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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







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

For the quarterly period ended June 30, 2009

OR



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

For the transition period from             to

Commission File Number: 000-50344





LPATH, INC.

(Name of small business issuer in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 16-1630142                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

6335 Ferris Square, Suite A, San Diego, CA 92121

(Address of principal executive offices, including zip code)

(858) 678-0800

(Registrants telephone number, including area code)





Indicate by check mark whether the registrant (1) 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 requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

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

The number of shares of issuers outstanding Class A common stock as of August 12, 2009 was 52,966,138.









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##### Table of Contents

LPATH, INC.

FORM 10-Q

June 30, 2009

TABLE OF CONTENTS



|           |  |                                                                                       |  |   
|---------- |  | ------------------------------------------------------------------------------------- |  | --
|           |  |                                                                                      
|PART I     |  | FINANCIAL INFORMATION                                                                 |  | 3 
|           |  |                                                                                      
|ITEM 1:    |  | Financial Statements                                                                  |  | 3 
|           |  |                                                                                      
|ITEM 2:    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10
|           |  |                                                                                      
|ITEM 4:    |  | Controls and Procedures                                                               |  | 13
|           |  |                                                                                      
|PART II    |  | OTHER INFORMATION                                                                     |  | 14
|           |  |                                                                                      
|ITEM 1:    |  | Legal Proceedings                                                                     |  | 14
|           |  |                                                                                      
|ITEM 2:    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 14
|           |  |                                                                                      
|ITEM 3:    |  | Defaults upon Senior Securities                                                       |  | 14
|           |  |                                                                                      
|ITEM 4:    |  | Submission of Matters to a Vote of Security Holders                                   |  | 14
|           |  |                                                                                      
|ITEM 5:    |  | Other Information                                                                     |  | 14
|           |  |                                                                                      
|ITEM 6:    |  | Exhibits                                                                              |  | 14
|           | 
|SIGNATURES |  | 17                                                                                   

|
|



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

LPATH, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                     |  | June 30,2009 |             |   | December 31,2008 |  
|                                                                                                                                                                     |  |              |             |   | (See note)       |  
|ASSETS                                                                                                                                                               |  |              |             |   |                  |   |             |  
|Current Assets:                                                                                                                                                      |  |              |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                                            |  | $            | 5,458,203   |   |                  | $ | 7,775,593   |  
|Accounts receivable                                                                                                                                                  |  |              | 433,333     |   |                  |   | 656,221     |  
|Prepaid expenses and other current assets                                                                                                                            |  |              | 105,778     |   |                  |   | 204,863     |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|Total current assets                                                                                                                                                 |  |              | 5,997,314   |   |                  |   | 8,636,677   |  
|                                                                                                                                                                     |  |             
|Equipment and leasehold improvements, net                                                                                                                            |  |              | 250,048     |   |                  |   | 285,218     |  
|Patents, net                                                                                                                                                         |  |              | 743,044     |   |                  |   | 462,785     |  
|Deposits and other assets                                                                                                                                            |  |              | 37,345      |   |                  |   | 37,272      |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|                                                                                                                                                                     |  |             
|Total assets                                                                                                                                                         |  | $            | 7,027,751   |   |                  | $ | 9,421,952   |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|                                                                                                                                                                     |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 |  |              |             |   |                  |   |             |  
|Current Liabilities:                                                                                                                                                 |  |              |             |   |                  |   |             |  
|Accounts payable                                                                                                                                                     |  | $            | 576,712     |   |                  | $ | 1,123,836   |  
|Accrued compensation                                                                                                                                                 |  |              | 326,913     |   |                  |   | 459,831     |  
|Accrued expenses                                                                                                                                                     |  |              | 821,972     |   |                  |   | 391,836     |  
|Deferred contract revenue                                                                                                                                            |  |              | 1,333,333   |   |                  |   | 3,333,333   |  
|Deferred rent, current portion                                                                                                                                       |  |              | 54,063      |   |                  |   | 51,130      |  
|Leasehold improvement debt, current portion                                                                                                                          |  |              | 15,900      |   |                  |   | 15,278      |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                            |  |              | 3,128,893   |   |                  |   | 5,375,244   |  
|                                                                                                                                                                     |  |             
|Deferred rent, long-term portion                                                                                                                                     |  |              | 21,981      |   |                  |   | 49,990      |  
|Leasehold improvement debt, long-term portion                                                                                                                        |  |              | 7,008       |   |                  |   | 15,116      |  
|Long-term accrued liabilities                                                                                                                                        |  |              |            |   |                  |   | 411,802     |  
|Warrants                                                                                                                                                             |  |              | 9,300,000   |   |                  |   |            |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                    |  |              | 12,457,882  |   |                  |   | 5,852,152   |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|Stockholders Equity:                                                                                                                                                |  |              |             |   |                  |   |             |  
|Common stock - $.001 par value; 100,000,000 shares authorized; 52,956,971 and 52,657,911 issued and outstanding at June 30, 2009 and
December 31, 2008, respectively |  |              | 52,956      |   |                  |   | 52,657      |  
|Additional paid-in capital                                                                                                                                           |  |              | 34,305,608  |   |                  |   | 43,144,945  |  
|Accumulated deficit                                                                                                                                                  |  |              | (39,788,695 | ) |                  |   | (39,627,802 | )
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|Total stockholders equity                                                                                                                                           |  |              | (5,430,131  | ) |                  |   | 3,569,800   |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  
|                                                                                                                                                                     |  |             
|Total liabilities and stockholders equity                                                                                                                           |  | $            | 7,027,751   |   |                  | $ | 9,421,952   |  
|                                                                                                                                                                     |  |              |             |   |                  |   |             |  

Note: The balance sheet at December 31, 2008 has been derived from the audited financial statements at
that date.

See accompanying notes to the condensed consolidated financial statements.

|
|



3



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##### Table of Contents

LPATH, INC.

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------------------------- |  | ------------------------ | ---------- | - | -------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                               |  | Six Months EndedJune 30, |            |   | Three Months EndedJune 30, |  
|                                                               |  | 2009                     |            |   | 2008                       |   |            | 2009 |  |   | 2008       |  
|Revenues:                                                      |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Grant and royalty revenue                                      |  | $                        | 447,333    |   |                            | $ | 474,714    |      |  | $ | 268,568    |   |  | $ | 461,588    |  
|Research and development revenue under collaborative agreement |  |                          | 5,000,000  |   |                            |   |           |      |  |   | 2,500,000  |   |  |   |           |  
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Total revenues                                                 |  |                          | 5,447,333  |   |                            |   | 474,714    |      |  |   | 2,768,568  |   |  |   | 461,588    |  
|                                                               |  |                          |            |  
|Expenses:                                                      |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Research and development                                       |  |                          | 3,682,988  |   |                            |   | 5,643,389  |      |  |   | 1,765,349  |   |  |   | 2,038,952  |  
|General and administrative                                     |  |                          | 2,087,987  |   |                            |   | 2,420,276  |      |  |   | 1,067,768  |   |  |   | 874,984    |  
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Total expenses                                                 |  |                          | 5,770,975  |   |                            |   | 8,063,665  |      |  |   | 2,833,117  |   |  |   | 2,913,936  |  
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|                                                               |  |                          |            |  
|Loss from operations                                           |  |                          | (323,642   | ) |                            |   | (7,588,951 | )    |  |   | (64,549    | ) |  |   | (2,452,348 | )
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|                                                               |  |                          |            |  
|Other income (expense), net                                    |  |                          | (37,251    | ) |                            |   | 77,788     |      |  |   | (62,338    | ) |  |   | 19,366     |  
|Change in fair value of warrants                               |  |                          | (3,000,000 | ) |                            |   |           |      |  |   | (3,800,000 | ) |  |   |           |  
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Total other income (expense)                                   |  |                          | (3,037,251 | ) |                            |   | 77,788     |      |  |   | (3,862,338 | ) |  |   | 19,366     |  
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|                                                               |  |                          |            |  
|Net income (loss)                                              |  | $                        | (3,360,893 | ) |                            | $ | (7,511,163 | )    |  | $ | (3,926,887 | ) |  | $ | (2,432,982 | )
|                                                               |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|                                                               |  |                          |            |  
|Earnings (loss) per share                                      |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Basic                                                          |  | $                        | (0.06      | ) |                            | $ | (0.17      | )    |  | $ | (0.07      | ) |  | $ | (0.05      | )
|Diluted                                                        |  | $                        | (0.06      | ) |                            | $ | (0.17      | )    |  | $ | (0.07      | ) |  | $ | (0.05      | )
|                                                               |  |                          |            |  
|Weighted average shares outstanding used in the calculation    |  |                          |            |   |                            |   |            |      |  |   |            |   |  |   |            |  
|Basic                                                          |  |                          | 54,113,969 |   |                            |   | 45,222,811 |      |  |   | 54,446,480 |   |  |   | 45,278,501 |  
|Diluted                                                        |  |                          | 54,113,969 |   |                            |   | 45,222,811 |      |  |   | 54,446,480 |   |  |   | 45,278,501 |  

See accompanying notes to the condensed consolidated financial statements.

|
|



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LPATH, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                            |  |                          |            |   |      |   |            |  
|--------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                            |  | Six Months EndedJune 30, |           
|                                                                            |  | 2009                     |            |   | 2008 |  
|Cash flows from operating activities:                                       |  |                          |            |   |      |   |            |  
|Net loss                                                                    |  | $                        | (3,360,893 | ) |      | $ | (7,511,163 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                          |            |   |      |   |            |  
|Stock-based compensation expense                                            |  |                          | 628,486    |   |      |   | 1,854,473  |  
|Change in fair value of warrants                                            |  |                          | 3,000,000  |   |      |   |           |  
|Depreciation and amortization                                               |  |                          | 79,092     |   |      |   | 77,736     |  
|Deferred rent expense                                                       |  |                          | (25,076    | ) |      |   | (22,229    | )
|Foreign currency exchange (gain) loss                                       |  |                          | 59,886     |   |      |   | (1,865     | )
|Changes in operating assets and liabilities:                                |  |                          |            |   |      |   |            |  
|Accounts receivable                                                         |  |                          | 222,888    |   |      |   | (271,776   | )
|Prepaid expenses and other current assets                                   |  |                          | 99,085     |   |      |   | 71,996     |  
|Accounts payable and accrued expenses                                       |  |                          | (759,114   | ) |      |   | 68,978     |  
|Deferred contract revenue                                                   |  |                          | (2,000,000 | ) |      |   |           |  
|Deposits and other assets                                                   |  |                          | (73        | ) |      |   | 2,348      |  
|                                                                            |  |                          |            |   |      |   |            |  
|Net cash used in operating activities                                       |  |                          | (2,055,719 | ) |      |   | (5,731,502 | )
|                                                                            |  |                          |            |   |      |   |            |  
|                                                                            |  |                         
|Cash flows from investing activities:                                       |  |                          |            |   |      |   |            |  
|Equipment and leasehold improvement expenditures                            |  |                          | (38,925    | ) |      |   | (3,112     | )
|Patent expenditures                                                         |  |                          | (247,736   | ) |      |   | (57,199    | )
|                                                                            |  |                          |            |   |      |   |            |  
|Net cash used in investing activities                                       |  |                          | (286,661   | ) |      |   | (60,311    | )
|                                                                            |  |                          |            |   |      |   |            |  
|                                                                            |  |                         
|Cash flows from financing activities:                                       |  |                          |            |   |      |   |            |  
|Proceeds from options and warrants exercised                                |  |                          | 32,476     |   |      |   | 171,218    |  
|Repayments of leasehold improvement debt                                    |  |                          | (7,486     | ) |      |   | (6,913     | )
|                                                                            |  |                          |            |   |      |   |            |  
|Net cash provided by financing activities                                   |  |                          | 24,990     |   |      |   | 164,305    |  
|                                                                            |  |                          |            |   |      |   |            |  
|                                                                            |  |                         
|Net decrease in cash                                                        |  |                          | (2,317,390 | ) |      |   | (5,627,508 | )
|                                                                            |  |                         
|Cash and cash equivalents at beginning of period                            |  |                          | 7,775,593  |   |      |   | 7,521,071  |  
|                                                                            |  |                          |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                  |  | $                        | 5,458,203  |   |      | $ | 1,893,563  |  
|                                                                            |  |                          |            |   |      |   |            |  
|                                                                            |  |                         
|Supplemental disclosures of cash flow information:                          |  |                          |            |   |      |   |            |  
|Cash paid during the period for:                                            |  |                          |            |   |      |   |            |  
|Income taxes                                                                |  | $                        | 1,600      |   |      | $ | 1,600      |  
|                                                                            |  |                          |            |   |      |   |            |  
|                                                                            |  |                         
|Supplemental Schedule of Non-cash Investing and Financing Activities:       |  |                          |            |   |      |   |            |  
|Incurred patent expenditures contained in accrued expenses                  |  | $                        | 41,320     |   |      | $ | 17,000     |  
|                                                                            |  |                          |            |   |      |   |            |  
|Change in fair value of warrant liability                                   |  | $                        | 3,000,000  |   |      | $ |           |  
|                                                                            |  |                          |            |   |      |   |            |  

See accompanying notes to the condensed consolidated financial statements.



5



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LPATH, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2009

Note 1  BASIS FOR PRESENTATION

The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.
Accordingly, they do not include all information and notes required by accounting principles generally accepted in the United States for complete financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results
for the six and three month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. For further information, refer to the consolidated financial statements and
footnotes thereto included in the companys annual report on Form 10-K for the year ended December 31, 2008.

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

Recent Accounting Pronouncements

In December 2007, the FASB ratified EITF No. 07-1, Accounting for
Collaborative Agreements (EITF 07-1). EITF 07-1 provides guidance regarding financial statement presentation and disclosure of collaborative arrangements. EITF 07-1 is applicable to the arrangement we have entered into regarding development and
commercialization of the companys drug candidate, ASONEP. EITF 07-1 was effective for us beginning on January 1, 2009. The adoption of EITF 07-1 did not have a significant impact on our consolidated results of operations or financial
position.

In May 2009, the FASB issued Statement of Financial Accounting Standard No. 165, Subsequent Events, to provide guidance for and
disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement is effective for interim and annual financial periods ending after June 15,
2009. Adoption of this statement does not have a material impact on the Company.

On July 1, 2009, the FASB issued Statement
of Financial Accounting Standard No. 168, The FASB Accounting Standards Codification TMand the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 , The Hierarchy of GenerallyAccepted Accounting Principles. This
statement establishes the FASB Accounting Standards CodificationTM(Codification)
as the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP in the United States (the GAAP
hierarchy). Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The
Codification is effective for interim and annual periods ending on or after September 15, 2009. All then-existing non-SEC accounting and reporting standards are superseded and all nongrandfathered, non-SEC accounting literature not
included in the Codification is deemed nonauthoritative. The Company is evaluating the impact of the Codification and will conform to the new guidance of the Codification references in its third quarter Form 10-Q.

Note 2  GOING CONCERN UNCERTAINTY

The accompanying financial
statements have been prepared assuming that the company will continue as a going concern. In the six months ended June 30, 2009 Lpath incurred an operating loss and utilized net cash in operating activities of $323,642 and $2,055,719,
respectively. In the year ended December 31, 2008 the company incurred an operating loss and utilized net cash in operating activities of $11,735,235 and $6,192,041, respectively. These conditions raise substantial doubt about the
companys ability to continue as a going concern. Managements plans with regard to these matters are discussed below. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of
this uncertainty.



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During 2009 the company expects to continue to incur cash losses from operations. While the company had cash
totaling $5,458,203 as of June 30, 2009, the cost of its ongoing drug discovery and development efforts, including general and administrative expenses, are expected to consume an additional $6 to $10 million in 2009. We believe that our
existing cash and expected funding under Lpaths collaborative research and development agreement with Merck KgaA (Merck) will be sufficient to meet Lpaths projected operating requirements at least through 2009. Although
we believe work under the collaborative agreement with Merck is progressing as planned, there can be no assurance that Merck will not cancel the agreement before the conclusion of the initial development period. In the event that Merck cancels
its agreement with us, we would need to seek additional sources of capital to finance our research and development activities into 2010. In the event we need to raise additional capital, we would:



| | 1. | Pursue additional fund raising activities from both existing and potential new investors.
| | -- | -----------------------------------------------------------------------------------------



| | 2. | Explore cash generating opportunities from strategic alliances, including licensing portions of our technology or entering into corporate partnerships or collaborations. In
such transactions, Lpath could transfer certain rights to one or more of its drug discovery or development programs, or to specific indications within those programs and receive infusions of cash in the short-term, and potentially in the long-term
as well.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | Continue to seek additional research grants from the National Institutes of Health or other sources.
|-- | ----------------------------------------------------------------------------------------------------

Note 3  SHARE-BASED PAYMENTS

The company recognized share-based compensation expense in accordance with SFAS
No. 123R, Share-Based Payment, as follows:



|                                       |  |                          |         |                            |   |           |  |      |         |  |   |        
|-------------------------------------- |  | ------------------------ | ------- | -------------------------- | - | --------- |  | ---- | ------- |  | - | -------
|                                       |  | Six Months EndedJune 30, |         | Three Months EndedJune 30,
|                                       |  | 2009                     |         | 2008                       |   | 2009      |  | 2008
|Research and development               |  | $                        | 91,472  |                            | $ | 617,889   |  | $    | 142,524 |  | $ | 12,457 
|General and administrative             |  |                          | 537,014 |                            |   | 1,236,584 |  |      | 296,594 |  |   | 305,860
|                                       |  |                          |         |                            |   |           |  |      |         |  |   |        
|Total share-based compensation expense |  | $                        | 628,486 |                            | $ | 1,854,473 |  | $    | 439,118 |  | $ | 318,317
|                                       |  |                          |         |                            |   |           |  |      |         |  |   |        

As of June 30, 2009 there was a total of $1.9 million unrecognized compensation expense related to unvested
stock-based compensation under the plan. That expense is expected to be recognized over a weighted-average period of 2.3 years. Because of its net operating losses, the company did not realize any tax benefits for the tax deductions from share-based
payment arrangements during the periods ended June 30, 2009 and 2008.

Note 4  WARRANTS

Lpath adopted EITF 07-5 effective January 1, 2009. The adoption of EITF 07-5 affected the accounting for warrants that contain provisions that protect holders from a
decline in the stock price (or down-round protection). For example, warrants with such provisions will no longer be recorded in equity. Down-round protection provisions reduce the exercise price of a warrant or convertible instrument if
a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. The company evaluated whether warrants to acquire stock
of the company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is
not an input to the fair value of a fixed-for-fixed option. The company determined that the following warrants contained such provisions, and therefore pursuant to the criteria of EITF 07-5, they were not indexed to the companys
own stock:



|                         |  |                 |  |                         |     
|------------------------ |  | --------------- |  | ----------------------- | ----
|Warrant Expiration Dates |  | Number ofShares |  | Exercise Priceper Share
|April  June 2012        |  | 8,017,951       |  | $                       | 1.04
|August 2013              |  | 1,940,490       |  | $                       | 1.25



7



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##### Table of Contents

In accordance with EITF 07-5, the company, beginning on January 1, 2009, recognizes these warrants as liabilities at
their respective fair values on each reporting date. The cumulative effect of the change in accounting for these warrants of $3,200,000 was recognized as an adjustment to the opening balance of accumulated deficit at January 1, 2009. The
cumulative effect adjustment was the difference between the amounts recognized in the consolidated balance sheet before initial adoption of EITF 07-5 and the amounts recognized in the consolidated balance sheet upon the initial application of EITF
07-5. The amounts recognized in the consolidated balance sheet as a result of the initial application of EITF 07-5 on January 1, 2009 were determined based on the amounts that would have been recognized if EITF 07-5 had been applied from the
issuance date of the warrants. The company recorded other expense of $3,000,000 and $3,800,000 for the six and three month periods ended June 30, 2009, respectively, to record the liabilities associated with these warrants at their respective
fair values.

The warrant liability reflected on Lpaths balance sheet is a consequence of current generally accepted accounting principles, arising
from the implementation of EITF 07-05. There is no foreseeable circumstance under which Lpath can be required to make any cash payment to settle the warrant liability now carried on the balance sheet.

Note 5  FAIR VALUE MEASUREMENTS

The company measures fair
value in accordance with Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework and gives
guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or
liability. As a basis for considering such assumptions there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:



| |  |  | Level 1  unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement
date.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through
corroboration with observable market data.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement
date.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

This hierarchy requires the company to use observable market data, when available, and to minimize the use of unobservable inputs
when determining fair value.

Recurring Fair Value Estimates

The companys recurring fair value measurements at June 30, 2009 were as follows:



|                                    |  |                               |           |                                              |   |                                           |  |                                        |   |                                                                 |   |           |  |   |            |  
|----------------------------------- |  | ----------------------------- | --------- | -------------------------------------------- | - | ----------------------------------------- |  | -------------------------------------- | - | --------------------------------------------------------------- | - | --------- |  | - | ---------- | -
|                                    |  | Fair Value as ofJune 30, 2009 |           | in ActiveMarkets forIdenticalAssets(Level 1) |   | SignificantotherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3) |   | Unrealizedgains (losses)during the sixmonths endedJune 30, 2009 |  
|Liabilities:                        |  |                               |           |                                              |   |                                           |  |                                        |   |                                                                 |   |           |  |   |            |  
|Warrants expiring April - June 2012 |  | $                             | 7,300,000 |                                              | $ |                                          |  | $                                      |  |                                                                 | $ | 7,300,000 |  | $ | (2,400,000 | )
|                                    |  |                               |           |                                              |  
|Warrants expiring August 2013       |  |                               | 2,000,000 |                                              |   |                                          |  |                                        |  |                                                                 |   | 2,000,000 |  |   | (600,000   | )
|                                    |  |                               |           |                                              |   |                                           |  |                                        |   |                                                                 |   |           |  |   |            |  
|                                    |  | $                             | 9,300,000 |                                              | $ |                                          |  | $                                      |  |                                                                 | $ | 9,300,000 |  | $ | (3,000,000 | )
|                                    |  |                               |           |                                              |   |                                           |  |                                        |   |                                                                 |   |           |  |   |            |  

The unrealized losses for the six and three months ended June 30, 2009 are included on the income statement
as change in fair value of warrants.



8



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##### Table of Contents

Recurring Level 3 Activity, Reconciliation and Basis for Valuation

The table below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3).
The table reflects net gains and losses for the six months ended June 30, 2009 for all financial assets and liabilities categorized as Level 3 as of June 30, 2009.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):



|                                   |  |   |          
|---------------------------------- |  | - | ---------
|Liabilities:                       |  |   |          
|Balance as of January 1, 2009      |  | $ | 6,300,000
|Increase in fair value of warrants |  |   | 3,000,000
|                                   |  |   |          
|Balance as of June 30, 2009        |  | $ | 9,300,000
|                                   |  |   |          

The company determined the fair value of the warrants using a Black-Scholes model with consideration given to
their down-round protection provisions that reduce the exercise price if the company issues new warrants or equity at a price lower than the stated exercise price. The model considered amounts and timing of future possible equity and
warrant issuances and historical volatility of the companys stock price.

Note 6  SUBSEQUENT EVENTS

Lpath has completed an evaluation of subsequent events through August 12, 2009, which is the issuance date of these condensed consolidated financial statements, and
concluded no subsequent events have occurred that require recognition or disclosure.



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##### Table of Contents

Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial
statements and notes thereto included in this quarterly report on Form 10-Q (the Quarterly Report) and the audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended
December 31, 2008 (the 2008 Annual Report), as filed with the Securities and Exchange Commission (the SEC). In addition to historical information, this discussion and analysis contains forward-looking statements that
involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors including but not limited to those identified in the 2008 Annual Report
in the section entitled Market Risks.

Overview

Lpath, Inc. is a biotechnology company focused on the discovery and development of lipidomic-based therapeutics. Lipidomics is an emerging field of medical science whereby bioactive signaling lipids are targeted to treat important
human diseases. Our lead product candidate, ASONEP, is a monoclonal antibody against sphingosine-1-phosphate (S1P). ASONEP is currently in Phase 1 clinical trials and holds promise for the treatment of cancer, multiple sclerosis, and other
diseases. A second product candidate, iSONEP (another formulation of the same S1P-targeted antibody) is currently in Phase I clinical trials, and has demonstrated superior results in various models of human ocular disease, including
age-related macular degeneration, retinopathy, and glaucoma. Our third product candidate, Lpathomab, is an antibody against lysophosphatidic acid (LPA), a key bioactive lipid that has been long recognized as a valid disease target.
Lpaths unique ability to generate novel antibodies against bioactive lipids is based on its ImmuneY2 technology, a series of proprietary processes developed by the company. We are currently applying the Immune Y2 process to other
lipid-signaling agents that are validated targets for disease treatment, thereby potentially creating a pipeline of monoclonal antibody-based drug candidates.

Lpath has incurred significant net losses since its inception. As of June 30, 2009, Lpath had an accumulated deficit of approximately $39.8 million. Lpath expects its operating losses to increase for the next several years as it
pursues the clinical development of its product candidates.

Results of Operations

Comparison of the Six Months Ended June 30, 2009 and June 30, 2008

Grant and Royalty
Revenue. Grant and royalty revenue for the six-month period ended June 30, 2009 was $447,000 compared to $474,000 for the six-month period ended June 30, 2008. The decrease of $27,000 reflects the winding down of work on grants
awarded to Lpath by the National Institutes of Health (NIH) in 2008 and work that began on a grant awarded in June 2009.

Research and
development revenue under collaborative agreement.In the first half of 2009, work continued as planned on the collaborative research and development agreement with Merck KgaA, (Merck). We received research and development funding of
$3,000,000 and recognized $2,000,000 of revenue related to the $4,000,000 upfront licensing fee received in November 2008.

Research and
Development Expenses. Research and development expenses decreased from $5,643,000 for the first half of 2008 to $3,682,000 for the first half of 2009, a decrease of $1,961,000. Outside services, consulting, and lab supplies expenses decreased by
$1,763,000 in 2009 due to significant costs incurred in the first half of 2008 to manufacture drug supplies to be used in clinical trials. Employee compensation and benefits expense increased by $337,000 in 2009 compared to 2008. The increase is due
principally to severance costs related to the departure of a senior research and development executive, additional staffing, and merit pay increases implemented in 2009. Stock-based compensation charges decreased by $526,000 due principally to two
factors: (1) the average market value of Lpaths common stock was relatively low during the six months ended June 30, 2009 compared to 2008 (Lpaths stock price is a key factor in the calculation of stock-based compensation
expense for outside consultants), and (2) adjustments for forfeited restricted stock units.

General and Administrative Expenses. General and
administrative expenses were $2,088,000 for the six-month period ended June 30, 2009 compared to $2,420,000 for the same period in 2008, a decrease of $332,000. Stock compensation expense decreased by $700,000 in 2009. This decrease is due
principally to the decline in Lpaths stock price compared to 2008 and cliff vesting of restricted stock units that occurred in 2008. Employee compensation and benefits expenses increased in 2009 compared to 2008 by $214,000 due to increased
staffing and merit increases in pay rates. Outside services, including legal, accounting, consulting, and fees to non-management directors, increased in aggregate by $130,000 in 2009.



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Other Income (Expense), net. Other income (expense) netted to $37,000 of expense for the six months ended
June 30, 2009 compared to $78,000 of income for the six months ended June 30, 2008, a decrease of $115,000. This net change is principally comprised of two elements: (1) interest income decreased by $45,000 in the first half of 2009
as compared to the same period in 2008 as a result of lower prevailing interest rates; and (2) Lpath recognized a foreign currency loss of $60,000 during the six months ended June 30, 2009 due to an increase in the U. K. Pound exchange
rate used to translate the carrying amount of the companys accrued liability related to a license agreement with a company located in the U. K.

Change in fair value of warrants. As discussed in the notes to the financial statements, Lpath implemented EITF 07-5 effective January 1, 2009. As required by EITF 07-5, changes in the fair value of the warrant liability are to
be reflected in the statement of operations each reporting period. Various factors are considered in the Black-Scholes model we use to value the warrants, including the companys current stock price, the remaining life of the warrants, the
volatility of the companys stock price and the risk free interest rate. Future changes in these factors will have a significant impact on the computed fair value of the warrant liability. The most significant factor in the valuation model is
the companys stock price. Lpaths stock is very thinly traded and relatively small transactions can impact the companys quoted stock price significantly. As a result, the companys stock price volatility factor is approximately
90%. As such, we expect future changes in the fair value of the warrants to vary significantly from quarter to quarter. Management cautions that the $3,000,000 increase in fair value of the warrants, and corresponding charge to the results of
operations, recognized during the six months ended June 30, 2009, and all future such changes, should not be given undue importance when considering the financial condition of Lpath and the results of its operations. Management does not believe
that these adjustments, required by current generally accepted accounting principles, reflect economic activities or financial obligations undertaken by the company.

Comparison of the Three Months Ended June 30, 2009 and June 30, 2008

Grant and Royalty
Revenue. Grant and royalty revenue for the three-month period ended June 30, 2009 was $269,000 compared to $462,000 for the three-month period ended June 30, 2008. The decrease of $193,000 reflects the winding down of work on
grants awarded to Lpath by the National Institutes of Health (NIH) in 2008 and the beginning of performance on an NIH grant awarded in June 2009.

Research and development revenue under collaborative agreement.During the second quarter of 2009, work continued as planned on the collaborative research and development agreement with Merck KgaA, (Merck). We received
research and development funding of $1,500,000 and recognized $1,000,000 of revenue related to the $4,000,000 upfront licensing fee received in November 2008.

Research and Development Expenses. Research and development expenses decreased from $2,039,000 for the second quarter of 2008 to $1,765,000 for the second quarter of 2009, a decrease of $274,000. Outside services, consulting, and lab
supplies expenses decreased by $472,000 in 2009 due to significant costs incurred in the second quarter of 2008 to manufacture drug supplies to be used in clinical trials. Employee compensation and benefits expense increased by $80,000 in 2009
compared to 2008. The increase is due principally to staffing and merit pay increases implemented in 2009. Stock-based compensation charges increased by $130,000 in 2009 due principally to Lpaths higher stock price at June 30, 2009
($1.42) compared to the price at June 30, 2008 ($1.23).

General and Administrative Expenses. General and administrative expenses were
$1,068,000 for the quarter ended June 30, 2009 compared to $875,000 for the same period in 2008, an increase of $193,000. Employee compensation and benefits expenses increased in 2009 compared to 2008 by $151,000 due to increased staffing and
merit increases in pay rates. Outside services, including legal, accounting, consulting, and fees to non-management directors, increased in aggregate by $43,000 in 2009.

Other Income (Expense), net. Other income (expense) netted to $62,000 of expense for the three months ended June 30, 2009 compared to $19,000 of income for the three months ended June 30, 2008, a
decrease of $81,000. Interest income decreased by $11,000 in 2009 as a result of lower interest rates that prevailed in 2009. Lpath recognized a foreign currency loss of $68,000 during the quarter ended June 30, 2009 due to an increase, during
the quarter, in the exchange rate for the U.K. Pound used to translate the carrying amount of the companys accrued liability related to a license agreement with a company located in the U. K.

Change in fair value of warrants. The company recorded other expense of $3,700,000 for the three month period ended June 30, 2009 to record the increase in
fair value of outstanding warrants. This increase in fair value was driven principally by the increase in Lpaths stock price from $0.94 at March 31, 2009 to $1.42 at June 30, 2009.



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##### Table of Contents

Liquidity and Capital Resources

Since Lpaths inception, its operations have been financed primarily through the private placement of equity and debt securities. Through June 30, 2009 Lpath had received net proceeds of approximately
$36,400,000 from the sale of equity securities and from the issuance of convertible promissory notes. In the fourth quarter of 2008 Lpath began to receive substantial funding from a research and development arrangment with Merck. Through
June 30, 2009 Lpath had received $8,000,000 from this collaborative research and development agreement. As of June 30, 2009, Lpath had cash and cash equivalents totaling $5,458,000.

During the six months ended June 30, 2009 we used net cash of $2,056,000 for operating activities compared to $5,732,000 in the six months ended June 30, 2008.
The $3,676,000 decrease in net cash used in operating activities was driven primarily by the receipt of $3,000,000 from Merck in connection with our collaborative research and development agreement. Net cash used in investing activities during the
six months ended June 30, 2009 was $287,000 compared to $60,000 during the same period in 2008. Of the amount used for investing activities in 2009, $248,000 was invested in the prosecution of additional patents compared to $57,000 in 2008. In
addition, 2009 acquisitions of equipment and leasehold improvements totaled $39,000 in 2009 compared to $3,000 in 2008.

Net cash provided from financing
activities during the six-month period ended June 30, 2009 totaled approximately $25,000 compared to $164,000 in the first six months of 2008.

During
2009 the company expects to continue to incur cash losses from operations. While the company had cash totaling $5,458,203 as of June 30, 2009, the cost of its ongoing drug discovery and development efforts, including general and
administrative expenses, are expected to consume an additional $6 to $10 million in 2009. We believe that our existing cash and expected funding under Lpaths collaborative research and development agreement with Merck will be sufficient
to meet Lpaths projected operating requirements at least through 2009. Although we believe work under the collaborative agreement with Merck is progressing as planned, there can be no assurance that Merck will not cancel the agreement
before the conclusion of the initial development period. In the event that Merck cancels its agreement with us, we would need to seek additional sources of capital to finance our research and development activities into 2010. Additional capital
may be required to continue to fund the companys research and development projects in 2009 and beyond. In the event we need to raise additional capital, we would:



| | 1. | Pursue additional fund raising activities from both existing and potential new investors.
| | -- | -----------------------------------------------------------------------------------------



| | 2. | Explore cash generating opportunities from strategic alliances, including licensing portions of our technology or entering into corporate partnerships or collaborations. In
such transactions, Lpath could transfer certain rights to one or more of its drug discovery or development programs, or to specific indications within those programs and receive infusions of cash in the short-term, and potentially in the long-term
as well.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Continue to seek additional research grants from the NIH or other sources.
| | -- | --------------------------------------------------------------------------

Critical Accounting Policies, Estimates and Judgments

Our financial statements are prepared in accordance with accounting principles that
are generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to revenue recognition, valuation
of long-lived assets and warrant liability, share-based compensation, the timing of the achievement of drug development milestones, and income taxes. We base our estimates and judgments on historical experience and other factors that we believe to
be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

Besides
the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets,
liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances.
Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

For further information, refer to the consolidated financial statements and notes thereto included in the companys annual report on Form 10-K for the year ended December 31, 2008.



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##### Table of Contents

Recent Accounting Pronouncements

On July 1, 2009, the FASB issued Statement of Financial Accounting Standard No. 168, The FASB Accounting Standards Codification TMand the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 , The Hierarchy of
GenerallyAccepted Accounting Principles. This statement establishes the FASB Accounting Standards CodificationTM(Codification) as the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied
by nongovernmental entities in the preparation of financial statements in conformity with GAAP in the United States (the GAAP hierarchy). Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative GAAP
for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending on or after September 15, 2009. All then-existing non-SEC
accounting and reporting standards are superseded and all non-grandfathered, non-SEC accounting literature not included in the Codification is deemed non-authoritative. The Company is evaluating the impact of the Codification and will conform
to the new guidance of the Codification references in its third quarter Form 10-Q.

Item 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision of our principal executive
officer and principal financial officer, and with the participation of all members of management, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the
Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were designed and operating effectively as of the end of the period covered by this
Quarterly Report on Form 10-Q.

Our management, including our principal executive officer and our principal financial officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the
quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II  OTHER INFORMATON

Item 1. LEGAL PROCEEDINGS

None.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON
SENIOR SECURITIES

None.

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

On June 24, 2009 we held our Annual Meeting of the Stockholders in San Diego,
California. Matters voted upon were (1) election of directors and (2) ratification of LevitZacks as the Companys independent auditors for the fiscal year ending December 31, 2009.

The number of votes cast for, against or withheld, with respect to each matter are set out below.

1. Election of Directors



|                    |  |            |  |         |  |          |  |  |  | 
|------------------- |  | ---------- |  | ------- |  | -------- |  |  |  | 
|Director            |  | For        |  | Against |  | Withheld |  |  |  | 
|Jeffrey A. Ferrell  |  | 33,914,798 |  |        |  | 625,062  |  |  |  | 
|Charles A. Mathews  |  | 33,904,058 |  |        |  | 635,802  |  |  |  | 
|Scott R. Pancoast   |  | 33,908,798 |  |        |  | 631,062  |  |  |  | 
|Daniel H. Petree    |  | 33,914,798 |  |        |  | 625,062  |  |  |  | 
|Donald R. Swortwood |  | 33,898,638 |  |        |  | 641,222  |  |  |  | 

2. Ratification of Independent Auditors



|           |  |         |  |         |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|---------- |  | ------- |  | ------- |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|For        |  | Against |  | Abstain |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|34,530,911 |  | 8,949   |  |        |  |  |  |  |  |  |  |  |  |  |  |  |  | 

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

The following exhibit index shows those exhibits filed with this report and those incorporated herein by reference:



|     |  |                                                                                                                                                                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1* |  | Agreement and Plan of Reorganization, by and between Neighborhood Connections, Inc., Neighborhood Connections Acquisition Corporation, and Lpath Therapeutics Inc. dated July 15,
2005.                                                                              
|     | 
|2.2  |  | Acquisition Agreement and Plan of Merger, dated as of March 19, 2004, between Neighborhood Connections, Inc. and JCG, Inc. (filed as Exhibit 2.1 to the Current Report on
Form 8-K filed on March 22, 2004 and incorporated herein by reference).                    
|     | 
|3.1* |  | Amendment to Articles of Incorporation filed December 1, 2005.                                                                                                                                                                                                       
|     | 
|3.2  |  | Articles of Incorporation filed on September 18, 2002 (filed as Exhibit 3.1 to Amendment No. 1 to the Annual Report on Form 10-KSB/A for the year ended December 31, 2003
(the 2003 Amended 10-KSB) (filed on March 25, 2004 and incorporated herein by reference).
|     | 
|3.3  |  | Amendment to Articles of Incorporation filed on December 27, 2002 (filed as Exhibit 3.3 to the Current Report on Form 8-K/A filed on January 9, 2006 and incorporated
herein by reference).                                                                          



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|       |  |                                                                                                                                                                                                                                                                                                                                            
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.4    |  | Amended and Restated By-laws (filed as Exhibit 3.4 to the Quarterly Report on Form 10-QSB filed on November 13, 2006 and incorporated herein by reference).                                                                                                                                                                                
|       | 
|3.5    |  | Amended and Restated Bylaws, as amended on April 3, 2007 (conformed) (filed as Exhibit 3.5 to the Registration Statement on Form SB-2, SEC File No. 144199 (the
June 2007 SB-2) and incorporated herein by reference).                                                                                                                   
|       | 
|3.6    |  | Amendment to Articles of Incorporation filed on June 8, 2007 (filed as Exhibit 3.6 to the June 2007 SB-2 and incorporated herein by reference).                                                                                                                                                                                            
|       | 
|4.1*   |  | Form of Warrant issued to Western States Investment Corporation for lease guaranty.                                                                                                                                                                                                                                                        
|       | 
|4.2*   |  | Form of Warrant issued pursuant to the Common Stock and Warrant Purchase Agreement dated June 30, 2005.                                                                                                                                                                                                                                    
|       | 
|4.3*   |  | Form of Warrant issued to purchasers of Convertible Secured Promissory Notes as amended by the Omnibus Amendment to Convertible Secured Promissory Notes and Warrants dated November 30,
2005.                                                                                                                                             
|       | 
|4.4*   |  | Form of Warrant issued pursuant to the Common Stock and Warrant Purchase Agreement dated November 30, 2005.                                                                                                                                                                                                                                
|       | 
|4.5#   |  | Form of Warrant issued pursuant to the Common Stock and Warrant Purchase Agreement dated January 31, 2006.                                                                                                                                                                                                                                 
|       | 
|4.6    |  | Form of Warrant issued pursuant to the Common Stock and Warrant Purchase Agreement dated March 28, 2006 (filed as Exhibit 4.7 to the registration statement on Form SB-2 filed
on March 30, 2006, SEC File No. 333-132850, and incorporated herein by reference).                                                                          
|       | 
|4.7    |  | Form of Warrant issued pursuant to the Securities Purchase Agreement dated April 6, 2007 (April 2007 Warrants) (filed as Exhibit 4.7 to the June 2007 SB-2 and
incorporated herein by reference).                                                                                                                                          
|       | 
|4.8    |  | Form of Warrant issued pursuant to the Securities Purchase Agreement dated June 13, 2007 (June 2007 Warrants) (filed as Exhibit 4.8 to the June 2007 SB-2 and
incorporated herein by reference).                                                                                                                                           
|       | 
|4.9    |  | Form of Warrant issued pursuant to the Securities Purchase Agreement dated August 12, 2008 (August 2008 Warrants) (filed as Exhibit 4.10 to the registration statement on
Form S-1 filed on September 11, 2008, SEC File No. 333-153423 and incorporated herein by reference).                                                             
|       | 
|10.1*  |  | Lease Agreement dated August 12, 2005 between Lpath Therapeutics Inc. and Pointe Camino Windell, LLC.                                                                                                                                                                                                                                      
|       | 
|10.2*  |  | Research Agreement dated January 28, 2004 between Medlyte, Inc. and San Diego State University, together with Amendments No.1 and No.2.                                                                                                                                                                                                    
|       | 
|10.3*  |  | Assignment Agreement dated June 9, 2005 between Lpath Therapeutics Inc. and LPL Technologies, Inc.                                                                                                                                                                                                                                         
|       | 
|10.4   |  | Research Collaboration Agreement dated August 2, 2005 between Lpath Therapeutics Inc. and AERES Biomedical Limited (filed as Exhibit 10.4 to the Current Report on Form 8-K/A filed
on January 9, 2006 and incorporated herein by reference) (portions of this exhibit have been omitted pursuant to a request for confidential treatment).
|       | 
|10.5*  |  | Lpath, Inc. Amended and Restated 2005 Equity Incentive Plan (filed as Appendix A to the Companys Schedule 14-A Proxy Statement filed on August 28, 2007 and incorporated herein by
reference).                                                                                                                                            
|       | 
|10.6#  |  | Assignment and Assumption Agreement dated December 1, 2005 by and between Lpath, Inc. and Lpath Therapeutics, Inc.                                                                                                                                                                                                                         
|       | 
|10.7** |  | Form of Employment Agreement between Lpath, Inc. and Scott R. Pancoast dated as of January 1, 2006.                                                                                                                                                                                                                                        
|       | 
|10.8** |  | Form of Employment Agreement between Lpath, Inc. and Gary Atkinson dated as of February 6, 2006.                                                                                                                                                                                                                                           



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|         |  |                                                                                                                                                                                                                                                                                                                                                                                     
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.9**   |  | Form of Consultant Agreement between Lpath, Inc. and William Garland dated as of January 1, 2006.                                                                                                                                                                                                                                                                                   
|         | 
|10.10**  |  | Form of Consultant Agreement between Lpath, Inc. and Roger Sabbadini dated as of February 1, 2006.                                                                                                                                                                                                                                                                                  
|         | 
|10.11    |  | Development and Manufacturing Services Agreement dated August 16, 2006 between Lpath Inc. and Laureate Pharma, Inc. (filed as Exhibit 10.13 to the Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2006 filed on November 13, 2006 and incorporated by reference) (portions of this exhibit have been omitted pursuant to a request for confidential treatment).
|         | 
|10.12    |  | Securities Purchase Agreement, dated as of April 6, 2007, by and among Lpath, Inc. and each investor identified therein (filed as Exhibit 10.14 to the June 2007 SB-2 and
incorporated herein by reference).                                                                                                                                                                        
|         | 
|10.13    |  | Registration Rights Agreement, dated as of April 6, 2007, by and among Lpath, Inc. and each investor identified therein (filed as Exhibit 10.15 to the June 2007 SB-2 and incorporated herein by reference).                                                                                                                                                                        
|         | 
|10.14##  |  | License Agreement dated August 8, 2006 between Lonza Biologics PLC and Lpath, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                                                   
|         | 
|10.15    |  | Securities Purchase Agreement, dated August 12, 2008, by and among Lpath, Inc. and each of the investors identified therein (filed as Exhibit 10.17 to the 2008 S-1 and
incorporated herein by reference).                                                                                                                                                                          
|         | 
|10.16    |  | Registration Rights Agreement, dated August 12, 2008, by and among Lpath, Inc. and each of the investors identified therein (filed as Exhibit 10.18 to the 2008 S-1 and
incorporated herein by reference).                                                                                                                                                                          
|         | 
|10.17*** |  | License Agreement, dated as of October 28, 2008, by and between Lpath, Inc. and Merck KgaA (portions of this exhibit have been omitted pursuant to a request for confidential treatment)                                                                                                                                                                                            
|         | 
|31.1     |  | Section 302 Certification by Chief Executive Officer of Lpath, Inc.                                                                                                                                                                                                                                                                                                                 
|         | 
|31.2     |  | Section 302 Certification by Chief Financial Officer of Lpath, Inc.                                                                                                                                                                                                                                                                                                                 
|         | 
|32.1     |  | Section 906 Certification by Chief Executive Officer and Chief Financial Officer of Lpath, Inc.                                                                                                                                                                                                                                                                                     



|* | Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on December 6, 2005 and incorporated herein by reference
|- | ---------------------------------------------------------------------------------------------------------------------------------

|# | Filed as an exhibit to the Annual Report on Form 10-KSB for the year ended December 31, 2005 filed with the SEC on March 16, 2006 and incorporated herein by reference
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on March 29, 2006 and incorporated herein by reference
|-- | -------------------------------------------------------------------------------------------------------------------------------

|## | Filed as an exhibit to the Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 2007 filed with the SEC on November 13, 2007 and incorporated
herein by reference
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 25, 2009 and incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of 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.



|                      |  |                                             
|--------------------- |  | --------------------------------------------
|                      |  | Lpath, Inc.                                 
|                      | 
|Date: August 12, 2009 |  | /s/    Scott R. Pancoast                    
|                      |  | Scott R. Pancoast                           
|                      |  | President and Chief Executive Officer       
|                      |  | (Principal executive officer)               
|                      | 
|                      |  | /s/    Gary J.G. Atkinson                   
|                      |  | Gary J.G. Atkinson,                         
|                      |  | Vice President and Chief Financial Officer  
|                      |  | (Principal financial and accounting officer)



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