----

----

**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   June              30, 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 |   | 15       |
|                                                                                                                     |   |     |
| ITEM                  3    Controls and Procedures                                                        |   | 16       |
|                                                                                                                     |   |     |
|                                                                                                                     |   |     |
|                                                                                                                     |   | 16       |
| **PART                  II. - OTHER INFORMATION**                                                                        |   |     |
|                                                                                                                     |   |     |
| ITEM                  1    Legal Proceedings                                                              |   | 16       |
|                                                                                                                     |   |     |
| ITEM                  2    Unregistered Sales of Equity Securities and Use of                  Proceeds   |   | 16       |
|                                                                                                                     |   |     |
| ITEM                  3    Default Upon Senior Securities                                                 |   | 16       |
|                                                                                                                     |   |     |
| ITEM                  4    Submission of Matters to a Vote of Security                  Holders           |   | 16       |
|                                                                                                                     |   |     |
| ITEM                  5    Other Information                                                              |   | 16       |
|                                                                                                                     |   |     |
| ITEM                  6    Exhibits and Reports on Form 8-K                                               |   | 17       |
|                                                                                                                     |   |     |
|                                                                                                                     |   |     |
| SIGNATURES                                                                                                               |   | 18       |

**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 June 30, 2006 and December 31,                2005 |
|---|----------------------------------------------------------------------------------------|

| 4 | Statements                Of Operations And Income For The Three Months Ended June 30, 2006                and                2005 |
|---|------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Statements                Of Cash Flows For The Three Months Ended June 30, 2006 and                2005 |
|---|----------------------------------------------------------------------------------------------------------|

| 6 -              14 | Notes                To Financial Statements - June 30,                2006 |
|--------------------------|-----------------------------------------------------------------------------|

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**INTEGRATED      PHARMACEUTICALS, INC.**

**(A              Development Stage Company)**

**BALANCE            SHEETS**

----

|                                                                                     |   |  June                      30, |        |                               |   |
|------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|-----------------------------------------|--------|
|                                                                                     |   |  2006                          |        |  December                      31, |   |
|                                                                                     |   |  (unaudited)                   |        |  2005                              |   |
|                                                                                     |   |                           |        |                               |   |
| **ASSETS**                                                                               |   |                           |        |                               |   |
| CURRENT                      ASSETS                                                 |   |                           |        |                               |   |
| Cash                                                                                |   | $                                   | 406,937     |                                    | $      | 182,582 |   |
| Accounts                      receivable                                            |   |                                | 39,085      |                                    |   | 20,173 |   |
| Inventory                                                                           |   |                                | 107,705     |                                    |   | 123,144 |   |
| Prepaid                      expenses                                               |   |                                | 34,038      |                                    |   | 58,220 |   |
| Total                      Current Assets                                                |   |                                | 587,765     |                                    |   | 384,119 |   |
|                                                                                     |   |                                |        |                                    |   |   |   |
| PROPERTY                      AND EQUIPMENT, net                                         |   |                                | 1,483,297   |                                    |   | 1,745,371 |   |
|                                                                                     |   |                                |        |                                    |   |   |   |
| OTHER                      ASSETS                                                        |   |                                |        |                                    |   |   |   |
| Investments                                                                         |   |                                | 3,430       |                                    |   | 980 |   |
| Deposits                                                                            |   |                                | —     |                                    |   | 763 |   |
| Patents,                      net of amortization                                   |   |                                | 97,580      |                                    |   | 57,796 |   |
| Total                      Other Assets                                                  |   |                                | 101,010     |                                    |   | 59,539 |   |
|                                                                                     |   |                                |        |                                    |   |   |   |
| **TOTAL                      ASSETS**                                                    |   | $                                   | 2,172,072   |                                    | $      | 2,189,029 |   |
|                                                                                     |   |                                |        |                                    |   |   |   |
| **LIABILITIES                      AND STOCKHOLDERS’                      EQUITY** |   |                                |        |                                    |   |   |   |
| CURRENT                      LIABILITIES                                                 |   |                                |        |                                    |   |   |   |
| Accounts                      payable                                               |   | $                                   | 160,803     |                                    | $      | 179,662 |   |
| Accrued                      expenses                                               |   |                                | 182,431     |                                    |   | 176,118 |   |
| Related                      party short-term debt                                  |   |                                | 40,381      |                                    |   | 52,815 |   |
| Capital                      leases payable - current portion                       |   |                                | —     |                                    |   | 195 |   |
| Total                      Current Liabilities                                           |   |                                | 383,615     |                                    |   | 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;                      22,553,106 and 18,632,626 shares                        |   |                                |        |                                    |   |   |   |
| issued                      and outstanding, respectively                                |   |                                | 225,530     |                                    |   | 186,326 |   |
| Additional                      paid-in capital                                     |   |                                | 7,457,730   |                                    |   | 6,736,346 |   |
| Other                      comprehensive income (loss)                              |   |                                | 1,410       |                                    |   | (1,040 | ) |
| Stock                      options and warrants                                     |   |                                | 8,132,267   |                                    |   | 7,824,142 |   |
| Accumulated                      deficit prior to development stage                 |   |                                | (494,624    | )                                       |   | (494,624 | ) |
| Accumulated                      deficit during development stage                   |   |                                | (13,533,856 | )                                       |   | (12,470,911 | ) |
|                                                                                     |   |                                |        |                                    |   |   |   |
| Total                      Stockholders’ Equity                                    |   |                                | 1,788,457   |                                    |   | 1,780,239 |   |
|                                                                                     |   |                                |        |                                    |   |   |   |
| **TOTAL                      LIABILITIES AND**                                           |   |                                |        |                                    |   |   |   |
| **STOCKHOLDERS’                      EQUITY**                                 |   | $                                   | 2,172,072   |                                    | $      | 2,189,029 |   |

----

**INTEGRATED              PHARMACEUTICALS, INC.**

**(A              Development Stage Company)**

**STATEMENTS              OF OPERATIONS**

----

|                                                                   |   |                                                   |       |                                                 |   |                                  |   |                                  |       |  Period                        from        |   |
|------------------------------------------------------------------------|--------|-------------------------------------------------------------|------------|-----------------------------------------------------------|--------|--------------------------------------------|--------|--------------------------------------------|------------|-------------------------------------------------|--------|
|                                                                   |   |                                                   |       |                                                 |   |                                  |   |                                  |       |  February                        1, 2003   |   |
|                                                                   |   |  Three                        Months Ended   |       |  Six                        Months Ended   |   |  (inception                        of |   |
|                                                                   |   |                                                   |       |                                                 |   |                                  |   |                                  |       |  development                        stage) |   |
|                                                                   |   |  June                        30, 2006                  |       |  June                        30, 2005                |   |  June                        30, 2006 |   |  June                        30, 2005 |       |  to                        June 30, 2006   |   |
|                                                                   |   |  (unaudited)                                           |       |  (unaudited)                                         |   |  (unaudited)                          |   |  (unaudited)                          |       |  (unaudited)                               |   |
|                                                                   |   |                                                   |       |                                                 |   |                                  |   |                                  |       |                                       |   |
| REVENUES                                                               |   | $                                                           | 14,400     |                                                      | $      | —                                    |   | $                                          | 60,658     |                                            | $      | 34,650 |   | $ | 137,999 |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| COST                        OF GOODS SOLD                              |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| Materials                        and supplies                          |   |                                                        | 13,112     |                                                      |   | —                                    |   |                                       | 56,101     |                                            |   | 5,694 |   |   | 101,079 |   |
| Total                        Cost of Goods Sold                        |   |                                                        | 13,112     |                                                      |   | —                                    |   |                                       | 56,101     |                                            |   | 5,694 |   |   | 101,079 |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| GROSS                        PROFIT                                    |   |                                                        | 1,288      |                                                      |   | —                                    |   |                                       | 4,557      |                                            |   | 28,956 |   |   | 36,920 |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| GENERAL                        AND ADMINISTRATIVE EXPENSES             |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| Depreciation                        and amortization              |   |                                                        | 64,286     |                                                      |   | 63,467                                     |   |                                       | 130,786    |                                            |   | 125,497 |   |   | 654,552 |   |
| Research                        and development                   |   |                                                        | 43,523     |                                                      |   | 81,819                                     |   |                                       | 86,533     |                                            |   | 167,142 |   |   | 835,627 |   |
| Marketing                                                         |   |                                                        | 6,777      |                                                      |   | 79,106                                     |   |                                       | 8,849      |                                            |   | 151,153 |   |   | 580,186 |   |
| Legal                        and professional fees                |   |                                                        | 45,669     |                                                      |   | 108,348                                    |   |                                       | 91,891     |                                            |   | 186,439 |   |   | 1,070,669 |   |
| Consulting                                                        |   |                                                        | 14,719     |                                                      |   | 152,864                                    |   |                                       | 74,078     |                                            |   | 354,393 |   |   | 3,108,077 |   |
| Idle                        facility expense                      |   |                                                        | 131,469    |                                                      |   | 287,496                                    |   |                                       | 285,264    |                                            |   | 616,623 |   |   | 1,714,446 |   |
| Occupancy                                                         |   |                                                        | 36,274     |                                                      |   | 75,378                                     |   |                                       | 69,210     |                                            |   | 178,568 |   |   | 1,095,327 |   |
| Labor                        and benefits                         |   |                                                        | 21,843     |                                                      |   | 80,988                                     |   |                                       | 47,668     |                                            |   | 150,507 |   |   | 801,690 |   |
| Services                        paid by stock options             |   |                                                        | 79,875     |                                                      |   | 126,555                                    |   |                                       | 180,648    |                                            |   | 260,580 |   |   | 1,436,077 |   |
| Office                        supplies and expenses               |   |                                                        | 5,037      |                                                      |   | 11,238                                     |   |                                       | 9,918      |                                            |   | 22,466 |   |   | 173,266 |   |
| Travel                                                            |   |                                                        | 2,819      |                                                      |   | 10,942                                     |   |                                       | 3,621      |                                            |   | 23,868 |   |   | 174,424 |   |
| Other                        general and administrative expenses  |   |                                                        | 25,453     |                                                      |   | 38,732                                     |   |                                       | 76,075     |                                            |   | 65,227 |   |   | 511,577 |   |
| Total                        General and Administrative Expenses       |   |                                                        | 477,744    |                                                      |   | 1,116,933                                  |   |                                       | 1,064,541  |                                            |   | 2,302,463 |   |   | 12,155,918 |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| OPERATING                        INCOME (LOSS)                         |   |                                                        | (476,456   | )                                                         |   | (1,116,933                                 | )      |                                       | (1,059,984 | )                                               |   | (2,273,507 | ) |   | (12,118,998 | ) |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| OTHER                        INCOME (EXPENSES)                         |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| Interest                        income                            |   |                                                        | 3          |                                                      |   | 312                                        |   |                                       | 76         |                                            |   | 1,128 |   |   | 10,274 |   |
| Interest                        expense                           |   |                                                        | (1,469     | )                                                         |   | (165                                       | )      |                                       | (3,037     | )                                               |   | (410 | ) |   | (1,419,572 | ) |
| Other                        income (expense)                     |   |                                                        | —    |                                                      |   | —                                    |   |                                       | —    |                                            |   | — |   |   | (5,560 | ) |
| Total                        Other Income and Expenses                 |   |                                                        | (1,466     | )                                                         |   | 147                                        |   |                                       | (2,961     | )                                               |   | 718 |   |   | (1,414,858 | ) |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| LOSS                        BEFORE TAXES                               |   |                                                        | (477,922   | )                                                         |   | (1,116,786                                 | )      |                                       | (1,062,945 | )                                               |   | (2,272,789 | ) |   | (13,533,856 | ) |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| INCOME                        TAXES                                    |   |                                                        | —    |                                                      |   | —                                    |   |                                       | —    |                                            |   | — |   |   | — |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| NET                        LOSS                                        |   |                                                        | (477,922   | )                                                         |   | (1,116,786                                 | )      |                                       | (1,062,945 | )                                               |   | (2,272,789 | ) |   | (13,533,856 | ) |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| OTHER                        COMPREHENSIVE INCOME (LOSS)               |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| Unrealized                        gain (loss) in market value of  |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| investments                                                            |   |                                                        | 900        |                                                      |   | (450                                       | )      |                                       | 2,450      |                                            |   | (780 | ) |   | 1,410 |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| COMPREHENSIVE                        LOSS                              |   | $                                                           | (477,022   | )                                                         | $      | (1,117,236                                 | )      | $                                          | (1,060,495 | )                                               | $      | (2,273,569 | ) | $ | (13,532,446 | ) |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| NET                        INCOME (LOSS) PER COMMON SHARE,             |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| BASIC                        AND DILUTED                          |   | $                                                           | (0.02      | )                                                         | $      | (0.07                                      | )      | $                                          | (0.05      | )                                               | $      | (0.14 | ) |   |   |   |
|                                                                   |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| WEIGHTED                        AVERAGE NUMBER OF COMMON               |   |                                                        |       |                                                      |   |                                       |   |                                       |       |                                            |   |   |   |   |   |   |
| SHARES                        OUTSTANDING, BASIC AND DILUTED      |   |                                                        | 20,231,949 |                                                      |   | 16,555,317                                 |   |                                       | 20,231,949 |                                            |   | 16,555,317 |   |   |   |   |

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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) |   |
|                                                                                                                        |   |  June                            30, 2006 |       |  June                            30, 2005 |   |  to                            June 30, 2006   |   |
| CASH                            FLOWS FROM OPERATING ACTIVITIES:                                                            |   |                                      |       |                                      |   |                                           |   |
| Net                            income (loss)                                                                           |   | $                                              | (1,062,945 | )                                              | $      | (2,272,789                                          | )      | $ | (13,533,856 | ) |
| Adjustments                            to reconcile net income (loss) to net cash                                      |   |                                           |       |                                           |   |                                                |   |   |   |   |
| flows                            provided (used) by operating activities:                                              |   |                                           |       |                                           |   |                                                |   |   |   |   |
|  Depreciation                            and amortization                                                              |   |                                           | 266,240    |                                           |   | 129,244                                             |   |   | 1,066,294 |   |
|  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                                                              |   |                                           | 17,033     |                                           |   | 71,903                                              |   |   | 608,612 |   |
|  Stock                            issued for services                                                                  |   |                                           | 11,954     |                                           |   | 43,227                                              |   |   | 1,019,575 |   |
|  Stock                            issued for assets and securities                                                     |   |                                           | —    |                                           |   | —                                             |   |   | 43,739 |   |
|  Stock                            options and warrants vested                                                          |   |                                           | 254,726    |                                           |   | 323,254                                             |   |   | 3,644,633 |   |
|  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                                                                                                           |   |                                           | (18,912    | )                                              |   | (14,650                                             | )      |   | (23,001 | ) |
|  Inventory                                                                                                             |   |                                           | 15,439     |                                           |   | (41,688                                             | )      |   | (107,705 | ) |
|  Prepaid                            expenses                                                                           |   |                                           | 24,182     |                                           |   | (22,398                                             | )      |   | 113,521 |   |
|  Other                            assets                                                                               |   |                                           | 763        |                                           |   | —                                             |   |   | 6,370 |   |
|  Accounts                            payable                                                                           |   |                                           | (18,859    | )                                              |   | (121,063                                            | )      |   | 62,256 |   |
|  Accrued                            expenses                                                                           |   |                                           | 6,313      |                                           |   | (43,119                                             | )      |   | (552 | ) |
| Net                            cash used by operating activities                                                       |   |                                           | (504,066   | )                                              |   | (1,948,079                                          | )      |   | (5,616,221 | ) |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| CASH                            FLOWS FROM INVESTING ACTIVITIES:                                                            |   |                                           |       |                                           |   |                                                |   |   |   |   |
|  Purchase                            of fixed assets                                                                   |   |                                           | (4,167     | )                                              |   | (189,502                                            | )      |   | (2,678,265 | ) |
|  Patent                            costs                                                                               |   |                                           | (39,783    | )                                              |   | —                                             |   |   | (104,001 | ) |
|  Leasehold                            concessions received                                                             |   |                                           | —    |                                           |   | —                                             |   |   | 185,000 |   |
| Net                            cash used by investing activities                                                       |   |                                           | (43,950    | )                                              |   | (189,502                                            | )      |   | (2,597,266 | ) |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| CASH                            FLOWS FROM FINANCING ACTIVITIES:                                                            |   |                                           |       |                                           |   |                                                |   |   |   |   |
|  Sale                            of common stock units                                                                 |   |                                           | 785,000    |                                           |   | —                                             |   |   | 7,417,375 |   |
|  Payments                            on capital leases                                                                 |   |                                           | (195       | )                                              |   | (742                                                | )      |   | (9,563 | ) |
|  Payments                            on related party loans                                                            |   |                                           | (12,434    | )                                              |   | —                                             |   |   | (16,320 | ) |
|  Proceeds                            from exercise of options                                                          |   |                                           | —    |                                           |   | —                                             |   |   | 1,080 |   |
|  Proceeds                            from convertible debt                                                             |   |                                           | —    |                                           |   | —                                             |   |   | 939,900 |   |
| Net                            cash provided by financing activities                                                   |   |                                           | 772,371    |                                           |   | (742                                                | )      |   | 8,332,472 |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| Net                            increase in cash                                                                             |   |                                           | 224,355    |                                           |   | (2,138,323                                          | )      |   | 118,985 |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| Cash,                            beginning of period                                                                        |   |                                           | 182,582    |                                           |   | 1,461,708                                           |   |   | 287,952 |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| Cash,                            end of period                                                                              |   | $                                              | 406,937    |                                           | $      | (676,615                                            | )      | $ | 406,937 |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| SUPPLEMENTAL                            CASH FLOW DISCLOSURES:                                                              |   |                                           |       |                                           |   |                                                |   |   |   |   |
| Income                            taxes paid                                                                           |   | $                                              | —    |                                           | $      | —                                             |   | $ | — |   |
| Interest                            paid                                                                               |   | $                                              | —    |                                           | $      | —                                             |   | $ | 25,000 |   |
|                                                                                                                        |   |                                           |       |                                           |   |                                                |   |   |   |   |
| NON-CASH                            INVESTING AND FINANCING:                                                                |   |                                           |       |                                           |   |                                                |   |   |   |   |
| Stock                            and warrants issued for convertible debt                                              |   | $                                              | —    |                                           | $      | —                                             |   | $ | 1,613,076 |   |
| Stock                            issued for assets and securities                                                      |   | $                                              | —    |                                           | $      | —                                             |   | $ | 43,739 |   |
| Stock                            issued as deferred incentive for notes payables                                       |   | $                                              | —    |                                           | $      | —                                             |   | $ | 519,587 |   |
| 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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**INTEGRATED              PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,              2006**

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

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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**NOTE        3 - PROPERTY AND EQUIPMENT**

|                                            |   | 2006   |       | 2005   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|
| Equipment                                       |   | $      | 1,734,981  |   | $      | 1,730,815 |   |
| Furniture                  and fixtures         |   |   | 120,114    |   |   | 120,114 |   |
| Leasehold                  improvements         |   |   | 826,511    |   |   | 826,511 |   |
|                                            |   |   | 2,681,606  |   |   | 2,677,440 |   |
| Less:                  Accumulated depreciation |   |   | (1,198,309 | )      |   | (932,069 | ) |
| Total                                           |   | $      | 1,483,297  |   | $      | 1,745,371 |   |

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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**NOTE        4 - CAPITAL STOCK**

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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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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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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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 June 30, 2006                   |   |                              | 1,025,000 |                                                                               | $      | 0.62 |   |
|                                                                    |   |                              |      |                                                                               |   |   |   |
| Options                  exercisable at June 30, 2006                   |   |                              | 765,000   |                                                                               | $      | 0.72 |   |
| Weighted                  average fair value of options granted in 2006 |   |                              |      |                                                                               |   | — |   |

**NOTE        6 - CONCENTRATIONS**

**NOTE        7 - COMMITMENTS AND CONTINGENCIES**

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**INTEGRATED            PHARMACEUTICALS, INC.CONDENSED NOTES TO FINANCIAL STATEMENTSJUNE 30,            2006**

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**NOTE        8 -SUBSEQUENT EVENTS**

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

**Management’s          Discussion and Analysis of Financial Conditions and Results of          Operations:**

**Plan          of Operation**

**Management          Discussion and Analysis of Financial Condition and Results of          Operations**

**Financial          Condition and 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       | Letter                    dated May 5, 2005 amending the Patent License Agreement with                    NEC Partners                    (3)                 |
|       |                                                                                                                                                          |
| 10.8       | 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)                                                                                             |

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**SIGNATURES**

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