**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 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, 2007**

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

|   | Commission                File Number |
|--------|---------------------------------------|

|   | 0-50481 |
|--------|---------|

|   | **AEOLUS                PHARMACEUTICALS, INC.** |
|--------|-------------------------------------------------|

|   | (Exact                Name of Registrant as Specified in Its                Charter) |
|--------|--------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Delaware                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  56-1953785                                             |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|
|  (State                  or Other Jurisdiction of Incorporation or                  Organization)                                                                                                                                                                                                                                                                                                                                               |   |                    (I.R.S. Employer Identification No.) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                         |
|                                              23811 Inverness Place                                                  Laguna Niguel, California |   |   92677                                            |
|  (Address                  of Principal Executive Offices)                                                                                                                                                                                                                                                                                                                                                                                      |   |                    (Zip Code)                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                         |
|  (Registrant’s                  Telephone Number, Including Area Code)949-481-9825                                                                                                                                                                                                                                                                                                                                                        |

|   |   |
|--------|--------|

** **

|  Class                                                   |  Outstanding                  as ofJuly                  27, 2007 |
|---------------------------------------------------------------|------------------------------------------------------------------------|
|  Common                  Stock, par value $.01 per share |  31,952,749                  shares                               |

----

|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        | **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|  **PART                I.**                                **FINANCIAL                INFORMATION** |
|                                                                                                                                                                                                                                                                     | Item                1.       | Financial                Statements                                                                                                                                                                                         |     |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     |                         | Statement                Regarding Financial                Information                                                                                                                                                     | 3        |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     |                         | Condensed                Consolidated Balance                Sheets as of June                30, 2007 (unaudited)                and September 30, 2006                                                               | 4        |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     |                         | Condensed                Consolidated Statements                of Operations for the Three Months and                Nine Months endedJune                30, 2007                and 2006                (unaudited) | 5        |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     |                         | Condensed                Consolidated Statements                of Cash Flows for the Nine Months                ended June 30,                2007                and 2006                (unaudited)                      | 6        |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     |                         | Notes                to Condensed Consolidated                Financial Statements                                                                                                                                          | 7        |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     | Item                2.       | Management’s                Discussion and                Analysis of Financial Condition and Results of                Operations                                                                                    | 11       |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                     | Item                3.       | Quantitative                and Qualitative                Disclosures About Market Risk                                                                                                                                    | 14       |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     | Item                4.       | Controls                and                Procedures                                                                                                                                                                       | 14       |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
| **PART                II.                                OTHER                INFORMATION**              |
|                                                                                                                                                                                                                                                                     | Item                1.       | Legal                Proceedings                                                                                                                                                                                            | 14       |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     | Item                1A.      | Risk                Factors                                                                                                                                                                                                 | 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                                                                                                                                                                                                                    | 15       |
|                                                                                                                                                                                                                                                                     |                         |                                                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                                     | SIGNATURES                   | 15                                                                                                                                                                                                                          |

----

**AEOLUS      PHARMACEUTICALS, INC.**

**PART      I - FINANCIAL INFORMATION**

**Statement      Regarding Financial Information**

----

| AEOLUS                PHARMACEUTICALS, INC.                                                                                                   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                          |   |   |   |   |   |   |
| CONDENSED                CONSOLIDATED BALANCE SHEETS                                                                                          |   |
| (In                thousands, except shares and per share data)                                                                               |   |
|                                                                                                                                          |   |   |   |   |   |   |
|                                                                                                                                          |   | June                30, |   |   | September                30, |   |
|                                                                                                                                          |   | 2007 |   |   | 2006 |   |
|                                                                                                                                          |   | (Unaudited) |   |   |   |   |
| ASSETS                                                                                                                                        |   |
| Current                  assets:                                                                                                              |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                    |   | $ | 2,173 |   |   | $ | 3,324 |   |
| Prepaids                  and other current assets                                                                                            |   |   | 298 |   |   |   | 104 |   |
| Total                  current assets                                                                                                         |   |   | 2,471 |   |   |   | 3,428 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| Investment                  in CPEC LLC                                                                                                       |   |   | 126 |   |   |   | 126 |   |
| Total                  assets                                                                                                                 |   | $ | 2,597 |   |   | $ | 3,554 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| LIABILITIES                  AND STOCKHOLDERS' EQUITY                                                                                         |   |
| Current                  liabilities:                                                                                                         |   |   |   |   |   |   |   |   |
| Accounts                  payable                                                                                                             |   | $ | 163 |   |   | $ | 868 |   |
| Accrued                  expenses                                                                                                             |   |   | 5 |   |   |   | 23 |   |
| Current                  maturity of long-term note payable                                                                                   |   |   | - |   |   |   | 956 |   |
| Total                  current liabilities                                                                                                    |   |   | 168 |   |   |   | 1,847 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| Long-term                  note payable                                                                                                       |   |   | 471 |   |   |   | - |   |
| Total                  liabilities                                                                                                            |   |   | 639 |   |   |   | 1,847 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| Commitments                  and contingences                                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| Stockholders'                  equity:                                                                                                        |   |   |   |   |   |   |   |   |
| Preferred                  stock, $.01 par value per share, 10,000,000 shares                  authorized:                                    |   |   |   |   |   |   |   |   |
| Series                  B nonredeemable convertible preferred stock, 600,000                  shares                                          |   |   |   |   |   |   |   |   |
| authorized;                  475,087 shares issued and outstanding at June 30,                                                                |   |   |   |   |   |   |   |   |
| 2007                  and September 30, 2006                                                                                                  |   |   | 5 |   |   |   | 5 |   |
| Common                  stock, $.01 par value per share, 150,000,000 shares                  authorized;                                      |   |   |   |   |   |   |   |   |
|                      31,952,749 and 29,265,249 shares issued and outstanding                  at                               |   |   |   |   |   |   |   |   |
|    June                  30, 2007 and September 30, 2006, respectively                                                         |   |   | 320 |   |   |   | 293 |   |
| Additional                  paid-in capital                                                                                                   |   |   | 156,537 |   |   |   | 154,311 |   |
| Accumulated                  deficit                                                                                                          |   |   | (154,904 | ) |   |   | (152,902 | ) |
| Total                  stockholders' equity                                                                                                   |   |   | 1,958 |   |   |   | 1,707 |   |
| Total                  liabilities and stockholders' equity                                                                                   |   | $ | 2,597 |   |   | $ | 3,554 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these unaudited condensed                  consolidated financial statements. |   |

----

| AEOLUS                PHARMACEUTICALS, INC.                                                                                               |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED                CONSOLIDATED STATEMENTS OF OPERATIONS                                                                            |   |
| (Unaudited)                                                                                                                               |   |
| (In                thousands, except per share data)                                                                                      |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   | Three                Months Ended |   |   | Nine                Months Ended |   |
|                                                                                                                                      |   | June                30, |   |   | June                30, |   |
|                                                                                                                                      |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| Revenue                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Grant                income                                                                                       |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 92 |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Research                and development                                                                           |   |   | 192 |   |   |   | 419 |   |   |   | 869 |   |   |   | 2,677 |   |
|     General                and administrative                                                                         |   |   | 320 |   |   |   | 524 |   |   |   | 1,396 |   |   |   | 1,571 |   |
|          Total                costs and expenses                                             |   |   | 512 |   |   |   | 943 |   |   |   | 2,265 |   |   |   | 4,248 |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from operations                                                                                                       |   |   | (512 | ) |   |   | (943 | ) |   |   | (2,265 | ) |   |   | (4,156 | ) |
| Interest                income (expense), net                                                                                             |   |   | 3 |   |   |   | (10 | ) |   |   | 38 |   |   |   | (29 | ) |
| Equity                in income of CPEC LLC                                                                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 433 |   |
| Other                income                                                                                                               |   |   | - |   |   |   | 17 |   |   |   | 225 |   |   |   | 53 |   |
| Increase                in fair value of common stock warrants                                                                            |   |   | - |   |   |   | (2,216 | ) |   |   | - |   |   |   | (1,815 | ) |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                                   |   |   | (509 | ) |   |   | (3,152 | ) |   |   | (2,002 | ) |   |   | (5,514 | ) |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred                stock dividend accreted                                                                                          |   |   | - |   |   |   | (26 | ) |   |   | - |   |   |   | (81 | ) |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss attributable to common stockholders                                                                               |   | $ | (509 | ) |   | $ | (3,178 | ) |   | $ | (2,002 | ) |   | $ | (5,595 | ) |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss per weighted share attributable to common                stockholders:                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    (basic                and diluted)                                                                                      |   | $ | (0.02 | ) |   | $ | (0.17 | ) |   | $ | (0.07 | ) |   | $ | (0.36 | ) |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares outstanding:                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                and diluted                                                                                        |   |   | 30,429 |   |   |   | 18,234 |   |   |   | 29,661 |   |   |   | 15,450 |   |
|                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                accompanying notes are an integral part of these unaudited condensed                consolidated financial statements. |   |

----

| AEOLUS                PHARMACEUTICALS, INC.                                                                                                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                       |   |   |   |   |   |   |
| CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                             |   |
| (Unaudited)                                                                                                                                |   |
| (In                thousands)                                                                                                              |   |
|                                                                                                                                       |   |   |   |   |   |   |
|                                                                                                                                       |   | Nine                Months Ended |   |
|                                                                                                                                       |   | June                30, |   |
|                                                                                                                                       |   | 2007 |   |   | 2006 |   |
| Cash                  flows from operating activities:                                                                                     |   |   |   |   |   |   |
| Net                  loss                                                                                                                  |   | $ | (2,002 | ) |   | $ | (5,514 | ) |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities:                              |   |   |   |   |   |   |   |   |
| Noncash                  compensation                                                                                                 |   |   | 471 |   |   |   | 264 |   |
| Noncash                  interest and financing costs                                                                                      |   |   | 40 |   |   |   | 66 |   |
| Noncash                  licensing fee                                                                                                     |   |   | - |   |   |   | 12 |   |
| Forgiveness                  of note payable                                                                                               |   |   | (225 | ) |   |   | - |   |
| Equity                  income of CPEC LLC                                                                                                 |   |   | - |   |   |   | (433 | ) |
| Decrease                  in fair value of common stock warrants                                                                      |   |   | - |   |   |   | 1,815 |   |
| Change                  in assets and liabilities:                                                                                    |   |   |   |   |   |   |   |   |
|    Accounts                  receivable, prepaids and other assets                                                          |   |   | (194 | ) |   |   | (20 | ) |
|    Accounts                  payable and accrued expenses                                                                   |   |   | (723 | ) |   |   | (337 | ) |
| Net                  cash used in operating activities                                                                                     |   |   | (2,633 | ) |   |   | (4,147 | ) |
|                                                                                                                                       |   |   |   |   |   |   |   |   |
| Cash                  flows from financing activities:                                                                                     |   |   |   |   |   |   |   |   |
| Payment                  of note payable                                                                                                   |   |   | (300 | ) |   |   | - |   |
| Proceeds                  from dividend from CPEC LLC                                                                                      |   |   | - |   |   |   | 315 |   |
| Net                  proceeds from issuance of Series A Preferred Stock                                                                    |   |   | - |   |   |   | 2,413 |   |
| Net                  proceeds from issuance of common stock                                                                                |   |   | 1,761 |   |   |   | 4,754 |   |
| Proceeds                  from exercise of stock options                                                                                   |   |   | 21 |   |   |   | 42 |   |
| Net                  cash provided by financing activities                                                                                 |   |   | 1,482 |   |   |   | 7,524 |   |
|                                                                                                                                       |   |   |   |   |   |   |   |   |
| Net                  decrease in cash and cash equivalents                                                                                 |   |   | (1,151 | ) |   |   | 3,377 |   |
| Cash                  and cash equivalents at beginning of period                                                                          |   |   | 3,324 |   |   |   | 626 |   |
| Cash                  and cash equivalents at end of period                                                                                |   | $ | 2,173 |   |   | $ | 4,003 |   |
|                                                                                                                                       |   |   |   |   |   |   |   |   |
|                                                                                                                                       |   |   |   |   |   |   |   |   |
| The                  accompanying notes are integral part of these unaudited condensed                  consolidated financial statements. |   |

----

**AEOLUS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

----

***Common      Stock***

----

***Warrants***

| **Number                of Shares** | **Exercise                Price** |                                                                    | **Expiration                Date** |
|-------------------------------------|-----------------------------------|-------------------------------------------------------------------------|------------------------------------|
| 50,000                              |                              |        $    0.50 |                               | May                2011 |
| 2,500,000                           |                              |        $    0.50 |                               | November                2010 |
| 2,186,668                           |                              |        $    0.75 |                               | May                2012 |
| 7,000,000                           |                              |        $    0.75 |                               | June                2011 |
| 50,000                              |                              |        $    1.00 |                               | May                2011 |
| 35,000                              |                              |        $    1.00 |                               | July                2008 |
| 50,000                              |                              |        $    1.50 |                               | May                2011 |
| 50,000                              |                              |        $    2.00 |                               | May                2011 |
| 50,000                              |                              |        $    2.50 |                               | May                2011 |
| 410,400                             |                              |        $    2.50 |                               | April                2009 |
| 1,641,600                           |                              |        $    4.00 |                               | April                2009 |
|      1,759 |                              |        $  19.90            |                               | October                2008 |
| 14,025,427                          |                              |        $    1.15 |                               |   |

|                                                      |   | **Shares** |      |   | **Weighted                Average Exercise Price** |   | **Weighted                Average Remaining Contractual Term** |   | **Aggregate                Intrinsic Value** |   |
|-----------------------------------------------------------|--------|------------|-----------|--------|----------------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------|--------|
| Outstanding                  at September 30, 2006        |   |       | 3,071,806 |   |                                               | $      | 3.25                                                           |   | 7.7                  years                   |   | $ | 22,000 |   |
| Granted                                                   |   |       | 748,000   |   |                                               | $      | 0.61                                                           |   |                                         |   |   |   |   |
| Exercised                                                 |   |       | (20,833   | )      |                                               | $      | 1.00                                                           |   |                                         |   |   |   |   |
| Forfeited                                                 |   |       | (477,356  | )      |                                               | $      | 0.64                                                           |   |                                         |   |   |   |   |
| Outstanding                  at June 30, 2007 (unaudited) |   |       | 3,321,617 |   |                                               | $      | 3.04                                                           |   | 7.0                  years                   |   | $ | 119,000 |   |
| Exercisable                  at June 30, 2007 (unaudited) |   |       | 3,119,117 |   |                                               | $      | 3.19                                                           |   | 6.9                  years                   |   | $ | 87,000 |   |

|                                        |   | **Options                Outstanding**                 |                           | **Options                Exercisable**             |
|---------------------------------------------|--------|--------------------------------------------------------|--------------------------------|----------------------------------------------------|
| **Range                of Exercise Prices** |   | **Number                Outstanding at June 30, 2007** |                           | **Weighted                Average Exercise Price** |   | **Weighted                Average Remaining Contractual Life** |   | **Number                Exercisable at****June                30, 2007** |   | **Weighted                Average Exercise Price** |
|                                        |   |                                                   |                           |                                               |   |   |   |   |   |   |   |   |
| $0.38                - 0.75                 |   | 592,461                                                |       | $                                                  | 0.68 |       | 8.5                years |       | 454,961 |       | $ | 0.69 |
| $0.78                - $0.83                |   | 133,000                                                |       | $                                                  | 0.80 |       | 9.0                years |       | 125,500 |       | $ | 0.80 |
| $0.85                                       |   | 335,744                                                |                           | $                                                  | 0.85 |   | 8.3                years |   | 278,244 |   | $ | 0.85 |
| $0.86                - $1.12                |   | 342,477                                                |                           | $                                                  | 0.95 |   | 8.2                years |   | 342,477 |   | $ | 0.95 |
| $1.13                - $1.45                |   | 52,450                                                 |                           | $                                                  | 1.16 |   | 7.6                years |   | 52,450 |   | $ | 1.16 |
| $1.50                                       |   | 1,256,015                                              |                           | $                                                  | 1.50 |   | 6.1                years |   | 1,256,015 |   | $ | 1.50 |
| $1.52                - $5.00                |   | 374,556                                                |                           | $                                                  | 2.74 |   | 7.0                years |   | 374,556 |   | $ | 2.74 |
| $5.10                - $31.88               |   | 186,115                                                |                           | $                                                  | 18.84 |   | 4.0                years |   | 186,115 |   | $ | 18.84 |
| $50.9375                                    |   | 2,999                                                  |                           | $                                                  | 50.94 |   | 2.8                years |   | 2,999 |   | $ | 50.94 |
| $51.25                                      |   | 45,800                                                 |                           | $                                                  | 51.25 |   | 2.8                years |   | 45,800 |   | $ | 51.25 |
| $0.38                - $51.25               |   | 3,321,617                                              |                           | $                                                  | 3.04 |   | 7.0                years |   | 3,119,117 |   | $ | 3.19 |

----

|                                                    |   | **For                  the nine months****June                  30,** |   |
|---------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                    |   | **2007**                                                              |   |   | **2006** |   |
| Research                  and development expenses      |   | $                                                                     | 161    |   |   | $ | 31 |   |
| General                  and administrative expenses    |   |                                                                  | 283    |   |   |   | 191 |   |
| Total                  stock-based compensation expense |   | $                                                                     | 444    |   |   | $ | 222 |   |

|                                                        |   | **For                the nine months June 30,** |
|-------------------------------------------------------------|--------|-------------------------------------------------|
|                                                        |   | **2007**                                        |   | **2006** |
| Dividend                yield                               |   | 0%                                              |   | 0% |
| Expected                volatility                          |   | 191                - 195%                       |   | 187                – 190% |
| Risk-free                interest rate                      |   | 4.5%                - 5.1%                      |   | 4.4%                - 5.2% |
| Expected                option life after shares are vested |   | 10                years                         |   | 10                years |

----

*Three      months ended June 30, 2007 versus three months ended June 30,      2006*

----

*Nine      months ended June 30, 2007 versus nine months ended June 30,      2006*

----

----

**PART      II. - OTHER INFORMATION**

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| **Exhibit                #** |   | **Description**                                                                                                                                                                                                                                                                                                                             |
|------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 4.1                          |   | Registration                  Rights Agreement dated May 22, 2007 by and among the Company and                  each of                  the Purchasers whose names appear on the Schedule attached                  thereto (incorporated by reference to Exhibit 4.1 to the Company's                  Form 8-K dated May 22, 2007). |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.1                         |   | Securities                  Purchase Agreement dated May 22, 2007 by and among the Company                  and the                  investors whose names appear on the signature pages                  thereof (incorporated by reference to Exhibit 10.1 to the Company's                  Form 8-K dated May 22, 2007).           |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.2                         |   | Form                of Warrant to Purchase Common Stock dated May 22, 2007 (incorporated                by                reference to Exhibit 10.2 to the Company's Form 8-K dated May 22,                2007).                                                                                                                           |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.3                         |   | Letter                  Agreement dated April 30, 2007 by and between the Company and Rodman                  and                  Renshaw, LLC  (incorporated by reference to Exhibit 10.3 to the                  Company's Form 8-K dated May 22, 2007).                                                                            |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.4                         |   | Convertible                  Promissory Note dated February 7, 2007 issued by Aeolus Pharmaceuticals,                  Inc. to Elan Pharma International Ltd. (incorporated by reference to                  Exhibit 10.43 to the Company's Form S-1 dated June 4,                  2007).                                             |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 31.1                         |   | Certification                  of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)                  and 15d-14(a).                                                                                                                                                                                                      |
|                         |   |                                                                                                                                                                                                                                                                                                                                        |
| 31.2                    |   | Certification                  of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)                  and 15d-14(a).                                                                                                                                                                                                      |
| 32.1                         |   | Certification                  by the Chief Executive Officer and Chief Financial Officer pursuant                  to 18                  U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act                  of 2002.                                                                                         |

**SIGNATURES**

| Date:                         July                30,                2007 | By:    | /s/                John L. McManus                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                   |   | John                L. McManusPresident                and Chief Executive Officer(Principal                Executive Officer)                                             |
|                                                                                                                                                                                                   |   |                                                                                                                                                                       |
| Date:                         July                30,                2007 | By:    | /s/                Michael P. McManus                                                                                                                                      |
|                                                                                                                                                                                                   |   | Michael                P. McManusChief                Financial Officer, Treasurer and Secretary(Principal                Financial and Accounting                Officer) |