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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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|x | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

for the fiscal year ended March 31, 2007



| ̈ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

for the transition period from  to

Commission file number 000-51925



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ALCiS HEALTH,
INC.

A DELAWARE CORPORATION



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IRS EMPLOYER IDENTIFICATION NO. 72-1235451

2001 Gateway Place, Suite 520W

San Jose, CA 95110

408-437-1060

Securities registered
pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|None                |  | None                                     

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value per share



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Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ̈

Check whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x    No ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure
will be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.    x

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

The issuers revenues for the fiscal year ended March 31, 2007 were $2,278,134.

The aggregate market value of common stock held by non-affiliates at May 31, 2007 was $5,706,538 (see Note A)

As of
June 15, 2007, there were 8,961,902 outstanding shares of common stock, par value $.001 per share.

DOCUMENTS INCORPORATED BY
REFERENCE

None.

Transitional Small
Business Disclosure Format:    Yes ̈No  x

Note A: Based upon the $2.00 price in the most recent transaction involving the sale of the Companys common stock as there is no active trading
market.

Total Number of Pages: 50

Exhibit Index is on Page 46



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PART I



|Item 1. | Description of Business
|------- | -----------------------

Forward-looking
Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical
facts and are based on current expectations, estimates, and projections about our industry; our beliefs and assumptions; and our goals and objectives. Words such as anticipates, expects, intends,
plans, believes, seeks, and estimates, and variations of these words and similar expressions are intended to identify forward-looking statements. Examples of the kinds of forward-looking statements in
this report include statements regarding the following: (1) our sales and marketing goals and objective and strategies and plans including that we expect that during fiscal 2008, our sales mix will change to where the majority of our revenue is
coming from retail outlets., (2) expectations as to the number of employees we will have, (3) our future plans as to facilities and research and development activities, (4) the growth rate of the worldwide analgesic market,
(5) our new product plans, (6) our expectation that our products are poised to be the first real innovative treatment alternative in the OTC topical analgesic market and will achieve strong success; (7) the Companys anticipated
product development and advertising and promotion expenses during some or all of fiscal 2008; (8) the belief that the Company through its contract manufacturer has ample production capacity in place to handle any projected increase in business
for fiscal 2008; (9) the anticipation that the available funds and expected cash usage from operations will be sufficient to meet the liquidity and capital requirements for the next six months to nine months; (10) our plans to raise debt
and equity financing; and (11) our contingency plan if we dont raise financing in the next three to six months to then reduce expenses so that we can stretch our cash for another three months . These statements are only predictions, are
not guarantees of future performance, and are subject to risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted
in the forward-looking statements. These risks and uncertainties include, but are not limited to, whether we are able to recruit key personnel, whether we generate enough cash from product sales or financing to conduct the marketing activities we
desire, whether customers like our products and perceive that they receive benefits from their usage, whether BioZone continues to make our product in a quality and timely manner, whether we are able to obtain retail shelf space, whether larger
companies decide to compete head-on with our products, no material adverse changes in the demand for the Companys products, competition to supply OTC products in the markets in which the Company competes does not increase and cause price
erosion, that there are no unexpected manufacturing issues as production ramps up, the demand for the Companys products is such that it would be unwise not to decrease research and development; our not having unanticipated cash requirements;
our not having difficulty raising financing on attractive or any terms; and our ability to effectively reduce cash expenses quickly as a contingency as well as risk and other factors detailed in this report, especially under the caption Risk
Factors at the end of this Item 1. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

Overview

ALCiS-CA was formed (under the name ALCiS
Health, Inc.) as a California corporation on April 13, 2004. On March 31, 2006, ALCiS-CA entered into a reverse triangular merger (the Merger) with Registrant Emerging Delta Corporation and a newly-created wholly-owned
subsidiary of Registrant, Delta Acquisition Sub, Inc. (Sub). In the Merger, (1) Sub merged into ALCiS-CA, with ALCiS-CA being the surviving corporation and becoming a wholly-owned subsidiary of Registrant, and (2) ALCiS-CA
shareholders and holders of other equity interests received shares and other equity in Registrant in lieu of their ALCiS-CA shares and equity such that after the Merger they would own in excess of 96% of Registrants outstanding stock.
Registrant, a Delaware shell company with no prior operations, changed its name as part of the Merger to ALCiS Health, Inc. Below, references to we, us, our the Company or ALCiS shall refer
to the combined company and its subsidiary unless the context otherwise requires a different interpretation. In general, references to past actions and events of ALCiS prior to March 31, 2006 refer to ALCiS-CA, and references to current (i.e.
April 1, 2006 and later) and future matters related to ALCiS refer to the combined Emerging Delta Corporation/ALCiS-CA Company, which is the reporting company pursuant to this Form 10-KSB. In addition, in this Form 10-KSB, our fiscal years
ended March 31, 2005 and March 31, 2006 are referred to as fiscal 2005 and fiscal 2006, respectively, and our fiscal year ending on March 31, 2007 is referred to as fiscal 2007.

ALCiS principal business is researching, developing, marketing and distributing body therapy solutions, including but not limited to the area of
pain management products such as topical analgesics. Since formation, ALCiS principal activities have consisted of securing rights to proprietary technologies for its topical analgesic pain relief products, product and market research and
development resulting in the granting of several trademarks, the development of five products and related proprietary formulations, research into the markets for ALCiS products and the best channels through which to sell them,



1



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providing samples and selling to end customers and resellers to develop these channels, business planning and raising the capital necessary to fund these
activities. ALCiS began shipping product in fiscal 2006 and through March 31, 2007, had revenues of approximately $3 million and a net loss of approximately $8.8 million during the same period.

ALCiS principal product, ALCiS®Daily Relief Pain Relief Cream, is based on the benefits and effectiveness of patented technology for topically applied pain relief
in the form of a cream or lotion. The pain relief ingredients are delivered via a liposomal delivery system which allows for penetration of active ingredients to the site of pain. ALCiS pain relief products are designed to be convenient,
effective and available without a prescription.

ALCiS Proprietary Technology

ALCiS has exclusively licensed certain technology from BioZone Laboratories, Inc. (BioZone) for its primary target market of topical analgesic
pain relief products. We will refer to this technology as LDS (liposome delivery system). Certain aspects of the proprietary technology are covered by recently awarded U.S. patents. The Company has also obtained an option from BioZone to
purchase certain broader rights related to this technology.

ALCiS flagship product,
ALCiS®Daily Relief Pain Relief Cream, incorporates the patented LDS, which improves
delivery of active ingredients to the lower layers of the skin, increasing the concentration of those active ingredients, and providing a prolonged treatment that can last four to six hours. Utilizing the LDS technology increases the
effectiveness of the ALCiS products. ALCiS promotes its Science of Relief®
marketing strategy primarily in connection with the LDS technology. ALCiS goal is to create a new niche in the pain relief market  stylish, scientific, effective, topical products without medicinal scents  capable of penetrating
the well-established category of topical analgesics.

Daily use of ALCiS®Daily Relief Pain Relief Cream can cost less than $20 per month. In comparison, prescription oral
drugs may cost about $80 per month while their generic over the counter (OTC) counterparts cost approximately $15 per month. Thus, ALCiS is available at a cost that is comparable with OTC solutions, but ALCiS products have the
significant benefit of providing pain relief without the risk of side effects. ALCiS is priced comparably with a number of other products  some are more expensive, some less expensive. However, ALCiS offers a high level of efficacy in a
product that is simple to use, without the safety concerns of other solutions.

Products

ALCiS core product is its Daily Relief Pain Relief Cream. In addition, ALCiS has launched a family of four complementary therapeutic products that
perform a number of functions, i.e. cleansing, moisturizing, soothing, relaxing, scenting, etc. Importantly, because the incorporated scientific technology is both flexible and odorless, a large array of additional products is available for future
development.

The following are the most distinguishing characteristics of ALCiS products:



| |  |  | ALCiS products can provide recognizable relief from aches and pains.
| | - |  | --------------------------------------------------------------------



| |  |  | The patented and proprietary LDS delivers the active ingredients more quickly than traditional topical analgesics.
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | ALCiS products are more in the style of cosmetics  they do not have the odor, look, feel or marketing of the traditional style pain relief products. ALCiS
products are scientific, stylish, sophisticated and unique. ALCiS pain relief products can be bundled with other ALCiS skin therapy solutions such as bath soaks and gels to increase the continuity of purchases.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In certain cases, ALCiS products may serve as a substitute for oral analgesic products, which have been known to have negative side effects for certain patients,
including gastro-intestinal bleeding, nausea, as well as cardiac events. Further, since ALCiS products are applied to the point of injury, the customer can treat the problem area without distribution of active ingredients throughout the entire body.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Core and Complementary Products

ALCiS has formulated and launched its core product and a family of four complementary companion products designed to provide a quick, convenient pain relief and/or therapeutic relief for consumers while providing a
potentially continuing and profitable revenue stream for it.



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| |  |  | ALCiS®Daily Relief Pain Relief Cream (Core Product)
| | - |  | ---------------------------------------------------



| |  |  | Therapeutic Body Soak (Complementary Product Extension)
| | - |  | -------------------------------------------------------



| |  |  | Therapeutic Body Scrub (Complementary Product Extension)
| | - |  | --------------------------------------------------------



| |  |  | Therapeutic Body Lotion (Complementary Product Extension)
| | - |  | ---------------------------------------------------------



| |  |  | Therapeutic Foot Rub (Complementary Product Extension)
| | - |  | ------------------------------------------------------

The full line of ALCiS products will include a unique set of total body therapy products which are used in a preventative regimen, i.e., products that have the benefit of relieving pain while also performing a number
of other functions, i.e., cleansing, moisturizing, soothing, relaxing, scenting etc.

Other Additional Future Products

While ALCiS LDS technology forms a cornerstone to ALCiS product development, not all ALCiS products will require the integration of licensed
technology. Additional products targeted for potential future development include the following, some of which fall within the pain relief category, others within a spa products category, and all of which are included within the concept of a total
body therapy solution:



| |  |  | Massage Lotions, Massage Oils
| | - |  | -----------------------------



| |  |  | Foot Soaks
| | - |  | ----------



| |  |  | After Shave Balms
| | - |  | -----------------



| |  |  | Cleansing Bars
| | - |  | --------------



| |  |  | Daily Exfoliating Cleansers
| | - |  | ---------------------------



| |  |  | Dermal Renewing Lotions
| | - |  | -----------------------



| |  |  | All-Day Moisturizing Creams
| | - |  | ---------------------------



| |  |  | Hydrating Creams
| | - |  | ----------------



| |  |  | Acne Creams & Eliminators
| | - |  | -------------------------



| |  |  | Shave Creams and Lotions
| | - |  | ------------------------



| |  |  | Self Tanning Lotions
| | - |  | --------------------



| |  |  | Sunburn Treatments
| | - |  | ------------------



| |  |  | ALCiS Dermatological Line (For Pre and Post Cosmetic Procedures)
| | - |  | ----------------------------------------------------------------

Markets

ALCiS addresses the growing needs of
the baby boomer market. Our products enable this unique customer segment, born between the years 1946 to 1964, to live more active and productive lives. ALCiS products incorporate advanced patented technology that provides a strong competitive
advantage. ALCiS®Daily Relief Pain Relief Cream, our flagship product, has earned the
respect of the medical community and is endorsed by thousands of members of key medical specialties.

The boomer population is comprised of
78 million people and makes up 46 million households in the USA alone. These households experience higher incomes and have a propensity to spend higher dollars per capita as they begin to focus more buying power on themselves. They are
very active and do not want to purchase or even be affiliated with products or services that label them as special or old.

The Boomer market segment has a desire for retaining its youthfulness and comfort. Todays baby boomer is more active than any previous generation. Exercise and staying healthy are a major concern and focus. Many boomers believe they
will live longer and be happier if they continue to be active. The typical boomer exercises at least once a week and plans to increase the amount of exercise as a plan to maintain health and retain their youth, strength and general sense of well
being in their later years.

The American Academy of Orthopedic Surgeons reports that older athletes are more susceptible to chronic and
overuse injuries and Americans with musculoskeletal problems will reach an all time-time high over the next several years.



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The worldwide analgesic market has been estimated at $50 billion for 2005, and growing by $25 billion
every 5 years through 2015. Prescription products, such as opioids and nonsteroidal anti-inflammatory drugs (NSAIDs) such as COX-2 inhibitors constitute most of the market. Use of OTC products in the United States is estimated at $3
billion, and topical analgesics are estimated at $500 -$700 million.

Additionally, the cosmeceuticals market is currently $5.5 billion, of
which approximately $3 billion comes directly from the skin care sector.

The market opportunity for ALCiS body therapy and pain relief
products is substantial. Some market statistics are as follows:



| |  |  | With the aging of the U.S. population, the prevalence of doctor-diagnosed arthritis is expected to increase. By the year 2030, an estimated 67 million (25% of
the projected total adult population) will have doctor-diagnosed arthritis, compared with the 42.7 million adults in 2002 (Center for Disease Control).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Over 70 million people in the United States alone suffer from arthritis, tendonitis and bursitis, and virtually every adult suffers from occasional backaches,
strains, and sprains (The Arthritis Foundation).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approximately two-thirds of arthritis sufferers are women and it affects all age groups including nearly 300,000 children.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | The baby boomer generation is now a prime risk group, with more than two-thirds of arthritis sufferers being under the age of 65.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Arthritis is the number one cause of disability, and lower back pain is the leading cause of disability for sufferers under the age of 45.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A Gallup Poll (2002) shows that 4 out of 10 (42%) American adults say they experience pain daily, with nearly all Americans (89%) saying they
experience pain each month.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Arthritis causes $125 billion expense per year to the US economy (Center for Disease Control).
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | At any given time, 1% of the US population is temporarily disabled by back pain.
| | - |  | --------------------------------------------------------------------------------

ALCiS is targeting purchasers of oral medications for its Daily Relief cream as they are currently users of medications and may wish to avoid the
potential risks and side effects of such oral medications, including:



| |  |  | Gastrointestinal bleeding & stroke; and
| | - |  | ---------------------------------------



| |  |  | Potential drug interactions.
| | - |  | ----------------------------

Marketing and Sales
Strategy

ALCiS launched its family of topical pain relief and therapeutic products in the United States to a broad base of customers
during fiscal 2006. ALCiS marketing strategy is to have a nationwide campaign of direct response (including print and television), physician oriented sampling programs and a public relations campaign. It is through the awareness achieved from
these strategies that the Company has been able to begin distribution through retail channels. ALCiS plans to expand its marketing and distribution internationally when its products have been successfully launched and established in the United
States.

ALCiS current direct marketing activities include a national public relations campaign, 60 & 120 second television
spots, 30-minute infomercials, print advertising and Internet-based advertising. ALCiS plan is designed to educate prospective customers while creating widespread awareness of its topical pain relief products and generating direct sales in key
target markets. ALCiS currently sells its products directly to consumers and has recently begun selling to small retailers, pharmacies and chiropractors. In addition, ALCiS has been laying the foundation to begin to sell to larger retail chains and
the Company expects that over the next year, the sales mix will change to where the majority of the revenue is coming from retail outlets. The direct to consumer sales drive awareness and allow the Company to cover a significant portion of the
advertising costs.

Competition

There
are three major niches that represent competition for the ALCiS family of products in the major markets; prescription ingestibles, OTC ingestibles, and OTC topical analgesics. This overview discusses the top leaders in each of the following markets:



| |  |  | Prescription Ingestibles
| | - |  | ------------------------



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The Prescription market saw an increase of several
billion dollars of annual worldwide revenues growth with the introduction of Mercks Vioxx®and Pfizers Celebrex®, highly selective COX-2 inhibitors that
became popular due to the thought that these drugs caused fewer side effects than traditional OTC NSAIDs (Non-Steroidal Anti-Inflammatory Drugs). Vioxx has been withdrawn from the market for reasons related to its safety and efficacy, while Celebrex
is still marketed but with a warning mandated by the Food and Drug Administration (FDA).



| |  |  | OTC Ingestibles
| | - |  | ---------------

The NSAID market is
a well established market exceeding $2 billion in sales, with many players competing for the same dollars. Due to the fact that many of the patents, providing marketing exclusivities, have long expired, everyone that has the capability to produce an
OTC NSAID via approved ingredients can create their own brand, hence the wide number of store brand generics. This over-saturation of the market has therefore driven prices down, thus making OTC NSAIDs widely available to a large spectrum of
consumers on many income levels. This is one of the single biggest strengths of this market. When considering treatment alternatives in terms of dollar cost, without regard to potential side effects, the OTC NSAID market is by far the cheapest
solution / option for pain management.

Over the last several years, there has been a tremendous amount of information circulating that
indicates the overuse of such drugs is prevalent, and the side effects that come along with such over use are manifesting themselves over a wider scale and affecting a wider spectrum of consumers.

OTC NSAIDs have a large number of potential short term and long term side effects. These side effects range from nausea, diarrhea, dizziness, vomiting,
GI bleeding, and ulcers to even death. According to federal health officials, each year an estimated 160,000 Americans end up in hospital emergency rooms and about 16,000 die from complications related to the use of OTC painkillers. Some health
officials say that the actual number of injuries and deaths is considerably higher, because many cases go unrecognized and unreported, especially among the elderly, many of whom take multiple medications.

A survey conducted by the National Consumers League in February 2003 found that 44% of nearly 4,300 adults surveyed said they had knowingly exceeded the
recommended dose of OTC pain relievers; of which only 16% said they had read the label completely. Further, a survey conducted by the National Council on Patient Information and Education found that 30% of people who use OTC pain-killers took the
drugs for longer than the label recommended, while 25% had trouble reading and understanding the label. These statistics alarm health officials, who note that most of the 175 million Americans who take OTC NSAIDs every year are unaware of their
potential hazards.



| |  |  | OTC Topical Analgesics
| | - |  | ----------------------

The external
analgesics category (analgesics being defined as medications or agents that relieve or reduce pain) has grown as a new generation of products (such as patches and sleeves) delivers convenient alternatives with greatly reduced side effects compared
to traditional ingestible pain management solutions. The market is also seeing growth due to the fact that consumers are now searching for safe, natural and novel solutions for everyday pain relief. The external analgesic market is estimated to be
between $500-700 million annually. There are several trends that have enhanced the appeal of such OTC external analgesic solutions, including consumer demand for pain relievers that help to alleviate discomfort from muscle and joint pain, and
ongoing concerns among health conscious Americans about the introduction of internal analgesics into their bodies.

BENGAY®and Icy Hot®have established themselves as the external analgesics of choice for active people around the world, along with other
imported external analgesics such as Tiger Balm®that find some niche popularity in US
markets. These brands have been in locker rooms, gyms, clinics, and the family medicine cabinet. They have been widely available, some for the last 50 years, and have become the top of mind brands in terms of muscle and joint pain.

The external analgesic category has been around for decades and has changed very little with regard to the technology utilized to provide pain
relief. The majority of external analgesics utilize a counterirritant approach as a solution to pain. This approach can only be considered a short term solution to pain, as these counterirritants merely mask the pain by confusing
the nervous system and sending an alternative sensory feeling from the same area. While this may cause a feeling of temporary relief, this course of action has not treated the injury, but has merely ignored it via distraction to the brain.

The wide array of consumer options all fall into the same set of characteristics. These characteristics are: (i) the products often
have a strong and unpleasant medicinal smell, (ii) these products often come with a severe burning or cooling sensation, (iii) these products are often greasy and leave a residue on the consumers skin. Along with these undesirable
characteristics, the products sometimes will also cause discoloration of the skin, severe irritations of the skin and skin rashes, because they are by their very nature an irritant.



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The OTC topical analgesic market has seen some
recent excitement with the introduction of new ways of using and applying the same old medicine. New to the topical analgesic market, the patch and sleeve methods of delivering these counterirritants have sparked a renewed interest with consumers.
These two methods of applying OTC topical treatments are not a new treatment, just a new way of delivering an old treatment. Procter & Gambles ThermaCare®saw sales over $100 million in its first year on the market, while IcyHot has spent millions in marketing and endorsements on their
IcyHot Sleeve. These new treatment options are not economical. A box of 3 single use ThermaCare pads costs nearly $2 per application (the manufacturer claims that a single application can produce results that last 8 hours). Seeing that these two
large and established brands are making such moves with decent success indicates that consumers are seeking innovative products in the topical space, and are ready for a new treatment that truly works. The topical market has stayed relatively
consistent, and flat, for the last several years. ALCiS is poised to be the first real innovative treatment alternative in this mature market and expects strong success in this category.

Manufacturing

ALCiS has a signed manufacturing agreement with BioZone under which BioZone has a
right of first refusal to manufacture ALCiS products containing the LDS technology that ALCiS licensed from BioZone. BioZone is an FDA certified manufacturing facility that is able to provide ALCiS with all manufacturing requirements over the
next several years. BioZone is a leading custom private-label manufacturer. BioZone provides cost-effective quality products with on-time delivery to its customers. BioZone manufactures millions of units per year for customers, and has adequate
plant capacity for ALCiS products over at least the next few years. BioZones flexible manufacturing can handle both short-run and high-volume capacity for skin care, body care, hair care, OTC drug preparations, and liquid dietary supplements.
BioZone formulates high-quality custom, as well as stock, formulas that are customized for each customer. BioZone is a cGMP (Current Good Manufacturing Practices) facility and is registered with the FDA as a drug manufacturer. The flexibility of
BioZones compounding and filling facilities allows for a vast range of batch and fill sizes. BioZones facilities include a full range of high speed to moderate speed custom filling and packaging equipment for jars, tubes, and bottles.
BioZone is currently the Companys sole provider of ALCiS products. As we do not own our own manufacturing facility, we are able to invest more in sales and marketing and be more nimble as we do not need a manufacturing infrastructure other
than internal resources to supervise and work with BioZone.

Distribution

ALCiS products are shipped from BioZone in Northern California to a fulfillment center in Van Nuys, CA. Moulton Logistics Management
(Moulton) provides pick and pack fulfillment services to the Companys direct to consumer accounts and physician sampling program. Moulton is a leading ISO 9000 certified fulfillment company. Moulton serves numerous
clients in B2B and B2C marketing, including DRTV (Direct Response Television), catalogs, online shopping, continuity programs, literature fulfillment and CRM services. Moulton operates from a 200,000 sq. ft. facility in Van Nuys, CA close to the Los
Angeles and Long Beach Ports. Moulton ships to some of the largest distributors and retailers in America every day. ALCiS products are currently returned to it at its contract fulfillment facility in Van Nuys, California. Subsequent to year end the
Company engaged the services of Logistics Master, LLC for distribution to retailers in North America. Logistics Master is based in Tulsa, Oklahoma and specializes not only in the unique aspects of fulfillment to large retailers but also is able to
handle the Companys technology platform to manage inventory and communications to our customers via EDI.

Intellectual Property

ALCiS has entered into a license and manufacturing agreement with BioZone for the LDS used in
ALCiS®Daily Relief Pain Relief Cream. The agreement grants ALCiS an exclusive, world-wide
license for the commercialization of the LDS for topical analgesic pain relief applications and body soak preparations and a non-exclusive, world-wide license for the commercialization of the LDS for similar preparations such as body lotions, soap
and other dermatological applications.

Under the agreement, ALCiS pays a percentage based royalty, with a minimum royalty of at least
$25,000 per month until December 31, 2008, when the minimum monthly royalty increases to $50,000.

Additionally, ALCiS is to pay
BioZone non-refundable, prepaid royalties of $400,000. ALCiS paid BioZone the initial $250,000 prior to fiscal 2007 and has been paying BioZone the remaining $150,000 over an 18-month period in equal payments of $8,333 beginning July 30, 2006.
As of March 31, 2007, the Company was current with its payments under this arrangement. ALCiS has also granted BioZone 460,000 warrants to purchase shares of its common stock at $2.00 per share.



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ALCiS has also entered into a purchase option with BioZone to acquire broader rights to the technology
licensed under the license and manufacturing agreement. ALCiS has granted to BioZone 100,000 warrants to purchase shares of its common stock at $2.00 per share. Such purchase option shall continue until September 30, 2007. In the event that
ALCiS chooses to exercise such purchase option, ALCiS shall pay BioZone agreed upon amounts of both cash and common stock and the parties shall enter into an asset purchase agreement and other related documents.

Although we license our technology from BioZone, and the licensed technology includes patents, our revenue is not dependent on any particular patent. We
do not believe the expiration or loss of any particular patent would materially harm our business. We do not know if BioZones patents will be challenged, invalidated, narrowed in scope, or declared unenforceable.

Our success also depends on our other rights in proprietary technology. We rely on a combination of copyright, trade secret, trademark and contractual
protection to establish and protect our proprietary rights that are not protected by patents, and we also typically enter into confidentiality agreements with our employees and consultants. Despite our efforts to protect our proprietary rights
through confidentiality and license agreements, unauthorized parties may attempt to copy or otherwise obtain and use our technology. It is difficult to monitor unauthorized use of technology, particularly in foreign countries where the laws may not
protect our proprietary rights as fully as laws in the United States. In addition, our competitors may independently develop technology similar to ours. Our precautions may not prevent misappropriation or infringement of our intellectual property.

Third parties could infringe or misappropriate our patents, copyrights, trademarks and other proprietary rights. In addition, other
parties may assert infringement claims against us or our customers. Although we do not believe our products infringe any patents, our products may be found to infringe one or more issued patents. In addition, because many pending patent applications
in the United States are not publicly disclosed by the United States Patent and Trademark Office until the application is published, there may be applications that relate to our products of which we have no knowledge. We may be subject to legal
proceedings and claims in the ordinary course of our business, including claims of alleged infringement of the trademarks and other intellectual property rights of third parties. We may also be required to resort to litigation to enforce our
intellectual property rights and in these regards would require the assistance of BioZone, which may or may not be readily provided. Intellectual property litigation is expensive and time-consuming and could divert managements attention away
from running our business. This litigation could also require us to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the allegedly infringing intellectual property, develop
non-infringing technology or enter into royalty or license agreements. These royalty or license agreements, if required, may not be available on acceptable terms, if at all, in the event of a successful claim of infringement. Our failure or
inability to develop non-infringing technology or license the proprietary rights on a timely basis would harm our business.

ALCiS
currently has registered U.S. trademarks for THE SCIENCE OF RELIEF and ALCIS in International Classes 003 and 005. The Company also has a registered U.S. trademark for ENGINEERED THERAPY FOR MUSCLES AND JOINTS in
International Class 005.

Each of ALCiS employees, independent contractors and consultants has executed assignment of application
agreements and nondisclosure agreements. The assignment of application agreements grant to ALCiS the right to own inventions and related patents which may be granted in the United States. The nondisclosure agreements generally provide that these
people will not disclose ALCiS confidential information to any other person without its prior written consent.

Product Development

From inception through March 31, 2006, and during the twelve-month period ended March 31, 2007, the Company spent
approximately $466,000 and $1,252,000, respectively, on product development activities. All of these expenditures were made to BioZone as we do not have a research and development staff and consist predominantly of the value of warrants we granted
to BioZone in connection with our license.

Governmental Regulation and Certification

Although there are currently many laws or regulations that specifically regulate health products, none currently require that the Company obtain
government approval of the Companys current products. Additional laws and regulations may be adopted in the future that address issues such as user allowable product claims, pricing and taxation, content, copyrights, distribution, antitrust
matters and the characteristics and quality of products and services. For example, the FDA currently has a tentative final monograph for external analgesics, and the finalization of this monograph may impact the permitted active
ingredients and the claims which can be made based upon such actives. Any new or additional laws or regulations could adversely affect ALCiS business. Further, ALCiS has secured certain rights relating to patented technology, certain uses of
which may or may not be approved by the FDA. Any such action by the FDA could adversely affect ALCiS business. In



7



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addition, because ALCiS products will be available in multiple states and foreign countries, these jurisdictions may require ALCiS to qualify to
do business as a foreign corporation in each of these states or foreign countries, which could subject it to taxes and other regulations. ALCiS is unable to predict the impact, if any, that future legislation, legal decisions or regulations may have
on its business, financial condition or results of operations. Because ALCiS does not conduct its own manufacturing, the cost and effects of compliance with environmental laws is not material.

Personnel

ALCiS works with a number of organizations
serving as outsourced service providers, including media buying, manufacturing, call centers, fulfillment and warehousing, contract sales representatives, legal and accounting. As such, ALCiS has been able to minimize personnel, and currently has
only eleven (11) employees, nine (9) of whom are full-time. ALCiS expects to increase the number of personnel considerably, and to have between 20 to 30 employees by the end of fiscal 2008, with most of the increase in marketing and
sales personnel.

Additional Information

Our
internet website address is www.alcis.com.

RISK FACTORS

The business, financial condition and operating results of ALCiS could be adversely affected by any of the following factors, in which event the value of the equity securities of ALCiS could decline, and investors
could lose part or all of their investment. The risks and uncertainties described below are not the only ones that the combined company faces. Additional risks and uncertainties not presently known to management, or that management currently thinks
are immaterial, may also impair future business operations.

Because ALCiS has a limited operating history, ALCiS may not be able to successfully
manage its business or achieve profitability.

ALCiS has a limited operating history upon which you can base your evaluation of its
prospects and the potential value of its common stock. The likelihood of success of ALCiS must be considered in light of the expenses, complications and delays frequently encountered in connection with the establishment and expansion of new business
and the competitive environment in which ALCiS will operate. ALCiS has little market penetration and successes to date, and may never reach profitability. No additional relevant operating history exists upon which an evaluation of its performance
can be made. ALCiS performance must be considered in light of the risks, expenses and difficulties frequently encountered in establishing new products and markets in the evolving, highly competitive consumer health products space. If ALCiS
cannot successfully manage its business, ALCiS may not be able to generate future profits and may not be able to support its operations.

ALCiS is in
the early stages of its development, has incurred substantial losses since inception and may never achieve profitability.

Since ALCiS
commenced its operations in 2004, ALCiS has incurred substantial operating losses. For the period April 1, 2006 through March 31, 2007, ALCiS-CA had a net loss of $5,411,162. ALCiS losses from operations have resulted in an
accumulated deficit of $10,120,870 at March 31, 2007. ALCiS expects that its operating expenses will outpace revenues for the near future and result in continued losses. ALCiS long-term viability, profitability and growth will depend upon
successful commercialization of initial products and the development and commercialization of new products relative to its business plan. You should consider the costs and difficulties frequently encountered by companies in their early stages of
launching a product and establishing a market presence. There is no assurance that ALCiS will ever obtain profitability which may lead to the loss of your entire investment.

We face significant competition in the OTC health care and toiletries markets.

The OTC health care
and toiletries markets are highly competitive and are characterized by the frequent introduction of new products, including the migration of prescription drugs to the OTC market, often accompanied by major advertising and promotional support. These
introductions may adversely affect our business especially because we compete in categories in which product sales are highly influenced by advertising and promotions. Our competitors include large pharmaceutical companies such as Merck, Pfizer,
Johnson & Johnson, and Wyeth, and consumer products companies such as Chattem and Haw Par Healthcare, Ltd, many of which have considerably greater financial and other resources than we do. These competitors are thus better positioned to
spend more on research and development, employ more aggressive pricing strategies, utilize greater purchasing power, build stronger vendor relationships and develop broader distribution channels than us. In addition, our competitors have often been
willing to use aggressive spending on trade promotions and advertising as a strategy for building market share at the expense of their competitors including us. If we are unable to continue to



8



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introduce new and innovative products that are attractive to consumers or are unable to allocate sufficient resources to effectively advertise and promote
our products so that they achieve wide spread market acceptance, we may not be able to compete effectively, and our operating results and financial condition may be adversely affected.

Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demands.

Our success depends on our products appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to change. If our current products do not meet consumer demands, our sales may decline. In
addition, our growth depends upon our ability to develop new products through product line extensions and product modifications, which involve numerous risks. We may not be able to accurately identify consumer preferences and translate our knowledge
into customer-accepted products or successfully integrate these products with our existing product platform or operations. We may also experience increased expenses incurred in connection with product development, marketing and advertising that are
not subsequently supported by a sufficient level of sales, which would negatively affect our margins. Furthermore, product development may divert managements attention from other business concerns, which could cause sales of our existing
products to suffer. We cannot assure you that newly developed products will contribute favorably to our operating results.

If ALCiS products fail
to perform properly, its business could suffer with increased costs and reduced income.

Although ALCiS has been testing its products
with users and has engaged in sales over the last two years, its products may fail to meet consumer expectations. ALCiS has had little experience in retail distribution and may encounter margins that are less favorable than expected due to
unexpected returns, credits and charge-backs. ALCiS will be required to replace products or refund the purchase price to consumers in cases of dissatisfaction. Failure of ALCiS products to meet expectations could:



| |  |  | damage its reputation,
| | - |  | ----------------------



| |  |  | decrease sales,
| | - |  | ---------------



| |  |  | incur costs related to returns,
| | - |  | -------------------------------



| |  |  | delay market acceptance of its products,
| | - |  | ----------------------------------------



| |  |  | result in unpaid accounts receivable, and
| | - |  | -----------------------------------------



| |  |  | divert its resources to reformulation or alternative products.
| | - |  | --------------------------------------------------------------

ALCiS needs additional capital to fund its growth.

ALCiS believes that its existing cash, cash
equivalents and short-term investments, will be sufficient to meet liquidity and capital requirements only for the next approximately six to nine months assuming our advertising monies spent yield approximately the same amount of revenue from new
orders. We are therefore currently actively attempting to raise both debt and equity financing which will dilute your stock ownership in ALCiS as the debt financing would likely have an equity component. There can be no assurance that we will be
successful in our financing efforts, or that any financing raised will be on terms we find to be attractive. If ALCiS cannot obtain additional financing on reasonable terms, ALCiS may not have sufficient capital to operate its business as planned
and would have to modify its business plan or curtail some or all of its operations. For example, we would reduce our discretionary spending, particularly our advertising and promotion expenses, in order to enable our existing cash to meet our
requirements for a longer time period.

There is no assurance that ALCiS will be successful in maintaining its technology licenses.

ALCiS has entered into a perpetual, worldwide exclusive license for use of certain technology in topical analgesic pain relief products, a nonexclusive
license on a number of other products, and an option to purchase broader rights to several technologies in the future. For the license, ALCiS agreed to pay warrants to purchase 400,000 shares of ALCiS Common Stock, $400,000 in advance royalty
payments of which $75,000 remain due as of March 31, 2007, and to a royalty rate based on sales with a minimum payment of $25,000 per month ($50,000 after December 31, 2008) to continue its exclusive license agreement. To secure its option
to purchase, ALCiS has provided warrants to purchase another 100,000 shares of ALCiS Common Stock. In the event that ALCiS fails to pay such minimum monthly amounts, ALCiS may lose all licensed rights relating to these technologies. While ALCiS has
successfully negotiated contract modifications in the past, there is no assurance ALCiS will continue to be successful in such negotiations.



9



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ALCiS has committed to have its products manufactured only by BioZone so long as BioZone desires to manufacture such
products. If BioZone does not supply us with quality products in a timely manner, our revenues will decline.

In our technology license
with BioZone, we have granted BioZone a right of first refusal to manufacture products licensed from BioZone, which includes all of our current products. This right of first refusal terminates if BioZone is unable to deliver such products or the
committed pricing. If BioZone does not supply us with quality products in a timely manner, or desires to charge us higher prices than those committed, we would have to attempt to work with BioZone to mitigate the adverse impacts or else terminate
our commitment to BioZone and attempt to locate another contract manufacturer. There can be no assurance we will be able to locate another contract manufacturer in a timely and cost-effective manner. Any such switch could take significant time and
could be contested by BioZone, and as a result our supply of product may be interrupted and our revenues may decline. In addition, the price which we pay for product could increase, thereby reducing our gross margin.

ALCiS intellectual property and proprietary rights give it only limited protection and can be expensive to defend.

Our trademarks are of material importance to our business and, together with our license agreement with BioZone, are among our most important assets. In
fiscal 2007, substantially all of ALCiS total revenues were from licensed products. ALCiS ability to produce and sell pain management products depends in part on maintaining various trademarks and protecting its operational trade secrets
and to a lesser extent on securing patent protection for its products. To protect its proprietary technology, ALCiS will rely upon a combination of proprietary technology and know-how, patents, trademarks, copyrights, confidentiality agreements
and/or other contractual covenants to establish and protect its intellectual property rights. There can be no assurance that steps taken by ALCiS to protect its intellectual property will be adequate to prevent infringement or misappropriation of
that intellectual property, or that ALCiS competitors will not independently develop products substantially equivalent or superior to ALCiS products. Any infringement or misappropriation could have a material adverse effect on
ALCiS future financial results. ALCiS believes its business does not infringe upon the valid proprietary rights of others, but there can be no assurance that third parties will not assert infringement claims against ALCiS and that, in the
event of an unfavorable ruling on any such claim, a license or similar agreement to utilize the intellectual property rights in question relied upon by ALCiS in the conduct of its business will be available to ALCiS or reasonable terms, if at all.
In addition, the laws of some foreign countries do not protect proprietary rights in brand names to the same extent as do the laws of the United States. We cannot assure you that we will be able to successfully protect our trademarks from
infringement or otherwise. The loss or infringement of our trademarks could impair the goodwill associated with our brands, harm our reputation and materially adversely affect our financial results. The loss of such rights (or the failure by ALCiS
to obtain similar licenses or agreements) could have a material adverse effect on ALCiS business, financial condition and results of operations. In addition, it is believed that, from time to time, ALCiS may become involved in intellectual
property disputes with third parties, which may not result in a favorable outcome for ALCiS. ALCiS also could incur substantial costs to assert its intellectual property or proprietary rights against others.

We license additional intellectual property from third parties that is used in certain of our products, and we cannot assure you that these third parties
can successfully maintain their intellectual property rights. In addition, the sale of these products relies on our ability to maintain and extend our licensing agreements with third parties, and we cannot assure you that we will be successful in
maintaining these licensing agreements. Any significant impairment of the intellectual property covered by these licenses, or in our rights to use this intellectual property, may cause our sales to decline.

ALCiS might not be able to hire and retain personnel with the appropriate experience and talent to build its sales and marketing capability which will negatively
affect future revenue.

ALCiS future success depends to a significant extent on the continued services of senior management and
other key personnel. ALCiS does not maintain key person life insurance for any of its executives. The loss of such key personnel would likely have a significantly detrimental effect on the business. ALCiS may also be unable to retain key
employees or attract, assimilate or retain other highly qualified employees in the future. ALCiS may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications as a result of rapid growth and expansion,
and there can be no assurance ALCiS will be able to attract and retain the qualified personnel necessary for the development of its business. The failure to recruit qualified technical, managerial or marketing personnel could have a material adverse
effect on ALCiS business, financial condition and results of operations.

ALCiS future depends on the financial success of its products.
Since ALCiS is introducing entirely new products without comparable sales history, ALCiS does not know if its products will generate wide acceptance by consumers.

ALCiS is introducing its pain management products as new products to consumer markets unfamiliar with their use and benefits. ALCiS does not know whether its products will generate widespread acceptance. If consumers
do not purchase its products, ALCiS will not be profitable and you may lose all of your investment. You must consider ALCiS prospects in light of the risks, expenses and challenges of attempting to introduce new products with unknown consumer
acceptance.



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ALCiS marketing strategies may not be successful, which would adversely affect its future revenues and
profitability.

ALCiS revenues and future depend on the successful marketing of pain management and body therapy products. ALCiS
cannot assure you that consumers will be interested in purchasing its products. ALCiS currently uses direct marketing to sell its products via television commercials, infomercials, magazine and newspaper advertising and the Internet. Its
infomercials and commercials may not generate sufficient income to continue to air the commercials. ALCiS expects that the awareness attained from the direct marketing will support its launch into retail stores. ALCiS may find less success in the
selling process than expected. Given that initial growth is focused on Direct Response Television sales, less than forecasted sales in this channel will significantly impact projections. The Company has sought to mitigate this risk by engaging EURO
RSCG 4D DRTV, the leader in the industry and the largest direct response media buying company in the world. ALCiS expects the incorporation of this strategic relationship will reduce the risk of underperformance. ALCiSs strategy is to use
direct response advertising to promote its products for sale at retail stores. ALCiS has a limited history in selling to drug store chains, pharmacies, specialty stores and mass retailers. ALCiS may encounter terms dictated by these potential
customers that are not acceptable or at a level that is not profitable. If ALCiS sales and marketing strategies fail to attract customers, its product sales will not produce future revenues sufficient to meet its operating expenses or fund its
future operations. If this occurs, ALCiS business may fail and you may lose your entire investment

ALCiS current or future manufacturers
could fail to fulfill ALCiS orders for products which would disrupt its business, increase its costs and could potentially cause it to lose its market.

ALCiS currently depends on one contract manufacturer in California to produce its pain management products. To date ALCiS has received only limited quantities of finished products and does not yet have an operating
history that demonstrates that this manufacturer can produce its pain management products in a timely manner or in sufficient volumes. In order to reduce the risk of undersupply, ALCiS will participate in all procurement of longer lead-time
materials, stock such materials for ready availability and, initially, stock more inventory than otherwise required under a just-in-time inventory program. The manufacturer may also fail to produce the products to ALCiS specifications or
deliver them on a timely basis. This manufacturer is located in California and could be subject to risk of natural disasters such as an earthquake resulting in disruption of supply. Any change in manufacturers or location could disrupt its business
due to delays in finding a new manufacturer, providing specifications and testing initial production. ALCiS has identified a back-up manufacturer on the East coast and we expect to complete the qualification process of this vendor during FY 2008.
There can be no assurance that we will be successful with this potential manufacturer. The loss of a contract manufacturer may force us to shift production to in-house facilities and possibly cause manufacturing delays, disrupt our ability to fill
orders or require us to suspend production until we find another third party manufacturer. We are not able to control the manufacturing efforts of these third party manufacturers as closely as we control our business. Should any of these
manufacturers fail to meet our standards, we may face regulatory sanctions, additional product liability claims or customer complaints, any of which could harm our reputation and our business. Any interruption or significant delay in the supply of
these active ingredients would impede our ability to manufacture these products, which would cause our sales to decline.

ALCiS may not be able to
manage expanding operations.

If ALCiS is successful in achieving market acceptance of its products, it will be required to expand its
operations quickly, requiring the establishment of technical operations, system administration, and sales and marketing in each target market. This may result in new and increased responsibilities for management and place significant strain on
ALCiS management, operating and financial systems and other resources. To accommodate such growth and compete effectively, ALCiS will be required to implement and improve information systems, procedures and controls, and to train, motivate and
manage its work force. ALCiS future success will depend to a significant extent on the ability of its future management personnel to operate effectively. There can be no assurance ALCiS personnel, systems; procedures and controls will be
adequate to support ALCiS future operations.

An active trading market for ALCiS common stock may not develop or be sustained.

There can be no assurance as to when and if the shares of common stock will become quoted on any stock exchange and, even if the shares
of common stock are quoted, there can be no assurance that an active trading market will develop for such shares. If an active public trading market does not develop or continue, you may have limited liquidity and may be forced to hold your shares
of ALCiS common stock for an indefinite period of time. Further, the prices and volume of trading in ALCiS common stock may be adversely affected if its securities are not listed or quoted.



11



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If an exemption from registration on which ALCiS has relied on for any of its past offerings of common stock or
warrants were later challenged legally, its principals may have to expend time defending claims and ALCiS would then risk paying expenses for defense, rescission and/or regulatory sanctions.

To raise working capital, ALCiS offered common stock and warrants in private transactions that ALCiS believed to be exempt from registration under the
Securities Act of 1933, as amended and state securities laws. In the event that one or more investors seeks rescission, with resulting return of investment funds and interest at a market rate, or that state or federal regulators seeks sanctions
against ALCiS or its principals, ALCiS would spend time and financial resources, to pay expenses for defense, rescission awards or regulatory sanctions. The use of funds would reduce the capital available to implement its full plan of operation.

There may be substantial sales of ALCiS common stock by existing stockholders which could cause the price of ALCiS stock to fall.

Future sales of substantial amounts of ALCiS common stock in the public market, if one develops, or the perception that such
sales might occur, could cause the market price of its common stock to decline and could impair the value of your investment in ALCiS common stock and its ability to raise equity capital in the future. As of May 31, 2007, ALCiS had
8,961,902 shares of common stock outstanding, of which 7,191,402 shares may be sold immediately without restriction in the public market, if one develops. Of the remaining shares, 1,770,500 shares are considered restricted shares under
Rule 144. The sales of ALCiS common stock by stockholders having registered stock or even the appearance that such holders may make such sales may depress any trading market that develops before shareholders are able to sell the common stock they
received in the Companys common stock offering conducted during the second half of 2007.

ALCiS outstanding warrants and options, and
additional future obligations to issue ALCiS securities to various parties, may dilute the value of your investment and may adversely affect ALCiS ability to raise additional capital.

As of March 31, 2007, ALCiS had warrants and options outstanding that can be exercised for 4,302,600 shares of its common stock at exercise prices
ranging from $0.10 to $4.75 per share. ALCiS has historically issued shares of its common stock or granted stock options to employees, consultants and vendors as a means to conserve cash, and ALCiS will continue to grant additional shares of stock
and issue stock options in the future. ALCiS can issue 1,300,000 shares of common stock under its 2004 Plan, and as March 31, 2007, had 697,575 outstanding options under the 2004 Plan of which 308,044 were exercisable, leaving 602,425 options
available for future grant under the 2004 Plan.

For the length of time these warrants and options are outstanding, the holders will have
an opportunity to profit from a rise in the market price of ALCiS common stock without assuming the risks of ownership. This may adversely affect the terms upon which ALCiS can obtain additional capital. The holders of such derivative
securities would likely exercise or convert them at a time when ALCiS would be able to obtain equity capital on terms more favorable than the exercise or conversion prices provided by the notes, warrants or options.

If ALCiS common stock is traded, ALCiS expects to be subject to the penny stock rules for the foreseeable future.

ALCiS is subject now and expects in the future to be subject to the SECs penny stock rules if its common stock sells below $5.00 per
share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly
account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing before or with the customers confirmation.

In
addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for ALCiS common stock. As long as ALCiS common stock is subject to the penny stock rules, the
holders of its shares may find it more difficult to sell their securities.

ALCiS certificate of incorporation authorizes the issuance of shares
of preferred stock, the rights, preferences, designations and limitations of which may be set by the board of directors.

ALCiS
certificate of incorporation authorizes issuance of up to 500,000 shares of preferred stock (Preferred Stock) at the discretion of its board of directors. Any undesignated shares of Preferred Stock may be issued by ALCiS board of
directors; no further shareholder action is required. If issued, the rights, preferences, designations and limitations of such Preferred Stock would be set by the board of directors and could operate to the disadvantage of the outstanding common
stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers.



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Concentration of ownership among our existing directors, executive officers and principal stockholders may prevent new
investors from influencing significant corporate decisions.

The Companys directors, executives and principal shareholders
beneficially own approximately 88% of total outstanding shares, as calculated on a fully diluted basis. Even where these amounts do not constitute a majority, if such persons act in concert, they will have significant power to elect the
Companys directors and, subject to certain limitations, effect or preclude fundamental corporate transactions involving the Company. See Principal Shareholders and Description of Capital Shares.

Government regulations and legal uncertainties could cause product sales or introductions to be delayed or canceled as a result of regulatory processes, which could
cause our sales or profitability to decline.

There are currently laws or regulations that specifically regulate health products.
Additional laws and regulations may be adopted in the future that address issues such as user allowable product claims, pricing and taxation, content, copyrights, distribution, antitrust matters and the characteristics and quality of products and
services. For example, the FDA currently has a tentative final monograph for external analgesics, and the finalization of this monograph may impact the permitted active ingredients and the claims which can be made based upon such
actives. Any new or additional laws or regulations could adversely affect ALCiS business. Further, the Company has secured certain rights relating to patented technology, certain uses of which may or may not be approved by the FDA. Any such
action by the FDA could adversely affect ALCiS business. In addition, because ALCiS products will be available in multiple states and foreign countries, these jurisdictions may require ALCiS to qualify to do business as a foreign
corporation in each of these states or foreign countries, which could subject it to taxes and other regulations. ALCiS is unable to predict the impact, if any, that future legislation, legal decisions or regulations may have on its business,
financial condition or results of operations.

If we become subject to product liability claims and our product liability insurance coverage is
inadequate or inapplicable, we may be required to engage in costly litigation or pay significant damages and our business may be harmed.

Product users may sue ALCiS if any of the products that it may sell are defective, fail to perform properly or injure the user. ALCiS has very limited experience in the sale of products and the development of relationships with
manufacturers or suppliers of such products. Although, when practical, agreements are expected to contain provisions intended to limit its exposure to liability claims, these limitations may not prevent all potential claims. ALCiS may be exposed to
liability claims in connection with the products it provides. Liability claims could require ALCiS to spend significant time and money in litigation and to pay significant damages. As a result, these claims, whether or not successful, could
seriously damage ALCiS reputation and business. The Company currently has product liability insurance; in the event such insurance is inadequate or contested, the Company may not have sufficient coverage for liability claims.



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|Item 2. | Description of Property
|------- | -----------------------

The Company is headquartered in
San Jose, California. The Companys main headquarters at 2001 Gateway Place, Suite 520W, San Jose, California 95110 comprises approximately 5,900 square feet. The Company rents these headquarters, which are in good condition and can accommodate
the executive, accounting, sales and marketing, and administrative staffs.



|Item 3. | Legal Proceedings
|------- | -----------------

ALCiS is not a party in any bankruptcy,
receivership or other legal proceeding, and to the best of ALCiS knowledge, no such proceedings by or against ALCiS have been threatened.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None



14



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Part II



|Item 5. | Market for the Common Equity, Related Shareholder Matters and Small Business Issuer Purchases of Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------------

Market Information

There is currently no public trading market
for ALCiS common stock.

Holders

As of
March 31, 2007, there were approximately 375 holders of record of our common stock. The number of record holders does not include beneficial owners whose shares are held in the names of banks, brokers, nominees or other fiduciaries.

Dividends

ALCiS has not declared or paid any cash
dividends on its common stock. It intends to retain any future earnings to finance the growth and development of its business, and therefore it does not anticipate paying any cash dividends on its common stock in the future. The board of directors
will determine any future payment of cash dividends depending on the financial condition, results of operations, capital requirements, general business condition and other relevant factors. If the Company issues preferred shares, although not
currently anticipated, no dividends may be paid on the outstanding common stock until all dividends then due on the outstanding preferred stock will have been paid.

Registrant Recent Sales of Unregistered Securities

During the fourth quarter of fiscal year 2007, the Company
issued 37,500 of its common shares to three individual investors. These shares were sold at $2.00 per share for cash proceeds totaling to $75,000. All of these shares were sold to accredited individual investors, some of whom were already Company
shareholders. The Company relied on Rule 506 promulgated under Regulation D as an exemption from the registration requirements of the Securities Act of 1933, as amended, for the sale of these shares.

Also during the fourth quarter of fiscal 2007, the Company issued warrants to purchase 10,000 shares of its common stock under its 2004 Stock Plan to a consultant who is
an accredited investor. The warrants are exercisable at a price of $2.00 per share and expire 10 years from the date of grant. The warrants vest over a two-year period where 5,000 shares vest after one year and the remaining 5,000 shares vest
monthly in the second year. The Company relied on Rule 506 promulgated under Regulation D as an exemption from the registration requirements of the Securities Act of 1933, as amended, for the sale of these warrants and for the shares issuable upon
exercise of these warrants.

Registrant Share Purchases

There were no purchases made by or on behalf of Registrant or any affiliated purchaser (as defined in Exchange Act Rule 10b-18(a)(3)) of shares of Registrants $0.001 par value common stock during the fourth quarter of fiscal
2007.



|Item 6. | Managements Discussion and Analysis or Plan of Operation
|------- | ---------------------------------------------------------

This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of a number
of factors, including, but not limited to, those described in our filings with the Securities and Exchange Commission.

The following discussion and
analysis should be read in conjunction with the Consolidated Financial Statements and related Notes thereto contained in Item 7 of this Annual Report. The information contained in this annual report on Form 10-KSB is not a complete description
of our business or the risks associated with an investment in our common stock. You are urged to carefully review and consider the various disclosures we made in this Report and in other reports filed with the SEC.



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Cautionary Statement Regarding Forward Looking Statements

This Managements Discussion and Analysis includes forward-looking statements. These forward-looking statements are not historical facts, and are based on current
expectations, estimates, and projections about the Companys industry, its beliefs, its assumptions, and its goals and objectives. Words such as anticipates, expects, intends, plans,
believes, seeks, forecasts, and estimates, and variations of these words and similar expressions, are intended to identify forward-looking statements. Examples of such forward-looking statements in
this are the Companys growth strategy; the Companys anticipated product development and advertising and promotion expenses during some or all of fiscal 2008; the belief that the Company through its contract manufacturer has ample
production capacity in place to handle any projected increase in business for this fiscal year; the anticipation that the available funds and expected cash usage from operations will be sufficient to meet the liquidity and capital requirements for
the next six to nine months; our plans to raise debt and equity financing; our contingency plan if we dont raise financing in the next three to six months to then reduce expenses so that we can stretch our cash for another three months. These
statements are only predictions, not a guaranty of future performance, and are subject to risks, uncertainties, and other factors, some of which are beyond the Companys control and are difficult to predict, and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties include no material adverse changes in the demand for the Companys products; competition to supply OTC products in the
markets in which the Company competes does not increase and cause price erosion; that there are no unexpected manufacturing issues as production ramps up; the demand for the Companys products is such that it would be unwise not to decrease
research and development; our not having unanticipated cash requirements; our not having difficulty raising financing on attractive or any terms; our ability to effectively reduce cash expenses quickly as a contingency as well as other risks and
factors set forth in this Form 10-KSB, including in Item 1 under Risk Factors . The information included in this Form 10-KSB is provided as of the filing date with the SEC and future events or circumstances could differ
significantly from the forward-looking statements included herein. Accordingly, the readers are cautioned not to place undue reliance on such statements. Except as required by law, the Company undertakes no obligation to update any forward-looking
statement, as a result of new information, future events, or otherwise.

Critical Accounting Policies

Revenue recognition

Net sales consist primarily of
products sold directly to consumers via a telephone call center and the internet, shipping revenue, net of estimated returns and promotional discounts. The Company recognizes revenue when all of the following have occurred: persuasive evidence of an
agreement with the customer exists, products are shipped and the customer takes delivery and assumes the risk of loss; the selling price is fixed or determinable and collectibility of the selling price is reasonably assured.

The Company requires payment at the point of sale. Amounts received prior to delivery of goods to customers are not recorded as revenue. Delivery is
considered to occur when title to our products has passed to the customer, which typically occurs at physical delivery of the products from our fulfillment center to a common carrier. The Company offers a return policy of generally 30 days and
provides an allowance for sales returns during the period in which the sales are made.

The Company generally does not extend credit to
customers, except through third party credit cards. The majority of sales are through credit cards, and accounts receivable are composed primarily of amounts due from financial institutions related to credit card sales. The Company does not maintain
an allowance for doubtful accounts because payment is typically received within two business days after the sale is complete.

The Company
periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers and offers for free product when multiple units are purchased. Current discount offers are treated as a reduction of the
purchase price of the related transaction, while the cost of the free product is included in cost of sales at the time of shipment.

Prepaid Royalties

Under the license and manufacturing agreement with the patent owner of the liposomal delivery system used in ALCiS Daily Relief,
prepaid royalties consists of the difference between the actual royalties owed and the minimum monthly payment due, when the minimum monthly payment exceeds the actual royalties owed. In addition, certain up-front payments are characterized as
prepaid royalties. Prepaid royalties are available to offset future royalties when actual royalties owed exceed the minimum monthly payment due. At that time, the prepaid royalties can be applied to the actual royalties owed and reduce the actual
payment to the minimum amount due. The prepaid royalties expire upon the termination of the license and manufacturing agreement.



16



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The Company charges to expense the prepaid royalties, that is the excess of the amounts paid over the
royalties due on the current period sales. The Company does not record an asset for prepaid royalties available for future sales.

Stock based
compensation

The Company accounts for its stock based compensation plans under Statement of Financial Accounting Standards
(SFAS) No. 123 (Revised 2004), Share Based Payments, whereby the cost of share based payments to employees, including grants of employee stock options, are measured based on the grant date fair value of the award.
That cost is recognized over the period during which an employee is required to provide service in exchange for the award, the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the
requisite service. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes model adjusted for the unique characteristics of those instruments.

The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock,
stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the date required by Emerging Issues Task Force (EITF) Issue 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

In accordance with EITF 96-18, the stock options or common stock warrants are fair valued using the Black-Scholes model on the basis of the market price of the underlying common stock on the valuation
date, which for options and warrants related to contracts that have substantial discentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is
recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes
option-pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock through the valuation date is reflected in the expense
recorded in the subsequent period in which that change occurs.

Income taxes

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences
between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a
deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Advertising expenses

The cost of advertising is
expensed in the fiscal year in which the related advertising takes place. Production and communication costs are expensed in the period in which the related advertising begins running. Costs for direct-response advertising are capitalized and
amortized over the estimated useful life of the advertisement.

Managements estimates and assumptions

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results may differ from such estimates. The Company reviews all
significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to their issuance.

Overview

ALCiS principal business is researching, developing, marketing and distributing body therapy solutions, including but not
limited to the area of pain management products such as topical analgesics. In order to reduce its capital requirements and increase its flexibility, ALCiS uses a contract manufacturer to manufacture its products. The products are then shipped to a
fulfillment center to await shipment to customers. ALCiS licenses certain patented technology exclusively in its field of use from its contract manufacturer.

Since formation, ALCiS principal activities have consisted of securing rights to proprietary technologies for its topical analgesic pain relief products, product and market research and development resulting in the filing of five
trademark applications, the development of five proprietary products, research into the markets for ALCiS products and the best channels through which to sell them, providing samples and selling to end customers and resellers to develop these
channels, business planning and raising the capital necessary to fund these activities.



17



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ALCiS began selling its products in May 2005, and has realized annual revenue of approximately $757,000, and $2.3 million
during fiscal 2006 and 2007, respectively.

Results of Operations

Net Sales

Net sales for the twelve months ended March 31, 2007 were $2,278,134, compared to $757,219 for the
same period of fiscal 2006. The year-over-year increase in net sales is due to our increased sales efforts and advertising during fiscal 2007. Substantially all sales were the result of direct-to-consumer sales activities, and a small amount of
wholesale sales or sales to distributors or retailers occurred during the fiscal year. There was no material price erosion for our product offerings.

Our
current growth strategy relies on increased sales in the direct-to-consumer channel, the successful launch of our current products into the retail channel, and our ability to continuously and successfully introduce and market new products and
technologies that meet our customers requirements.

Our principal market is the United States, which accounts for 99% of all sales. The Company has
made a small amount of sales to a distributor in India, but the amount is immaterial.

Our assets are all located in the United States.

Gross Profit

Gross profit represents net sales less cost of net
sales. Cost of sales includes the cost of purchasing product, cost associated with packaging, testing, and quality assurance, the charges of the fulfillment contractor, the cost of personnel, facilities, and equipment associated with manufacturing
support and charges for excess inventory. For the twelve months ended March 31, 2007, gross profit was $1,418,524 compared to $411,865, or a 244% increase. This increase was primarily due to increased net sales.



|              |  |                      |           |   |      |   |         |  
|------------- |  | -------------------- | --------- | - | ---- | - | ------- | -
|              |  | Year Ended March 31, |          
|              |  | 2007                 |           |   | 2006 |  
|Net Sales     |  | $                    | 2,278,134 |   |      | $ | 757,219 |  
|Cost of Sales |  |                      | 859,610   |   |      |   | 345,354 |  
|              |  |                      |           |   |      |   |         |  
|Gross Profit  |  | $                    | 1,418,524 |   |      | $ | 411,865 |  
|              |  |                      |           |   |      |   |         |  
|Gross Margin  |  |                      | 62        | % |      |   | 54      | %
|              |  |                      |           |   |      |   |         |  

Gross margin, which is gross profit as a percent of net sales, for the twelve months ended March 31, 2007,
was 62% versus 54% during fiscal 2006. This increase was due to lower manufacturing charges due to increased production volume.

Product Development
Expenses

Product development expenses are primarily comprised of consulting payments to the manufacturer and formulator of our products. Product
development expenses during the twelve months ended March 31, 2007 were $1,251,573 compared to $465,619 in the previous twelve months, or a 169% increase. Of the $1,251,573, $942,713 was due to stock-based compensation charges from warrants
issued to the manufacturer for the exclusive license of the technologies and $308,860 was due to the monthly royalty payments in accordance with our technology contracts. The expense related to the warrants was calculated using the Black-Scholes
option pricing model and thus does not represent any cash payments to the manufacturer.

We plan to increase product development activities to enhance our
product offerings in order to meet current and future requirements of our customers and markets. As such, product development expenses in absolute dollars are likely to increase in the first quarter of fiscal 2008 and for fiscal 2008 as whole.
However, product development expenses as a percentage of net sales may fluctuate.

Advertising and Promotion Expenses

Advertising and promotion expenses consist primarily of television and print media, outside sales commissions, call center expenses, public relations and employee related
expenses.



18



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Advertising and promotion expenses for the twelve months ended March 31, 2007 increased $1,719,857 or 105%, from
$1,631,019 to $3,350,876 compared to the same period last year. The increase is primarily attributed to increases in media purchasing, outside sales commission, marketing consulting expense and production costs of approximately $1.1 million,
$250,000, $120,000, and $119,000, respectively, compared to the previous year. The remaining overall increase in Advertising and Promotion is comprised of various employee related expenses, travel, and website development, as we continue to expand
our sales and marketing efforts.

Advertising and Promotion expenses for the first quarter of fiscal 2008 are expected to increase in absolute dollars as
we continue to expand our sales and marketing presence in retail; however, advertising and promotion expenses as a percentage of net sales may fluctuate.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses consist primarily of employee-related expenses, stock based
compensation, insurance, occupancy expenses, and outside services such as legal, auditing, and tax services.

SG&A expenses for the twelve months ended
March 31, 2007 increased $718,145 or 46% from $1,559,708 to $2,277,853 for the comparable period of last year. This increase is primarily attributed to employee related expenses of approximately $465,000 and a $393,493 increase in stock based
compensation charges related to certain warrants and options issued to directors and Company advisors. (We incurred stock based compensation charges for employees under FAS 123R for the first time during fiscal 2007, previously having incurred such
charges only for directors and consultants.) Other significant increases include office rent of approximately $30,000, and legal & accounting of approximately $213,000.

Other Income, Net

ALCiS earned $53,230 of interest income during the year ended March 31, 2007. The Company did
not earn any interest in fiscal 2006.

Provision for Income Taxes

Provision for income taxes represents federal and state taxes. There was no provision for income taxes for the years ended March 31, 2007 and March 31, 2006. The Company has generated net operating losses
since inception which may be available to reduce future taxable income. There is currently a full valuation allowance against our deferred tax asset.

Financial Condition

Overview

We ended
fiscal 2007 with $1,771,989 in cash, cash equivalents, and short-term investments. This represents a decrease of $232,636 when compared with the amount of $2,004,625 on March 31, 2006. As of March 31, 2007, working capital, current assets
less current liabilities, was $1,501,374, which represents a decrease of $208,375 from $1,709,749 as of March 31, 2006. The decrease in working capital was mostly the result of cash usage from the Companys operating loss and
increased inventory. Our operating activities used cash of $3,738,487 for the twelve months ended March 31, 2007, and we expect our cash usage to increase as we grow our revenues and increase our operating expenses. As a result, we are
currently seeking debt and equity financing in the next three to six months. There can be no assurance that we will be successful in raising financing or that any financing we obtain will be on terms we find attractive.

Liquidity and Capital Resources

Our cash and cash equivalents
decreased $232,636 during the twelve months ended March 31, 2007 to $1,771,989 from $2,004,625 at March 31, 2006. The decrease in cash and cash equivalents during the twelve months ended March 31, 2007 is mainly due to
higher inventory level, prepaid expenses and negative cash flows from operating activities of $3,738,487.

Our operating activities used cash of $3,738,487
for the twelve months ended March 31, 2007, compared to cash usage of $2,088,652 for the same period in the prior fiscal year. The negative cash flows from operating activities were primarily attributable to the increased infrastructure,
inventory and sales and marketing expenses required to launch our products. Working capital sources of cash included an increase in accounts payable and accrued expenses of $137,606. Working capital uses of cash included an increase in inventory of
$115,811 and prepaid expenses of $55,217 primarily from prepaid television media for the Companys commercial.

In the comparable period in fiscal
2006, the negative cash flows from operating activities were primarily attributable to developing its line of products and marketing plan. Working capital sources of cash included an increase in accounts payable and accrued expenses of $268,446.
Working capital uses of cash included an increase in prepaid expenses of $80,701.



19



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The Company used cash in investing activities by purchasing property and equipment totaling $53,131 and $5,662 in the
years ending March 31, 2007 and March 31, 2006, respectively.

Net cash provided from financing activities during the twelve months ended
March 31, 2007, was $3,558,982, which consisted of proceeds from the sale of common stock.

We believe that our manufacturing provider has substantial
production capacity in place to handle any projected increase in business for the next fiscal year. We also believe our existing cash, cash equivalents and short-term investments, together with cash flow from operations, will be sufficient to meet
liquidity and capital requirements only for the next approximately six to nine months as the cash usage from our operating activities increases as we increase revenues, and therefore have to build inventory in advance of payment for product, and as
we increase our expenditures, especially in sales and marketing. We are therefore beginning to attempt to raise both debt and equity financing. Should we not be successful in raising monies in the next three to six months, we plan to reduce our
expenditures in order to attempt to stretch our cash to last us for an additional three months. There can be no assurance that we will be successful in our financing efforts, or that any financing raised will be on terms we find to be attractive, or
that we will be able to operate so that our cash lasts us as long as nine months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are likely to have, a current or future material effect on the financial condition, revenues, expenses,
results of operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

ALCiS has entered into a perpetual, worldwide exclusive license for use of certain technology in topical analgesic pain relief products, a nonexclusive license on a
number of other products, and an option to purchase broader rights to several technologies in the future. For the license, ALCiS has agreed to pay a royalty rate based on sales with a minimum payment of $25,000 per month ($50,000 after
December 31, 2008) to continue its exclusive license agreement. ALCiS also has advance royalty payments of $8,333 at the end of each of the first nine months of fiscal 2008 for a total of $75,000. ALCiS leases its office space under a
non-cancelable operating lease which expires in August 2008. Future rental payments are approximately $128,000 and $53,000 for fiscal 2008 and 2009, respectively.

Recently issued accounting standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value Measurement. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This
statement applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the
adoption of SFAS No. 157 will have on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin
(SAB) No. 108 in order to eliminate the diversity of practice surrounding how public companies quantify financial statement misstatements. In SAB No. 108, the SEC staff established an approach that requires quantification of
financial statement misstatements based on the effects of the misstatements on each of the companys financial statements and the related financial statement disclosures. SAB No. 108 is effective for fiscal years ending after
November 15, 2006. The Company believes that complying with the interpretive guidance of SAB No. 108 will not have a material impact to its consolidated financial statements.

In July 2006, the FASB issued Financial Interpretation Number (FIN) 48, Accounting for Uncertainty in Income Taxes  an Interpretation of SFAS No. 109. This interpretation
clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of FIN 48.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which replaces APB Opinion No. 20, Accounting
Changesand SFAS No. 3 Reporting Accounting Changes in Interim Financial Statements.This pronouncement applies to all voluntary changes in accounting principle, and revises the requirements for accounting for and
reporting a change in accounting principle. SFAS No. 154 requires retrospective application to prior periods financial statements of a voluntary change in accounting principle, unless it is impracticable to do so. This pronouncement also
requires that a change in the method of depreciation, amortization, or depletion for long-lived, non-financial assets to be accounted for as a change in accounting estimate that is effected by a change in accounting principle. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS



20



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No. 154 does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the
effective date of SFAS No. 154. The adoption of this accounting pronouncement is not expected to have a material effect on the Companys consolidated financial statements.

Available Information

We file electronically with the SEC our annual reports on Form 10-KSB, quarterly reports on
Form 10-QSB, current reports on Form 8-K, and amendments, if any, to those reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding ALCiS Health, Inc. and Emerging Delta Corporation (the name of the Registrant prior to the Merger).



21



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|Item 7. | Financial Statements
|------- | --------------------

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

ALCiS Health, Inc.

San Jose, California

We have audited the accompanying consolidated balance sheets of ALCiS Health, Inc. (the Company) as of March 31, 2007 and 2006 and the related
consolidated statements of operations, shareholders equity and cash flows for each of the two years ended March 31, 2007 and 2006. These financial statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have nor
were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Companys internal control of financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ALCiS Health, Inc. at March 31, 2007 and 2006, and the results of its operations and its cash flows for each of the two years ended March 31, 2007 and 2006 in conformity with U.S.
generally accepted accounting principles.

/s/ Pannell Kerr Forster of Texas, P.C.

Houston, Texas

July 10, 2007



22



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ALCiS Health, Inc.

Consolidated Balance Sheets



|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                                                                             |  | As of March 31, |            
|                                                                                                                                                             |  | 2007            |             |   | 2006 |  
|Assets                                                                                                                                                       |  |                 |             |   |      |   |            |  
|Current                                                                                                                                                      |  |                 |             |   |      |   |            |  
|Cash and cash equivalents                                                                                                                                    |  | $               | 1,771,989   |   |      | $ | 2,004,625  |  
|Inventory                                                                                                                                                    |  |                 | 221,848     |   |      |   | 106,037    |  
|Accounts receivable                                                                                                                                          |  |                 | 9,513       |   |      |   | 20,218     |  
|Prepaid expenses and other current assets                                                                                                                    |  |                 | 135,918     |   |      |   | 80,701     |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Total current assets                                                                                                                                         |  |                 | 2,139,268   |   |      |   | 2,211,581  |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Property and equipment, net of accumulated depreciation of $20,503 and $3,567 at March 31, 2007 and 2006, respectively                                       |  |                 | 43,958      |   |      |   | 7,763      |  
|Other assets                                                                                                                                                 |  |                 | 41,541      |   |      |   | 29,505     |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Total assets                                                                                                                                                 |  | $               | 2,224,767   |   |      | $ | 2,248,849  |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|                                                                                                                                                             |  |                
|Liabilities and Shareholders Equity (Deficit)                                                                                                               |  |                 |             |   |      |   |            |  
|Current liabilities                                                                                                                                          |  |                 |             |   |      |   |            |  
|Accounts payable and accrued liabilities                                                                                                                     |  | $               | 623,916     |   |      | $ | 486,309    |  
|Deferred revenue                                                                                                                                             |  |                 | 13,978      |   |      |   | 15,523     |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Total current liabilities                                                                                                                                    |  |                 | 637,894     |   |      |   | 501,832    |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Commitments and contingencies                                                                                                                                |  |                 |             |   |      |   |            |  
|                                                                                                                                                             |  |                
|Shareholders equity (deficit)                                                                                                                               |  |                 |             |   |      |   |            |  
|Common stock; $0.001 par value, 20,000,000 shares authorized, 8,936,902 and 7,148,902 shares issued and outstanding at March 31, 2007 and
2006, respectively |  |                 | 8,937       |   |      |   | 7,149      |  
|Preferred stock                                                                                                                                              |  |                 |            |   |      |   |           |  
|Additional paid-in capital                                                                                                                                   |  |                 | 11,698,806  |   |      |   | 6,639,576  |  
|Common stock subscribed                                                                                                                                      |  |                 |            |   |      |   | (190,000   | )
|Accumulated deficit                                                                                                                                          |  |                 | (10,120,870 | ) |      |   | (4,709,708 | )
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Total shareholders equity                                                                                                                                   |  |                 | 1,586,873   |   |      |   | 1,747,017  |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  
|Total liabilities and shareholders equity                                                                                                                   |  | $               | 2,224,767   |   |      | $ | 2,248,849  |  
|                                                                                                                                                             |  |                 |             |   |      |   |            |  

See accompanying notes to consolidated financial statements.



23



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ALCiS Health, Inc.

Consolidated Statements of Operations



|                                                                    |  |                      |            |   |      |   |            |  
|------------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                    |  | Year Ended March 31, |           
|                                                                    |  | 2007                 |            |   | 2006 |  
|Revenue                                                             |  | $                    | 2,278,134  |   |      | $ | 757,219    |  
|                                                                    |  |                      |            |   |      |   |            |  
|Operating expenses                                                  |  |                      |            |   |      |   |            |  
|Cost of sales                                                       |  |                      | 859,610    |   |      |   | 345,354    |  
|Advertising and promotion                                           |  |                      | 3,350,876  |   |      |   | 1,631,019  |  
|Selling, general and administrative                                 |  |                      | 2,277,853  |   |      |   | 949,298    |  
|Product development                                                 |  |                      | 1,251,573  |   |      |   | 465,620    |  
|                                                                    |  |                      |            |   |      |   |            |  
|Total operating expenses                                            |  |                      | 7,739,912  |   |      |   | 3,391,291  |  
|                                                                    |  |                      |            |   |      |   |            |  
|Operating loss                                                      |  |                      | (5,461,778 | ) |      |   | (2,634,072 | )
|Interest income (expense), net                                      |  |                      | 53,230     |   |      |   | (2,088     | )
|Other expense, net                                                  |  |                      | (2,614     | ) |      |   | (71,221    | )
|Loss on extinguishment of debt                                      |  |                      |           |   |      |   | (610,410   | )
|                                                                    |  |                      |            |   |      |   |            |  
|Total other income (expense), net                                   |  |                      | 50,616     |   |      |   | (683,719   | )
|                                                                    |  |                      |            |   |      |   |            |  
|Net loss available to common shareholders                           |  | $                    | (5,411,162 | ) |      | $ | (3,317,791 | )
|                                                                    |  |                      |            |   |      |   |            |  
|Net loss per common share:                                          |  |                      |            |   |      |   |            |  
|Basic and fully diluted                                             |  | $                    | (0.68      | ) |      | $ | (0.90      | )
|                                                                    |  |                      |            |   |      |   |            |  
|Number of common shares:                                            |  |                      |            |   |      |   |            |  
|Weighted average common shares outstanding, basic and fully diluted |  |                      | 7,911,894  |   |      |   | 3,682,911  |  
|                                                                    |  |                      |            |   |      |   |            |  

See accompanying notes to consolidated financial statements.



24



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ALCiS Health, Inc.

Consolidated Statements of Shareholders Equity (Deficit)

For the Years ending March 31, 2007 and
2006



|                                                                                                               |  |                  |   |  |                 |       |   |                  |            |   |        |   |            |                          |  |   |                        |   |  |                    |          |   |                                      |   |            |   |  |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ---------------- | - |  | --------------- | ----- | - | ---------------- | ---------- | - | ------ | - | ---------- | ------------------------ |  | - | ---------------------- | - |  | ------------------ | -------- | - | ------------------------------------ | - | ---------- | - |  | - | ---------- | -
|                                                                                                               |  | Common Stock     |   |  | Preferred Stock |       |   |                  |            |   |        |   |            |                          |  |   |                        |  
|                                                                                                               |  | Number of Shares |   |  | Amount          |       |   | Number of Shares |            |   | Amount |   |            | AdditionalPaid-InCapital |  |   | Common StockSubscribed |   |  | AccumulatedDeficit |          |   | Total Shareholders Equity (Deficit) |  
|Balance, March 31, 2005                                                                                        |  | 3,700,000        |   |  | $               | 3,700 |   |                  | 1,000,000  |   |        | $ | 1,000,000  |                          |  | $ | 14,065                 |   |  | $                  |         |   |                                      | $ | (1,391,917 | ) |  | $ | (374,152   | )
|Director and consultant option expense for the quarter ended June 30, 2005                                     |  |                 |   |  |                 |      |   |                  |           |   |        |   |           |                          |  |   | 6,100                  |   |  |                    |         |   |                                      |   |           |   |  |   | 6,100      |  
|Director and consultant option expense for the quarter ended September 30, 2005                                |  |                 |   |  |                 |      |   |                  |           |   |        |   |           |                          |  |   | 6,000                  |   |  |                    |         |   |                                      |   |           |   |  |   | 6,000      |  
|Issuance of Series B Preferred Stock and warrants for cash in December 31, 2005                                |  |                 |   |  |                 |      |   |                  | 352,500    |   |        |   | 458,250    |                          |  |   | 246,750                |   |  |                    |         |   |                                      |   |           |   |  |   | 705,000    |  
|Director and consultant option expense for the quarter ended December 31, 2005                                 |  |                 |   |  |                 |      |   |                  |           |   |        |   |           |                          |  |   | 6,000                  |   |  |                    |         |   |                                      |   |           |   |  |   | 6,000      |  
|Issuance of Series B Preferred Stock and warrants for cash in January 2006                                     |  |                 |   |  |                 |      |   |                  | 87,500     |   |        |   | 113,750    |                          |  |   | 61,250                 |   |  |                    |         |   |                                      |   |           |   |  |   | 175,000    |  
|Conversion of notes payable to Series B Preferred Stock and issuance of warrants in January 2006               |  |                 |   |  |                 |      |   |                  | 974,006    |   |        |   | 1,948,013  |                          |  |   | 610,410                |   |  |                    |         |   |                                      |   |           |   |  |   | 2,558,423  |  
|Repurchase and retirement of Common Stock for cash in February 2006                                            |  | (250,000         | ) |  |                 | (250  | ) |                  |           |   |        |   |           |                          |  |   |                       |   |  |                    |         |   |                                      |   |           |   |  |   | (250       | )
|Issuance of Common Stock and warrants in a private placement for cash on March 30, 2006, net of offering costs |  | 1,012,500        |   |  |                 | 1,013 |   |                  |           |   |        |   |           |                          |  |   | 1,833,844              |   |  |                    | (190,000 | ) |                                      |   |           |   |  |   | 1,644,856  |  
|Conversion of Series A and Series B Preferred Stock to Common Stock on March 31, 2006                          |  | 2,414,006        |   |  |                 | 2,414 |   |                  | (2,414,006 | ) |        |   | (3,520,013 | )                        |  |   | 3,517,599              |   |  |                    |         |   |                                      |   |           |   |  |   |           |  
|Acquisition of Emerging Delta Corporation in a reverse transaction on March 31, 2006                           |  | 272,396          |   |  |                 | 272   |   |                  |           |   |        |   |           |                          |  |   | (273                   | ) |  |                    |         |   |                                      |   |           |   |  |   |           |  
|Director and consultant option expense for the quarter ended March 31, 2006                                    |  |                 |   |  |                 |      |   |                  |           |   |        |   |           |                          |  |   | 337,831                |   |  |                    |         |   |                                      |   |           |   |  |   | 337,831    |  
|Net Loss for the year ended March 31, 2006                                                                     |  |                 |   |  |                 |      |   |                  |           |   |        |   |           |                          |  |   |                       |   |  |                    |         |   |                                      |   | (3,317,791 | ) |  |   | (3,317,791 | )
|                                                                                                               |  |                  |   |  |                 |       |   |                  |            |   |        |   |            |                          |  |   |                        |   |  |                    |          |   |                                      |   |            |   |  |   |            |  

See accompanying notes to consolidated financial statements.



25



---

ALCiS Health, Inc.

Consolidated Statements of Shareholders Equity (Deficit)

For the Years ending March 31, 2007 and
2006



|                                                                                                    |  |                  |  |                 |       |                  |   |        |   |                           |  |                        |            |  |                     |          |   |                                     |   |             |   |  |   |            |  
|--------------------------------------------------------------------------------------------------- |  | ---------------- |  | --------------- | ----- | ---------------- | - | ------ | - | ------------------------- |  | ---------------------- | ---------- |  | ------------------- | -------- | - | ----------------------------------- | - | ----------- | - |  | - | ---------- | -
|                                                                                                    |  | Common Stock     |  | Preferred Stock |       |                  |   |        |   |                           |  |                        |            |  |                    
|                                                                                                    |  | Number of Shares |  | Amount          |       | Number of Shares |   | Amount |   | Additional Paid-InCapital |  | Common StockSubscribed |            |  | Accumulated Deficit |          |   | Total ShareholdersEquity (Deficit) |  
|Balance, March 31, 2006                                                                             |  | 7,148,902        |  | $               | 7,149 |                  |  |        |   |                          |  | $                      | 6,639,576  |  | $                   | (190,000 | ) |                                     | $ | (4,709,708  | ) |  | $ | 1,747,017  |  
|Cash received from Common Stock Subscribed as of March 31, 2006                                     |  |                 |  |                 |      |                  |  |        |   |                          |  |                        |           |  |                     | 190,000  |   |                                     |   |            |   |  |   | 190,000    |  
|Issuance of Common Stock for cash in April 2006                                                     |  | 42,500           |  |                 | 43    |                  |  |        |   |                          |  |                        | 84,957     |  |                     |         |   |                                     |   |            |   |  |   | 85,000     |  
|Consultant option expense for the quarter ended June 30, 2006                                       |  |                 |  |                 |      |                  |  |        |   |                          |  |                        | 78,515     |  |                     |         |   |                                     |   |            |   |  |   | 78,515     |  
|Technology warrant expense for the quarter ended June 30, 2006                                      |  |                 |  |                 |      |                  |  |        |   |                          |  |                        | 942,713    |  |                     |         |   |                                     |   |            |   |  |   | 942,713    |  
|Issuance of Common Stock for cash in September 2006                                                 |  | 88,000           |  |                 | 88    |                  |   |        |   |                          |  |                        | 175,912    |  |                     |         |   |                                     |   |            |   |  |   | 176,000    |  
|Consultant option expense for the quarter ended September 30, 2006                                  |  |                 |  |                 |      |                  |  |        |   |                          |  |                        | 338,468    |  |                     |         |   |                                     |   |            |   |  |   | 338,468    |  
|Issuance of Common Stock for cash during the quarter ended December 31, 2006, net of offering costs |  | 1,620,000        |  |                 | 1,620 |                  |  |        |   |                          |  |                        | 3,031,362  |  |                     |         |   |                                     |   |            |   |  |   | 3,032,982  |  
|Consultant option expense for the quarter ended December 31, 2006                                   |  |                 |  |                 |      |                  |  |        |   |                          |  |                        | 216,544    |  |                     |         |   |                                     |   |            |   |  |   | 216,544    |  
|Issuance of Common Stock for cash during the quarter ended March 31, 2007                           |  | 37,500           |  |                 | 37    |                  |  |        |   |                          |  |                        | 74,963     |  |                     |         |   |                                     |   |            |   |  |   | 75,000     |  
|Consultant option expense for the quarter ended March 31, 2007                                      |  |                 |  |                 |      |                  |  |        |   |                          |  |                        | 115,796    |  |                     |         |   |                                     |   |            |   |  |   | 115,796    |  
|Net Loss for the year ended March 31, 2007                                                          |  |                 |  |                 |      |                  |  |        |   |                          |  |                        |           |  |                     |         |   |                                     |   | (5,411,162  | ) |  |   | (5,411,162 | )
|                                                                                                    |  |                  |  |                 |       |                  |   |        |   |                           |  |                        |            |  |                     |          |   |                                     |   |             |   |  |   |            |  
|Balance, March 31, 2007                                                                             |  | 8,936,902        |  | $               | 8,937 |                  |  |        | $ |                          |  | $                      | 11,698,806 |  | $                   |         |   |                                     | $ | (10,120,870 | ) |  | $ | 1,586,873  |  
|                                                                                                    |  |                  |  |                 |       |                  |   |        |   |                           |  |                        |            |  |                     |          |   |                                     |   |             |   |  |   |            |  

See accompanying notes to consolidated financial statements.



26



---

ALCiS Health, Inc.

Consolidated Statements of Cash Flows



|                                                                            |  |                      |            |   |      |   |            |  
|--------------------------------------------------------------------------- |  | -------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                            |  | Year Ended March 31, |           
|                                                                            |  | 2007                 |            |   | 2006 |  
|Cash flows from operating activities:                                       |  |                      |            |   |      |   |            |  
|Net loss                                                                    |  | $                    | (5,411,162 | ) |      | $ | (3,317,791 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                      |            |   |      |   |            |  
|Loss on extinguishment of debt                                              |  |                      |           |   |      |   | 610,410    |  
|Consultant, director and product development option and warrant expense     |  |                      | 1,692,037  |   |      |   | 355,931    |  
|Capitalized interest expense                                                |  |                      |           |   |      |   | 71,013     |  
|Depreciation                                                                |  |                      | 16,935     |   |      |   | 4,010      |  
|Loss on disposal of assets                                                  |  |                      |           |   |      |   | 2,214      |  
|Changes in operating assets and liabilities:                                |  |                      |            |   |      |   |            |  
|Inventory                                                                   |  |                      | (115,811   | ) |      |   | 17,177     |  
|Accounts receivable                                                         |  |                      | 10,705     |   |      |   | (20,218    | )
|Prepaid expenses and other current assets                                   |  |                      | (55,217    | ) |      |   | (80,701    | )
|Due from related party                                                      |  |                      |           |   |      |   | 5,984      |  
|Other assets                                                                |  |                      | (12,036    | ) |      |   | (20,650    | )
|Accounts payable and accrued liabilities                                    |  |                      | 137,607    |   |      |   | 268,446    |  
|Deferred revenue                                                            |  |                      | (1,545     | ) |      |   | 15,523     |  
|                                                                            |  |                      |            |   |      |   |            |  
|Net cash used in operating activities                                       |  |                      | (3,738,487 | ) |      |   | (2,088,652 | )
|                                                                            |  |                      |            |   |      |   |            |  
|Cash flows from investing activities:                                       |  |                      |            |   |      |   |            |  
|Purchase of property and equipment                                          |  |                      | (53,131    | ) |      |   | (5,662     | )
|                                                                            |  |                      |            |   |      |   |            |  
|Net cash used in investing activities                                       |  |                      | (53,131    | ) |      |   | (5,662     | )
|                                                                            |  |                      |            |   |      |   |            |  
|Cash flows from financing activities:                                       |  |                      |            |   |      |   |            |  
|Proceeds from issuance of preferred stock                                   |  |                      |           |   |      |   | 880,000    |  
|Proceeds from issuance of common stock                                      |  |                      | 3,558,982  |   |      |   | 1,644,856  |  
|Proceeds from notes payable                                                 |  |                      |           |   |      |   | 1,125,000  |  
|Repurchase of common stock                                                  |  |                      |           |   |      |   | (250       | )
|                                                                            |  |                      |            |   |      |   |            |  
|Net cash provided by financing activities                                   |  |                      | 3,558,982  |   |      |   | 3,649,606  |  
|                                                                            |  |                      |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                        |  |                      | (232,636   | ) |      |   | 1,555,292  |  
|Cash and cash equivalents at beginning of period                            |  |                      | 2,004,625  |   |      |   | 449,333    |  
|                                                                            |  |                      |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                  |  | $                    | 1,771,989  |   |      | $ | 2,004,625  |  
|                                                                            |  |                      |            |   |      |   |            |  

See accompanying notes to consolidated financial statements.



27



---

ALCiS Health, Inc.

Consolidated Statements of Cash Flows (Continued)



|                                                                              |  |                      |   |      |   |          
|----------------------------------------------------------------------------- |  | -------------------- | - | ---- | - | ---------
|                                                                              |  | Year Ended March 31,
|                                                                              |  | 2007                 |   | 2006
|Supplemental disclosure of cash flow information:                             |  |                      |   |      |   |          
|Cash paid for interest                                                        |  | $                    |  |      | $ | 261      
|                                                                              |  |                      |   |      |   |          
|Non-cash financing activities                                                 |  |                      |   |      |   |          
|Conversion of notes payable and related accrued interest into preferred stock |  | $                    |  |      | $ | 1,948,013
|                                                                              |  |                      |   |      |   |          
|Conversion of preferred stock into common stock                               |  | $                    |  |      | $ | 3,520,013
|                                                                              |  |                      |   |      |   |          

See accompanying notes to consolidated financial statements.



28



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ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007

Note 1 - Organization and Business

On March 30,
2006, ALCiS Health, Inc. (ALCiS-CA), a California corporation incorporated on April 13, 2004, entered into a Plan of Merger and Merger Agreement (the Merger) with Emerging Delta Corporation (Delta), a
Delaware corporation incorporated on February 10, 1993, pursuant to which Delta acquired ALCiS-CA in a reverse merger transaction with ALCiS-CA being the accounting acquirer and surviving corporation. Prior to the Merger, Delta was a public
shell company with minimal assets and operations.

On March 30, 2006, ALCiS-CA completed the sale of 1,012,500 shares of its common
stock for gross proceeds of $2,025,000 in a private placement transaction (the Offering). As additional consideration, the purchasers received 202,500 warrants to purchase common stock with an exercise price of $2.00 per share, 202,500
warrants to purchase common stock with an exercise price of $3.75 per share and 100,000 warrants to purchase common stock with an exercise price of $4.75 per share. The warrants are exercisable immediately and expire 10 years from the date of
issuance. The Offering and Merger were conditional upon each other.

On March 31, 2006, the Merger was consummated and all of
ALCiS-CAs Preferred Stock was converted into 2,414,006 shares of its common stock, resulting in 6,876,506 shares of common stock issued and outstanding. In the Merger, each share of ALCiS-CAs stock was exchanged for 0.16 shares of
Deltas common stock, resulting in the issuance of 1,100,241 shares of Deltas common stock to ALCiS-CAs shareholders and a total of 1,143,841 shares of Deltas common stock being issued and outstanding after the Merger. Also,
ALCiS-CAs options to purchase 200,000 shares of common stock and warrants to purchase 1,056,400 shares of common stock were converted into options to purchase 32,000 shares of Deltas common stock and warrants to purchase 169,024 shares
of Deltas common stock with identical terms.

Following the Merger, Delta amended its Certificate of Incorporation to change its name
to ALCiS Health, Inc., to reduce the par value of its common stock from $1.00 per share to $0.001 per share, and to increase its authorized shares of common stock from 2,000,000 to 20,000,000 shares. The authorized preferred stock remained at
500,000 shares. In addition, ALCiS-CA changed its name to ALCiS, Inc. The accompanying consolidated financial statements include the accounts of ALCiS Health, Inc. and its wholly-owned subsidiary, ALCiS, Inc. (hereinafter referred to
ALCiS or the Company). All intercompany accounts and transaction have been eliminated.

The Merger for accounting
and financial reporting purposes is accounted for as an acquisition of Delta by ALCiS-CA. As such ALCiS-CA was the accounting acquirer in the Merger, and the historical financial statements of ALCiS-CA are the financial statements for ALCiS
following the Merger.

Following and under the terms of the Merger, ALCiS granted a stock dividend of 5.25 shares to each of its common
shareholders which has the effect of a 6.25 for 1 stock split, resulting in 7,148,902 shares of common stock issued and outstanding. In addition, 200,000 warrants to purchase the ALCiSs common stock were granted to two former directors of
Delta for consulting services. These warrants have an exercise price of $2.00 per share, a term of 10 years with 50% vesting upon issuance and the remaining 50% vesting after one year. An additional 18,750 warrants were issued to two other former
directors of Delta as a replacement for warrants previously issued by Delta. These warrants have an exercise price of $2.00 per share and vest immediately upon grant. Finally, the Company assumed 26,875 options with an exercise price of $2.40 per
share and 12,500 options with an exercise price of $1.91 per share from Delta. These options are fully vested and expire in March 2008. ALCiS estimated the fair value of these options using the Black-Scholes option-pricing model and recorded the
related expense in the current period for vested awards and will record expense related to unvested awards over the vesting period.

ALCiS
also issued 120,000 warrants to two former directors of Delta upon their joining its Board of Directors. These warrants have an exercise price of $2.00 per share, a term of 10 years and vest at a rate of 5,000 shares per quarter. ALCiS estimated the
fair value of these warrants using the Black-Scholes option-pricing model and is recording the related expense over the vesting period.

ALCiS markets and distributes over-the-counter health care products, including ALCiS®Daily Relief Pain Relief Cream and related products. Initially the products will be sold primarily
through direct-response advertising and web commerce. The Company plans on introducing ALCiS®Daily Relief Pain Relief Cream into retail channels in fiscal year 2008.



29



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 1 - Organization and Business (Continued)



Prior to September 30, 2006, the Company was in the development stage as it had been primarily
engaged in developing its marketing strategy and infrastructure and raising capital. In the course of its development activities, the Company has sustained losses and expects such losses to continue through at least 2008. The Company will finance
its operations primarily through its existing cash, future financing and revenues from product sales.

Note 2 - Summary of Significant Accounting
Policies

Cash and cash equivalents

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Inventory

Inventory consists of ALCiS®Daily Relief Pain Relief
Cream and related products available for sale to consumers and packing materials. Inventory is valued at the lower of first-in, first-out cost or market.

Property and equipment

Property and equipment, consisting primarily of computer equipment, is
carried at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over estimated useful lives of three to five years. Expenditures for maintenance and repairs are charged to expense as incurred.

Revenue recognition

Net sales
consist primarily of products sold directly to consumers via a telephone call center and the internet, shipping revenue, net of estimated returns and promotional discounts. The Company recognizes revenue when all of the following have occurred:
persuasive evidence of an agreement with the customer exists, products are shipped and the customer takes delivery and assumes the risk of loss; the selling price is fixed or determinable and collectibility of the selling price is reasonably
assured.

The Company requires payment at the point of sale. Amounts received prior to delivery of goods to customers are not recorded as
revenue. Delivery is considered to occur when title to our products has passed to the customer, which typically occurs at physical delivery of the products from our fulfillment center to a common carrier. The Company offers a return policy of
generally 30 days and provides an allowance for sales returns during the period in which the sales are made. At March 31, 2007, the reserve for sales returns was $32,120 and was recorded as an accrued liability.

The Company generally does not extend credit to customers, except through third party credit cards. The majority of sales are through credit cards, and
accounts receivable are composed primarily of amounts due from financial institutions related to credit card sales. The Company does not maintain an allowance for doubtful accounts because payment is typically received within two business days after
the sale is complete.

The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include
current discount offers and offers for free product when multiple units are purchased. Current discount offers are treated as a reduction of the purchase price of the related transaction, while the cost of the free product is included in cost of
sales at the time of shipment.



30



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 2 - Summary of Significant Accounting Policies (Continued)



Prepaid Royalties

Under the license and manufacturing agreement with the patent owner of the liposomal delivery
system used in ALCiS®Daily Relief Pain Relief Cream, prepaid royalties consists of the
difference between the actual royalties owed and the minimum monthly payment due, when the minimum monthly payment exceeds the actual royalties owed. In addition, certain up-front payments are characterized as prepaid royalties. Prepaid royalties
are available to offset future royalties when actual royalties owed exceed the minimum monthly payment due. At that time, the prepaid royalties can be applied to the actual royalties owed and reduce the actual payment to the minimum amount due. The
prepaid royalties expire upon the termination of the license and manufacturing agreement.

The Company charges to expense the prepaid
royalties, that is the excess of the amounts paid over the royalties due on the current period sales. The Company does not record an asset for prepaid royalties available for future sales (See Note 6 for further discussion).

Advertising expenses

The cost of
advertising is expensed in the fiscal year in which the related advertising takes place. Production and communication costs are expensed in the period in which the related advertising begins running. Costs for direct-response advertising are
capitalized and amortized over the estimated useful life of the advertisement.

Product development

Product development costs relate to costs incurred in the development of its product,
ALCiS®Daily Relief Pain Relief Cream, and are expensed as incurred.

Shipping and handling costs

Shipping
and handling costs are included in cost of sales as incurred in the consolidated statement of operations.

Stock based compensation

The Company accounts for its stock based compensation plans under Statement of Financial Accounting Standards (SFAS)
No. 123R, Share Based Payments, whereby the cost of share based payments to employees, including grants of employee stock options, are measured based on the grant date fair value of the award. That cost is recognized over the
period during which an employee is required to provide service in exchange for the award, the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant date
fair value of employee share options and similar instruments will be estimated using the Black-Scholes option-pricing model adjusted for the unique characteristics of those instruments.

The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock,
stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the date required by Emerging Issues Task Force (EITF) Issue 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

In accordance with EITF 96-18, the stock options or common stock warrants are valued using the Black-Scholes option-pricing model on the basis of the market price of the underlying common stock on the valuation
date, which for options and warrants related to contracts that have substantial discentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is
recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes
option-pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock through the valuation date is reflected in the expense
recorded in the subsequent period in which that change occurs.



31



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 2 - Summary of Significant Accounting Policies (Continued)



Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing earnings (loss) available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share include the effects of the potential dilution of outstanding options, warrants, and convertible debt on the Companys common stock, determined using the treasury stock method.

Earnings (loss) per share is as follows:



|                                                    |  |                        |            |   |      |   |            |  
|--------------------------------------------------- |  | ---------------------- | ---------- | - | ---- | - | ---------- | -
|                                                    |  | Period ended March 31, |           
|                                                    |  | 2007                   |            |   | 2006 |  
|Basic and Diluted:                                  |  |                        |            |   |      |   |            |  
|Net loss available to common shareholders           |  | $                      | (5,411,162 | ) |      | $ | (3,317,791 | )
|                                                    |  |                        |            |   |      |   |            |  
|Net loss per share available to common shareholders |  | $                      | (0.68      | ) |      | $ | (0.90      | )
|                                                    |  |                        |            |   |      |   |            |  
|Weighted average common shares outstanding          |  |                        | 7,911,894  |   |      |   | 3,682,911  |  
|                                                    |  |                        |            |   |      |   |            |  

For the years ended March 31, 2007 and 2006, potential dilutive common shares under the
warrant agreements and stock option plan of 4,302,600 and 1,634,525, respectively, were not included in the calculation of diluted loss per share as they were antidilutive.

Income taxes

An asset and liability
approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different
periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or
all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Managements estimates and assumptions

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results may differ from such estimates. The Company
reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to their issuance.

Reclassifications

Certain reclassifications have been made to the 2006 financial statements to
conform to the 2007 presentation.

Recently issued accounting standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurement. This
statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that
require or permit fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the adoption of SFAS No. 157 will have on its consolidated
financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in order to eliminate the
diversity of practice surrounding how public companies quantify financial statement misstatements. In SAB No. 108, the SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of
the misstatements on each of the companys financial statements and the related financial statement disclosures. SAB No. 108 is effective for fiscal years ending after November 15, 2006. The Company believes that complying with the
interpretive guidance of SAB No. 108 will not have a material impact on its consolidated financial statements.



32



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ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 2 - Summary of Significant Accounting Policies (Continued)



Recently issued accounting standards (Continued)



In July 2006, the FASB issued Financial Interpretation Number (FIN) 48,
Accounting for Uncertainty in Income Taxes  an Interpretation of SFAS No. 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning
after December 15, 2006. The Company is currently evaluating the impact of FIN 48.

In May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections, which replaces APB Opinion No. 20, Accounting Changesand SFAS No. 3 Reporting Accounting Changes in Interim Financial Statements.This
pronouncement applies to all voluntary changes in accounting principle, and revises the requirements for accounting for and reporting a change in accounting principle. SFAS No. 154 requires retrospective application to prior periods
financial statements of a voluntary change in accounting principle, unless it is impracticable to do so. This pronouncement also requires that a change in the method of depreciation, amortization, or depletion for long-lived, non-financial assets to
be accounted for as a change in accounting estimate that is effected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
SFAS No. 154 does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of SFAS No. 154. The adoption of this accounting pronouncement is not
expected to have a material effect on the Companys consolidated financial statements.

Note 3 - Notes Payable

The Company had unsecured notes payable to various individuals totaling $752,000 at March 31, 2005. During the year ended March 31, 2006, the
Company issued additional, unsecured notes payable to various individuals totaling $1,125,000. The notes bear interest at 7% per annum and are due on demand at any time after January 31, 2006.

During January 2006, all of the outstanding notes payable with principal amounts totaling $1,877,000 together with accrued interest of $71,013 were
converted into shares of Series B preferred stock (Series B). The conversion price was $2.00 per share resulting in the issuance of 974,006 shares of Series B. After the conversion, there were 1,414,006 shares of Series B issued and
outstanding. Additionally, the holders of the notes received 187,700 warrants to purchase shares of Series B with an exercise price of $2.00 per share and an additional 187,700 warrants to purchase shares of Series B with an exercise price of $3.75
per share. The warrants vest immediately and are exercisable for a term of 10 years. The fair value of the warrants was estimated to be $610,410 using the Black-Scholes option pricing model and was recorded as a loss on extinguishment of debt in the
statement of operations for the year ended March 31, 2006.



33



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007

Note 4 - Income Taxes

The Company files a U.S.
Federal income tax return. The components of the Companys deferred tax assets are as follows:



|                           |  |           |            |   |      |   |            |  
|-------------------------- |  | --------- | ---------- | - | ---- | - | ---------- | -
|                           |  | March 31, |           
|                           |  | 2007      |            |   | 2006 |  
|Loss carryforwards         |  | $         | 2,291,484  |   |      | $ | 998,088    |  
|Stock options and warrants |  |           | 903,815    |   |      |   | 328,522    |  
|Intangible assets          |  |           | 218,214    |   |      |   | 254,759    |  
|Returns reserve            |  |           | 10,921     |   |      |   | 7,728      |  
|Deferred revenue           |  |           | 4,753      |   |      |   | 5,278      |  
|Property and equipment     |  |           |           |   |      |   |           |  
|                           |  |           |            |   |      |   |            |  
|                           |  |           | 3,429,187  |   |      |   | 1,594,375  |  
|Less: valuation allowance  |  |           | (3,429,187 | ) |      |   | (1,594,375 | )
|                           |  |           |            |   |      |   |            |  
|                           |  | $         |           |   |      | $ |           |  
|                           |  |           |            |   |      |   |            |  

As of March 31, 2007, the Company had generated U.S. net operating loss carryforwards of
approximately $6,739,658 which expire beginning in 2025. These net operating loss carryforwards are available to reduce future taxable income. However, a change in ownership, as defined by federal income tax regulations, could significantly limit
the Companys ability to utilize its loss carryforwards. Additionally, because Federal tax laws limit the time during which the loss carryforwards may be applied against future taxes, if the Company fails to generate sufficient taxable income
prior to the expiration date, it may not be able to utilize the loss carryforwards. As the Company is not yet profitable and there is no assurance of future taxable income, a valuation allowance has been recorded to fully offset the deferred tax
assets at March 31, 2007 and 2006. For the year ended March 31, 2007, the valuation allowance increased by $1,834,810.

Income
tax expense (benefit) for the years ended March 31, is as follows:



|                |  |      |   |      |   |  
|--------------- |  | ---- | - | ---- | - | -
|                |  | 2007 |   | 2006
|Current:        |  |      |   |      |   |  
|Federal         |  | $    |  |      | $ | 
|State and local |  |      |  |      |   | 
|                |  |      |   |      |   |  
|                |  |      |  |      |   | 
|                |  |      |   |      |   |  
|Deferred        |  |      |   |      |   |  
|Federal         |  | $    |  |      | $ | 
|State and local |  |      |  |      |   | 
|                |  |      |   |      |   |  
|                |  | $    |  |      | $ | 
|                |  |      |   |      |   |  

Actual income tax expense (benefit) differs from the amount computed using the federal statutory
rate of 34% for the years ended March 31, as follows:



|                                                 |  |      |            |   |      |   |            |  
|------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                 |  | 2007 |            |   | 2006 |  
|Computed expected income tax expense (benefit) |  | $    | (1,839,795 | ) |      | $ | (1,128,049 | )
|State income taxes, net of federal tax effect    |  |      |           |   |      |   |           |  
|Changes in deferred tax valuation allowance      |  |      | 1,834,810  |   |      |   | 1,124,081  |  
|Other, net                                       |  |      | 4,985      |   |      |   | 3,968      |  
|                                                 |  |      |            |   |      |   |            |  
|Actual income tax expense (benefit)              |  | $    |           |   |      | $ |           |  
|                                                 |  |      |            |   |      |   |            |  



34



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007

Note 5 - Equity

Common stock

During February 2006, the Company agreed to repurchase and retirement of 250,000 shares of its common stock from one of its founders for cash totaling
$250.

On March 30, 2006, the Company completed the Offering of 1,012,500 shares of its common stock for gross proceeds of $2,025,000,
recorded net of the direct cost of the Offering totaling $190,144. As additional consideration, the purchasers received 202,500 warrants to purchase common stock with an exercise price of $2.00 per share, 202,500 warrants to purchase common stock
with an exercise price of $3.75 per share and 100,000 warrants to purchase common stock with an exercise price of $4.75 per share. In April 2006, the Company sold an additional 42,500 shares of its common stock for gross cash proceeds of $85,000. In
addition, the purchasers received 8,500 warrants to purchase common stock with an exercise price of $2.00 per share and 8,500 warrants to purchase common stock with an exercise price of $3.75 per share. The warrants are exercisable immediately and
expire 10 years from the date of issuance. The Offering and Merger were conditional upon each other.

On March 31, 2006, the Company
issued 272,500 shares of its common stock to the shareholders of Emerging Delta Corporation to effect the reverse merger transaction described in Note 1.

During the fiscal year 2007, the Company issued 1,788,000 shares of its common stock at $2.00 per share for cash proceeds of $3,576,000, recorded as $3,369,000 net of the direct costs of the offering totaling
$207,000. As additional consideration, the Company issued the investors 1,325,000 warrants to purchase common stock with an initial exercise price of $2.30. The warrants are exercisable immediately, expire on December 31, 2011 and escalate in
price every six months as follows:



|                      |  |               |     
|--------------------- |  | ------------- | ----
|Months After Issuance |  | Warrant Price
|1  6                 |  | $             | 2.30
|7  12                |  | $             | 3.00
|13  18               |  | $             | 4.00
|19  Term             |  | $             | 5.00

The Company also granted the placement agent warrants to purchase 103,500 shares of its common
stock expiring on December 31, 2011, with an exercise price of $2.30 per share. Using the Black-Scholes option-pricing model, the fair value of the warrants issued to the placement agent totaled $120,505. This was calculated using an expected
life of 2.5 years, a risk-free interest rate of 4.3% and a volatility rate of 104%. Because the value of these warrants is a non-cash item, there is no effect on the net amount of proceeds received and recorded as common stock.

Preferred Stock

ALCiS-CA was
authorized to issue up to 1,000,000 shares of Series A Preferred Stock and up to 4,000,000 shares of Series B Preferred Stock. The Series A and Series B Preferred Stock did not accrue dividends and dividends could not be paid to common stock holders
unless an equal amount was paid to Preferred Stock holders. The Series A and Series B Preferred Stock also had certain liquidation rights and was convertible to common stock at a ratio of one share to one share. In October 2004, ALCiS-CA sold in a
private offering 1,000,000 shares of Series A Preferred Stock at an offering price of $1.00 per share of which 775,000 shares were purchased by related parties.

In December 2005 and January 2006, ALCiS-CA also sold for cash 440,000 shares of its Series B Preferred Stock (Series B) at a price of $2.00 per share. Additionally, the purchasers of the Series B received
88,000 warrants to purchase shares of Series B with an exercise price of $2.00 per share and an additional 88,000 warrants to purchase shares of Series B with an exercise price of $3.75 per share. The warrants vest immediately and are exercisable
for a term of 10 years. The fair value of the warrants was estimated to be $308,000 and was recorded as additional paid in capital against the proceeds received as a direct cost of the issuance. Related parties purchased 50,000 of the 440,000 shares
of Series B and received 10,000 of the 88,000 warrants.

On March 31, 2006, the Merger was consummated and all of ALCiS-CAs
Preferred Stock was converted into 2,414,006 shares of its common stock. Following the Merger, the Company is authorized to issue 500,000 shares of preferred stock. At March 31, 2007, there are no shares of preferred stock issued or
outstanding.



35



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 5 - Equity (Continued)



2004 Stock Plan

Effective September 28, 2004, the Companys Board of Directors approved the ALCiS Health, Inc. 2004 Stock Plan (the Stock Plan). The Stock Plan as amended on March 31, 2006 in conjunction
with the Merger is discretionary and allows for an aggregate of up to 1,300,000 shares of the Companys common stock to be awarded through incentive and non-qualified stock options and stock purchase rights. The Stock Plan is administered by
the Board of Directors which has exclusive discretion to select participants who will receive the awards and determine the type, size and terms of each award granted.

Options and warrants issued to non-employees

On March 31, 2006, the Company issued warrants to
purchase 200,000 shares of its common stock to two former directors of Delta for consulting services. These warrants have an exercise price of $2.00 per share, a term of 10 years with 50% vesting upon issuance and the remaining 50% vesting after one
year. An additional 18,750 warrants were issued to two other former directors of Delta as a replacement for options previously issued by Delta. These warrants have an exercise price of $2.00 per share and vested immediately upon grant. Finally, the
Company assumed 26,875 options with an exercise price of $2.40 per share and 12,500 options with an exercise price of $1.91 per share from Delta. These options are fully vested and expire in March 2008.

In May 2006, the Company issued warrants to purchase 25,000 shares of its common stock under the Stock Plan to an advisory board member. The options are
exercisable at a price of $2.00 per share, vest quarterly over three years and expire 10 years from the date of grant.

In January 2007,
the Company issued warrants to purchase 10,000 shares of its common stock under the Stock Plan to a consultant. The warrants are exercisable at a price of $2.00 per share and expire 10 years from the date of grant. The warrants vest over a two year
period where 5,000 shares vest after one year and the remaining 5,000 shares vest monthly in the second year.

Expense relating to the
options and warrants granted to non-employees was $240,320 and $346,040 for the years ended March 31, 2007 and 2006, respectively, and was calculated using the Black-Scholes option-pricing model.

Options and warrants issued to employees and directors

During January 2006, the Company issued to a member of its Board of Directors options to purchase 60,000 shares of its common stock at an exercise price of $2.00 per share. The options have a term of 10 years and vest
at a rate of 5,000 shares per quarter.

On March 31, 2006, the Company issued 120,000 warrants to two former directors of Delta upon
their joining its Board of Directors. These warrants have an exercise price of $2.00 per share, a term of 10 years and vest at a rate of 5,000 shares per quarter.



36



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 5 - Equity (Continued)



Options and warrants issued to employees and directors (Continued)



In July 2006, the Company issued to three members of its Board of Directors warrants to purchase a
total of 130,000 shares of its common stock at an exercise price of $2.00 per share. The options have a term of 10 years and vest quarterly. The Company also issued to two Officers options to purchase a total of 336,570 shares of its common stock at
an exercise price of $2.00 per share. The options have a term of 10 years and 86,570 shares were immediately vested. The remaining 250,000 shares vest monthly over four years.

During the year ending March 31, 2007, the Company issued to employees options to purchase a total of 161,005 shares of its common stock at an
exercise price of $2.00 per share. The options have a term of 10 years and vest monthly over a four year period.

The Company uses the
Black-Scholes option-pricing model to compute the fair value of stock options which requires the Company to make the following assumptions:



|                        |  |                      |   |  |      |  
|----------------------- |  | -------------------- | - |  | ---- | -
|                        |  | Year Ended March 31, |  
|                        |  | 2007                 |   |  | 2006 |  
|Expected life (years)   |  | 5.70                 |   |  | 6.50 |  
|Risk-free interest rate |  | 5.0                  | % |  | 4.3  | %
|Dividend yield          |  |                     |   |  |     |  
|Volatility              |  | 97                   | % |  | 115  | %



| |  |  | The term of grants is based on the simplified method as described in Staff Accounting Bulletin No. 107.
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | The risk free rate is based on the five year Treasury bond at the date of grant.
| | - |  | --------------------------------------------------------------------------------



| |  |  | The dividend yield on the Companys common stock is assumed to be zero since the Company does not pay dividends and has no current plans to do so in the
future.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The market price volatility of the Companys common stock is based on the Companys recent stock activity and the volatility of other companies at a
similar stage of development.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Expense relating to the options and warrants granted to directors was $261,733 and $9,891
for the years ended March 31, 2007 and 2006, respectively, and there is $441,779 associated with nonvested awards that will be expensed in the future over a weighted average period of 1.23 years.

Summary stock option information

Information regarding the options and warrants granted is as follows:



|                               |         |                      |          |           |      |           |      |          
|------------------------------ | ------- | -------------------- | -------- | --------- | ---- | --------- | ---- | ---------
|                               |         | Year Ended March 31,
|                               | Options |                      | Warrants
|                               | 2007    |                      | 2006     |           | 2007 |           | 2006
|Outstanding, beginning of year |         | 200,000              |          | 140,000   |      | 1,434,525 |      |         
|Granted                        |         | 497,575              |          | 60,000    |      | 2,170,500 |      | 1,434,525
|Exercised                      |         |                     |          |          |      |          |      |         
|Forfeited or cancelled         |         |                     |          |          |      |          |      |         
|                               |         |                      |          |           |      |           |      |          
|Outstanding, end of year       |         | 697,575              |          | 200,000   |      | 3,605,025 |      | 1,434,525
|                               |         |                      |          |           |      |           |      |          
|Exercisable, end of year       |         | 308,044              |          | 56,563    |      | 3,399,192 |      | 1,214,525
|                               |         |                      |          |           |      |           |      |          
|Available for grant            |         | 602,425              |          | 1,100,000 |      |           |      |          
|                               |         |                      |          |           |      |           |      |          

At March 31, 2007, the aggregate intrinsic value of stock options outstanding is $230,000
with a weighted average remaining contractual term of 6.2 years and the aggregate intrinsic value of stock options exercisable is $139,345 with a weighted average remaining contractual life of 6.4 years.



37



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 5 - Equity (Continued)



Summary stock option information (Continued)



Information regarding the weighted average exercise prices of options and warrants outstanding is as
follows:



|                                                            |         |                      |          |  |      |      |      |   |      |  |   |     
|----------------------------------------------------------- | ------- | -------------------- | -------- |  | ---- | ---- | ---- | - | ---- |  | - | ----
|                                                            |         | Year Ended March 31,
|                                                            | Options |                      | Warrants
|                                                            | 2007    |                      | 2006     |  | 2007 |      | 2006
|Outstanding, beginning of year                              |         | $                    | 0.90     |  | $    | 0.36 |      | $ | 2.76 |  | $ |    
|Granted                                                     |         |                      | 2.00     |  |      | 2.00 |      |   | 2.00 |  |   | 2.76
|Exercised                                                   |         |                      |         |  |      |     |      |   |     |  |   |    
|Forfeited or cancelled                                      |         |                      |         |  |      |     |      |   |     |  |   |    
|                                                            |         |                      |          |  |      |      |      |   |      |  |   |     
|Outstanding, end of year                                    |         | $                    | 1.67     |  | $    | 0.90 |      | $ | 2.58 |  | $ | 2.76
|                                                            |         |                      |          |  |      |      |      |   |      |  |   |     
|Exercisable, end of year                                    |         | $                    | 1.55     |  | $    | 0.43 |      | $ | 2.46 |  | $ | 2.89
|                                                            |         |                      |          |  |      |      |      |   |      |  |   |     
|Weighted average fair value of options and warrants granted |         | $                    | 1.69     |  | $    | 1.79 |      | $ | 2.20 |  | $ | 1.75
|                                                            |         |                      |          |  |      |      |      |   |      |  |   |     

The following table summarizes significant information about stock options and warrants
outstanding at March 31, 2007.



|              |  |                    |  |                     |  |             |  |                              |      |                                      |     
|------------- |  | ------------------ |  | ------------------- |  | ----------- |  | ---------------------------- | ---- | ------------------------------------ | ----
|Grant Date    |  | OptionsOutstanding |  | WarrantsOutstanding |  | Exercisable |  | WeightedAverageExercisePrice |      | WeightedAverageRemainingLife (Years)
|October 2004  |  | 100,000            |  |                    |  | 62,813      |  | $                            | 0.10 |                                      | 7.5 
|March 2005    |  | 40,000             |  |                    |  | 20,000      |  | $                            | 1.00 |                                      | 3   
|Dec 2005      |  |                   |  | 141,000             |  | 141,000     |  | $                            | 2.88 |                                      | 8.75
|Jan 2006      |  | 60,000             |  |                    |  | 25,000      |  | $                            | 2.00 |                                      | 8.83
|Jan 2006      |  |                   |  | 410,400             |  | 410,400     |  | $                            | 2.88 |                                      | 8.83
|March 2006    |  |                   |  | 505,000             |  | 505,000     |  | $                            | 3.25 |                                      | 9   
|March 2006    |  |                   |  | 378,125             |  | 298,125     |  | $                            | 2.03 |                                      | 8.17
|April 2006    |  |                   |  | 17,000              |  | 17,000      |  | $                            | 2.88 |                                      | 9   
|May 2006      |  |                   |  | 585,000             |  | 566,250     |  | $                            | 2.00 |                                      | 9.08
|July 2006     |  | 365,075            |  | 130,000             |  | 210,075     |  | $                            | 2.00 |                                      | 9.25
|December 2006 |  |                   |  | 1,428,500           |  | 1,428,500   |  | $                            | 2.30 |                                      | 4.75
|March 2007    |  | 132,500            |  | 10,000              |  | 23,073      |  | $                            | 2.00 |                                      | 10  

Note 6 - Commitments and Contingencies

License and manufacturing agreement

The Company has entered into a license and manufacturing agreement with the patent owner (the
Manufacturer) of the liposomal delivery system used in ALCiS®Daily Relief
Pain Relief Cream. The agreement grants the Company an exclusive, world-wide license for the commercialization of the liposomal delivery system for topical analgesic pain relief applications and body soak preparations and a non-exclusive, world-wide
license for the commercialization of the liposomal delivery system for similar preparations such as body lotions and soap.

Under the
agreement, the Company pays a royalty on monthly net sales or $25,000 per month, if greater. After December 31, 2008, the minimum monthly royalty of $25,000 increases to $50,000. To the extent that the actual royalties owed based on net monthly
sales is less than the minimum monthly payment, the difference is available to offset future royalties, however, these royalties are not capitalized in the Companys balance sheet. Per the agreement with the Manufacturer, these excess payments
are available to offset future royalties when the monthly royalty owed based on net monthly sales exceeds the monthly payment.



38



---

ALCiS Health, Inc.

Notes to Consolidated Financial Statements

March 31, 2007



Note 6 - Commitments and Contingencies (Continued)



At that time, the prepaid royalties can be applied to the royalty owed based on net monthly sales to
the Manufacturer and reduce the actual payment to the monthly minimum.

Additionally, the Company is required to pay the Manufacturer a
non-refundable prepaid royalty totaling $400,000 of which $250,000 was paid during the year ended March 31, 2006. The remaining $150,000 is payable in 18 equal monthly payments of $8,333 with the first payment due July 30, 2006. During
April 2006, the Company also granted the Manufacturer warrants to purchase 560,000 shares of the Companys common stock. The warrants have an exercise price of $2.00 per share, are exercisable immediately and expire 10 years from the date of
issue. Expense related to these warrants totaling $942,713 was calculated using the Black-Scholes option pricing model and recorded as product development costs in the Consolidated Statement of Operations.

In general, the agreement terminates upon the expiration of the Manufacturers patents used
in ALCiS®Daily Relief Pain Relief Cream. The Manufacturer is currently the Companys
sole provider of ALCiS®Daily Relief Pain Relief Cream.

Operating Lease

The Company leases
its office space under a non-cancelable operating lease which expires in August 2008. Future rental payments are approximately $128,000 and $53,000 for fiscal 2008 and 2009, respectively. Rent expense was $70,730 for the year ended March 31,
2007.

Note 7 - Related Party Transactions

In January 2006, the Company entered into an agreement with a law firm owned by a former director, officer, and employee who is also a holder of 750,000 shares of its common stock. Under the agreement, the Company receives a discount off of
regular billing rates in exchange for a monthly commitment of time. The agreement terminated on October 31, 2006 but ALCiS still uses the law firms services from time to time for various corporate law issues. For the periods ended
March 31, 2007 and 2006, the Company made payments totaling $86,268 and $55,701, respectively.

Note 8 - Subsequent Events

In April 2007, the Company sold in a private placement 25,000 shares of common stock for gross cash proceeds of $50,000.

In June 2007, an investor exercised 10,000 warrants at $2.00 per share for total cash proceeds of $20,000. Also in June 2007, an additional investor
exercised 50,000 warrants at $2.30 per share for total cash proceeds of $115,000.



39



---

|Item 8. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|Item 8A. | Controls and Procedures
|-------- | -----------------------

(a) Evaluation of Disclosure
Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet, and management believes that
they meet, reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls
and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions.

Based on their evaluation as of the end of the period covered by this Form 10-KSB, our Chief Executive Officer and Chief
Financial Officer have concluded that, subject to the limitations noted above, as of such dates, our disclosure controls and procedures were effective at the reasonable assurance level.

(b) Changes in Internal Control over Financial Reporting. Our internal control over our financial reporting is designed to provide reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. There were no significant changes in the Companys internal control
over financial reporting that occurred during the fourth quarter of fiscal year 2007 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

(c) Inherent Limitations on Effectiveness of Controls.Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect
that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the control systems objectives will be met. The design of a control system must reflect the fact that there are resource constraints and competing use of resources, and the benefits of controls must be considered relative to
their costs in light of competing demands on limited resources. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or
that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or
mistake. Controls can also be circumvented by the individual acts or omissions of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in
conditions or deterioration in the degree of compliance with policies or procedures.



|Item 8B. | Other Information
|-------- | -----------------

None



40



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PART III

Certain information required by Part III is incorporated by reference from our definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for our 2007 Annual Meeting
Stockholders to be held on September 14, 2007 (the 2007 Proxy Statement).



|Item 9. | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
|------- | ----------------------------------------------------------------------------------------------------------------

The information required by this Item is set forth in the 2007 Proxy Statement under the captions Directors and Executive Officers of the Registrant and
Executive Compensation and is incorporated herein by reference, except that

(1) where this Item calls for disclosure of any known late filings
or failure by an insider to file a report required by Section 16(a) of the Securities Act, such information is contained in the 2007 Proxy Statement under the caption Section 16(a) Beneficial Ownership Reporting Compliance and is
incorporated herein by reference.

(2) where this Item calls for disclosure regarding the composition of the audit committee of our Board of Directors and
whether or not we have a financial expert serving on the audit committee of our Board of Directors, and if so who that individual is, such information is contained in the 2007 Proxy Statement under the caption Board Meetings and Committees and
Audit Committee Financial Expert and is incorporated herein by reference.

We have adopted a code of business conduct and ethics that applies to our
directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. We have posted the text of such code of ethics on our
website at www.alcis.com/investors. Information on our website is not part of this report.



|Item 10. | Executive Compensation
|-------- | ----------------------

The information required by this
Item is set forth in the 2007 Proxy Statement under the caption Executive Compensation, Director Compensation, and Stock Option Table and is incorporated herein by reference.



|Item 11. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The information required by this Item is set forth in the 2007 Proxy Statement under the caption Executive Compensation, Director Compensation,
and Stock Option Table and is incorporated herein by reference.

Information related to security ownership of certain beneficial owners and
security ownership of management is set forth in the 2007 Proxy Statement under the caption Security Ownership of Certain Beneficial Owners and Management and is incorporated herein by reference and information related to our equity
compensation plans is set forth in the 2007 Proxy Statement under the caption Equity Compensation Plan Information and is incorporated herein by reference.



|Item 12. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

Information related to certain relationships and related transactions is set forth in the 2007 Proxy Statement under the caption Certain Relationships and Related Transactions and is incorporated herein by
reference and information related to director independence is set forth in the 2007 Proxy Statement under the caption Directors and Executive Officers of the Registrant and is incorporated herein by reference.



41



---

|Item 13. | Exhibits
|-------- | --------

The following exhibits are either
incorporated by reference from prior filings or included with this filing as indicated below.



|     |  |                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Certificate of Incorporation of the Registrant*                                                                                          
|     | 
|3.2  |  | Certificate of Amendment to Certificate of Incorporation dated February 22, 2006, and filed on February 24, 2006*                                             
|     | 
|3.3  |  | Certificate of Amendment to Certificate of Incorporation dated April 3, 2006, and filed on April 5, 2006*                                                     
|     | 
|3.4  |  | Bylaws of the Registrant*                                                                                                                                     
|     | 
|4.1  |  | Form of Certificate of Common Stock of Registrant**                                                                                                           
|     | 
|4.2  |  | Form of Warrant*                                                                                                                                              
|     | 
|4.3  |  | Amended 2004 Stock Plan*                                                                                                                                      
|     | 
|4.4  |  | Form of Stock Option Agreement relating to the 2004 Stock Plan*                                                                                               
|     | 
|4.5  |  | Form of Lock-up Agreement for certain investors*                                                                                                              
|     | 
|10.1 |  | Agreement and Plan of Merger among Registrant, Delta Acquisition Sub, Inc., and ALCiS Health, Inc., a California corporation, dated March 30, 2006.***        
|     | 
|10.2 |  | License Agreement between ALCiS and BioZone Laboratories, Inc. dated August 17, 2005, as amended on September 28, 2005, and December 27, 2005*+               
|     | 
|10.3 |  | Purchase Option between ALCiS and BioZone Laboratories, Inc. dated November 4, 2005*                                                                          
|     | 
|10.4 |  | Form of Statement of Confidentiality, Non-Disclosure and Non-Compete Agreement between ALCiS and our employees, consultants and other third-party contractors*
|     | 
|10.5 |  | Form of Subscription Agreement relating to Offering consummated March 31, 2006 for the sale of common stock and warrants*                                     
|     | 
|10.6 |  | Engagement Agreement between Landrum & Company, Inc. and ALCiS effective February 1, 2006*                                                                    
|     | 
|10.7 |  | Form of Indemnification Agreement*                                                                                                                            



42



---

|     |  |                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------
|10.8 |  | 1stAmendment to Purchase Option between ALCiS and BioZone
Laboratories, Inc. Dated April 13, 2006****                 
|     | 
|10.9 |  | 3rdAmendment to License Agreement between ALCiS and BioZone
Laboratories, inc. dated April 13, 2006****               
|     | 
|21.0 |  | List of Subsidiaries*                                                                                                 
|     | 
|24.0 |  | Power of attorney, included on pages 44 and 45                                                                        
|     | 
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Brian J. Berchtold, principal executive officer; filed herewith as page 47  
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Mark E. Lemma, principal financial officer; filed herewith as page 48       
|     | 
|32.1 |  | Section 1350 Certification of Brian J. Berchtold, principal executive officer and president; filed herewith as page 49
|     | 
|32.2 |  | Section 1350 Certification of Mark E. Lemma, principal financial officer; filed herewith as page 50                   

---

|* | Incorporated by reference as exhibit of the same number from Current Report on Form 8-K dated March 31, 2006, and filed with the SEC on April 6, 2006.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference as Exhibit 4.1 from Registration Statement on Form 10-SB filed with the SEC on April 21, 2006.
|-- | ------------------------------------------------------------------------------------------------------------------------

|*** | Incorporated by reference as Exhibit 10.1 from Current Report on Form 8-K filed by Registrant dated March 30, 2006, and filed with the SEC on April 5, 2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | Incorporated by reference as exhibit of the same number from Quarterly Report on Form 10-QSB for the Quarter ended June 30, 2007, and filed with the SEC on August 14,
2007.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Confidential treatment has been requested for portions of this exhibit.
|- | -----------------------------------------------------------------------



43



---

|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

The information
required by this Item is set forth in the 2007 Proxy Statement under the caption Ratification of Independent AuthorsAudit and Non-Audit Fees and is incorporated herein by reference.

SIGNATURES

In accordance with Section 13 or 15
(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                    |  |                                      
|-------------------- |  |  |  | ------------------ |  | -------------------------------------
|                     |  |  |  | ALCiS HEALTH, INC.
|                     |  |  | 
|Dated: July 13, 2007 |  |  |  | By:                |  | /s/ Brian J. Berchtold               
|                     |  |  |  |                    |  | Brian J. Berchtold                   
|                     |  |  |  |                    |  | President and Chief Executive Officer
|                     |  |  | 
|                     |  |  |  | By:                |  | /s/ Mark E. Lemma                    
|                     |  |  |  |                    |  | Mark E. Lemma                        
|                     |  |  |  |                    |  | Chief Financial Officer              

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brian
J. Berchtold and Mark E., Lemma and each of them, acting individually, as his attorney-in-fact, each with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all
amendments to this Report on Form 10-KSB, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.



44



---

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated:



|                       |  |  |  |                                              |  |              
|---------------------- |  |  |  | -------------------------------------------- |  | -------------
|Signature              |  |  |  | Title                                        |  | Date         
|                       |  |  | 
|/s/ Brian J. Berchtold |  |  |  | Director, Chief Executive Officer, President |  | July 13, 2007
|Brian J. Berchtold     |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ Mark E. Lemma      |  |  |  | Chief Financial Officer                      |  | July 13, 2007
|Mark E. Lemma          |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ Douglas Glader     |  |  |  | Chairman of the Board, Director              |  | June 29, 2007
|Douglas Glader         |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ David Booth        |  |  |  | Director                                     |  | June 29, 2007
|David Booth            |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ Allen F. Campbell  |  |  |  | Director                                     |  | June 29, 2007
|Allen F. Campbell      |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ Jerry Jarrell      |  |  |  | Director                                     |  | June 29, 2007
|Jerry Jarrell          |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ Ravinder Sajwan    |  |  |  | Director                                     |  | June 29, 2007
|Ravinder Sajwan        |  |  |  |                                              |  |              
|                       |  |  | 
|/s/ David Scoffone     |  |  |  | Director                                     |  | June 29, 2007
|David Scoffone         |  |  |  |                                              |  |              



45



---

ALCiS HEALTH, INC.

EXHIBIT INDEX



|     |  |                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Certificate of Incorporation of the Registrant*                                                                                          
|3.2  |  | Certificate of Amendment to Certificate of Incorporation dated February 22, 2006, and filed on February 24, 2006*                                             
|3.3  |  | Certificate of Amendment to Certificate of Incorporation dated April 3, 2006, and filed on April 5, 2006*                                                     
|3.4  |  | Bylaws of the Registrant*                                                                                                                                     
|4.1  |  | Form of Certificate of Common Stock of Registrant**                                                                                                           
|4.2  |  | Form of Warrant*                                                                                                                                              
|4.3  |  | Amended 2004 Stock Plan*                                                                                                                                      
|4.4  |  | Form of Stock Option Agreement relating to the 2004 Stock Plan*                                                                                               
|4.5  |  | Form of Lock-up Agreement for certain investors*                                                                                                              
|10.1 |  | Agreement and Plan of Merger among Registrant, Delta Acquisition Sub, Inc., and ALCiS Health, Inc., a California corporation, dated March 30, 2006.***        
|10.2 |  | License Agreement between ALCiS and BioZone Laboratories, Inc. dated August 17, 2005, as amended on September 28, 2005, and December 27, 2005*+               
|10.3 |  | Purchase Option between ALCiS and BioZone Laboratories, Inc. dated November 4, 2005*                                                                          
|10.4 |  | Form of Statement of Confidentiality, Non-Disclosure and Non-Compete Agreement between ALCiS and our employees, consultants and other third-party contractors*
|10.5 |  | Form of Subscription Agreement relating to Offering consummated March 31, 2006 for the sale of common stock and warrants*                                     
|10.6 |  | Engagement Agreement between Landrum & Company, Inc. and ALCiS effective February 1, 2006*                                                                    
|10.7 |  | Form of Indemnification Agreement*                                                                                                                            
|10.8 |  | 1stAmendment to Purchase Option between ALCiS and BioZone
Laboratories, Inc. Dated April 13, 2006****                                                         
|10.9 |  | 3rdAmendment to License Agreement between ALCiS and
BioZone Laboratories, inc. dated April 13, 2006****                                                       
|21.0 |  | List of Subsidiaries*                                                                                                                                         
|24.0 |  | Power of attorney, included on pages 44 and 45                                                                                                                
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Brian J. Berchtold, principal executive officer; filed herewith as page 47                                          
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Mark E. Lemma, principal financial officer; filed herewith as page 48                                               
|32.1 |  | Section 1350 Certification of Brian J. Berchtold, principal executive officer and president; filed herewith as page 49                                        
|32.2 |  | Section 1350 Certification of Mark E. Lemma, principal financial officer; filed herewith as page 50                                                           

---

|* | Incorporated by reference as exhibit of the same number from Current Report on Form 8-K dated March 31, 2006, and filed with the SEC on April 6, 2006.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference as Exhibit 4.1 from Registration Statement on Form 10-SB filed with the SEC on April 21, 2006.
|-- | ------------------------------------------------------------------------------------------------------------------------

|*** | Incorporated by reference as Exhibit 10.1 from Current Report on Form 8-K filed by Registrant dated March 30, 2006, and filed with the SEC on April 5, 2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | Incorporated by reference as exhibit of the same number from Quarterly Report on Form 10-QSB for the Quarter ended June 30, 2007, and filed with the SEC on August 14,
2007.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Confidential treatment has been requested for portions of this exhibit.
|- | -----------------------------------------------------------------------



46