----

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**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 |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

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

|   | For the quarterly period ended March              31, 2006 |
|--------|------------------------------------------------------------|

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

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

|   | For the transition period from ______________              to________________ |
|--------|-------------------------------------------------------------------------------|

| Commission              file number |                       000-50960 |   |   |
|-------------------------------------|-------------------------------------------------------------------------|--------|--------|
|                                |                                                                    |   |   |
|                                |                                                                    |   |   |

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| 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**

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**INTEGRATED      PHARMACEUTICALS, INC.**

**FORM      10-QSB**

**TABLE      OF CONTENTS**

|                                                                                                                   |   | **PAGE** |
|------------------------------------------------------------------------------------------------------------------------|--------|----------|
| **PART                  I. FINANCIAL INFORMATION**                                                                     |   | 2        |
|                                                                                                                   |   |     |
| ITEM                  1    Financial Statements                                                         |   | 2        |
|                                                                                                                   |   |     |
| ITEM                  2    Plan of Operation; Management's Discussion and                  Analysis     |   | 16       |
|                                                                                                                   |   |     |
| ITEM                  3    Controls and Procedures                                                      |   | 18       |
|                                                                                                                   |   |     |
|                                                                                                                   |   |     |
|                                                                                                                   |   | 18       |
| **PART                  II. - OTHER INFORMATION**                                                                      |   |     |
|                                                                                                                   |   |     |
| ITEM                  1    Legal Proceedings                                                            |   | 18       |
|                                                                                                                   |   |     |
| ITEM                  2    Unregistered Sales of Equity Securities and Use of                  Proceeds |   | 18       |
|                                                                                                                   |   |     |
| ITEM                  3    Default Upon Senior Securities                                               |   | 18       |
|                                                                                                                   |   |     |
| ITEM                  4    Submission of Matters to a Vote of Security                  Holders         |   | 18       |
|                                                                                                                   |   |     |
| ITEM                  5    Other Information                                                            |   | 18       |
|                                                                                                                   |   |     |
| ITEM                  6    Exhibits and Reports on Form 8-K                                             |   | 19       |
|                                                                                                                   |   |     |
|                                                                                                                   |   |     |
| SIGNATURES                                                                                                             |   | 20       |

**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.**

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**PART      I**

**Item      1.**
**Financial      Statements**

| 3 | Balance                Sheets As At March 31, 2006 and December 31,                2005 |
|---|-----------------------------------------------------------------------------------------|

| 4 | Statements                Of Operations And Income For The Three Months Ended March 31, 2006                and                2005 |
|---|-------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Statements                Of Cash Flows For The Three Months Ended March 31, 2006 and                2005 |
|---|-----------------------------------------------------------------------------------------------------------|

| 6 -              10 | Notes                To Financial Statements - March 31,                2006 |
|--------------------------|------------------------------------------------------------------------------|

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| **INTEGRATED                  PHARMACEUTICALS, INC.**                                                                                                                                      |   |                       |        |                     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|-------------|-------------------------------|--------|
| **(A                  Development Stage Company)**                                                                                                                                         |   |                       |        |                     |   |
| **BALANCE                  SHEETS**                                                                                                                                                        |   |                       |        |                     |   |
|                                                                                                                                                                                       |   |                       |        |                     |   |
|                                                                                                                                                                                       |   | March                  31, |        |                     |   |
|                                                                                                                                                                                       |   | 2006                       |        | December                  31, |   |
|                                                                                                                                                                                       |   | (unaudited)                |        | 2005                          |   |
| **ASSETS**                                                                                                                                                                                 |   |                       |        |                     |   |
| CURRENT                  ASSETS                                                                                                                                                            |   |                       |        |                     |   |
| Cash                                                                                                                                                                                  |   | $                          | 142,985     |                          | $      | 182,582 |   |
| Accounts                  receivable                                                                                                                                                  |   |                       | 50,897      |                          |   | 20,173 |   |
| Inventory                                                                                                                                                                             |   |                       | 111,148     |                          |   | 123,144 |   |
| Prepaid                  expenses                                                                                                                                                     |   |                       | 32,193      |                          |   | 58,220 |   |
|  Total                  Current Assets                                                                                                                                                |   |                       | 337,223     |                          |   | 384,119 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| PROPERTY                  AND EQUIPMENT, net                                                                                                                                               |   |                       | 1,612,456   |                          |   | 1,745,371 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| OTHER                  ASSETS                                                                                                                                                              |   |                       |        |                          |   |   |   |
| Investments                                                                                                                                                                           |   |                       | 2,530       |                          |   | 980 |   |
| Deposits                                                                                                                                                                              |   |                       | —     |                          |   | 763 |   |
| Patents,                  net of amortization                                                                                                                                         |   |                       | 75,033      |                          |   | 57,796 |   |
|  Total                  Other Assets                                                                                                                                                  |   |                       | 77,563      |                          |   | 59,539 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| **TOTAL                  ASSETS**                                                                                                                                                          |   | $                          | 2,027,242   |                          | $      | 2,189,029 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                                                                  |   |                       |        |                          |   |   |   |
| CURRENT                  LIABILITIES                                                                                                                                                       |   |                       |        |                          |   |   |   |
| Accounts                  payable                                                                                                                                                     |   | $                          | 156,524     |                          | $      | 179,662 |   |
| Accrued                  expenses                                                                                                                                                     |   |                       | 182,172     |                          |   | 176,118 |   |
| Related                  party short-term debt                                                                                                                                        |   |                       | 48,220      |                          |   | 52,815 |   |
| Capital                  leases payable - current portion                                                                                                                             |   |                       | —     |                          |   | 195 |   |
|  Total                  Current Liabilities                                                                                                                                           |   |                       | 386,916     |                          |   | 408,790 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| 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; 19,919,209 and 18,632,626 shares issued                  and outstanding, respectively |   |                       | 199,220     |                          |   | 186,326 |   |
| Additional                  paid-in capital                                                                                                                                           |   |                       | 7,009,232   |                          |   | 6,736,346 |   |
| Other                  comprehensive income (loss)                                                                                                                                    |   |                       | 510         |                          |   | (1,040 | ) |
| Stock                  options and warrants                                                                                                                                           |   |                       | 8,011,575   |                          |   | 7,824,142 |   |
| Accumulated                  deficit prior to development stage                                                                                                                       |   |                       | (494,624    | )                             |   | (494,624 | ) |
| Accumulated                  deficit during development stage                                                                                                                         |   |                       | (13,085,587 | )                             |   | (12,470,911 | ) |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
|  Total                  Stockholders' Equity                                                                                                                                          |   |                       | 1,640,326   |                          |   | 1,780,239 |   |
|                                                                                                                                                                                       |   |                       |        |                          |   |   |   |
| **TOTAL                    LIABILITIES AND STOCKHOLDERS'                    EQUITY**                                                                                                  |   | $                          | 2,027,242   |                          | $      | 2,189,029 |   |

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| **INTEGRATED                  PHARMACEUTICALS, INC.**                                                               |   |                           |       |                            |   |                                 |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------------------------------------|--------|-------------------------------------------|--------|
| **(A                  Development Stage Company)**                                                                  |   |                           |       |                            |   |                                 |   |
| **STATEMENTS                  OF OPERATIONS**                                                                       |   |                           |       |                            |   |                                 |   |
|                                                                                                                |   |                           |       |                            |   |                                 |   |
|                                                                                                                |   |                           |       |                            |   |  Period                  from        |   |
|                                                                                                                |   |                           |       |                            |   |  February                  1, 2003   |   |
|                                                                                                                |   | Three                  Months Ended |       |  (inception                  of |   |
|                                                                                                                |   |                           |       |                            |   |  development                  stage) |   |
|                                                                                                                |   | March                  31, 2006     |       | March                  31, 2005      |   |  to                  March 31, 2006  |   |
|                                                                                                                |   | (unaudited)                         |       | (unaudited)                          |   |  (unaudited)                         |   |
|                                                                                                                |   |                           |       |                            |   |                                 |   |
| REVENUES                                                                                                            |   | $                                   | 46,258     |                                 | $      | 34,650                                    |   | $ | 123,599 |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| COST                  OF GOODS SOLD                                                                                 |   |                                |       |                                 |   |                                      |   |   |   |   |
| Materials                  and supplies                                                                        |   |                                | 42,989     |                                 |   | 5,694                                     |   |   | 87,967 |   |
|  Total                  Cost of Goods Sold                                                                     |   |                                | 42,989     |                                 |   | 5,694                                     |   |   | 87,967 |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| GROSS                  PROFIT                                                                                       |   |                                | 3,269      |                                 |   | 28,956                                    |   |   | 35,632 |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| GENERAL                  AND ADMINISTRATIVE EXPENSES                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| Depreciation                  and amortization                                                                 |   |                                | 66,500     |                                 |   | 62,030                                    |   |   | 590,266 |   |
| Research                  and development                                                                      |   |                                | 43,010     |                                 |   | 85,323                                    |   |   | 792,104 |   |
| Marketing                                                                                                      |   |                                | 2,072      |                                 |   | 72,047                                    |   |   | 573,409 |   |
| Legal                  and professional fees                                                                   |   |                                | 46,222     |                                 |   | 78,091                                    |   |   | 1,025,000 |   |
| Consulting                                                                                                     |   |                                | 59,359     |                                 |   | 201,529                                   |   |   | 3,093,358 |   |
| Idle                  facility expense                                                                         |   |                                | 153,795    |                                 |   | 329,127                                   |   |   | 1,582,977 |   |
| Occupancy                                                                                                      |   |                                | 32,936     |                                 |   | 103,190                                   |   |   | 1,059,053 |   |
| Labor                  and benefits                                                                            |   |                                | 25,825     |                                 |   | 69,519                                    |   |   | 779,847 |   |
| Services                  paid by stock options                                                                |   |                                | 130,426    |                                 |   | 134,025                                   |   |   | 1,385,855 |   |
| Office                  supplies and expenses                                                                  |   |                                | 4,881      |                                 |   | 11,228                                    |   |   | 168,229 |   |
| Travel                                                                                                         |   |                                | 802        |                                 |   | 12,926                                    |   |   | 171,605 |   |
| Other                  general and administrative expenses                                                     |   |                                | 50,622     |                                 |   | 26,495                                    |   |   | 486,124 |   |
|  Total                  General and Administrative Expenses                                                    |   |                                | 616,450    |                                 |   | 1,185,530                                 |   |   | 11,707,827 |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| OPERATING                  INCOME (LOSS)                                                                            |   |                                | (613,181   | )                                    |   | (1,156,574                                | )      |   | (11,672,195 | ) |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| OTHER                  INCOME (EXPENSES)                                                                            |   |                                |       |                                 |   |                                      |   |   |   |   |
| Interest                  income                                                                               |   |                                | 73         |                                 |   | 816                                       |   |   | 10,271 |   |
| Interest                  expense                                                                              |   |                                | (1,568     | )                                    |   | (245                                      | )      |   | (1,418,103 | ) |
| Other                  income (expense)                                                                        |   |                                | —    |                                 |   | —                                   |   |   | (5,560 | ) |
|  Total                  Other Income and Expenses                                                              |   |                                | (1,495     | )                                    |   | 571                                       |   |   | (1,413,392 | ) |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| LOSS                  BEFORE TAXES                                                                                  |   |                                | (614,676   | )                                    |   | (1,156,003                                | )      |   | (13,085,587 | ) |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| INCOME                  TAXES                                                                                       |   |                                | —    |                                 |   | —                                   |   |   | — |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| NET                  LOSS                                                                                           |   |                                | (614,676   | )                                    |   | (1,156,003                                | )      |   | (13,085,587 | ) |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| OTHER                  COMPREHENSIVE INCOME (LOSS)                                                                  |   |                                |       |                                 |   |                                      |   |   |   |   |
| Unrealized                    gain (loss) in market value of investments                                       |   |                                | 1,550      |                                 |   | (330                                      | )      |   | 510 |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| COMPREHENSIVE                  LOSS                                                                                 |   | $                                   | (613,126   | )                                    | $      | (1,156,333                                | )      | $ | (13,085,077 | ) |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| NET                    INCOME (LOSS) PER COMMON SHARE, BASIC AND DILUTED                                            |   | $                                   | (0.03      | )                                    | $      | (0.07                                     | )      |   |   |   |
|                                                                                                                |   |                                |       |                                 |   |                                      |   |   |   |   |
| WEIGHTED                    AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND                    DILUTED  |   |                                | 19,343,829 |                                 |   | 16,479,544                                |   |   |   |   |

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| **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, 2006 |     |  March                  31, 2005 |   |  to                  March 31, 2006  |   |
|                                                                                                    |   |  (unaudited)                     |     |  (unaudited)                     |   |  (unaudited)                         |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                  |   |                             |     |                             |   |                                 |   |
| Net                  income (loss)                                                                 |   | $                                     | (614,676 | )                                     | $      | (1,156,003                                | )      | $ | (13,085,587 | ) |
| Adjustments                  to reconcile net income (loss) to net cash                            |   |                                  |     |                                  |   |                                      |   |   |   |   |
| flows                  provided (used) by operating activities:                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
|  Depreciation                  and amortization                                                    |   |                                  | 136,219  |                                  |   | 129,244                                   |   |   | 936,273 |   |
|  Loss                  on disposition of assets                                                    |   |                                  |     |                                  |   | —                                   |   |   | 7,024 |   |
|  Stock                  and warrants issued as incentive for notes payables                        |   |                                  | —  |                                  |   | —                                   |   |   | 496,389 |   |
|  Stock                  issued for interest expense                                                |   |                                  | —  |                                  |   | —                                   |   |   | 149,878 |   |
|  Stock                  issued for rent expense                                                    |   |                                  | 8,675    |                                  |   | 71,903                                    |   |   | 600,254 |   |
|  Stock                  issued for services                                                        |   |                                  | 4,754    |                                  |   | 43,227                                    |   |   | 1,012,375 |   |
|  Stock                  issued for assets and securities                                           |   |                                  | —  |                                  |   | —                                   |   |   | 43,739 |   |
|  Stock                  options and warrants vested                                                |   |                                  | 189,784  |                                  |   | 323,254                                   |   |   | 3,579,691 |   |
|  Recognition                  of noncash deferred financing expense                                |   |                                  | —  |                                  |   | —                                   |   |   | 578,699 |   |
|  Options                  and warrants issued for services and financing                           |   |                                  | —  |                                  |   | —                                   |   |   | 253,753 |   |
|  Noncash                  recovery of other income                                                 |   |                                  | —  |                                  |   | —                                   |   |   | (1,850 | ) |
| Changes                  in assets and liabilities:                                                |   |                                  |     |                                  |   |                                      |   |   |   |   |
|  Receivables                                                                                       |   |                                  | (30,724  | )                                     |   | (14,650                                   | )      |   | (34,813 | ) |
|  Inventory                                                                                         |   |                                  | 11,996   |                                  |   | (41,688                                   | )      |   | (111,148 | ) |
|  Prepaid                  expenses                                                                 |   |                                  | 26,027   |                                  |   | (22,398                                   | )      |   | 115,366 |   |
|  Deposits                                                                                          |   |                                  | 763      |                                  |   | —                                   |   |   | 6,370 |   |
|  Accounts                  payable                                                                 |   |                                  | (23,138  | )                                     |   | (121,063                                  | )      |   | 57,977 |   |
|  Accrued                  expenses                                                                 |   |                                  | 6,054    |                                  |   | (43,119                                   | )      |   | (811 | ) |
| Net                  cash used by operating activities                                             |   |                                  | (284,266 | )                                     |   | (831,293                                  | )      |   | (5,396,421 | ) |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                  |   |                                  |     |                                  |   |                                      |   |   |   |   |
|  Purchase                  of fixed assets                                                         |   |                                  | —  |                                  |   | (189,502                                  | )      |   | (2,674,098 | ) |
|  Patent                  costs                                                                     |   |                                  | (20,541  | )                                     |   | —                                   |   |   | (84,759 | ) |
|  Leasehold                  concessions received                                                   |   |                                  | —  |                                  |   | —                                   |   |   | 185,000 |   |
| Net                  cash used by investing activities                                             |   |                                  | (20,541  | )                                     |   | (189,502                                  | )      |   | (2,573,857 | ) |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                  |   |                                  |     |                                  |   |                                      |   |   |   |   |
|  Sale                  of common stock units                                                       |   |                                  | 270,000  |                                  |   | —                                   |   |   | 6,902,375 |   |
|  Payments                  on capital leases                                                       |   |                                  | (195     | )                                     |   | (742                                      | )      |   | (9,563 | ) |
|  Proceeds                  from (payments on) related party loans                                  |   |                                  | (4,595   | )                                     |   | —                                   |   |   | (8,481 | ) |
|  Proceeds                  from exercise of options                                                |   |                                  | —  |                                  |   | —                                   |   |   | 1,080 |   |
|  Proceeds                  from convertible debt                                                   |   |                                  | —  |                                  |   | —                                   |   |   | 939,900 |   |
| Net                  cash provided by financing activities                                         |   |                                  | 265,210  |                                  |   | (742                                      | )      |   | 7,825,311 |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| Net                  increase in cash                                                                   |   |                                  | (39,597  | )                                     |   | (1,021,537                                | )      |   | (144,967 | ) |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| Cash,                  beginning of period                                                              |   |                                  | 182,582  |                                  |   | 1,461,708                                 |   |   | 287,952 |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| Cash,                  end of period                                                                    |   | $                                     | 142,985  |                                  | $      | 440,171                                   |   | $ | 142,985 |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| SUPPLEMENTAL                  CASH FLOW DISCLOSURES:                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| Income                  taxes paid                                                                 |   | $                                     | —  |                                  | $      | —                                   |   | $ | — |   |
| Interest                  paid                                                                     |   | $                                     | 1,304    |                                  | $      | —                                   |   | $ | 26,304 |   |
|                                                                                                    |   |                                  |     |                                  |   |                                      |   |   |   |   |
| NON-CASH                  INVESTING AND FINANCING:                                                      |   |                                  |     |                                  |   |                                      |   |   |   |   |
| Stock                  and warrants issued for convertible debt                                    |   | $                                     | —  |                                  | $      | —                                   |   | $ | 1,613,076 |   |
| Stock                  issued for assets and securities                                            |   | $                                     | —  |                                  | $      | —                                   |   | $ | 43,739 |   |
| Warrants                  and options issued for deferred services and                  financing  |   | $                                     | —  |                                  | $      | —                                   |   | $ | 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**

|                                          |   | 2006   |       | 2005   |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|
| Equipment                                     |   | $      | 1,730,815  |   | $      | 1,730,815 |   |
| Furniture                and fixtures         |   |   | 120,114    |   |   | 120,114 |   |
| Leasehold                improvements         |   |   | 826,511    |   |   | 826,511 |   |
|                                          |   |   | 2,677,440  |   |   | 2,677,440 |   |
| Less:                Accumulated depreciation |   |   | (1,064,984 | )      |   | (932,069 | ) |
| Total                                         |   | $      | 1,612,456  |   | $      | 1,745,371 |   |

**NOTE      4 - CAPITAL STOCK**

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**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) |   |                                                                                 | 1,025,000 |                                                                  | $      | 0.62                                                                                                                       |   |   | 575,000 |   |
| Total                                                                    |   |                                                                                 | 1,025,000 |                                                                  |   |                                                                                                                       |   |   | 575,000 |   |

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|                                                                  |   | Number                of Shares |      | Weighted                Average Exercise Price |   |
|-----------------------------------------------------------------------|--------|---------------------------------|-----------|------------------------------------------------|--------|
| Outstanding                at December 31, 2004                       |   |                            | 1,283,000 |                                           | $      | 0.96 |   |
| Granted                                                               |   |                            | 2,000     |                                           |   | .65 |   |
| Exercised                                                             |   |                            | (6,000    | )                                              |   | .18 |   |
| Rescinded                                                             |   |                            | (119,000  | )                                              |   | — |   |
| Outstanding                at December 31, 2005                       |   |                            | 1,160,000 |                                           |   | 0.60 |   |
| Granted                                                               |   |                            | —   |                                           |   | — |   |
| Exercised                                                             |   |                            | —   |                                           |   | — |   |
| Rescinded                                                             |   |                            | (135,000  | )                                              |   | — |   |
| Options                outstanding at March 31, 2006                  |   |                            | 1,025,000 |                                           | $      | 0.62 |   |
|                                                                  |   |                            |      |                                           |   |   |   |
| Options                exercisable at March 31, 2006                  |   |                            | 747,000   |                                           | $      | 0.70 |   |
| Weighted                average fair value of options granted in 2006 |   |                            |      |                                           |   | — |   |

**NOTE      6 - CONCENTRATIONS**

**NOTE      7 - COMMITMENTS AND CONTINGENCIES**

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**NOTE      8 -SUBSEQUENT EVENTS**

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

**Plan      of Operation**

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**Financial      Condition and Results of Operations**

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**Liquidity.      **

**Material      Commitments for Capital Expenditures. **
***.***

**Trends      and Seasonality.**

**Item      3.         Controls and      Procedures**

**PART      II. - OTHER INFORMATION**

**Item      1.          Legal      Proceedings.**

**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.**

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**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)                 |
| 10.9       | Letter                dated October 13, 2005 amending the Patent License Agreement with                NEC                Partners (4)            |
| 14         | Financial                Code of Ethics (5)                                                                                                       |
| 21         | Subsidiaries                of Integrated Pharmaceuticals (5)                                                                                     |
| **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)                                                                                                                |

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| 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)                                                                                                                                          |
| 10.9 | Letter                dated October 13, 2005 amending the Patent License Agreement with                NEC                Partners (4)                                                                                                                                     |
| 14   | Financial                Code of Ethics (5)                                                                                                                                                                                                                                |
| 21   | Subsidiaries                of Integrated Pharmaceuticals (5)                                                                                                                                                                                                              |
| 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 Office rand 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 |

**SIGNATURES**

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