**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**Form        10-QSB**

| þ   | QUARTERLY                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                  OF                  1934 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

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

| Idaho                                                                                                        | 04-3413196                                            |
|--------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| (State                  or other jurisdiction of incorporation or                  organization)   | (I.R.S.                  Employer Identification No.) |

**310        Authority Drive**

**Fitchburg,        MA 01420**

**(978)        696-0020**

| **Title                  of class**                           | **Name                  of Exchange on Which Registered** |
|---------------------------------------------------------------|-----------------------------------------------------------|
|  Common                  Stock, par value $.01 per share |  None                                                |
|  2006                  Common Stock Purchase Warrants    |  None                                                |

**APPLICABLE        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE        YEARS**

**APPLICABLE        ONLY TO CORPORATE ISSUERS**

----

**INTEGRATED        PHARMACEUTICALS, INC.**

**FORM        10-QSB**

**TABLE        OF CONTENTS**

|                                                                                                     | **PAGE** |
|----------------------------------------------------------------------------------------------------------|----------|
|                                                                                                     |     |
| **PART                    I. FINANCIAL INFORMATION**                                                     | 2        |
|                                                                                                     |     |
| ITEM                    1 Financial Statements                                                           | 2        |
|                                                                                                     |     |
| ITEM                    2 Management's Discussion and Analysis                                           | 14       |
|                                                                                                     |     |
| ITEM                    3 Controls and Procedures                                                        | 14       |
|                                                                                                     |     |
|                                                                                                     |     |
| **PART                    II. - OTHER INFORMATION**                                                      | 14       |
|                                                                                                     |     |
| ITEM                    1 Legal Proceedings                                                              | 14       |
|                                                                                                     |     |
| ITEM                    2 Unregistered Sales of Equity Securities and Use of                    Proceeds | 15       |
|                                                                                                     |          |
| ITEM                    3 Default Upon Senior Securities                                                 | 15       |
|                                                                                                     |     |
| ITEM                    4 Submission of Matters to a Vote of Security Holders                            | 15       |
|                                                                                                     |     |
| ITEM                    5 Other Information                                                              | 15       |
|                                                                                                     |     |
| ITEM                    6 Exhibits and Reports on Form 8-K                                               | 16       |

**NOTE        REGARDING FORWARD-LOOKING STATEMENTS **

**Except        for statements of historical fact, certain information described in this        document contains “forward-looking statements” that involve substantial risks        and uncertainties. You can identify these statements by forward-looking words        such as "anticipate," "believe," "could," "estimate," "expect," "intend,"        "may,"        "should," "will" and "would" or similar words. You should read the statements        that contain these words carefully because these statements discuss our future        expectations, contain projections of our future results of operations or        of our        financial position or state other "forward-looking" information. Integrated        Pharmaceuticals, Inc. believes that it is important to communicate our future        expectations to our investors. However, there may be events in the future        that        we are not able to accurately predict or control. The factors listed below        in        the section captioned "Risk Factors," within the section “Description of        Business” as well as any cautionary language in this Form, provide examples of        risks, uncertainties and events that may cause our actual results and        achievements expressed or implied to differ materially from the expectations        we        described in our forward-looking statements. Integrated Pharmaceuticals,        Inc.        believes that before you invest in our common stock, you should be aware        that        the occurrence of the events described in these risk factors and elsewhere        in        this Form could have a material adverse effect on our business, results of        operations and financial position.**

----

**PART        I**

**ITEM        1.**
**Financial        Statements**

----

| **INTEGRATED                    PHARMACEUTICALS, INC.**                    |   |                          |       |                             |   |
|----------------------------------------------------------------------------|--------|------------------------------------|------------|---------------------------------------|--------|
| **(A                    Development Stage Company)**                       |   |                          |       |                             |   |
| **BALANCE                    SHEETS**                                      |   |                          |       |                             |   |
|                                                                       |   |                          |       |                             |   |
|                                                                       |   |  March                    31, |       |                             |   |
|                                                                       |   |  2005                         |       |  December                    31, |   |
|                                                                       |   |  (unaudited)                  |       |  2004                            |   |
|                                                                       |   |                          |       |                             |   |
| **ASSETS**                                                                 |   |                          |       |                             |   |
| CURRENT                    ASSETS                                          |   |                          |       |                             |   |
| Cash                                                                  |   | $                                  | 440,171    |                                  | $      | 1,461,708 |   |
| Accounts                    receivable                                |   |                               | 14,650     |                                  |   | - |   |
| Inventory                                                             |   |                               | 125,246    |                                  |   | 83,558 |   |
| Prepaid                    expenses                                   |   |                               | 64,941     |                                  |   | 42,543 |   |
| Total                    Current Assets                                    |   |                               | 645,008    |                                  |   | 1,587,809 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| PROPERTY                    AND EQUIPMENT, net                             |   |                               | 2,135,259  |                                  |   | 2,075,001 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| OTHER                    ASSETS                                            |   |                               |       |                                  |   |   |   |
| Investments                                                           |   |                               | 1,670      |                                  |   | 2,000 |   |
| Deposits                                                              |   |                               | 763        |                                  |   | 763 |   |
| Total                    Other Assets                                      |   |                               | 2,433      |                                  |   | 2,763 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| **TOTAL                    ASSETS**                                        |   | $                                  | 2,782,700  |                                  | $      | 3,665,573 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| **LIABILITIES                    AND STOCKHOLDERS' EQUITY**                |   |                               |       |                                  |   |   |   |
| CURRENT                    LIABILITIES                                     |   |                               |       |                                  |   |   |   |
| Accounts                    payable                                   |   | $                                  | 147,967    |                                  | $      | 269,030 |   |
| Accrued                    expenses                                   |   |                               | 71,590     |                                  |   | 114,709 |   |
| Capital                    leases payable - current portion           |   |                               | 3,904      |                                  |   | 4,646 |   |
| Total                    Current Liabilities                               |   |                               | 223,461    |                                  |   | 388,385 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
|                                                                       |   |                               |       |                                  |   |   |   |
|  Total                    Liabilities                                 |   |                               | 223,461    |                                  |   | 388,385 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| COMMITMENTS                    AND CONTINGENCIES                           |   |                               | -          |                                  |   | - |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| STOCKHOLDERS'                    EQUITY                                    |   |                               |       |                                  |   |   |   |
| Preferred                    stock, $0.10 par value, 20,000 shares    |   |                               |       |                                  |   |   |   |
|  authorized;                    no shares issued                      |   |                               | -          |                                  |   | - |   |
| Common                    stock, $0.01 par value, 75,000,000 shares   |   |                               |       |                                  |   |   |   |
|  authorized;                    16,500,393 and 16,443,500 shares      |   |                               |       |                                  |   |   |   |
|  issued                    and outstanding, respectively              |   |                               | 165,004    |                                  |   | 164,435 |   |
| Additional                    paid-in capital                         |   |                               | 5,724,142  |                                  |   | 5,609,581 |   |
| Other                    comprehensive income (loss)                  |   |                               | (350       | )                                     |   | (20 | ) |
| Stock                    options and warrants                         |   |                               | 6,936,763  |                                  |   | 6,613,509 |   |
| Accumulated                    deficit prior to development stage     |   |                               | (494,624   | )                                     |   | (494,624 | ) |
| Accumulated                    deficit during development stage       |   |                               | (9,771,696 | )                                     |   | (8,615,693 | ) |
|                                                                       |   |                               |       |                                  |   |   |   |
| Total                    Stockholders' Equity                              |   |                               | 2,559,239  |                                  |   | 3,277,188 |   |
|                                                                       |   |                               |       |                                  |   |   |   |
| **TOTAL                    LIABILITIES AND**                               |   |                               |       |                                  |   |   |   |
| **STOCKHOLDERS'                    EQUITY**                           |   | $                                  | 2,782,700  |                                  | $      | 3,665,573 |   |

----

| **INTEGRATED                      PHARMACEUTICALS, INC.**            |   |                                     |       |                                     |   |                                     |   |
|----------------------------------------------------------------------|--------|-----------------------------------------------|------------|-----------------------------------------------|--------|-----------------------------------------------|--------|
| **(A                      Development Stage Company)**               |   |                                     |       |                                     |   |                                     |   |
| **STATEMENTS                      OF OPERATIONS**                    |   |                                     |       |                                     |   |                                     |   |
|                                                                 |   |                                     |       |                                     |   |                                     |   |
|                                                                 |   |                                     |       |                                     |   |  Period                      from        |   |
|                                                                 |   |                                     |       |                                     |   |  February                      1, 2003   |   |
|                                                                 |   |                                     |       |                                     |   |  (inception                      of      |   |
|                                                                 |   |  Three                      Months Ended |       |  Three                      Months Ended |   |  development                      stage) |   |
|                                                                 |   |  March                      31, 2005     |       |  March                      31, 2004     |   |  to                      March 31, 2005  |   |
|                                                                 |   |  (unaudited)                             |       |  (unaudited)                             |   |  (unaudited)                             |   |
|                                                                 |   |                                     |       |                                     |   |                                     |   |
| REVENUES                                                             |   | $                                             | 34,650     |                                          | $      | -                                             |   | $ | 34,650 |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| COST                      OF GOODS SOLD                              |   |                                          |       |                                          |   |                                          |   |   |   |   |
| Materials                      and supplies                     |   |                                          | 5,694      |                                          |   | -                                             |   |   | 5,694 |   |
| Total                      Cost of Goods Sold                        |   |                                          | 5,694      |                                          |   | -                                             |   |   | 5,694 |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| GROSS                      PROFIT                                    |   |                                          | 28,956     |                                          |   | -                                             |   |   | 28,956 |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| GENERAL                      AND ADMINISTRATIVE EXPENSES             |   |                                          |       |                                          |   |                                          |   |   |   |   |
| Depreciation                      and amortization              |   |                                          | 62,030     |                                          |   | 13,422                                        |   |   | 326,746 |   |
| Research                      and development                   |   |                                          | 85,323     |                                          |   | 130,722                                       |   |   | 558,076 |   |
| Marketing                                                       |   |                                          | 72,047     |                                          |   | 137,926                                       |   |   | 431,704 |   |
| Legal                      and professional fees                |   |                                          | 78,091     |                                          |   | 62,634                                        |   |   | 801,568 |   |
| Consulting                                                      |   |                                          | 201,529    |                                          |   | 1,430,250                                     |   |   | 2,678,928 |   |
| Idle                      facility expense                      |   |                                          | 329,127    |                                          |   | -                                             |   |   | 737,017 |   |
| Occupancy                                                       |   |                                          | 103,190    |                                          |   | 100,922                                       |   |   | 870,623 |   |
| Labor                      and benefits                         |   |                                          | 69,519     |                                          |   | 86,689                                        |   |   | 573,510 |   |
| Services                      paid by stock options             |   |                                          | 134,025    |                                          |   | -                                             |   |   | 805,090 |   |
| Office                      supplies and expenses               |   |                                          | 11,228     |                                          |   | 28,098                                        |   |   | 135,577 |   |
| Travel                                                          |   |                                          | 12,926     |                                          |   | 12,630                                        |   |   | 156,161 |   |
| Other                      general and administrative expenses  |   |                                          | 26,495     |                                          |   | 29,899                                        |   |   | 314,584 |   |
| Total                      General and Administrative Expenses       |   |                                          | 1,185,530  |                                          |   | 2,033,192                                     |   |   | 8,389,584 |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| OPERATING                      LOSS                                  |   |                                          | (1,156,574 | )                                             |   | (2,033,192                                    | )      |   | (8,360,628 | ) |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| OTHER                      INCOME (EXPENSES)                         |   |                                          |       |                                          |   |                                          |   |   |   |   |
| Interest                      income                            |   |                                          | 816        |                                          |   | 1,408                                         |   |   | 9,728 |   |
| Interest                      expense                           |   |                                          | (245       | )                                             |   | (156,270                                      | )      |   | (1,415,236 | ) |
| Miscellaneous                      income (expense)             |   |                                          | -          |                                          |   | 1,300                                         |   |   | (5,560 | ) |
| Total                      Other Income and Expenses                 |   |                                          | 571        |                                          |   | (153,562                                      | )      |   | (1,411,068 | ) |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| LOSS                      BEFORE TAXES                               |   |                                          | (1,156,003 | )                                             |   | (2,186,754                                    | )      |   | (9,771,696 | ) |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| INCOME                      TAXES                                    |   |                                          | -          |                                          |   | -                                             |   |   | - |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| NET                      LOSS                                        |   |                                          | (1,156,003 | )                                             |   | (2,186,754                                    | )      |   | (9,771,696 | ) |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| OTHER                      COMPREHENSIVE INCOME (LOSS)               |   |                                          |       |                                          |   |                                          |   |   |   |   |
| Unrealized                      gain (loss) in market value of  |   |                                          |       |                                          |   |                                          |   |   |   |   |
| investments                                                          |   |                                          | 80         |                                          |   | -                                             |   |   | 60 |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| COMPREHENSIVE                      LOSS                              |   | $                                             | (1,155,923 | )                                             | $      | (2,186,754                                    | )      | $ | (9,771,636 | ) |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| NET                      INCOME (LOSS) PER COMMON SHARE,             |   |                                          |       |                                          |   |                                          |   |   |   |   |
| BASIC                      AND DILUTED                          |   | $                                             | (0.07      | )                                             | $      | (0.16                                         | )      |   |   |   |
|                                                                 |   |                                          |       |                                          |   |                                          |   |   |   |   |
| WEIGHTED                      AVERAGE NUMBER OF COMMON               |   |                                          |       |                                          |   |                                          |   |   |   |   |
| SHARES                      OUTSTANDING, BASIC AND DILUTED      |   |                                          | 16,479,544 |                                          |   | 13,323,858                                    |   |   |   |   |

----

| INTEGRATED                          PHARMACEUTICALS,                          INC.                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                          Development Stage                          Company)**                 |
| **STATEMENT                        OF STOCKHOLDERS'                        EQUITY**                                                         |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                |   |   |   |    |   |    |   |    |   |    |   | Accumulated |   |    |   |    |   |    |   |
|                                                                                                                                                                                |   |   |   |    |   |    |   |    |   |    |   | Deficit |   | Accumulated   |   |  Accumulated |   |    |   |
|                                                                                                                                                                                |   | Common                        Stock    |   |  Additional |   |    |   |    |   | Prior                        to |   | Deficit                        During |   |  Other |   |    |   |
|                                                                                                                                                                                |   | Number |   |    |   |  Paid-in |   |  Discount                        on |   |  Stock                        Options |   | Development |   | Development  |   |  Comprehensive |   |    |   |
|                                                                                                                                                                                |   | of                        Shares |   |  Amount |   |  Capital |   |  Common                        Stock |   |  and                        Warrants |   |                          Stage |   |                          Stage |   |  Loss |   | Total |   |
|                                                                                                                                                                                |   |   |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |
| Balance,                        December 31, 2002                                                                                                                                   |   |   | 7,646,250 |   | $ | 76,463 |   | $ | 173,059 |   | $ | (240,000 | ) | $ | - |   | $ | (417,775 | ) | $ | - |   | $ | - |   | $ | (408,253 | ) |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                        issued at an average price of                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.01                        per share as an incentive                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                        notes payable                                                                                                                                            |   |   | 516,250 |   |   | 5,162 |   |   | 514,425 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 519,587 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                        issued at an average price of                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.50                        per share in exchange                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                        services and asset purchases                                                                                                                             |   |   | 160,719 |   |   | 1,607 |   |   | 77,918 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 79,525 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                        issued at an average price of                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $1.00                        per share in exchange                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                        rent expense                                                                                                                                             |   |   | 35,240 |   |   | 352 |   |   | 59,014 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 59,366 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Value                        of options vested during the                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| period                                                                                                                                                                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 12,520 |   |   | - |   |   | - |   |   | - |   |   | 12,520 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants                        issued as incentive for                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| notes                        payable                                                                                                                                                |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 328,100 |   |   | - |   |   | - |   |   | - |   |   | 328,100 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants                        issued for services                                                                                                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 180,040 |   |   | - |   |   | - |   |   | - |   |   | 180,040 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payment                        of accounts payable by                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shareholder                                                                                                                                                                         |   |   | - |   |   | - |   |   | 27,767 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 27,767 |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Close                        discount on common stock                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                        additional paid-in capital                                                                                                                                |   |   | - |   |   | - |   |   | (240,000 | ) |   | 240,000 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                        loss on market value                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                        investment                                                                                                                                                |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (100 | ) |   | (100 | ) |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                        loss for the year ended                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December                        31, 2003                                                                                                                                            |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (76,849 | ) |   | (1,123,977 | ) |   | - |   |   | (1,200,826 | ) |
|                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                        December 31, 2003                                                                                                                                   |   |   | 8,358,459 |   | $ | 83,584 |   | $ | 612,183 |   | $ | - |   | $ | 520,660 |   | $ | (494,624 | ) | $ | (1,123,977 | ) | $ | (100 | ) | $ | (402,274 | ) |

----

| INTEGRATED                          PHARMACEUTICALS,                          INC.                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                          Development Stage                          Company)**                     |
| **STATEMENT                          OF STOCKHOLDERS'                          EQUITY**                 |
|                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    |   |   |   |    |   |    |   |    |   |    |   | Accumulated |   |    |   |    |   |    |   |
|                                                                                                                                                                                    |   |   |   |    |   |    |   |    |   |    |   | Deficit |   | Accumulated   |   |  Accumulated |   |    |   |
|                                                                                                                                                                                    |   | Common                          Stock    |   |  Additional |   |    |   |    |   | Prior                          to |   | Deficit                          During |   |  Other |   |    |   |
|                                                                                                                                                                                    |   | Number |   |    |   |  Paid-in |   |  Discount                          on |   |  Stock                          Options |   | Development |   | Development  |   |  Comprehensive |   |    |   |
|                                                                                                                                                                                    |   | of                          Shares |   |  Amount |   |  Capital |   |  Common                          Stock |   |  and                          Warrants |   |                            Stage |   |                            Stage |   |  Loss |   | Total |   |

|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
|---------------------------------------------------------------------|--------|--------|------------|--------|--------|---------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|----------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|
| Balance,                          December 31, 2003                 |   |   | 8,358,459  |   | $      | 83,584  |   | $      | 612,183   |   | $      | -      |   | $      | 520,660   |   | $      | (494,624 | )      | $      | (1,123,977 | )      | $      | (100   | )      | $      | (402,274   | )      |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          and warrants issued as incentive     |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| for                          notes payable                          |   |   | 194,950    |   |   | 1,950   |   |   | 165,708   |   |   | -      |   |   | 222,243   |   |   | -        |   |   | -          |   |   | -      |   |   | 389,901    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Value                          of warrants vested during the period |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | 1,616,673 |   |   | -        |   |   | -          |   |   | -      |   |   | 1,616,673  |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Value                          of options vested during the period  |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | 658,545   |   |   | -        |   |   | -          |   |   | -      |   |   | 658,545    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average of $2.63 per    |   |   | 84,701     |   |   | 847     |   |   | 221,662   |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 222,509    |   |
| share                          in exchange for legal services.      |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average of $2.14 per    |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| share                          in exchange for services.            |   |   | 292,083    |   |   | 2,921   |   |   | 622,391   |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 625,312    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average price of        |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| $2.78                          per share in exchange                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| for                          rent expense                           |   |   | 132,610    |   |   | 1,326   |   |   | 367,967   |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 369,293    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued for purchase of assets        |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| at                          $1.88 per share                         |   |   | 9,974      |   |   | 100     |   |   | 18,639    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 18,739     |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          and warrants issued for cash at      |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| an                          average price of $0.95 per              |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| unit,                          less expenses of $126,000            |   |   | 5,896,000  |   |   | 58,960  |   |   | 1,967,135 |   |   | -      |   |   | 3,568,905 |   |   | -        |   |   | -          |   |   | -      |   |   | 5,595,000  |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          and warrants issued for              |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| convertible                          debt plus interest at          |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| prices                          ranging from $0.75 to               |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| $1.25                          per unit                             |   |   | 1,434,723  |   |   | 14,347  |   |   | 1,572,246 |   |   | -      |   |   | 26,483    |   |   | -        |   |   | -          |   |   | -      |   |   | 1,613,076  |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued for securities at             |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| $1.00                          per share                            |   |   | 25,000     |   |   | 250     |   |   | 24,750    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 25,000     |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued for cash at                   |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| $2.47                          per share                            |   |   | 15,000     |   |   | 150     |   |   | 36,900    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 37,050     |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Unrealized                          gain on market value of         |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| investment                                                          |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | 80     |   |   | 80         |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Net                          loss for the year ended                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| December                          31, 2004                          |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | -         |   |   | -        |   |   | (7,491,716 | )      |   | -      |   |   | (7,491,716 | )      |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Balance,                          December 31, 2004                 |   |   | 16,443,500 |   | $      | 164,435 |   | $      | 5,609,581 |   | $      | -      |   | $      | 6,613,509 |   | $      | (494,624 | )      | $      | (8,615,693 | )      | $      | (20    | )      | $      | 3,277,188  |   |

----

| **INTEGRATED                            PHARMACEUTICALS,                            INC.**                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                            Development Stage                            Company)**                     |
| **STATEMENT                            OF STOCKHOLDERS'                            EQUITY**                 |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                        |   |   |   |    |   |    |   |    |   |    |   | Accumulated |   |    |   |    |   |    |   |
|                                                                                                                                                                                        |   |   |   |    |   |    |   |    |   |    |   | Deficit |   | Accumulated   |   |  Accumulated |   |    |   |
|                                                                                                                                                                                        |   | Common                            Stock    |   |  Additional |   |    |   |    |   | Prior                            to |   | Deficit                            During |   |  Other |   |    |   |
|                                                                                                                                                                                        |   | Number |   |    |   |  Paid-in |   |  Discount                            on |   |  Stock                            Options |   | Development |   | Development  |   |  Comprehensive |   |    |   |
|                                                                                                                                                                                        |   | of                            Shares |   |  Amount |   |  Capital |   |  Common                            Stock |   |  and                            Warrants |   |                              Stage |   |                              Stage |   |  Loss |   | Total |   |
|                                                                                                                                                                                        |

| Balance,                          December 31, 2004                 |   |   | 16,443,500 |   | $      | 164,435 |   | $      | 5,609,581 |   | $      | -      |   | $      | 6,613,509 |   | $      | (494,624 | )      | $      | (8,615,693 | )      | $      | (20    | )      | $      | 3,277,188  |   |
|---------------------------------------------------------------------|--------|--------|------------|--------|--------|---------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|----------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average of $2.09 per    |   |   | 8,715      |   |   | 87      |   |   | 18,140    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 18,227     |   |
| share                          in exchange for legal services.      |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average price of        |   |   | 33,810     |   |   | 338     |   |   | 71,565    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 71,903     |   |
| $2.13                          per share in exchange                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| for                          rent expense                           |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Stock                          issued at an average of $1.74 per    |   |   | 14,368     |   |   | 144     |   |   | 24,856    |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | -      |   |   | 25,000     |   |
| share                          in exchange for consulting/BOD       |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| services.                                                           |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Value                          of warrants vested during the period |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | 189,229   |   |   | -        |   |   | -          |   |   | -      |   |   | 189,229    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Value                          of options vested during the period  |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | 134,025   |   |   | -        |   |   | -          |   |   | -      |   |   | 134,025    |   |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Unrealized                          loss on market value of         |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| investment                                                          |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | -         |   |   | -        |   |   | -          |   |   | (330   | )      |   | (330       | )      |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Net                          loss for the period ended              |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| March                          31, 2005 (unaudited)                 |   |   | -          |   |   | -       |   |   | -         |   |   | -      |   |   | -         |   |   | -        |   |   | (1,156,003 | )      |   | -      |   |   | (1,156,003 | )      |
|                                                                |   |   |       |   |   |    |   |   |      |   |   |   |   |   |      |   |   |     |   |   |       |   |   |   |   |   |       |   |
| Balance,                          March 31, 2005 (unaudited)        |   |   | 16,500,393 |   | $      | 165,004 |   | $      | 5,724,142 |   | $      | -      |   | $      | 6,936,763 |   | $      | (494,624 | )      | $      | (9,771,696 | )      | $      | (350   | )      | $      | 2,559,239  |   |

----

| **INTEGRATED                      PHARMACEUTICALS, INC.**                                                       |   |                                 |       |                                 |   |                                     |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|------------|-------------------------------------------|--------|-----------------------------------------------|--------|
| **(A                      Development Stage Company)**                                                          |   |                                 |       |                                 |   |                                     |   |
| **STATEMENTS                      OF CASH FLOWS**                                                               |   |                                 |       |                                 |   |                                     |   |
|                                                                                                            |   |                                 |       |                                 |   |                                     |   |
|                                                                                                            |   |                                 |       |                                 |   |  Period                      from        |   |
|                                                                                                            |   |                                 |       |                                 |   |  February                      1, 2003   |   |
|                                                                                                            |   |                                 |       |                                 |   |  (inception                      of      |   |
|                                                                                                            |   |  Period                      Ended   |       |  Period                      Ended   |   |  development                      stage) |   |
|                                                                                                            |   |  March                      31, 2005 |       |  March                      31, 2004 |   |  to                      March 31, 2005  |   |
|                                                                                                            |   |  (unaudited)                         |       |  (unaudited)                         |   |  (unaudited)                             |   |
| CASH                      FLOWS FROM OPERATING ACTIVITIES:                                                      |   |                                 |       |                                 |   |                                     |   |
| Net                      income (loss)                                                                     |   | $                                         | (1,156,003 | )                                         | $      | (2,186,754                                    | )      | $ | (9,771,696 | ) |
| Adjustments                      to reconcile net income (loss) to net cash                                |   |                                      |       |                                      |   |                                          |   |   |   |   |
| flows                      provided (used) by operating activities:                                        |   |                                      |       |                                      |   |                                          |   |   |   |   |
|  Depreciation                                                                                              |   |                                      | 129,244    |                                      |   | 13,422                                        |   |   | 393,920 |   |
|  Loss                      on disposition of assets                                                        |   |                                      | -          |                                      |   | -                                             |   |   | 7,024 |   |
|  Stock                      and warrants issued as incentive for notes payables                            |   |                                      | -          |                                      |   | 167,657                                       |   |   | 496,389 |   |
|  Stock                      issued for interest expense                                                    |   |                                      | -          |                                      |   | -                                             |   |   | 149,878 |   |
|  Stock                      issued for rent expense                                                        |   |                                      | 71,903     |                                      |   | -                                             |   |   | 500,562 |   |
|  Stock                      issued for services                                                            |   |                                      | 43,227     |                                      |   | 579,217                                       |   |   | 970,573 |   |
|  Stock                      issued for assets and securities                                               |   |                                      | -          |                                      |   | -                                             |   |   | 43,739 |   |
|  Stock                      options and warrants vested                                                    |   |                                      | 323,254    |                                      |   | -                                             |   |   | 2,598,472 |   |
|  Recognition                      of noncash deferred financing expense                                    |   |                                      | -          |                                      |   | -                                             |   |   | 578,699 |   |
|  Options                      and warrants issued for services and financing                               |   |                                      | -          |                                      |   | 877,500                                       |   |   | 253,753 |   |
|  Noncash                      recovery of other income                                                     |   |                                      | -          |                                      |   | -                                             |   |   | (1,850 | ) |
| Changes                      in assets and liabilities:                                                    |   |                                      | -          |                                      |   | -                                             |   |   |   |   |
|  Receivables                                                                                               |   |                                      | (14,650    | )                                         |   | -                                             |   |   | 1,434 |   |
|  Inventory                                                                                                 |   |                                      | (41,688    | )                                         |   | (41,200                                       | )      |   | (125,246 | ) |
|  Prepaid                      expenses                                                                     |   |                                      | (22,398    | )                                         |   | 47,136                                        |   |   | 82,618 |   |
|  Other                      assets                                                                         |   |                                      | -          |                                      |   | -                                             |   |   | 5,607 |   |
|  Accounts                      payable                                                                     |   |                                      | (121,063   | )                                         |   | 10,627                                        |   |   | 49,420 |   |
|  Accrued                      expenses                                                                     |   |                                      | (43,119    | )                                         |   | 41,480                                        |   |   | (111,393 | ) |
| Net                      cash used by operating activities                                                 |   |                                      | (831,293   | )                                         |   | (490,915                                      | )      |   | (3,878,097 | ) |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| CASH                      FLOWS FROM INVESTING ACTIVITIES:                                                      |   |                                      |       |                                      |   |                                          |   |   |   |   |
|  Purchase                      of fixed assets                                                             |   |                                      | (189,502   | )                                         |   | (339,055                                      | )      |   | (2,664,274 | ) |
|  Leasehold                      concessions received                                                       |   |                                      | -          |                                      |   | -                                             |   |   | 185,000 |   |
| Net                      cash used by investing activities                                                 |   |                                      | (189,502   | )                                         |   | (339,055                                      | )      |   | (2,479,274 | ) |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| CASH                      FLOWS FROM FINANCING ACTIVITIES:                                                      |   |                                      |       |                                      |   |                                          |   |   |   |   |
|  Sale                      of common stock units                                                           |   |                                      | -          |                                      |   | 4,322,000                                     |   |   | 5,632,050 |   |
|  Payments                      on capital leases                                                           |   |                                      | (742       | )                                         |   | (873                                          | )      |   | (5,659 | ) |
|  Payments                      on related party loans                                                      |   |                                      | -          |                                      |   | (10,561                                       | )      |   | (56,701 | ) |
|  Proceeds                      from convertible debt                                                       |   |                                      | -          |                                      |   | 389,900                                       |   |   | 939,900 |   |
|  Applicable                      beneficial conversion allocated to warrants                               |   |                                      | -          |                                      |   | (67,035                                       | )      |   | - |   |
| Net                      cash provided by financing activities                                             |   |                                      | (742       | )                                         |   | 4,633,431                                     |   |   | 6,509,590 |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| Net                      increase in cash                                                                       |   |                                      | (1,021,537 | )                                         |   | 3,803,461                                     |   |   | 152,219 |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| Cash,                      beginning of period                                                                  |   |                                      | 1,461,708  |                                      |   | 253,940                                       |   |   | 287,952 |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| Cash,                      end of period                                                                        |   | $                                         | 440,171    |                                      | $      | 4,057,401                                     |   | $ | 440,171 |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| SUPPLEMENTAL                      CASH FLOW DISCLOSURES:                                                        |   |                                      |       |                                      |   |                                          |   |   |   |   |
| Income                      taxes paid                                                                     |   | $                                         | -          |                                      | $      | -                                             |   | $ | - |   |
| Interest                      paid                                                                         |   | $                                         | -          |                                      | $      | -                                             |   | $ | 25,000 |   |
|                                                                                                            |   |                                      |       |                                      |   |                                          |   |   |   |   |
| NON-CASH                      INVESTING AND FINANCING:                                                          |   |                                      |       |                                      |   |                                          |   |   |   |   |
| Stock                      options and warrants vested                                                     |   | $                                         | 323,254    |                                      | $      | -                                             |   | $ | 2,598,472 |   |
| Stock                      and warrants issued for convertible debt                                        |   | $                                         | -          |                                      | $      | -                                             |   | $ | 1,613,076 |   |
| Stock                      issued for assets and securities                                                |   | $                                         | -          |                                      | $      | 12,178                                        |   | $ | 43,739 |   |
| Stock                      issued as deferred incentive for notes payables                                 |   | $                                         | -          |                                      | $      | 167,657                                       |   | $ | 519,587 |   |
| Stock                      issued for rent expense                                                         |   | $                                         | 71,903     |                                      | $      | -                                             |   | $ | 500,562 |   |
| Stock                      and warrants issued for services                                                |   | $                                         | 43,227     |                                      | $      | 579,217                                       |   | $ | 970,573 |   |
| Warrants                      and options issued for deferred services and                      financing  |   | $                                         | -          |                                      | $      | 877,500                                       |   | $ | 520,102 |   |
| Accounts                      payable paid by contributed capital                                          |   | $                                         | -          |                                      | $      | -                                             |   | $ | 27,767 |   |
| Noncash                      recovery of other income                                                      |   | $                                         | -          |                                      | $      | -                                             |   | $ | 1,850 |   |

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**NOTE          1 - BUSINESS ORGANIZATION AND BASIS OF PRESENTATION**

**NOTE        2 - LIMITED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

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**NOTE        3 - PROPERTY AND EQUIPMENT**

|                                            |   | 2005   |      | 2004   |   |
|-------------------------------------------------|--------|--------|-----------|--------|--------|
| Equipment                                       |   | $      | 1,729,654 |   | $      | 1,609,268 |   |
| Furniture                  and fixtures         |   |   | 120,113   |   |   | 106,809 |   |
| Leasehold                  improvements         |   |   | 817,849   |   |   | 762,036 |   |
|                                            |   |   | 2,667,616 |   |   | 2,478,113 |   |
| Less:                  Accumulated depreciation |   |   | (532,357  | )      |   | (403,112 | ) |
| Total                                           |   | $      | 2,135,259 |   | $      | 2,075,001 |   |

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**NOTE        4 - CAPITAL STOCK**

**NOTE        5 - COMMON STOCK OPTIONS AND WARRANTS**

| Plan                                                                       |   | Number                  of securities to be issued upon exercise of outstandingoptions |      | Weighted-average                  exercise price of outstanding options |   | Number                  of securities remaining available for future issuance under equity                  compensation plans |   |
|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|-----------|-------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                       |   |                                                                                   |      |                                                                    |   |                                                                                                                           |   |
| Equity                  compensation plan approved by security holders (1) |   |                                                                                   | 1,273,000 |                                                                    | $      | 0.94                                                                                                                           |   |   | 327,000 |   |
|                                                                       |   |                                                                                   |      |                                                                    |   |                                                                                                                           |   |   |   |   |
| Total                                                                      |   |                                                                                   | 1,273,000 |                                                                    |   |                                                                                                                           |   |   | 327,000 |   |

|                                                                    |   | Number                  of Shares |      | Weighted                  Average Exercise Price |   |
|-------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------------------------------------------------|--------|
| Outstanding                  at December 31, 2003                       |   |                              | 690,000   |                                             | $      | 0.25 |   |
| Granted                                                                 |   |                              | 668,000   |                                             |   | 1.61 |   |
| Exercised                                                               |   |                              | -         |                                             |   | - |   |
| Rescinded                                                               |   |                              | (75,000   | )                                                |   | - |   |
| Outstanding                  at December 31, 2004                       |   |                              | 1,283,000 |                                             |   | 0.96 |   |
| Granted                                                                 |   |                              | -         |                                             |   | - |   |
| Exercised                                                               |   |                              | -         |                                             |   | - |   |
| Rescinded                                                               |   |                              | (10,000   | )                                                |   | 2.88 |   |
| Options                  outstanding at March 31, 2005                  |   |                              | 1,273,000 |                                             | $      | 0.94 |   |
| Options                  exercisable at March 31, 2005                  |   |                              | 501,000   |                                             | $      | 0.65 |   |
| Weighted                  average fair value of options granted in 2005 |   |                              |      |                                             |   | - |   |

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**NOTE        6 - CONCENTRATIONS**

**NOTE        7 - COMMITMENTS AND CONTINGENCIES**

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**NOTE        8 -SUBSEQUENT EVENTS**

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**Item        2 **
**Management’s        Discussion and Analysis **

**Item        3. Controls and Procedures**

**PART        II. - OTHER INFORMATION**

**Item        1. Legal Proceedings.**

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**ITEM        2**
**Unregistered        Sales of Equity Securities and Use of Proceeds**

**ITEM        3 Default Upon Senior Securities**

**Item        4. Submission of Matters to a Vote of Security Holders.**

**Item        5. Other Information.**

**ITEM        6 Exhibits and Reports on Form 8-K **

| **Number** | **Description                  of Exhibit**                                                                                                                                                                                                                                          |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1        | Amended                  and Restated Articles of Incorporation of Integrated Pharmaceuticals,                  Inc.                  (1)                                                                                                                                            |
| 3.2        | Amended                  and Restated Bylaws of Integrated Pharmaceuticals, Inc.                  (2)                                                                                                                                                                                |
| 4.1        | Specimen                  Certificate for Integrated Pharmaceuticals, Inc. Common Stock,                  par value                  $.01 per share (2)                                                                                                                              |
| 4.2        | Form                  of Common Stock Purchase Warrant (2)                                                                                                                                                                                                                           |
| 10.1       | Amended                  and Restated Patent License Agreement with NEC Partners                  (2)                                                                                                                                                                                |
| 10.2       | Lease                  Agreement with Chantilas Properties, LLC and Advanced Process                  Technologies, Inc. (2)                                                                                                                                                         |
| 10.3       | Assignment                  and Assumption of Lease(2)                                                                                                                                                                                                                               |
| 10.4       | Consulting                  and Warrant Agreements with James Czirr (2)                                                                                                                                                                                                              |
| 10.5       | 2002                  Stock Plan (2)                                                                                                                                                                                                                                                 |
| 10.6       | Registration                  Rights Agreement(2)                                                                                                                                                                                                                                    |
| 10.7       | First                  Amended and Restated Supply Agreement with Frag-Chem Corporation                  (3)                                                                                                                                                                         |
| 10.8       | Letter                  dated May 5, 2005 amending the Patent License Agreement with NEC                  Partners                  (3)                                                                                                                                              |
| 31         | Certification                  of the Chief Financial Officer of the Company as adopted pursuant                  to                  section 302 of the Sarbanes-Oxley Act of 2002                                                                                                  |
| 32         | Certification                  of the Chief Executive Officer and Chief Financial Officer of the                  Company                  pursuant to 18 U.S.C. section 1250 as adopted pursuant to section                  906 of                  the Sarbanes-Oxley Act of 2002 |

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**SIGNATURES**

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