. If and to the extent these warrants and options are exercised, you
may experience dilution to your holdings.

IF WE ARE UNABLE TO EFFECT A BUSINESS COMBINATION AND ARE FORCED TO LIQUIDATE,
OUR WARRANTS WILL EXPIRE WORTHLESS.

         If we do not complete a business combination by April 27, 2007, or by
October 27, 2007 if certain criteria have been satisfied, we will be dissolved
and will distribute to all holders of IPO Shares, in proportion to the number of
IPO Shares held by them, an aggregate sum equal to the amount in the trust fund,
inclusive of any interest, plus any remaining net assets. In such event, there
will be no distribution with respect to our outstanding warrants. Accordingly,
the warrants will expire worthless.

IF OUR FOUNDERS EXERCISE THEIR REGISTRATION RIGHTS, IT MAY HAVE AN ADVERSE
EFFECT ON THE MARKET PRICE OUR COMMON STOCK AND THE EXISTENCE OF THESE RIGHTS
MAY MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS COMBINATION.

         Our Founders are entitled to demand that we register the resale of
their shares of common stock at any time commencing three months prior to the
date on which their shares are to be released from escrow. If our Founders
exercise their registration rights with respect to all of their shares of common
stock, then there will be an additional 2,125,000 shares of common stock
eligible for trading in the public market. The presence of this additional
number of shares of common stock eligible for trading in the public market may
have an adverse effect on the market price of our common stock. In addition, the
existence of these rights may make it more difficult to effectuate a business
combination or increase the cost of the target business, as the stockholders of
the target business may be discouraged from entering into a business combination
with us or will request a higher price for their securities as a result of these
registration rights and the potential future effect their exercise may have on
the trading market for our common stock.

IF WE ARE DEEMED TO BE AN INVESTMENT COMPANY, WE MAY BE REQUIRED TO INSTITUTE
BURDENSOME COMPLIANCE REQUIREMENTS AND OUR ACTIVITIES MAY BE RESTRICTED, WHICH
MAY MAKE IT DIFFICULT FOR US TO COMPLETE A BUSINESS COMBINATION.

         If we are deemed to be an investment company under the Investment
Company Act of 1940, we may be subject to certain restrictions that may make it
more difficult for us to complete a business combination, including:

         o    restrictions on the nature of our investments; and

         o    restrictions on the issuance of securities.

         In addition, we may have imposed upon us burdensome requirements,
including:

         o    registration as an investment company;'

         o    adoption of a specific form of corporate structure; and

         o    reporting, record keeping, voting, proxy and disclosure
              requirements and other rules and


                                       15




              regulations.


         We do not believe that our anticipated principal activities will
subject us to the Investment Company Act of 1940. To this end, the proceeds held
in trust may only be invested by the trust agent in "government securities" with
specific maturity dates. By restricting the investment of the proceeds to these
instruments, we intend to meet the requirements for the exemption provided in
Rule 3a-1 promulgated under the Investment Company Act of 1940. If we were
deemed to be subject to the act, compliance with these additional regulatory
burdens would require additional expense that we have not allotted for.

         RISKS ASSOCIATED WITH OUR ACQUISITION OF A TARGET BUSINESS IN THE
HEALTHCARE INDUSTRY

IF WE ARE UNABLE TO OBTAIN ANY NECESSARY GOVERNMENT APPROVALS OR ARE UNABLE TO
SUBSTANTIATE OUR CLINICAL TRIALS FOLLOWING A BUSINESS COMBINATION, WE MAY BE
UNABLE TO OFFER OUR PRODUCTS, TECHNOLOGIES OR SERVICES.

         We may effect a business combination with a target business engaged in
the development of products or technologies or that is conducting clinical
trials on products. Our failure to obtain and maintain regulatory approval for a
product candidate following a business combination will prevent us from
commercializing it. Additionally, if the results of any clinical trials do not
support our product candidate claims, we may be unable to offer such products.

         Product candidates and the activities associated with their development
and commercialization, including their testing, manufacture, safety, efficacy,
recordkeeping, labeling, storage, approval, advertising, promotion, sale and
distribution, are subject to comprehensive regulation by the FDA and other
United States regulatory agencies and by comparable authorities in other
countries. We may need to conduct, at our own expense, extensive preclinical,
clinical and post-commercialization trials to demonstrate the safety and
efficacy in humans of product candidates. Securing product approval often
requires the submission of extensive preclinical and clinical data, information
about product manufacturing processes, and inspection of facilities and
supporting information for each therapeutic indication to establish the product
candidate's safety and efficacy. Varying interpretations of the data obtained
from preclinical and clinical testing could delay, limit or prevent regulatory
approval of a product candidate. The process of obtaining and maintaining
regulatory approvals may vary and involves substantial regulatory discretion, is
expensive, and often takes many years, if approval is obtained at all. Moreover,
success in preclinical testing and early clinical trials does not ensure that
later clinical trials will be successful, and interim results of a clinical
trial do not necessarily predict final results. Because earlier stage clinical
trials often involve small patient populations, the results of these clinical
trials may not be indicative of future results and later clinical trials may not
replicate the results of prior clinical trials and pre-clinical testing.

         Unanticipated problems may arise at various stages of the development
of products or technologies, and such efforts may ultimately be unsuccessful.
Any delay in, or termination of, clinical trials will delay the filing with the
FDA of an application for approval of that product and, ultimately, may delay
our ability to commercialize product candidates and generate product revenues.
Delays in commercializing products may result in the need to seek additional
capital, potentially diluting the interests of investors. These various factors,
which often result in abrupt changes in the share prices of companies in the
healthcare industry generally, may have a broad effect on the share price of our
securities as well.

IF WE ARE UNABLE TO COMPLY WITH GOVERNMENTAL REGULATIONS AFFECTING THE
HEALTHCARE INDUSTRY FOLLOWING A BUSINESS COMBINATION, IT COULD RESULT IN THE
IMPOSITION OF PENALTIES AND FINES AGAINST US AND RESULT IN





THE CURTAILMENT OF OUR OPERATIONS.

         There is extensive government regulation of many healthcare businesses,
as well as various proposals at the federal government level to reform the
healthcare system. Changes to the existing regulatory framework and/or the
implementation of various reform initiatives could adversely affect certain
sectors of the healthcare industry. If we are unable to adhere to these
requirements, it could result in the imposition of penalties and fines against
us, and could also result in the imposition of restrictions on our business and
operations. Furthermore, the costs of compliance could reduce our profitability.

IF WE ARE UNABLE TO OBTAIN AND MAINTAIN PROTECTION FOR THE INTELLECTUAL PROPERTY
RELATING TO OUR TECHNOLOGIES, PRODUCTS OR SERVICES FOLLOWING A BUSINESS
COMBINATION, OR IF WE FAIL TO SECURE RIGHTS TO THE PATENTS OF OTHERS, THE VALUE
OF OUR TECHNOLOGY, PRODUCTS OR SERVICES MAY BE DIMINISHED AND OUR REVENUES MAY
BE DECREASED.

         Our success, competitive position and future revenues following a
business combination will depend in part on our ability (and possibly the
ability of our licensors) to obtain and maintain patent protection in the United
States and in other countries for our products, methods, processes, services and
other technologies, to preserve our trade secrets, to prevent third parties from
infringing on our proprietary rights and to operate without infringing the
proprietary rights of third parties. At the same time, intellectual property
rights in the fields of medical devices, diagnostics, pharmaceuticals and
biotechnology are highly uncertain and may involve complex legal and scientific
questions. We may not be able to obtain additional issued patents relating to
our products, methods, processes, services or other technologies. Even if
issued, patents may be challenged, narrowed, invalidated or circumvented, or
others may obtain patents claiming aspects similar to those covered by our
patents and patent applications, which factors could limit our ability to stop
competitors from marketing similar products or services, limit the length of
term of patent protection we may have for our products or services, and expose
us to substantial costs and risks in litigation and administrative proceedings
and drain our resources. Changes in either patent laws or in interpretations of
patent laws in the United States and other countries may diminish the value of
our intellectual property or narrow the scope of our patent protection.

         In addition, our success following a business combination likely will
depend at least in part upon the skills, knowledge and experience of our
scientific and technical personnel, our consultants and advisors and possibly
our licensors and contractors as well. To help protect our proprietary know-how
and our inventions for which patents may be unobtainable or difficult to obtain,
we likely will need to rely on trade secret protection and confidentiality
agreements. However, even if employees, consultants, advisors and contractors
enter into agreements prohibiting the disclosure of confidential information
and, where applicable, require disclosure and assignment to us of the ideas,
developments, discoveries and inventions important to our business, these
agreements may not provide adequate protection for our trade secrets, know-how
or other proprietary information in the event of any unauthorized use or
disclosure or the lawful development by others of such information. If any of
our trade secrets, know-how or other proprietary information is disclosed, the
value of our trade secrets, know-how and other proprietary rights may be
significantly impaired and our business and competitive position may suffer.

IF WE INFRINGE THE RIGHTS OF THIRD PARTIES, WE COULD BE PREVENTED FROM SELLING
PRODUCTS, FORCED TO PAY DAMAGES, AND DEFEND AGAINST LITIGATION.

         In the event that, following a business combination, our products,
methods, processes or other technologies are claimed to infringe the proprietary
rights of other parties, we could incur substantial costs and may be required
to:

         o    obtain licenses, which may not be available on commercially
              reasonable terms, if at all;






         o    abandon an infringing product, process or technology;

         o    redesign our products, processes or technologies to avoid
              infringement;

         o    stop using the subject matter claimed in the patents held by
              others;

         o    pay damages; or

         o    defend litigation or administrative proceedings which may be
              costly whether we win or lose, and which could result in a
              substantial diversion of valuable management resources.

THE HEALTHCARE INDUSTRY IS SUSCEPTIBLE TO SIGNIFICANT LIABILITY EXPOSURE. WE MAY
INCUR SUBSTANTIAL LIABILITIES AND BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
PRODUCTS IN RESPONSE TO PRODUCT LIABILITY LAWSUITS.

         The testing and marketing of medical products and technologies entail
an inherent risk of product liability. Accordingly, any target business that we
acquire in the healthcare industry may be exposed to potential liability risks
inherent in the testing, manufacturing, marketing and sale of healthcare
products and/or the provision of healthcare services. A liability claim or the
imposition of liability may have a material adverse effect on our business,
financial condition or market prices of our securities.

         If we cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products. Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of the products,
processes or technologies that we develop. Further, even if we have agreements
with any third parties that entitle us to indemnification against losses, such
indemnification may not be adequate should any claim arise.

THE COMMERCIAL SUCCESS OF THE PRODUCTS BEING MARKETED AND/OR DEVELOPED BY A
TARGET BUSINESS THAT WE ACQUIRE WILL BE IMPAIRED IF PHYSICIANS AND PATIENTS DO
NOT ACCEPT AND USE OUR PRODUCT CANDIDATES.

         Even if the target business that we acquire has an approved and
marketed product, and the FDA following a business combination approves the use
of additional product candidates, physicians and patients may not accept and use
them. Acceptance and use of our products will depend upon a number of factors
including:

         o    perceptions by members of the health care community, including
              physicians, regarding the safety and effectiveness of our
              products;

         o    cost-effectiveness of our products relative to competing products;

         o    availability of reimbursement for our products from government or
              other healthcare payers; and

         o    effectiveness of marketing and distribution efforts by us and our
              licensees and distributors, if any.

The failure of a product to obtain or maintain market acceptance would harm our
business and could require us to seek additional financing in order to fund the
development of future product candidates.






ITEM 2. DESCRIPTION OF PROPERTY


         We maintain our executive offices at 787 7th Avenue, 48th Floor, New
York, New York pursuant to an agreement with Paramount BioCapital Asset
Management, an affiliate of our executive officers. We pay Paramount BioCapital
Asset Management a monthly fee of $7,500 for general and administrative
services, including office space, utilities and secretarial support. We believe,
based on rents and fees for similar services in the New York City metropolitan
area, that the fee charged by Paramount BioCapital Asset Management is at least
as favorable as we could have obtained from an unaffiliated person. We consider
our current office space adequate for our current operations.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Our units, common stock and warrants are traded on the Over-the-Counter
Bulletin Board under the symbols PMQCU, PMQC and PMQCW, respectively. The
following table sets forth the range of high and low closing bid prices for the
units, common stock and warrants for the periods indicated since the units
commenced public trading on October 24, 2005 and since the common stock and
warrants commenced public trading on January 11, 2006. The over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not necessarily reflect actual transactions.





                                                            Units              Common Stock            Warrants
                                                            -----              ------------            --------
                                                       High        Low       High        Low       High        Low
                                                       ----        ---       ----        ---       ----        ---

      2006:
           First Quarter*................              8.40       6.30       5.75       5.06       1.40       0.55

      2005:
           Fourth Quarter................              6.75       6.00        --         --         --         --


*Through March 27, 2006


HOLDERS

         As of March 29, 2006, there was one holder of record of our units,
eight holders of record of our common stock and one holder of record of our
warrants.






DIVIDENDS

         We have not paid any cash dividends on our common stock to date and do
not intend to pay cash dividends prior to the completion of a business
combination. The payment of cash dividends in the future will be contingent upon
our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of a business combination. The payment of any
dividends subsequent to a business combination will be within the discretion of
our then board of directors. It is the present intention of our board of
directors to retain all earnings, if any, for use in our business operations
and, accordingly, our board does not anticipate declaring any dividends in the
foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS

         In June 2005, we sold the following shares of common stock without
registration under the Securities Act of 1933, as amended:

                  Stockholders                                Number of Shares
                  ------------                                ----------------

                  Lindsay A. Rosenwald                            584,375
                  Lindsay A. Rosenwald 2000 Family Trusts         584,375
                  J. Jay Lobell                                   318,750
                  I. Keith Maher                                  318,750
                  Michael Weiser                                  106,250
                  Arie Belldegrun                                 106,250
                  Isaac Kier                                      106,250

Such shares were issued in connection with our organization pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act as
they were sold to sophisticated, wealthy individuals or entities. The shares
issued to the individuals and entities above were sold at a purchase price of
approximately $0.01176 per share.

INITIAL PUBLIC OFFERING

         On October 27, 2005, we closed our initial public offering of
8,500,000 units with each unit consisting of one share of our common stock and
two warrants, each to purchase one share of our common stock at an exercise
price of $5.00 per share. On October 31, 2005 and November 1, 2005, we
consummated the closing of an aggregate of 1,275,000 additional units which were
subject to the over-allotment option. The units were sold at an offering price
of $6.00 per unit, generating total gross proceeds of $58,650,000. The managing
underwriter in the offering was EarlyBirdCapital, Inc. The securities sold in
the offering were registered under the Securities Act of 1933 on a registration
statement on Form S-1 (No. 333-127149). The Securities and Exchange Commission
declared the registration statement effective on October 21, 2005.

         We paid a total of $4,105,500 in underwriting discounts and commissions
and $1,071,134 for other costs and expenses related to the offering, including
$510,000 for the underwriters' non-accountable expense allowance of 1% of the
gross proceeds on the initial closing only. After deducting the underwriting
discounts and commissions and the offering expenses, the total net proceeds to
us from the offering were $53,473,366, of which $52,164,500 was deposited into
the trust account and the remaining proceeds of $1,308,868 became available to
be used to provide for business, legal and accounting due diligence on
prospective business combinations and continuing general and administrative
expenses. The net proceeds deposited into the trust fund remain on deposit in
the trust fund and have earned $358,735, a component of interest income, through
December 31, 2005.






ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         We were formed on June 1, 2005 to serve as a vehicle to effect a
merger, capital stock exchange, asset acquisition or other similar business
combination with an operating business in the healthcare industry. We intend to
utilize cash derived from the proceeds of our recently completed public
offering, our capital stock, debt or a combination of cash, capital stock and
debt, in effecting a business combination.

         We consummated our initial public offering on October 27, 2005. All
activity from June 1, 2005 through October 27, 2005 related to our formation and
our initial public offering. Since October 27, 2005, we have been searching for
prospective target businesses to acquire.

         We had net income of $185,122 for the period June 1, 2005 (inception)
to December 31, 2005 consisting of $367,145 of interest income on the trust fund
and operating account offset by $70,857 of general and administrative costs and
$111,166 of tax expenses.

         $52,164,500 of the net proceeds of our initial public offering are in
trust, with the remaining net proceeds of $1,308,866 to pay for business, legal
and accounting due diligence on prospective acquisitions and continuing general
and administrative expenses. We will use the majority of the net proceeds of our
initial public offering not held in trust to identify and evaluate prospective
acquisition candidates, select the target business, and structure, negotiate and
consummate the business combination. We intend to utilize our cash, including
the funds held in the trust fund, capital stock, debt or a combination of the
foregoing to effect a business combination. To the extent that our capital stock
or debt securities are used in whole or in part as consideration to effect a
business combination, the proceeds held in the trust fund as well as any other
available cash will be used to finance the operations of the target business. At
December 31, 2005, we had cash outside of the trust fund of $1,122,290, prepaid
expenses of $219,072 and total liabilities of $181,009, leaving us with working
capital of $53,683,588 or $1,160,353 excluding investments held in the trust
account. We believe that we have sufficient available funds outside of the trust
fund to operate through October 27, 2007, assuming that a business combination
is not consummated during that time. However, we may need to raise additional
funds through a private offering of debt or equity securities if such funds are
required to consummate a business combination that is presented to us. We would
only consummate such a financing simultaneously with the consummation of a
business combination.

         We are obligated to pay to Paramount BioCapital Asset Management a
monthly fee of $7,500 for general and administrative services. In 2005, we paid
a total of $17,500 to Paramount BioCapital Asset Management for these services.
In addition, in 2005, Lindsay A. Rosenwald advanced an aggregate of $100,000 to
us, on a non-interest bearing basis, for payment of offering expenses on our
behalf. This amount was repaid in November 2005 out of proceeds of our initial
public offering.

         In connection with our initial public offering, we issued an option,
for $100, to EarlyBirdCapital to purchase 425,000 units at an exercise price of
$7.50 per unit, with each unit consisting of one share of common stock and two
warrants. The warrants underlying such units are exercisable at $6.25 per share.
We accounted for the fair value of the option, inclusive of the receipt of the
$100 cash payment, as an expense of the public offering resulting in a charge
directly to stockholders' equity. We estimated that the fair value of this
option was approximately $922,250 ($2.17 per Unit) using a Black-Scholes
option-pricing model. The fair value of the option granted to EarlyBirdCapital
was estimated as of the date of grant using the following assumptions: (1)
expected volatility of 42.875%, (2) risk-free interest rate of 4.03%, (3)
expected life of 5 years and (4) dividend rate of zero. The option may be
exercised for cash or on a "cashless" basis, at the holder's option, such that
the holder may use the appreciated value of the option (the difference between
the exercise prices of the option and the underlying warrants and the

                                       21





market price of the units and underlying securities) to exercise the option
without the payment of any cash.

ITEM 7. FINANCIAL STATEMENTS

         This information appears following Item 14 of this Report and is
incorporated herein by reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         None.

ITEM 8A. CONTROL AND PROCEDURES

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in company
reports filed or submitted under the Securities Exchange Act of 1934 (the
"Exchange Act") is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
company reports filed or submitted under the Exchange Act is accumulated and
communicated to management, including our chief executive officer and treasurer,
as appropriate to allow timely decisions regarding required disclosure.

         As required by Rules 13a-15 and 15d-15 under the Exchange Act, our
chief executive officer carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures as of December
31, 2005. His evaluation was carried out with the participation of other members
of our management. Based upon their evaluation, he concluded that our disclosure
controls and procedures were effective.

         Our internal control over financial reporting is a process designed by,
or under the supervision of, our chief executive officer and effected by our
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of our financial reporting and the
preparation of our financial statements for external purposes in accordance with
generally accepted accounting principles (United States). Internal control over
financial reporting includes policies and procedures that pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary to permit preparation of our
financial statements in accordance with generally accepted accounting principles
(United States), and that our receipts and expenditures are being made only in
accordance with the authorization of our board of directors and management; and
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on our financial statements.

         During the most recently completed fiscal quarter, there has been no
change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

ITEM 8B.  OTHER INFORMATION

None.




                                       22




                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

        Our current directors and executive officers are as follows:




            Name                                Age               Position
            ----                                ---               --------

            Lindsay A. Rosenwald                50                Chairman of the Board

            J. Jay Lobell                       42                Chief Executive Officer, Secretary
                                                                  and Director

            I. Keith Maher                      37                President and Director

            Michael Weiser                      42                Executive Vice President and
                                                                  Director

            Arie Belldegrun                     55                Director

            Isaac Kier                          52                Director


         LINDSAY A. ROSENWALD, M.D. has served as our chairman of the board
since our inception. Dr. Rosenwald has served as chairman and chief executive
officer of Paramount BioCapital, Inc., since 1991, as managing member of
Paramount Biosciences LLC (and its predecessor, Paramount BioCapital
Investments, LLC) since 1996, and as chairman and chief executive officer of
Paramount BioCapital Asset Management, Inc. since 1994. Paramount BioCapital,
Inc. is a private investment banking firm and an SEC- and NASD-registered
broker-dealer specializing in private placements of equity and debt securities
for publicly-traded and privately-held companies in the biomedical,
biopharmaceutical and medical technology industries. Paramount BioSciences, LLC
is engaged in the research, formation and acquisition of seed-stage and
distressed life science technologies and companies, identifying and evaluating a
broad spectrum of therapeutic and medical technologies in order to capture
innovations with significant commercial potential. Paramount BioCapital Asset
Management, Inc. manages hedge and private equity funds focused on healthcare
and life science companies. He has also served since March 2000 as a director of
Keryx BioPharmaceuticals, Inc., a NASDAQ National Market listed
biopharmaceutical company focused on the acquisition, development and
commercialization of novel pharmaceutical products for the treatment of
life-threatening diseases, including diabetes and cancer. Dr. Rosenwald received
a B.S. from Pennsylvania State University and a M.D. from the Temple University
School of Medicine.

         J. JAY LOBELL has served as our chief executive officer, secretary and
a member of our board of directors since our inception. Mr. Lobell has served as
president and chief operating officer of Paramount BioCapital Asset Management,
Inc. and Paramount Biosciences, LLC since January 2005, and is a registered
representative of Paramount BioCapital, Inc. From 1996 through December 2004,
Mr. Lobell was a partner at Covington & Burling, a law firm, where he provided
litigation, corporate and regulatory advice. Mr. Lobell received a B.A. from
Queens College and a J.D. from Yale Law School.

         I. KEITH MAHER, M.D. has served as our president and a member of our
board of directors since our inception. Dr. Maher has served as managing
director of Paramount BioCapital Asset Management, Inc. since March 2005, and is
a registered representative of Paramount BioCapital, Inc. From February



                                       23




2002 to March 2005, Dr. Maher worked at Weiss, Peck & Greer, where he served as
managing director and as portfolio manager and analyst at the WPG Farber Fund,
an equity hedge fund, where he also led that fund's direct investment practice.
From July 2000 to February 2002, Dr. Maher was with Lehman Brothers, where he
was involved in equity research, including research on medical technology
companies. Dr. Maher received a B.A. from Boston University, a M.D. from Union
University and a M.B.A. from the Kellogg School of Business at Northwestern
University.

         MICHAEL WEISER, M.D. has served as our executive vice president and a
member of our board of directors since our inception. Since July 1998, Dr.
Weiser has served as the director of research at Paramount BioCapital Asset
Management, and is a registered representative of Paramount BioCapital, Inc.
Prior to joining Paramount, Dr. Weiser was a medical student and later a
resident at NYU School of Medicine and NYU Medical Center. Dr. Weiser is also a
director of the following public companies:

         o    Hana Biosciences, Inc., an OTC Bulletin Board-listed
              biopharmaceutical company that aims to acquire, develop and
              commercialize innovative products for the treatment of important
              unmet medical needs in cancer and immunological diseases;

         o    Manhattan Pharmaceuticals, Inc., an OTC Bulletin Board-listed
              company developing and commercializing biomedical and
              pharmaceutical technologies; and

         o    VioQuest Pharmaceuticals, Inc., an OTC Bulletin Board-listed
              company that, through its subsidiaries, provides products and
              services to pharmaceutical and fine chemical companies.

Dr. Weiser received a B.A. from University of Vermont, a Ph.D. from Cornell
University Graduate School of Medicine and a M.D. from NYU School of Medicine.

         ARIE BELLDEGRUN, M.D. has been a member of our board of directors since
our inception. He has served as professor of urology since 1994, and chief of
the division of urologic oncology since 1996, at the David Geffen School of
Medicine at the University of California, Los Angeles (UCLA), whose faculty he
first joined in 1988. He has also held the Roy and Carol Doumani Chair in
urologic oncology at UCLA since 2000. Prior to UCLA, Dr. Belldegrun served as a
research fellow in surgical oncology at the National Cancer Institute/NIH from
1985 to 1988. He is certified by the American Board of Urology and is a Fellow
of the American College of Surgeons. Dr. Belldegrun is on the scientific boards
of several biotechnology and pharmaceutical companies and serves as a reviewer
for many medical journals and granting organizations. In addition to holding
several patents, Dr. Belldegrun is the author of several books on prostate and
kidney cancers, and has written over 350 scientific publications with an
emphasis on urologic oncology, particularly kidney, prostate and bladder
cancers. He is the founder of Agensys, Inc., a company focused on the
development of fully human monoclonal antibodies to treat solid tumor cancers
based on Agensys' propriety targets. Dr. Belldegrun served as founding chairman
of Agensys from 1997 to 2002 and has served on the board of directors and as a
consultant since that time. Dr. Belldegrun has served on the board of directors
of Hana Biosciences, Inc. since April 2004. Dr. Belldegrun also is vice chairman
of the board of directors and chairman of the Scientific Advisory Board of
Cougar Biotechnology, Inc., a private company that was established to in-license
and develop early clinical stage drugs, with a specific focus on the field of
oncology. Dr. Belldegrun received a B.S. and a M.D. from Hebrew University
Hadassah Medical School in Jerusalem. He completed his post training at the
Weizmann Institute of Science and his residency in urology at Harvard Medical
School.

         ISAAC KIER has been a member of our board of directors since our
inception. Since February 2000, Mr. Kier has served as a general partner of
Coqui Capital Partners L.P., a venture capital firm, which invests primarily in
early stage companies. Since October 1997, he has been a principal and



                                       24




managing partner of First Americas Partners, LLC, an investment partnership
focusing on investments in North and South America. Since January 2005, Mr. Kier
has also served as president, secretary, treasurer and a director of MPLC, Inc.,
a public "shell" company that recently emerged from bankruptcy and is seeking to
locate and consummate a merger or acquisition with a private company. From 1987
to 1997, he served as the managing partner of the Alabama 8 Market, a
non-wireline cellular licensee. From 1982 until its sale in 1995, Mr. Kier
served as the chairman of the board and chief executive officer of Lida, Inc., a
NASDAQ-listed company engaged in textile production and printing. Since February
2004, Mr. Kier has served as a member of the board of directors and secretary
and treasurer of Tremisis Energy Acquisition Corporation, an OTC Bulletin
Board-listed company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business in either the energy or the environmental industry and their
related infrastructures. Since October 2004, Mr. Kier has served as a member of
the board of directors of Hana Biosciences Inc. and Rand Acquisition
Corporation, an OTC Bulletin Board-listed company formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition or other similar
business combination with an unidentified operating business. Mr. Kier also
serves on the board of directors of several private companies, including
Caribbean Storage, Inc. and Montebello Brand Liquors, Inc. Mr. Kier received a
B.A. from Cornell University and a J.D. from George Washington University Law
School.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires our
officers, directors and persons who own more than ten percent of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
ten percent stockholders are required by regulation to furnish us with copies of
all Section 16(a) forms they file. Based solely on copies of such forms received
or written representations from certain reporting persons that no Form 5s were
required for those persons, we believe that, during the period June 1, 2005
(inception) to December 31, 2005, all filing requirements applicable to our
officers, directors and greater than ten percent beneficial owners were complied
with.

CODE OF ETHICS

                  In November 2005, our board of directors adopted a code of
ethics that applies to our directors, officers and employees as well as those of
our subsidiaries. Requests for copies of our code of ethics should be sent in
writing to Paramount Acquisition Corp., 787 7th Avenue, 48th Floor, New York,
New York 10019.
















                                       25




ITEM 10. EXECUTIVE COMPENSATION

         No executive officer has received any cash compensation for services
rendered to us. Commencing on October 21, 2005 and ending upon the acquisition
of a target business, we will pay Paramount BioCapital Asset Management, an
affiliate of Lindsay A. Rosenwald, J. Jay Lobell, I. Keith Maher and Michael
Weiser, a fee of $7,500 per month for providing us with office space and certain
office and secretarial services. However, this arrangement is solely for our
benefit and is not intended to provide such individuals compensation in lieu of
a salary. Other than this $7,500 per-month fee, no compensation of any kind,
including finders and consulting fees, will be paid to any of our Founders or
any of their respective affiliates, prior to, or for any services they render in
order to effectuate, the consummation of a business combination. However, our
Founders will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations.

         Since our formation, we have not granted any stock options or stock
appreciation rights or any awards under long-term incentive plans.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information regarding the beneficial
ownership of our common stock as of March 29, 2006 by:

         o    each person known by us to be the beneficial owner of more than 5%
              of our outstanding shares of common stock;

         o    each of our officers and directors; and

         o    all our officers and directors as a group.

         Unless otherwise indicated, we believe that all persons named in the
table have sole voting and investment power with respect to all shares of common
stock beneficially owned by them.

                                          Amount and Nature
                                            of Beneficial         Percent of
Name and Address of Beneficial Owner(1)       Ownership             Class
--------------------------------------        ---------             -----

Lindsay A. Rosenwald                         1,168,750(2)           9.8%

J. Jay Lobell                                 318,750(3)            2.7%

I. Keith Maher                                318,750(4)            2.7%

Isaac Kier((5))                               156,250(6)            1.3%

Michael Weiser                                106,250(7)              *

Arie Belldegrun((8))                          106,250(7)              *


                                       26




North Sound Capital LLC((9))                 800,000(10)            6.7%

Fir Tree, Inc.((11))                         700,000(12)            5.9%


All directors and executive officers        2,175,000(13)          18.3%
as a group (six individuals)

-----------------------------------
* Less than one percent.

(1)      Unless otherwise indicated, the business address of each of the
         following is 787 7th Avenue, 48th Floor, New York, New York 10019.
(2)      Includes 584,375 shares of common stock held by the Lindsay A.
         Rosenwald 2000 Family Trusts established for the benefit of Dr.
         Rosenwald's family. Dr. Rosenwald disclaims beneficial ownership of
         such shares except with regard to his pecuniary interest therein, if
         any. Does not include 493,145 shares of common stock issuable upon
         exercise of warrants held by Dr. Rosenwald that are not currently
         exercisable and will not become exercisable within 60 days.
(3)      Does not include 191,094 shares of common stock issuable upon exercise
         of warrants held by Mr. Lobell that are not currently exercisable and
         will not become exercisable within 60 days.
(4)      Does not include 49,311 shares of common stock issuable upon exercise
         of warrants held by Dr. Maher that are not currently exercisable and
         will not become exercisable within 60 days.
(5)      The business address of Mr. Kier is Coqui Capital Partners, L.P., 1775
         Broadway, Suite 604, New York, New York 10019.
(6)      Includes 50,000 shares of common stock held by the Kier Family LP. Does
         not include (i) 43,150 shares of common stock issuable upon exercise of
         warrants held by Mr. Kier and (ii) 100,000 shares of common stock
         issuable upon exercise of warrants held by the Kier Family LP, none of
         which are not currently exercisable and all of which will not become
         exercisable within 60 days.
(7)      Does not include 43,150 shares of common stock issuable upon exercise
         of warrants that are not currently exercisable and will not become
         exercisable within 60 days.
(8)      The business address of Dr. Belldegrun is 10940 Wilshire Blvd., Suite
         600, Los Angeles, California 90024.
(9)      The business address of North Sound Capital LLC is 20 Horseneck Avenue,
         Greenwich, Connecticut 06830.
(10)     Represents shares held by North Sound Legacy Institutional Fund LLC and
         North Sound Legacy International Ltd. North Sound Capital LLC is the
         managing member of North Sound Legacy Institutional Fund and investment
         advisor of North Sound Legacy International Ltd. and as such exercises
         voting and dispositive power over the shares. Does not include
         1,600,000 shares of common stock issuable upon exercise of warrants
         held by North Sound Legacy Institutional Fund LLC and North Sound
         Legacy International Ltd. that are not currently exercisable and will
         not become exercisable within 60 days. The foregoing information was
         derived from a Schedule 13G filed with the SEC on October 27, 2005.
(11)     The business address of Fir Tree, Inc. is 535 Fifth Avenue, 31st Floor,
         New York, New York 10017.
(12)     Represents (i) 470,257 shares of common stock held by Sapling, LLC and
         (ii) 229,743 shares of common stock held by Fir Tree Recovery Master
         Fund, L.P. Fir Tree, Inc. is the investment manager of both entities.
         The foregoing information was derived from a Schedule 13G filed with
         the SEC on November 3, 2005.
(13)     Does not include 863,000 shares of common stock issuable upon exercise
         of warrants beneficially owned by our officers and directors that are
         not currently exercisable and will not become exercisable within 60
         days.



                                       27




         All 2,125,000 shares of our outstanding common stock owned by our
Founders prior to our initial public offering have been placed in escrow with
Continental Stock Transfer & Trust Company, as escrow agent, pursuant to an
escrow agreement described below.
         Drs. Rosenwald and Maher and Mr. Lobell may be deemed to be our
"parents" and "promoters," as these terms are defined under the Federal
securities laws.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In June 2005, we issued 2,125,000 shares of our common stock to the
following individuals for $25,000 in cash, at a purchase price of approximately
$0.01176 per share as set forth below:




         Name                       Number of Shares    Relationship to Us
         ----                       ----------------    ------------------

         Lindsay A. Rosenwald       584,375             Chairman of the Board
         Lindsay A. Rosenwald
         2000 Family Trusts         584,375             Stockholder
         J. Jay Lobell              318,750             Chief Executive Officer, Secretary and Director
         I. Keith Maher             318,750             President and Director
         Michael Weiser             106,250             Executive Vice President and Director
         Arie Belldegrun            106,250             Director
         Isaac Kier                 106,250             Director



         Pursuant to an escrow agreement between us, the Founders and
Continental Stock Transfer & Trust Company, all of the Founders Shares were
placed in escrow, with Continental acting as escrow agent, pursuant to an escrow
agreement, until the earliest of:

         o    October 21, 2008;

         o    our liquidation; or

         o    the consummation of a liquidation, merger, stock exchange or other
              similar transaction which results in all of our stockholders
              having the right to exchange their shares of common stock for
              cash, securities or other property subsequent to our consummating
              a business combination with a target business.

         During the escrow period, these shares cannot be sold, but the Founders
will retain all other rights as stockholders, including, without limitation, the
right to vote their shares of common stock and the right to receive cash
dividends, if declared. If dividends are declared and payable in shares of
common stock, such dividends will also be placed in escrow. If we are unable to
effect a business combination and liquidate, none of our Founders will receive
any portion of the liquidation proceeds with respect to common stock owned by
them prior to our initial public offering.

         We also entered into a registration rights agreement with the Founders
pursuant to which the holders of the majority of the Founders Shares will be
entitled to make up to two demands that we register these shares pursuant to an
agreement to be signed prior to or on the date of this prospectus. The holders
of the majority of these shares may elect to exercise these registration rights
at any time commencing three months prior to the date on which these shares of
common stock are released from escrow. In addition, these stockholders have
certain "piggy-back" registration rights on registration statements filed




                                       28




subsequent to the date on which these shares of common stock are released from
escrow. We will bear the expenses incurred in connection with the filing of any
such registration statements.

         Each of our Founders also entered into a letter agreement with us and
EarlyBirdCapital pursuant to which, among other things:

         o    each agreed to vote all Founder Shares owned by him in accordance
              with the majority of the IPO Shares if we solicit approval of our
              stockholders for a business combination;

         o    if we fail to consummate a business combination by April 27, 2007
              (or by October 27, 2007 under certain limited circumstances), each
              agreed to take all reasonable actions within his power to cause us
              to liquidate as soon as reasonably practicable;

         o    each waived any and all rights he may have to receive any
              distribution of cash, property or other assets as a result of such
              liquidation with respect to his Founder Shares;

         o    each agreed to present to us for our consideration, prior to
              presentation to any other person or entity, any suitable
              opportunity to acquire an operating business, until the earlier of
              our consummation of a business combination, our liquidation or
              until such time as he ceases to be an officer or director of ours,
              subject to any pre-existing fiduciary obligations he might have;

         o    each agreed that we could not consummate any business combination
              which involves a company which is affiliated with any of the
              Founders unless we obtain an opinion from an independent
              investment banking firm reasonably acceptable to EarlyBirdCapital
              that the business combination is fair to our stockholders from a
              financial perspective;

         o    each agreed that he and his affiliates will not be entitled to
              receive and will not accept any compensation for services rendered
              to us prior to the consummation of our business combination; and

         o    each agreed that he and his affiliates will not be entitled to
              receive or accept a finder's fee or any other compensation in the
              event he or his affiliates originate a business combination.

         Paramount BioCapital Asset Management, an affiliate of our executive
officers, has agreed that, through the acquisition of a target business, it will
make available to us a small amount of office space and certain office and
secretarial services, as we may require from time to time. We have agreed to pay
Paramount BioCapital Asset Management $7,500 per month for these services.

         During 2005, Dr. Rosenwald advanced an aggregate of $100,000 to us to
cover expenses related to our initial public offering. The loans were payable
without interest on the earlier of December 1, 2006 or the consummation of our
initial public offering. These loans were repaid in November 2005.

         We will reimburse our officers and directors for any reasonable
out-of-pocket business expenses incurred by them in connection with certain
activities on our behalf such as identifying and investigating possible target
businesses and business combinations.


                                       29



         Other than reimbursable out-of-pocket expenses payable to our officers
and directors and the $7,500 per month payment to Paramount BioCapital Asset
Management, no compensation or fees of any kind, including finders and
consulting fees, will be paid to any of our Founders or to any of their
respective affiliates prior to, or for any services they render in order to
effectuate, the consummation of a business combination.

         All ongoing and future transactions between us and any of our officers
and directors or their respective affiliates, will be on terms believed by us to
be no less favorable than are available from unaffiliated third parties and will
require prior approval in each instance by a majority of the members of our
board who do not have an interest in the transaction.

ITEM 13. EXHIBITS

(a) The following Exhibits are filed as part of this report.




    Exhibit No.            Description
    -----------            -----------

         3.1               Certificate of Incorporation. (1)

         3.2               By-laws. (1)

         4.1               Specimen Unit Certificate. (1)

         4.2               Specimen Common Stock Certificate. (1)

         4.3               Specimen Warrant Certificate. (1)

         4.4               Form of Unit Purchase Option granted to
                           EarlyBirdCapital, Inc. (1)

         4.5               Form of Warrant Agreement between Continental Stock
                           Transfer & Trust Company and the Registrant. (1)

         10.1              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and Lindsay A. Rosenwald. (1)

         10.2              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and Lindsay A. Rosenwald 2000
                           Family Trusts. (1)

         10.3              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and J. Jay Lobell. (1)

         10.4              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and I. Keith Maher. (1)

         10.5              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and Michael Weiser. (1)

         10.6              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and Arie Belldegrun. (1)




                                       30





         10.7              Letter Agreement among the Registrant,
                           EarlyBirdCapital, Inc. and Isaac Kier. (1)

         10.8              Form of Investment Management Trust Agreement between
                           Continental Stock Transfer & Trust Company and the
                           Registrant. (1)

         10.9              Form of Stock Escrow Agreement between the
                           Registrant, Continental Stock Transfer & Trust
                           Company and the Founders. (1)

         10.10             Form of Letter Agreement between Paramount BioCapital
                           Asset Management, Inc. and Registrant regarding
                           administrative support. (1)

         10.11             Promissory Note, dated July 22, 2005, issued to
                           Lindsay A. Rosenwald. (1)

         10.12             Registration Rights Agreement among the Registrant
                           and the Founders. (1)

         10.13             Form of Warrant Purchase Agreements among
                           EarlyBirdCapital, Inc. and each of Lindsay A.
                           Rosenwald, J. Jay Lobell, I. Keith Maher, Michael
                           Weiser, Arie Belldgrun and Isaac Kier. (1)

         31                Certification of Chief Executive Officer pursuant to
                           Section 302 of the Sarbanes-Oxley Act of 2002.

         32                Certification of Chief Executive Officer pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.


         (1)  Incorporated by reference to the Registrant's Registration
              Statement on Form S-1 (SEC File No. 333-127149).














                                       31




ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

         The firm of Marcum & Kliegman LLP acts as our Independent Registered
Public Accounting Firm. The following is a summary of fees paid to our
Independent Registered Public Accounting Firm for services rendered.

AUDIT FEES

         During the fiscal year ended December 31, 2005, the fees for our
Independent Public Registered Accounting Firm are $50,000 for the services they
performed in connection with our initial public offering, including the
financial statements included in the Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 27, 2005, our Quarterly Report for
the quarter ended September 30, 2005 on Form 10-QSB and the audit of our
December 31, 2005 Annual Report on Form 10-KSB.

AUDIT-RELATED FEES

         During 2005, our Independent Registered Public Accounting Firm did not
render assurance and related services related to the performance of the audit or
review of financial statements.

TAX FEES

         During 2005, our Independent Registered Public Accounting Firm did not
render services to us for tax compliance, tax advice and tax planning.

ALL OTHER FEES

         During 2005, there were no fees billed for products and services
provided by the Independent Registered Public Accounting Firm other than those
set forth above.

AUDIT COMMITTEE APPROVAL

         We currently do not have an audit committee.








                                       32




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)



  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   F-2



  FINANCIAL STATEMENTS


      Balance Sheet                                                         F-3
      Statement of Operations                                               F-4
      Statement of Changes in Stockholders' Equity                          F-5
      Statement of Cash Flows                                               F-6


  NOTES TO FINANCIAL STATEMENTS                                      F-7 - F-11


























                                       F-1





Report of Independent Registered Public Accounting Firm
-------------------------------------------------------

To the Board of Directors
Paramount Acquisition Corp.


We have audited the accompanying balance sheet of Paramount Acquisition Corp. (a
development stage enterprise) (the "Company") as of December 31, 2005, and the
related statements of operations, changes in stockholders' equity and cash flows
for the period June 1, 2005 (inception) to December 31, 2005. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Paramount Acquisition Corp. as
of December 31, 2005, and the results of its operations and its cash flows for
the period June 1, 2005 (inception) to December 31, 2005, in conformity with
United States generally accepted accounting principles.


/s/ Marcum & Kliegman LLP
Marcum & Kliegman LLP
Melville, New York

March 17, 2006



                                       F-2





                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)


                                                                   BALANCE SHEET

--------------------------------------------------------------------------------
                                                          December 31,
                                                              2005
--------------------------------------------------------------------------------

ASSETS
     Current Assets:
     Cash                                                  $ 1,122,290
     Investments held in Trust Fund                         52,523,235
     Prepaid expenses and other                                219,072
                                                           -----------
          Total current assets                             $53,864,597
                                                           ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities-Accrued expenses                      181,009
                                                           -----------


Common stock, subject to possible conversion,
    1,954,023 shares at conversion value                    10,499,394
                                                           -----------

Commitment and contingencies

STOCKHOLDERS' EQUITY
     Preferred stock, $.0001 par value, authorized
          1,000,000 shares; none issued                             --
     Common stock, $.0001 par value;
          authorized 40,000,000 shares;
          issued and outstanding 11,900,000 shares
               (less 1,954,023 subject to
               possible conversion)                                996
     Additional paid-in capital                             42,998,076
     Earnings accumulated during development stage             185,122
                                                           -----------

          Total stockholders' equity                        43,184,194
                                                           -----------
Total liabilities and stockholders' equity                 $53,864,597
                                                           ===========

   The accompanying notes are an integral part of these financial statements.



                                      F-3




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)


                                                         STATEMENT OF OPERATIONS

--------------------------------------------------------------------------------

                                                           From
                                                           June 1, 2005
                                                           (inception) to
                                                           December 31, 2005
--------------------------------------------------------------------------------

Revenue                                                    $       --
                                                           -----------

General, selling and administrative expenses               $    70,857
                                                           -----------

Operating loss                                                 (70,857)

Interest income                                                367,145
                                                           -----------
Income before income taxes                                     296,288
Provision for income tax                                   $   111,166
                                                           -----------

Net income                                                 $   185,122
                                                           -----------

Accretion of Trust Fund relating to common stock
subject to possible conversion                                 (71,711)
                                                           -----------

Net income attributable to other common stockholders       $   113,411
                                                           -----------

Weighted average shares outstanding                          5,112,909
                                                           ===========

Basic and diluted income per share                             $   .02
                                                               =======


   The accompanying notes are an integral part of these financial statements.


                                       F-4




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                    STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                              FROM JUNE 1, 2005 (INCEPTION) TO DECEMBER 31, 2005

--------------------------------------------------------------------------------




                                                          Common Stock       Additional       Earnings          Total
                                                          ------------         paid-in   accumulated during stockholders'
                                                       Shares      Amount      capital   development stage      equity
--------------------------------------------------------------------------------------------------------------------------

Balance, June 1, 2005 (inception)                         ---     $  ---      $   ---         $    ---       $    ---

Issuance of stock to initial stockholders             2,125,000      213         24,787            ---            25,000

Sale of 9,775,000 units, net of underwriters'
   discount and offering expenses (includes
   1,954,023 shares subject to possible conversion)   9,775,000      978     53,472,388            ---        53,473,366

Proceeds subject to possible conversion of
    1,954,023 shares                                      ---       (195)   (10,427,488)           ---       (10,427,683)

Proceeds from issuance of option                          ---        ---            100            ---               100

Accretion of Trust Fund relating to common stock
subject to possible conversion                            ---        ---        (71,711)           ---           (71,711)

Net income for the period                                 ---        ---          ---           185,122          185,122
--------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005                           11,900,000  $   996    $42,998,076       $ 185,122      $43,184,194
                                                     ==========  =======    ===========       =========      ===========



   The accompanying notes are an integral part of these financial statements.

                                      F-5





                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)

                                                         STATEMENT OF CASH FLOWS

--------------------------------------------------------------------------------

                                                              From June 1, 2005
                                                               (inception) to
                                                              December 31, 2005
--------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
       Net income                                                 $  185,122
       Adjustments to reconcile net income to net cash
           provided by operating activities:
       Prepaid expenses                                             (219,072)
       Accrued expenses                                              181,009
                                                                  ----------
           Net cash provided by operating activities                 147,059
                                                                  ----------


CASH FLOWS USED IN INVESTING ACTIVITIES
     Investments held in Trust Fund                              (52,523,235)
                                                                  ----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Gross proceeds from initial public offering                  58,650,000
     Proceeds from sale of shares of common stock                     25,000
     Proceeds from issuance of option                                    100
     Payments of deferred offering costs                          (5,176,634)
                                                                  ----------
           Net cash provided by financing activities              53,498,466
                                                                  ----------

Net increase in cash                                               1,122,290
Cash at beginning of the period                                            -
                                                                  ----------
Cash at end of the period                                         $1,122,290
                                                                  ==========

Supplemental disclosure of non cash activity:

           Accretion of Trust Fund relating to common stock
           subject to possible conversion                             71,711



   The accompanying notes are an integral part of these financial statements.



                                      F-6




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS

1.      ORGANIZATION,                  Paramount Acquisition Corp. (the
        BUSINESS                       "Company") was incorporated in Delaware
        OPERATIONS AND                 on June 1, 2005 as a blank check company
        SIGNIFICANT ACCOUNTING         whose objective is to acquire an
        POLICIES                       operating business in the healthcare
                                       industry.

                                       All activity from June 1, 2005
                                       (inception) through October 27, 2005,
                                       relates to the Company's formation and
                                       initial public offering described below.
                                       Activity from October 28, 2005 to
                                       December 31, 2005 relates to general and
                                       administrative expenses incurred in
                                       connection with the search for a target
                                       business. The Company has selected
                                       December 31 as its fiscal year-end.

                                       The registration statement for the
                                       Company's initial public offering
                                       ("Offering") was declared effective
                                       October 21, 2005. The Company consummated
                                       the Offering on October 27, 2005. In
                                       addition, on October 31, 2005 and
                                       November 1, 2005 the Company issued
                                       shares pursuant to an over-allotment
                                       option for the Offering, receiving total
                                       gross proceeds of approximately
                                       $58,650,000 for the entire offering (Note
                                       2). The Company's management has broad
                                       discretion with respect to the specific
                                       application of the net proceeds of this
                                       Offering, although substantially all of
                                       the net proceeds of this Offering are
                                       intended to be generally applied toward
                                       consummating a business combination with
                                       an operating business in the healthcare
                                       industry ("Business Combination").
                                       Furthermore, there is no assurance that
                                       the Company will be able to successfully
                                       effect a Business Combination. An amount
                                       of $52,164,500 of the net proceeds was
                                       deposited in an interest-bearing trust
                                       account ("Trust Account") until the
                                       earlier of (i) the consummation of a
                                       Business Combination or (ii) liquidation
                                       of the Company. As of December 31, 2005,
                                       the balance in the Trust Account was
                                       $52,523,235. Under the agreement
                                       governing the Trust Account, funds will
                                       only be invested in United States
                                       "government securities" within the
                                       meaning of Section 2(a)(16) of the
                                       Investment Company Act of 1940 having a
                                       maturity of 180 days or less, or in money
                                       market funds meeting certain conditions
                                       under Rule 2a-7 promulgated under the
                                       Investment Company Act of 1940. The
                                       remaining net proceeds (not held in the
                                       Trust Account) may be used to pay for
                                       business, legal and accounting due
                                       diligence on prospective acquisitions and
                                       continuing general and administrative
                                       expenses.

                                       The Company, after signing a definitive
                                       agreement for the acquisition of a target
                                       business, will submit such transaction
                                       for stockholder approval. In the event
                                       that stockholders owning 20% or more of
                                       the shares sold in the Offering vote
                                       against the Business Combination and
                                       exercise their conversion rights
                                       described below, the Business Combination
                                       will not be

                                      F-7




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     --CONTINUED


                                       consummated.

                                       All of the Company's stockholders prior
                                       to the Offering, including all of the
                                       officers and directors of the Company
                                       ("Initial Stockholders"), have agreed to
                                       vote their 2,125,000 founding shares of
                                       common stock in accordance with the vote
                                       of the majority in interest of all other
                                       stockholders of the Company ("Public
                                       Stockholders") with respect to any
                                       Business Combination. After consummation
                                       of a Business Combination, these voting
                                       restrictions will no longer be
                                       applicable.

                                       With respect to a Business Combination
                                       which is approved and consummated, any
                                       Public Stockholder who voted against the
                                       Business Combination may demand that the
                                       Company convert its shares. The per share
                                       conversion price will equal the amount in
                                       the Trust Account, calculated as of two
                                       business days prior to the consummation
                                       of the proposed Business Combination,
                                       divided by the number of shares of common
                                       stock held by Public Stockholders at the
                                       consummation of the Offering.
                                       Accordingly, Public Stockholders holding
                                       19.99% of the aggregate number of shares
                                       owned by all Public Stockholders may seek
                                       conversion of their shares in the event
                                       of a Business Combination. Such Public
                                       Stockholders are entitled to receive
                                       their per share interest in the Trust
                                       Account computed without regard to the
                                       shares held by Initial Stockholders.
                                       Accordingly, $10,499,394 (which includes
                                       accretion of the Trust Fund) (19.99% of
                                       the amount held in the Trust Account) has
                                       been classified as common stock subject
                                       to possible conversion in the
                                       accompanying December 31, 2005 balance
                                       sheet.

                                       The Company's Certificate of
                                       Incorporation provides for mandatory
                                       liquidation of the Company in the event
                                       that the Company does not consummate a
                                       Business Combination within 18 months
                                       from the date of the consummation of the
                                       Offering, or 24 months from the
                                       consummation of the Offering if certain
                                       extension criteria have been satisfied.
                                       In the event of liquidation, it is likely
                                       that the per share value of the residual
                                       assets remaining available for
                                       distribution (including Trust Account
                                       assets) will be less than the initial
                                       public offering price per share in the
                                       Offering due to costs related to the
                                       Offering and since no value would be
                                       attributed to the warrants contained in
                                       the units sold (Note 2).

                                       CASH

                                       The Company has cash balances in banks in
                                       excess of the maximum amounts insured by
                                       the FDIC.

                                       INVESTMENTS HELD IN TRUST FUND

                                       The Company carries its investment in
                                       U.S. Government securities at cost which
                                       approximates fair value.

                                       INCOME TAXES



                                      F-8




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     --CONTINUED

                                       Deferred income taxes are provided for
                                       the differences between the bases of
                                       assets and liabilities for financial
                                       reporting and income tax purposes. A
                                       valuation allowance is established when
                                       necessary to reduce deferred tax assets
                                       to the amount expected to be realized.
                                       Management did not record the impact of
                                       deferred taxes as they were deemed
                                       immaterial. The provision for Federal,
                                       State and local taxes amounted to $90,900
                                       and $20,266, respectively, and is
                                       included in this accompanying statement
                                       of operations.

                                       EARNINGS PER SHARE

                                       Basic earnings per share is computed by
                                       dividing net income after accretion
                                       attributable to common stockholders by
                                       the weighted-average number of shares of
                                       common stock outstanding during the
                                       period. Diluted earnings per share is
                                       calculated by dividing net income after
                                       accretion attributable to common
                                       stockholders by the weighted-average
                                       number of shares of common stock and
                                       warrants outstanding during the period.
                                       The conversion of the outstanding
                                       Warrants is contingent upon the
                                       occurrence of future events, and
                                       therefore, is not includable in the
                                       calculation of diluted earnings per share
                                       in accordance with Statement of Financial
                                       Accounting Standards No. 128, "Earnings
                                       per Share."

                                       ESTIMATES

                                       The preparation of financial statements
                                       in conformity with accounting principles
                                       generally accepted in the United States
                                       of America requires management to make
                                       estimates and assumptions that affect the
                                       reported amounts of assets and
                                       liabilities and disclosures of contingent
                                       assets and liabilities at the date of the
                                       financial statements and the reported
                                       amounts of expenses during the reporting
                                       period. Actual results could differ from
                                       those estimates.

                                       RECENTLY ISSUED PRONOUNCEMENTS

                                       Management does not believe that any
                                       recently issued, but not yet effective,
                                       accounting standards if currently adopted
                                       would have a material effect on the
                                       accompanying financial statements.

2.      INITIAL PUBLIC                 On October 21, 2005, the Company sold
        OFFERING                       8,500,000 units ("Units") in the Offering
                                       at $6.00 per Unit. On October 31, 2005
                                       and November 1, 2005, the Company sold an
                                       additional aggregate 1,275,000 units
                                       pursuant to an over-allotment option of
                                       the Offering. Each Unit consists of one
                                       share of the Company's common stock,
                                       $.0001 par value, and two Redeemable
                                       Common Stock Purchase Warrants
                                       ("Warrants"). Each Warrant entitles the
                                       holder to purchase from the Company one
                                       share of common stock at an exercise
                                       price of $5.00 commencing the later of
                                       the completion of a Business Combination
                                       or one year from the effective date of
                                       the Offering and expiring four years from
                                       the effective date of the Offering. The
                                       Warrants will be redeemable by the
                                       Company, upon prior



                                      F-9



                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     --CONTINUED

                                       written consent of EarlyBirdCapital,
                                       Inc., the representative of the
                                       underwriters ("Representative"), at a
                                       price of $.01 per Warrant upon 30 days'
                                       notice after the Warrants become
                                       exercisable, only in the event that the
                                       last sale price of the common stock is at
                                       least $8.50 per share for any 20 trading
                                       days within a 30 trading day period
                                       ending on the third day prior to the date
                                       on which notice of redemption is given.
                                       In connection with this Offering, the
                                       Company issued an option, for $100, to
                                       the Representative to purchase 425,000
                                       Units at an exercise price of $7.50 per
                                       Unit. The warrants underlying such Units
                                       are exercisable at $6.25 per share. The
                                       Company has accounted for the fair value
                                       of the option, inclusive of the receipt
                                       of the $100 cash payment, as an expense
                                       of the public offering resulting in a
                                       charge directly to stockholders' equity.
                                       The Company estimates that the fair value
                                       of this option is approximately $922,250
                                       ($2.17 per Unit) using a Black-Scholes
                                       option-pricing model. The fair value of
                                       the option granted to the Representative
                                       is estimated as of the date of grant
                                       using the following assumptions: (1)
                                       expected volatility of 42.875%, (2)
                                       risk-free interest rate of 4.03%, (3)
                                       expected life of 5 years and (4) dividend
                                       rate of zero. The option may be exercised
                                       for cash or on a "cashless" basis at the
                                       holder's option, such that the holder may
                                       use the appreciated value of the option
                                       (the difference between the exercise
                                       prices of the option and the underlying
                                       Warrants and the market price of the
                                       Units and underlying securities) to
                                       exercise the option without the payment
                                       of any cash.

3.      NOTE PAYABLE,                  In July 2005, the Company issued a
        STOCKHOLDER                    $100,000 unsecured promissory note to one
                                       of its Initial Stockholders. The note was
                                       non interest-bearing and was payable upon
                                       the earlier of the consummation of the
                                       Offering from the net proceeds of such
                                       Offering or December 1, 2006. The note
                                       was repaid in full during November 2005.

                                       In October 2005, an affiliate of one of
                                       the Company's executive officers paid
                                       offering expenses of $54,796 (see Note 2)
                                       on behalf of the Company. These amounts
                                       were repaid upon the consummation of the
                                       Offering from the net proceeds of such
                                       Offering.

4.      COMMITMENT AND                 The Company presently occupies office
        CONTINGENCIES                  space provided by an affiliate of the
                                       Company's executive officers. Such
                                       affiliate has agreed that, until the
                                       acquisition of a target business by the
                                       Company, it will make such office space,
                                       as well as certain office and secretarial
                                       services, available to the Company, as
                                       may be required by the Company from time
                                       to time. The Company has agreed to pay
                                       such affiliate $7,500 per month for such
                                       services commencing on October 21, 2005
                                       (the effective date of the Offering). The
                                       statement of operations for the period
                                       June 1, 2005 (inception) to December 31,
                                       2005 includes $17,500 related



                                      F-10




                                                     PARAMOUNT ACQUISITION CORP.
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     --CONTINUED

                                       to this agreement.

                                       Pursuant to letter agreements dated July
                                       25, 2005 with the Company and the
                                       Representative, the Initial Stockholders
                                       have waived their right to receive
                                       distributions with respect to their
                                       founding shares upon the Company's
                                       liquidation.

                                       The Initial Stockholders have agreed with
                                       the Representative that after
                                       consummation of the Proposed Offering and
                                       within the first three month period after
                                       separate trading of the Warrants has
                                       commenced, that they or certain of their
                                       affiliates or designees will collectively
                                       purchase up to $1,750,000 of Warrants in
                                       the public marketplace at prices not to
                                       exceed $0.70 per Warrant.

                                       The Initial Stockholders are entitled to
                                       registration rights with respect to their
                                       founding shares pursuant to an agreement
                                       dated October 21, 2005. The holders of
                                       the majority of these shares are entitled
                                       to make up to two demands that the
                                       Company register these shares at any time
                                       commencing three months prior to the
                                       third anniversary of the effective date
                                       of the Offering. In addition, the Initial
                                       Stockholders have certain "piggy-back"
                                       registration rights on registration
                                       statements filed subsequent to the third
                                       anniversary of the effective date of the
                                       Offering.

5.      PREFERRED STOCK                The Company is authorized to issue
                                       1,000,000 shares of preferred stock with
                                       such designations, voting and other
                                       rights and preferences as may be
                                       determined from time to time by the Board
                                       of Directors.

6.      COMMON STOCK                   At December 31, 2005, 20,825,000 shares
                                       of common stock were reserved for
                                       issuance upon exercise of redeemable
                                       warrants and the underwriters' unit
                                       purchase option.











                                      F-11




                                   SIGNATURES

         Pursuant to the requirements of the Section 13 or 15 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on the
31st day of March 2006.

                                      PARAMOUNT ACQUISITION CORP.



                                      By: /s/ J. Jay Lobell
                                          -----------------
                                          J. Jay Lobell
                                          Chief Executive Officer
                                          (Principal Executive Officer)


In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




Name                                                       Title                              Date
----                                                       -----                              ----

/s/ Lindsay A. Rosenwald                 Chairman of the Board                           March 31, 2006
------------------------
Lindsay A. Rosenwald

/s/ J. Jay Lobell                        Chief Executive Officer, Secretary and          March 31, 2006
-----------------                        Director (Principal Executive Officer and
J. Jay Lobell                            Principal Accounting and Financial
                                         Officer)

/s/ I. Keith Maher                       President and Director                          March 31, 2006
------------------
I. Keith Maher

/s/ Michael Weiser                       Executive Vice President and Director           March 31, 2006
------------------
Michael Weiser

/s/ Arie Belldegrun                      Director                                        March 31, 2006
-------------------
Arie Belldegrun

/s/ Isaac Kier                           Director                                        March 31, 2006
--------------
Isaac Kier`