**United States**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**
| (Mark One)                                        |
|---------------------------------------------------|
|                                              |
| **x**                                             | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                        | ** ** |
| **For the  quarterly period ended June 30, 2007** |
| ** **                                        |
| **or**                                            |
| ** **                                        |
| **o**                                             | **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:  000-51708**

**Redpoint Bio Corporation**

(Exact name of Registrant as specified in its charter)

| **Delaware**                     |   | **22-3393959**                        |
|----------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)  |   |                                  |

 

**Redpoint Bio Corporation, 7 Graphics Drive, Ewing, New Jersey08628**

(Address ofprincipal executive offices) (Zip Code)

**(609)637-9700**

(Registrant’s Telephone Number, Including Area Code)

(Former Name,Former Address and Former Fiscal Year, If Changed Since Last Report**)**

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x  No o

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act.(Check one):

| Large Accelerated Filer o |   | Accelerated  Filer o |   | Non-Accelerated  Filer x |
|---------------------------|--------|----------------------|--------|--------------------------|

 

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

Thenumber of shares of the registrant’s common stock outstanding as of August 9,2007 was 78,916,157.

 

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**REDPOINTBIO CORPORATION**

**TABLE OF CONTENTS**
|              | ** **                                                                                                                                            | **Page**   |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| **PART I:**  | **FINANCIAL  INFORMATION**                                                                                                                            |       |
| ** **   | ** **                                                                                                                                            | ** ** |
| ITEM 1.      | FINANCIAL STATEMENTS  (unaudited):                                                                                                                    | 3          |
|         |                                                                                                                                                  |       |
|         | Balance Sheets as of December 31, 2006 and June 30,  2007                                                                                             | 3          |
|         |                                                                                                                                                  |       |
|         | Statements of Operations for the Three and Six Months  Ended June 30, 2006 and 2007 and the period from August 16, 1995 (inception)  to June 30, 2007 | 4          |
|         |                                                                                                                                                  |       |
|         | Statements  of Cash Flows for the Six Months Ended June 30, 2006 and 2007 and the period  from August 16, 1995 (inception) to June 30, 2007           | 5          |
|         |                                                                                                                                                  |       |
|         | Notes  to Financial Statements                                                                                                                        | 6          |
|         |                                                                                                                                                  |       |
| ITEM 2.      | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                           | 11         |
|         |                                                                                                                                                  |       |
| ITEM 3.      | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                           | 18         |
|         |                                                                                                                                                  |       |
| ITEM 4T.     | CONTROLS AND  PROCEDURES                                                                                                                              | 18         |
|         |                                                                                                                                                  |       |
| **PART II:** | **OTHER INFORMATION**                                                                                                                                 |       |
| ** **   | ** **                                                                                                                                            | ** ** |
| ITEM 1.      | LEGAL PROCEEDINGS                                                                                                                                     | 20         |
|         |                                                                                                                                                  |       |
| ITEM  1A.    | RISK  FACTORS                                                                                                                                         | 20         |
|         |                                                                                                                                                  |       |
| ITEM 2.      | UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                          | 36         |
|         |                                                                                                                                                  |       |
| ITEM 3.      | DEFAULTS UPON  SENIOR SECURITIES                                                                                                                      | 36         |
|         |                                                                                                                                                  |       |
| ITEM 4.      | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                  | 36         |
|         |                                                                                                                                                  |       |
| ITEM  6.     | EXHIBITS                                                                                                                                              | 37         |
|         |                                                                                                                                                  |       |
| SIGNATURES   |                                                                                                                                                  |

 

2

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**PARTI. FINANCIAL INFORMATION.**

**ITEM 1.  FINANCIAL STATEMENTS.**

**REDPOINTBIO CORPORATION (A DEVELOPMENT-STAGE ENTERPRISE)BALANCE SHEETS**

**(UNAUDITED)**
| ** **                                                                                                                                                                             | ** ** | **December 31,** | ** ** | **June 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------|------------|
| **Assets**                                                                                                                                                                             | ** ** | **2006**              | ** ** | **2007**          | ** ** |
| Current assets:                                                                                                                                                                        |       |                  |       |              |       |
| Cash and cash  equivalents                                                                                                                                                             |       | $                | 974,378    |              | $          | 28,530,981 |   |
| Accounts  receivable                                                                                                                                                                   |       | —                |       | 30,000            |       |
| Prepaid expenses  and other current assets                                                                                                                                             |       | 72,697                |       | 196,174           |       |
| Total current  assets                                                                                                                                                                  |       | 1,047,075             |       | 28,757,155        |       |
| Property and equipment,  net                                                                                                                                                           |       | 840,435               |       | 1,107,278         |       |
| Deferred financing  costs                                                                                                                                                              |       | 308,456               |       | —            |       |
| Other assets                                                                                                                                                                           |       | 355,816               |       | 301,845           |       |
| Total assets                                                                                                                                                                           |       | $                | 2,551,782  |              | $          | 30,166,278 |   |
| **Liabilities  and Stockholders’ Equity (Deficit)**                                                                                                                               |       |                  |       |              |       |
| Current liabilities:                                                                                                                                                                   |       |                  |       |              |       |
| Convertible  notes payable                                                                                                                                                             |       | $                | 3,462,359  |              | $          | — |   |
| Current portion  of long-term debt                                                                                                                                                     |       | 574,132               |       | 543,402           |       |
| Accounts payable                                                                                                                                                                       |       | 833,739               |       | 1,600,089         |       |
| Accrued expenses                                                                                                                                                                       |       | 351,650               |       | 333,868           |       |
| Accrued  compensation                                                                                                                                                                  |       | 704,964               |       | 318,809           |       |
| Deferred revenue                                                                                                                                                                       |       | —                |       | 1,048,691         |       |
| Total current  liabilities                                                                                                                                                             |       | 5,926,844             |       | 3,844,859         |       |
| Long-term debt                                                                                                                                                                         |       | 635,344               |       | 385,973           |       |
| Deferred revenue                                                                                                                                                                       |       | —                |       | 835,720           |       |
| Total  liabilities                                                                                                                                                                     |       | 6,562,188             |       | 5,066,552         |       |
|                                                                                                                                                                                   |       |                  |       |              |       |
|  Redeemable convertible preferred stock,  $0.0001 par value;                                                                                                                      |       |                  |       |              |       |
| Series A  convertible preferred stock; issued and outstanding 6,444,835 shares (liquidation  value of $16,350,586 at December 31, 2006)                                                |       | 16,217,778            |       | —            |       |
| Junior preferred  stock; issued and outstanding 236,987 shares (liquidation value of $622,787  at December 31, 2006)                                                                   |       | 497,673               |       | —            |       |
|                                                                                                                                                                                   |       |                  |       |              |       |
| Stockholders’ equity  (deficit):                                                                                                                                                  |       |                  |       |              |       |
| Preferred stock;  10,000,000 shares authorized, $0.0001 par value, none issued                                                                                                         |       | —                |       | —            |       |
| Common stock;  authorized 150,000,000 shares; $0.0001 par value, issued and outstanding  4,439,345 at December 31, 2006 and issued and outstanding 78,916,157 shares  at June 30, 2007 |       | 444                   |       | 7,891             |       |
| Additional  paid-in capital                                                                                                                                                            |       | 1,568,697             |       | 54,247,653        |       |
| Deficit  accumulated during development stage                                                                                                                                          |       | (22,294,998           | )          | (29,155,818       | )          |
| Total  stockholders’ equity (deficit)                                                                                                                                             |       | (20,725,857           | )          | 25,099,726        |       |
| Total liabilities and  stockholders’ equity (deficit)                                                                                                                             |       | $                | 2,551,782  |              | $          | 30,166,278 |   |

 

Seeaccompanying notes to unaudited financial statements.

 

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**REDPOINTBIO CORPORATION(A DEVELOPMENT-STAGE ENTERPRISE)STATEMENTS OF OPERATIONS**

**(UNAUDITED**)
| ** **                                           | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** | **August 16 1995  (Inception) to** | ** ** |
|------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                           | ** ** | **2006**                                            | ** ** | **2007**                                          | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **June 30, 2007** | ** ** |
|                                                 | ** ** | ** **                                          | ** ** | ** **                                        | ** ** | ** **                                        |       |   | ** ** | ** ** | ** ** |
| Research and  grant revenue                          |       | $                                                   | —     |                                              | $     | 675,542                                           |       | $ | — |   | $  | 716,393 |   | $ | 4,949,254 |   |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Operating  expenses:                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Research and development                             |       | 925,913                                             |       | 1,241,841                                         |       | 1,834,293                                         |       | 3,810,341 |   | 16,334,094 |   |
| General and administrative                           |       | 702,388                                             |       | 1,151,406                                         |       | 1,409,595                                         |       | 2,062,665 |   | 12,146,559 |   |
| Total operating expenses                             |       | 1,628,301                                           |       | 2,393,247                                         |       | 3,243,888                                         |       | 5,873,006 |   | 28,480,653 |   |
| Operating loss                                       |       | (1,628,301                                          | )          | (1,717,705                                        | )          | (3,243,888                                        | )          | (5,156,613 | ) | (23,531,399 | ) |
| Interest income                                      |       | 12,652                                              |       | 155,162                                           |       | 28,527                                            |       | 176,136 |   | 361,333 |   |
| Interest expense                                     |       | (119,572                                            | )          | (25,962                                           | )          | (161,846                                          | )          | (1,655,497 | ) | (3,292,069 | ) |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Loss before income taxes                             |       | (1,735,221                                          | )          | (1,588,505                                        | )          | (3,377,207                                        | )          | (6,635,974 | ) | (26,462,135 | ) |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Income tax  benefit                                  |       | —                                              |       | —                                            |       | —                                            |       | — |   | 719,206 |   |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Net loss                                             |       | (1,735,221                                          | )          | (1,588,505                                        | )          | (3,377,207                                        | )          | (6,635,974 | ) | $ | (25,742,929 | ) |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Accretion of  redeemable convertible preferred stock |       | (286,759                                            | )          | —                                            |       | (570,551                                          | )          | (224,846 | ) |   |   |
| Net loss  applicable to common stockholders          |       | $                                                   | (2,021,980 | )                                                 | $          | (1,588,505                                        | )          | $ | (3,947,758 | ) | $ | (6,860,820 | ) |   |   |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Basic and  diluted net loss per common share         |       | $                                                   | (0.46      | )                                                 | $          | (0.02                                             | )          | $ | (0.89 | ) | $ | (0.14 | ) |   |   |
|                                                 |       |                                                |       |                                              |       |                                              |       |   |   |   |   |
| Weighted average of  shares outstanding              |       | 4,429,950                                           |       | 77,657,121                                        |       | 4,420,665                                         |       | 47,354,110 |   |   |   |

 

Seeaccompanying notes to the unaudited financial statements.

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**REDPOINT BIO CORPORATION**

**(A DEVELOPMENT-STAGE ENTERPRISE)**

**STATEMENTSOF CASH FLOWS**

**(UNAUDITED)**
| ** **                                                                   | ** ** | **Six Months Ended June 30,** | ** ** | **August 16  1995  (Inception)  to** | ** ** |
|------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                   | ** ** | **2006**                                          | ** ** | **2007**                                  | ** ** | **June 30, 2007** | ** ** |
| Cash flows from  operating activities:                                       |       |                                              |       |                                      |       |   |   |
| Net loss                                                                     |       | $                                                 | (3,377,207 | )                                         | $          | (6,635,974 | ) | $ | (25,742,929 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |                                              |       |                                      |       |   |   |
| Depreciation                                                                 |       | 203,315                                           |       | 225,868                                   |       | 1,242,190 |   |
| Options,  warrants and stock issued for services and dilution provisions     |       | 16,899                                            |       | 1,896,431                                 |       | 2,288,564 |   |
| Beneficial  conversion feature                                               |       | —                                            |       | 1,228,565                                 |       | 1,228,565 |   |
| Amortization of  discount on convertible notes                               |       | 69,928                                            |       | 302,032                                   |       | 899,935 |   |
| Amortization of  deferred financing costs                                    |       | 3,759                                             |       | 32,892                                    |       | 130,050 |   |
| Debt inducement  charge                                                      |       | —                                            |       | —                                    |       | 361,598 |   |
| Interest expense  on convertible notes                                       |       | —                                            |       | —                                    |       | 136,075 |   |
| Changes in  assets and liabilities:                                          |       |                                              |       |                                      |       |   |   |
| Accounts  receivable                                                         |       | —                                            |       | (30,000                                   | )          | (30,000 | ) |
| Prepaid expenses  and other assets                                           |       | (103,856                                          | )          | (133,159                                  | )          | (791,842 | ) |
| Accounts payable                                                             |       | 468,782                                           |       | 643,440                                   |       | 1,477,179 |   |
| Accrued expenses  and accrued compensation                                   |       | 217,645                                           |       | (272,332                                  | )          | 784,282 |   |
| Deferred revenue                                                             |       | —                                            |       | 1,884,411                                 |       | 1,884,411 |   |
| Net cash used in  operating activities                                       |       | (2,500,735                                        | )          | (857,826                                  | )          | (16,131,922 | ) |
| Cash flows from  investing activities:                                       |       |                                              |       |                                      |       |   |   |
| Purchases of  property and equipment                                         |       | (41,018                                           | )          | (61,345                                   | )          | (1,918,102 | ) |
| Net cash used in  investing activities                                       |       | (41,018                                           | )          | (61,345                                   | )          | (1,918,102 | ) |
| Cash flows from  financing activities:                                       |       |                                              |       |                                      |       |   |   |
| Proceeds from  issuance of long-term debt                                    |       | —                                            |       | —                                    |       | 2,085,810 |   |
| Net proceeds  from convertible notes                                         |       | 2,308,179                                         |       | —                                    |       | 5,253,811 |   |
| Payments of debt                                                             |       | (248,825                                          | )          | (280,101                                  | )          | (1,156,435 | ) |
| Net proceeds  from issuance of preferred stock                               |       | —                                            |       | —                                    |       | 11,883,447 |   |
| Net proceeds  from issuance of common stock and warrants                     |       | 12,350                                            |       | 28,718,753                                |       | 28,760,371 |   |
| Proceeds from  exercise of common stock options                              |       | —                                            |       | 37,122                                    |       | 37,122 |   |
| Common stock  reacquired                                                     |       | —                                            |       | —                                    |       | (283,121 | ) |
| Net cash  provided by financing activities                                   |       | 2,071,704                                         |       | 28,475,774                                |       | 46,581,005 |   |
| Net decrease  (increase) in cash and cash equivalents                        |       | (470,049                                          | )          | 27,556,603                                |       | 28,530,981 |   |
| Cash and cash  equivalents, beginning of period                              |       | 2,557,680                                         |       | 974,378                                   |       | — |   |
| Cash and cash  equivalents, end of period                                    |       | $                                                 | 2,087,631  |                                      | $          | 28,530,981 |   | $ | 28,530,981 |   |
| Supplemental cash flow  disclosures:                                         |       |                                              |       |                                      |       |   |   |
| Noncash  investing and financing activities:                                 |       |                                              |       |                                      |       |   |   |
| Increase in  property and equipment included in accounts payable             |       | $                                                 | —     |                                      | $          | 431,366 |   | $ | 431,366 |   |
| Conversion of  notes payable and accrued interest to preferred stock         |       | —                                            |       | —                                    |       | 1,446,395 |   |
| Conversion of  notes payable and accrued interest to common stock            |       | —                                            |       | 3,896,001                                 |       | 3,896,001 |   |
| Conversion of  preferred and junior preferred stock to common stock          |       | —                                            |       | 16,940,297                                |       | 16,940,297 |   |
| Accretion of  preferred stock                                                |       | 570,551                                           |       | 224,846                                   |       | 3,248,857 |   |
| Warrants issued  in connection with notes payable                            |       | 679,267                                           |       | —                                    |       | 1,258,642 |   |
| Cash paid for interest                                                       |       | 77,719                                            |       | 51,593                                    |       | 370,667 |   |

 

See accompanying notes to the unaudited financial statements.

5

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**REDPOINT BIO CORPORATION**

**(A DEVELOPMENT-STAGE ENTERPRISE)**

**NOTES TOFINANCIAL STATEMENTS**

**(UNAUDITED)**

**1****                                         Basis ofPresentation**

The accompanying unaudited financial statements ofRedpoint Bio Corporation (“Redpoint” or the “Company”) have been prepared inaccordance with generally accepted accounting principles for interim financialinformation and pursuant to the rules and regulations of the Securities andExchange Commission, referred to herein as the SEC. Accordingly, they do notinclude all of the information and footnotes required by generally acceptedaccounting principles for complete financial statements.

In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for a fairpresentation have been included (See Note 2 for discussion of the impact of theReverse Merger (as defined below)). Operating results for the three and six months ended June 30, 2007 arenot necessarily indicative of the results that may be expected for the yearending December 31, 2007.

For further information, refer to the 2006 financialstatements and footnotes thereto of Redpoint included in the Company’sProspectus filed with the SEC pursuant to Rule 424(b)(3) on July 20, 2007.

**2****                                         ReverseMerger, Financing and Reincorporation Merger**

*Completion of Merger*

Robcor Properties, Inc., a Florida corporation (“Robcor”),and its newly-formed subsidiary, Robcor Acquisition Corp., a Delawarecorporation (“Merger Sub”) entered into an Agreement and Plan of Merger (the “MergerAgreement”), dated as of March 12, 2007, by and among, Redpoint, formerly aprivately-held Delaware corporation, on the one hand, and Robcor, Merger Sub,Robcor LLC, a Kentucky limited liability company and wholly-owned subsidiary ofRobcor (“Robcor LLC”) and Halter Financial Investments, L.P., a Texas limitedpartnership (“Halter”), and Michael Heitz (“Heitz”), as stockholders of Robcor,on the other hand.  Pursuant to the Merger Agreement, Merger Sub, whichRobcor had incorporated in the state of Delaware for the purpose of completingthe transaction, merged into Redpoint (the “Reverse Merger”) on March 12, 2007(the “Closing” or the “Closing Date”) with Redpoint continuing as the survivingentity in the Reverse Merger.  As a result of the Reverse Merger, Redpointbecame a wholly-owned subsidiary of Robcor.  In connection with theReverse Merger, each share of capital stock of Redpoint was converted into2.7820 shares of common stock of Robcor and all of Redpoint’s convertiblepromissory notes were converted into shares of common stock of Robcor.

Redpoint was deemed to have been the accountingacquirer in the Reverse Merger.  Accordingly, the financial statements ofthe Company presented reflect the historical results of Redpoint prior to theReverse Merger, and of the combined entities following the Reverse Merger, anddo not include the historical financial results of Robcor prior to theconsummation of the Reverse Merger.

*Private Placement*

Concurrently with the completion of the ReverseMerger, Robcor received $17.2 million in net proceeds from the initial closingof a private placement of approximately 24.7 million shares common stock at aprice of $0.81 per share, and warrants to purchase approximately 6.2 millionshares of Robcor common stock at an exercise price of $1.35 per share (the “PrivatePlacement”).  The initial closing of the Private Placement occurredon March 12, 2007, concurrently with the completion of the Reverse Merger.

In connection with the Private Placement, Redpointengaged two placement agents which were issued five-year warrants to buyapproximately 2.0 million shares of Robcor common stock equal to 10% of thenumber of shares of common stock sold in the Private Placement at an exerciseprice of $0.97 per share; provided, however, no warrants were issued to theplacement agents with respect to shares and warrants sold to existing Redpointstockholders.

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On April 6, 2007, Robcor sold an additional 16.1million shares of common stock and warrants to purchase 4.0 million shares ofcommon stock which resulted in net proceeds of approximately $11.2million.  In connection with the Aprilclosing, warrants to purchase an additional 1.6 million shares of common stockwere issued to the placement agents.

*Reincorporation Merger*

On June 15, 2007, Robcor was merged with and intoRedpoint, its wholly-owned subsidiary, with Redpoint being the survivingcorporation pursuant to the Agreement and Plan of Merger dated May 3,2007. As a result of the merger, the Company’s state of incorporation changedfrom Florida to Delaware.

In connection with the reincorporation merger, theauthorized number of shares of common stock was decreased from 1,000,000,000shares of common stock, no par value per share, to 150,000,000 shares of commonstock, $0.0001 par value per share, and the authorized number of shares ofpreferred stock was decreased from 20,000,000 shares of preferred stock, no parvalue per share, to 10,000,000 shares of preferred stock, $0.0001 par value pershare. The Company’s share data and capital stock have been retrospectivelyadjusted for all periods presented to reflect the reincorporation merger.

In addition, the maximum number of shares of commonstock reserved for issuance under the Company’s 2007 Omnibus EquityCompensation Plan was increased from 13,511,562 to 17,644,267 shares.

**3****                                        Summaryof Significant Accounting Policies**

***(a)******                                 Useof Estimates***

The preparation of financial statements in conformitywith U.S. generally accepted accounting principles requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from such estimates.

***(b)******                                 Cashand Cash Equivalents***

The Company considers all highly liquid investmentsthat have maturities of three months or less when acquired to be cashequivalents. Cash equivalents consist of bank deposits and investments in moneymarket mutual funds. Cash equivalents subject the Company to concentrations ofcredit risk. However, the Company has invested only in money market mutualfunds that invest substantially all of their assets in obligations of the U.S.government.

***(c)******                                  RevenueRecognition***

Revenue from corporate collaborations and licensingagreements consists of up-front fees, research and development funding, andmilestone payments. Nonrefundable up-front fees are deferred and recognized asrevenue in the period the earnings process is complete based on the terms ofthe specific agreements. Revenue from research and development agreements andgovernment grants is recognized pursuant to the related agreements as work isperformed and related costs are incurred. Revenue resulting from theachievement of milestone events as defined in the agreements is recognized whenthe milestone is achieved.

***(d)******                                 Researchand Development***

Research and development costs are charged to expenseas incurred. These expenses include internal research and development conductedon behalf of the Company by third parties, including sponsored university-basedresearch agreements and clinical study vendors. Costs incurred in obtainingtechnology licenses are charged immediately to research and development expenseif the technology licensed has not reached technological feasibility and has noalternative future uses.

***(e)******                                  Stock-BasedCompensation***

The Company follows Statement of Financial AccountingStandards (SFAS) No. 123 (revised 2004), *Share-BasedPayment* (SFAS 123R) under which the Company recognizescompensation cost for awards to

7

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employees and nonemployee board members based on thegrant-date fair value of stock-based awards over the period during which anaward holder is required to provide service in exchange for the award. Nocompensation cost is recognized for awards for which the award holder does notrender the requisite service.

***(f)******                                    NetLoss per Share***

Net loss per share is computed in accordance with SFASNo. 128, *Earnings per Share*, by dividing the net loss allocable to common stockholders by the weightedaverage number of shares of Common Stock outstanding.

As of June 30, 2007 the Company has outstandingcertain options and warrants, which have not been used in the calculation ofdiluted net loss per share because, to do so would be anti-dilutive. As such,the numerator and the denominator used in computing both basic and diluted netloss per share allocable to common stockholders are equal.

***(g)******                                 IncomeTaxes***

In July 2006, the Financial Accounting Standards Boardissued FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes (FIN 48)*, which is applicable forfiscal years beginning after December 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxesrecognized in an enterprise’s financial statements in accordance with SFAS No.109, *Accounting for Income Taxes*. FIN 48 prescribes a recognition threshold and measurement attribute forfinancial statement recognition and measurement of a tax position reported orexpected to be reported on a tax return. FIN 48 also provides guidance onderecognition, classification, interest and penalties, accounting in interimperiods, disclosure, and transition. We adopted the provisions of FIN 48 onJanuary 1, 2007.  Upon adoption of FIN 48and through June 30, 2007, we determined that we had no liability for uncertainincome taxes as prescribed by FIN 48. Our policy is to recognize potential accrued interest and penaltiesrelated to the liability for uncertain tax benefits, if applicable, in incometax expense.  Net operating loss and credit carryforwards since inceptionremain open to examination by taxing authorities, and will for a period postutilization.  We do not anticipate anyevents during 2007 that would require the Company to record a liability relatedto any uncertain income taxes.

**4****                                        ConvertibleNotes Payable**

In May, June and October 2006, the Companyentered into a convertible debt financing agreement with certain of itsexisting investors which provided for $4,116,774 in funding. The Company issued5% secured promissory notes (the “Promissory Notes”) with principal amountstotaling $4,093,024 and warrants to purchase shares of a new series ofpreferred stock that may be designated in the future in a Qualified Financing,as defined in such Promissory Notes.  The Promissory Notes were due on theearliest to occur of: (i) demand by holders of a majority of theoutstanding principal at any time after the one year anniversary of the initialMay closing; (ii) a Liquidation Event, as defined in such PromissoryNotes; and (iii) the two-year anniversary of the initial Mayclosing.  In connection with the Reverse Merger, the Promissory Notes andaccrued interest were converted into 5,223,522 shares of common stock andwarrants were exercised resulting in the issuance of 2,033,175 shares of commonstock.

In accordance with APB Opinion No. 14, *Accounting for Convertible Debt and Debt Issued withStock Purchase Warrants* , the Company allocated the proceeds fromthe financing between the Promissory Notes and warrants based on their relativeestimated fair values.  The relative fair value of the warrants of$1,228,565 was recorded against the carrying value of the Promissory Notes asan original issue discount (OID) which was being amortized as interest expenseover the one year anniversary of the initial May issuance date of thePromissory Notes until the closing of Reverse Merger. During the six monthsended June 30, 2007, the Company recognized a noncash charge to interestexpense of $302,032 for the amortization of the remaining OID.

In accordance with Emerging Issues Task Force (EITF)No. 00-27, *Application of IssueNo. 98-5 to Certain Convertible Instruments* , and EITFNo. 98-5, *Accounting for ConvertibleSecurities with Beneficial Conversion Features or Contingently AdjustableRatios* , after considering the allocation of the proceeds to thePromissory Notes, the Company determined that the Promissory Notes contained acontingent beneficial conversion feature (Contingent BCF). The Contingent BCFexisted at the date of the issuance of the Promissory Notes due to the factthat the original carrying value of Promissory Notes, after allocation of theproceeds, would be less than the purchase price of the new series of preferredstock paid by investors in the new series. In accordance with EITFNo. 98-5, the Contingent BCF of $1,228,565 was recognized as additionalinterest expense during the six months ended June 30, 2007 when the PromissoryNotes were converted into shares of the common stock.

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**5****                                        Stockholders’Equity**

***(a)******                                 CommonStock***

The Company was party to a number of agreements thatprovided for dilution protection to certain investors.  In connection withthe Reverse Merger and closing of the Private Placement, the Company issuedapproximately 2.0 million shares of common stock to a founder and shareholderof the Company pursuant to certain antidilution protection.  During thesix months ended June 30, 2007, the Company recorded a charge of $1.6 millionto research and development expenses, which represents the fair value of theseshares.

***(b)******                                 Warrants***

As of June 30, 2007, the Company had the followingwarrants to purchase Common Stock outstanding:
| **Number of shares** | ** ** | **Exercise price** | ** ** | **Expiration** | ** **    |
|--------------------------------|------------|-------------------------|------------|----------------|---------------|
|                           |       |                    |       |           |          |
| 138,446                        |       | $                       | 0.15       |           | December 2007 |   |
|                           |       |                    |       |           |          |
| 53,039                         |       | $                       | 0.75       |           | December 2012 |   |
|                           |       |                    |       |           |          |
| 6,182,287                      |       | $                       | 1.35       |           | March 2010    |   |
|                           |       |                    |       |           |          |
| 4,015,059                      |       | $                       | 1.35       |           | April 2010    |   |
|                           |       |                    |       |           |          |
| 3,574,906                      |       | $                       | 0.97       |           | April 2012    |   |

 

***(c)******                                  StockOption Plans***

In November 2003, the Company adopted the 2003Stock Incentive Plan, as amended (the 2003 Plan), that authorized the Companyto grant up to 6,523,790 shares of Common Stock to eligible employees,directors, and consultants to the Company in the form of restricted stock andstock options. The amount and terms of grants were determined by the board ofdirectors. The term of the options could have been up to 10 years, andoptions were exercisable in cash or as otherwise determined by the board ofdirectors. Generally, options vested 25% upon the first anniversary of the dateof grant and ratably each month thereafter through the fourth anniversary ofthe date of grant.

On March 12, 2007, the Company adopted the RedpointBio Corporation 2007 Omnibus Equity Compensation Plan (“ 2007 Plan “),which provided for the issuance of up to 13,511,562 shares of common stock,subject to adjustment in certain circumstances.  In connection with theadoption of the 2007 Plan, the 2003 Plan merged with and into the 2007 Plan andno additional grants may be made thereafter under the 2003 Plan.  Outstandinggrants under the 2003 Plan will continue in effect in accordance with theirterms as in effect before March 12, 2007 and the shares with respect tooutstanding grants under the 2003 Plan will be issued or transferred under the2007 Plan.  The 2007 Plan is now the Company’s only plan in effect.

On April 20, 2007, the Company approved an amendmentto the 2007 Plan, which increased the maximum number of shares of common stockreserved for issuance under the 2007 Plan by an additional 4,132,705 sharesfrom 13,511,562 to 17,644,267 shares of common stock.

The following is a summary of stock option activityunder the Plan during the six months ended June 30, 2007:
| ** **                        | ** ** | **Number of** | ** ** | **average**             | ** ** | **contractual** | ** ** |
|-----------------------------------|------------|--------------------|------------|-------------------------|------------|-----------------|------------|
| ** **                        | ** ** | **shares**         | ** ** | **exercise price** | ** ** | **term**        | ** ** |
| Outstanding at  December 31, 2006 |       | 5,426,049          |       | $                       | 0.16       |            |       |   |
| Granted                           |       | 4,874,516          |       | 0.81                    |       |            |       |
| Exercised                         |       | (247,482           | )          | 0.15                    |       |            |       |
| Forfeited                         |       | (1,105,690         | )          | 0.60                    |       |            |       |
| Outstanding at June 30,  2007     |       | 8,947,393          |       | 0.46                    |       | 8.4 years       |       |
|                                   |            |                    |            |                         |            |                 |            |  |

 

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All options granted to date have exercise prices equalto the estimated fair value of the underlying common stock on the date of grantas determined by the board of directors. As of June 30, 2007, there were8,414,152 shares of common stock available for grant under the 2007 Plan.

The per-share weighted average fair value of optionsgranted during the six months ended June 30, 2007 and 2006 was estimated at$0.53 and $0.28, respectively, on the date of grant using the Black-Scholesoption-pricing model.

The Company recognized $155,715, $264,724, $6,662 and$16,899 of compensation expense pursuant to SFAS 123R for the three andsix months ended June 30, 2007 and 2006, respectively. As of June 30, 2007,there was $2.0 million of unrecognized compensation expense related to unvestedstock options, which is expected to be recognized over a weighted averageperiod of 3.7 years.

***(d)******                                 RegistrationRights***

On June 5, 2007, the Company filed a “resale”registration statement with the SEC covering all shares of common stock issuedin the Private Placement and in connection with the Reverse Merger, includingshares of common stock into which certain warrants are exercisable.  Such registration statement was declaredeffective on July 20, 2007.  The Companywill use its best efforts to maintain its effectiveness until such time as allsecurities registered under the registration statement have been sold or areotherwise able to be sold under Rule 144 of the Securities Act without regardto volume limitations, whichever is earlier.

**6****                                        Researchand Development Collaboration**

On March 27, 2007, Redpoint entered into a JointResearch and Development and License Agreement (the “Givaudan Agreement”) withGivaudan Schweiz AG, a Swiss company (“Givaudan”), for the development andcommercialization of compounds that enhance sweetness or savory sensation, aswell as compounds that block or desensitize bitter taste for use in the foodand beverage industry.  Under terms of the Givaudan Agreement, Redpointreceived an upfront payment of $1.3 million in March, 2007 and will receiveresearch funding over the initial 3.5 year term of the Givaudan Agreement, ofup to $11.6 million.  Redpoint will also be eligible to receive milestonepayments of up to $2.5 million as well as royalty payments based on globalsales of Givaudan products that contain flavor systems incorporating compounddeveloped under the collaboration.  The upfront payment of $1.3 millionwill be recognized as revenue on a straight-line basis over the initial term ofthe Givaudan Agreement.

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| **ITEM 2.** | ** ** | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|------------|-------------------------------------------------------------------------------------------------|

 

**Cautionary Note RegardingForward-Looking Statements**

The Securities and Exchange Commission, referred toherein as the SEC, encourages companies to disclose forward-looking informationso that investors can better understand a company’s future prospects and makeinformed investment decisions.  Certain statements that we may make fromtime to time, including, without limitation, statements contained in thisQuarterly Report on Form 10-Q, referred to herein as the Quarterly Report,constitute “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995.  These statements may be madedirectly in this Quarterly Report, and they may also be made a part of thisQuarterly Report by reference to other documents filed with the SEC, which isknown as “incorporation by reference.”

Words such as “may,” “anticipate,” “estimate,” “expects,”“projects,” “intends,” “plans,” “believes” and words and terms of similarsubstance used in connection with any discussion of future operating orfinancial performance, identify forward-looking statements.  Allforward-looking statements are management’s present expectations of futureevents and are subject to a number of risks and uncertainties that could causeactual results to differ materially from those described in the forward-lookingstatements.  These risks and uncertainties include, among other things:

·                 our need foradditional capital to fund the current level of our research and developmentprograms, our inability to further identify, develop and achieve commercialsuccess for new products and technologies;

·                 the possibilityof delays in the research and development necessary to select drug developmentcandidates and delays in clinical trials;

·                 the risk thatclinical trials may not result in marketable products;

·                 the risk that wemay be unable to successfully finance and secure regulatory approval of andmarket our drug candidates;

·                 our dependenceupon food, ingredient and pharmaceutical and biotechnology collaborations;

·                 the levels andtiming of payments under our collaborative agreement;

·                 uncertaintiesabout our ability to obtain new corporate collaborations and acquire newtechnologies on satisfactory terms, if at all;

·                 the developmentof competing diagnostic and therapeutic products; our ability to protect ourproprietary technologies;

·                 patent-infringementclaims;

·                 risks of new,changing and competitive technologies and regulations in the United States andinternationally; and

·                 other factorsdiscussed under the heading Item 1A “Risk Factors” in this Quarterly Report.

In light of these assumptions, risks anduncertainties, the results and events discussed in the forward-lookingstatements contained in this Quarterly Report or in any document incorporatedby reference might not occur.  You are cautioned not to place unduereliance on forward-looking statements, which speak only as of the date of thisQuarterly Report or the date of the document incorporated by reference in thisQuarterly Report.  We are not under any obligation, and we expresslydisclaim any obligation, to update or alter any forward-looking statements,whether as a result of new information, future events or otherwise, except asmay be required by applicable law.  All subsequent forward-lookingstatements attributable to Redpoint, or to any person authorized to act on ourbehalf are expressly qualified in their entirety by the cautionary statementscontained or referred to in this section.

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**Introduction**

*Reverse Triangular Merger andPrivate Placement*

On March 12, 2007, we entered into the Agreementand Plan of Merger, dated as of March 12, 2007, by and among Redpoint, onthe one hand, and Robcor, Robcor Acquisition Corp., a Delaware corporation andwholly-owned subsidiary of Robcor, referred to herein as Merger Sub, Robcor,LLC, a Kentucky limited liability company and wholly-owned subsidiary ofRobcor, referred to herein as Robcor, LLC, and Halter Financial Investments,L.P., a Texas limited partnership, and Michael Heitz, as stockholders ofRobcor, on the other hand, referred to herein as the Reverse Merger Agreement.The transactions contemplated by the Reverse Merger Agreement were consummatedon March 12, 2007, which is referred to herein as the Closing or ClosingDate.

Pursuant to the Reverse Merger Agreement, on theClosing Date, Merger Sub merged with and into Redpoint, which will be referredto herein as the Reverse Merger, with Redpoint being the surviving corporation.Redpoint became a wholly-owned subsidiary of Robcor and the outstanding sharesof capital stock, convertible notes and certain warrants to purchase capitalstock of Redpoint were converted into an aggregate of 35,073,259 shares ofRobcor common stock in accordance with the Delaware General Corporation Law,also known as the DGCL, on the terms and conditions as set forth in the ReverseMerger Agreement.

Additionally, on the Closing Date, Robcor cancelledand extinguished 1,150,000 shares of Robcor common stock held by our formerstockholder Michael Heitz in exchange for the transfer to Mr. Heitz,simultaneous with the Closing, of Robcor’s membership interest in Robcor, LLCheld prior to the Closing Date.

Contemporaneously with the Reverse Merger, Redpointand Robcor completed the first closing of a private placement, referred toherein as the Private Placement, of an aggregate of 24,729,060 shares of Robcorcommon stock at a price of $0.81 per share, together with three-year warrantsto buy 25% of the number of shares of Robcor common stock purchased at a cashexercise price of $1.35 per share, referred to herein as the Investor Warrants.On April 6, 2007, Redpoint and Robcor completed the second and finalclosing of the Private Placement of an aggregate of 16,060,203 shares of Robcorcommon stock at a price of $0.81 per share, together with the InvestorWarrants.

*Reincorporation Merger*

On May 3, 2007, Redpoint and Robcor entered intoan Agreement and Plan of Merger in which Robcor, the former parent company ofRedpoint, merged with and into Redpoint. Such merger, referred to herein as the Reincorporation Merger, wasapproved by the holders of a majority of Robcor common stock outstanding as ofMay 3, 2007 via the execution of a written consent.  The Reincorporation Merger was deemedeffective on June 15, 2007 and resulted in:

·                the change in ourstate of incorporation from Florida to Delaware via the merger of Robcor intoRedpoint, pursuant to the Agreement and Plan of Merger, dated May 3, 2007,between Redpoint and Robcor, which means that we, as the surviving corporationin the Reincorporation Merger, are now governed by the laws of the State ofDelaware;

·                the change ofRobcor’s duly registered name from “Robcor Properties, Inc.” to “RedpointBio Corporation”;

·                Redpoint’s ThirdAmended and Restated Certificate of Incorporation becoming the certificate ofincorporation of the surviving corporation, under which the authorized numberof shares of common stock was decreased from 1,000,000,000 shares of commonstock, no par value per share, as authorized under Robcor’s articles ofincorporation, to 150,000,000 shares of common stock, $0.0001 par value pershare, and the authorized number of shares of preferred stock was decreasedfrom 20,000,000 shares of preferred stock, no par value per share, as authorizedunder Robcor’s articles of incorporation, to 10,000,000 shares of preferredstock, $0.0001 par value per share;

·                Redpoint’s Amendedand Restated By-laws became our by-laws as the surviving corporation; and

·                a 4,132,705 shareincrease to the maximum number of shares of common stock reserved for issuanceunder our 2007 Omnibus Equity Compensation Plan, from 13,511,562 to 17,644,267shares.

***Outstanding Securities***

As of June 30, 2007, there were 78,916,157 shares ofour common stock outstanding, outstanding options to purchase 8,947,393 sharesof our common stock, and outstanding warrants to purchase 13,963,737 shares ofour common stock.

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This discussion and analysis should be read inconjunction with the financial statements and notes, and other financialinformation included in this report and the financial statements of Redpointincluded in our Prospectus filed pursuant to Rule 424(b)(3) on July 20, 2007.

**Overview**

Redpoint is a development stage biotechnology companyfocused on discovering, developing, and commercializing ingredients thatimprove the taste of medicines and consumer health care products and enhancethe nutritional value of foods and beverages.  We use our technology todiscover and develop products for partners and for our own pipeline.

Since its inception in 1995, Redpoint has incurredlosses and negative cash flows from operations, and such losses have continuedsubsequent to June 30, 2007.  As of June 30, 2007, Redpoint had anaccumulated deficit of $29.2 million and anticipates incurring additionallosses for at least the next several years.  We expect to spendsignificant resources over the next several years to enhance our technologiesand to fund research and development of our pipeline of potentialproducts.  Through June 30, 2007, substantially all of our revenue hasbeen derived from corporate collaborations, license agreements, and governmentgrants.  In order to achieve profitability, we must continue to developproducts and technologies that can be commercialized by us or through existingand future collaborations.

On March 12, 2007, we completed the first closing ofour private placement of shares of common stock and warrants to purchase sharesof common stock raising approximately $17.2 million of net proceeds.  OnApril 6, 2007, we completed the final closing of the private placement raisingan additional $11.2 million of net proceeds, bringing the total privateplacement net proceeds to $28.4 million.

On March 27, 2007, we entered into a Joint Researchand Development and License Agreement, which we refer to as the GivaudanAgreement, with Givaudan Schweiz AG, a Swiss company, referred to herein asGivaudan, for the development and commercialization of compounds that enhancesweetness or savory sensation (Enhancer Compounds), as well as compounds thatblock or desensitize bitter taste (Bitter Blocker Compounds) for use in thefood and beverage industry, which we refer to as the Field.  Under theGivaudan Agreement, Redpoint and Givaudan will collaborate exclusively with eachother to discover and develop Enhancer Compounds and Bitter Blocker Compoundsthat act primarily through the modulation of the TRPM5 channel (CollaborationCompounds) pursuant to the research plan and the development plan,respectively.  In consideration of our agreement to conduct research anddevelop Collaboration Compounds and grant exclusive licenses and other rightsto Givaudan pursuant to the terms and conditions of the Givaudan Agreement,Givaudan paid us an upfront technology fee in the amount of $1.3 million andagreed to provide research funding to us over the initial 3.5 year term of theGivaudan Agreement of up to $11.6 million.  Givaudan will also reimburseus for costs incurred by Redpoint in connection with obtaining certain regulatoryapprovals.  In addition, Givaudan also agreed to pay us milestone paymentsof up to $2.5 million upon the achievement of specified development andcommercialization events set forth in the Givaudan Agreement.  Givaudanwill make royalty payments to us, including an annual minimum royalty androyalty payments based on net sales of Givaudan products that contain theCollaboration Compounds for use in the Field.  We will make certainlimited payments to Givaudan relating to the use of the Collaboration Compoundsoutside the Field.

Our discovery programs capitalize on advances in tastescience and our know-how to create new products.  We believe theseproducts may have the potential to make processed foods and beverages healthierand enhance the acceptability, safety and efficacy of many types ofpharmaceutical products.  We have developed an integrated discoveryplatform and identified prototype compounds for both enhancement of sweet andsavory taste and blocking bitter taste.  To leverage our technology in thefood and beverage markets, in addition to our existing agreement with Givaudan,we intend to partner with other major ingredient suppliers, or food andbeverage companies, to develop and commercialize taste enhancers throughstrategic collaborations and licensing agreements.  In addition, we planto use our technology to discover aversive taste blockers, principally todevelop a pipeline of proprietary taste-modified pharmaceutical products. We may develop such products ourselves or partner with pharmaceutical companieswho are seeking to extend the patent life or enhance the performance of theirproducts.  We have identified several categories of products where patientacceptability, or the potential for novel formulation options, are currentlylimited due to the intense bitter or other aversive taste of the activepharmaceutical ingredient (API).  We plan to incorporate the proprietarybitter taste or aversive taste blockers found through our discovery programswith drugs of proven safety and efficacy to create novel, valued-addedformulations.  We have not yet developed any products that arecommercially available.

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Our research and development efforts are currentlyfocused upon the identification of two novel compounds for tastemodification.  We are working to identify a compound that can be used toenhance the taste of both sweet and savory flavors in a wide variety of foodand beverage applications.  Additionally, we are working to identify acompound that could act as a universal bitter taste blocker for use both in ourpharmaceutical product pipeline and for collaborative formulation developmentprograms with major pharmaceutical companies.  We intend to design ourcompounds to be safe and effective in minute quantities, and to be able toincorporate them into food and pharmaceutical products through the GRAS(Generally Recognized as Safe) determination/notification process. Although the GRAS process involves extensive testing to insure safety in use,the overall time required (estimated to be 18-24 months) and development costsincurred (estimated to be $1-2 million per compound) are modest compared to thesize of the accessible markets.  Moreover, a single GRAS-determined tasteenhancer can potentially be used in a wide range of food applications.  Inaddition, a GRAS determination is heavily relied upon by the Food and DrugAdministration (FDA) to evaluate the safety and inclusion of flavor modifiersinto pharmaceutical products.  A single aversive taste blocker canpotentially be used to create a multitude of new drug formulations that in manycases may be patentable in their own right.  New drug product or productvariations will require FDA approval through the new drug approval, or NDA,process.  We believe there may be additional potential applications forour technology for the modification of aversive taste sensations in foodproducts, as well as potential for discovering novel compounds for otherpharmaceutical applications.

**Revenue**

To date, our revenue has come solely from corporatecollaborations, licensing agreements and government grants.  Since ourinception, we have undertaken research projects for which we were the recipientof several Small Business Innovative Research, or SBIR, Awards. The SBIR Awardswere sponsored by the National Institutes of Health. The last SBIR relatedresearch project was completed in 2004.

To leverage our technology in the food and beveragemarkets, in March 2007, we entered into the Givaudan Agreement where we arecollaborating exclusively with each other to discover and develop EnhancerCompounds and Bitter Blocker Compounds that act primarily through themodulation of the TRPM5 channel.  We also intend to partner with othermajor ingredient suppliers, or food and beverage companies, to develop andcommercialize taste enhancers that act through a variety of other newlydiscovered mechanisms of taste sensation in exchange for technology accessfees, research funding, product development milestones, and product royalties.

In addition to developing our own pharmaceuticalformulations, we plan to form agreements with pharmaceutical companies todevelop and market liquid and innovative pharmaceutical formulations inexchange for technology access fees, research funding, product developmentmilestones and product royalties. We have identified a broad selection ofpotential products for development, including both liquid formulations andinnovative formulations that we believe would be attractive licensingcandidates.  In general, our strategy involves the development of a prototypeformulation demonstrating the effectiveness of our technology by combining thetarget API with our GRAS-approved bitter or other aversive taste blocker. Some products could incorporate third-party APIs that could constitute lineextensions to be marketed to the API patent holder.  Additional prototypeproducts could be developed with either soon-to-be or patent-expiredAPIs.  These products could either be licensed to the original patentholder to create a line extension, or to a generics company wishing to market adifferentiated or branded generic product.

Any failure to maintain or establish licensing orcollaboration arrangements on favorable terms could adversely affect ourbusiness prospects, financial condition or ability to develop and commercializeour product candidates.

**Research and Development**

Our research and development expenses consistprimarily of internal costs associated with our bitter blocker and tasteenhancer research programs as well as amounts paid to third parties to conductresearch on our behalf.  Our internal research and development costs arecomprised of salaries and related benefits, facilities and depreciation onlaboratory equipment, compound acquisition costs and research supplies. We charge research and development costs to operations as incurred.

**General and Administrative**

Our general and administrative expenses consistprimarily of salaries and related benefit expenses for business development,financial, legal and other administrative functions.  In addition, weincur external costs for

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professional fees for legal, patent and accountingservices.  We expect that our general and administrative expenses, bothinternal and external, will increase as we are now a public company.

**Results of Operations**

**Three months ended June 30, 2007compared to June 30, 2006**

*Research and Grant Revenue*. We recorded revenue of $0.7 million, including $0.1 million attributable to theupfront fee which is being recognized as revenue over the initial term of theagreement and $0.6 million of research funding, during the three months endedJune 30, 2007 as a result of the commencement of the Givaudan Agreement, whichbegan on March 27, 2007, for the development and commercialization of compoundsthat enhance sweetness or savory sensation as well as compounds that block ordesensitize bitter taste for use in the food and beverage industry. During the three months ended June 30, 2006, we did not generate any researchand grant revenue, as we focused our efforts on advancing our technologies anddid not enter into any discovery collaborations.

*Research and Development Expenses.* Our research and development expenses were $1.2 million for the three monthsended June 30, 2007 compared to $0.9 million for the three months ended June30, 2006.  The increase was primarily attributable to increased costsassociated with investment in our bitter blocker and taste enhancer researchprograms as well as amounts paid to third parties to conduct research on ourbehalf.  In particular, our facilitiescosts increased as a result of our move to our new location in Ewing, NewJersey effective in May 2007.  Our new,state-of-the-art facility in Ewing, New Jersey will enable us to move aheadwith the planned build-out of our research and development operations.  In addition, salaries and related benefits,depreciation on laboratory equipment increased.   We anticipate thatresearch and development expenses will increase as we advance our research anddevelopment programs covering our bitter blocker and taste enhancer programs.

*General and Administrative Expenses.*Our general and administrative expenses were $1.2 million for the three monthsended June 30, 2007 compared to $0.7 million for the three months ended June30, 2006.  The increase of $0.5 million was primarily related to costsassociated with Redpoint becoming a public company, such as increases inaccounting, legal and investor relations fees, as well as expenses associatedwith our move to our new facility. During the three months ended June 30, 2007 we also incurred an expenseof approximately $0.1 million as a result of the write-off of the remaininglease obligation on our prior facility which we no longer occupy.  In addition, during the three months endedJune 30, 2007 we recognized non-cash compensation expense of approximately $0.1million pursuant to SFAS 123R.    Weanticipate that general and administrative expenses will continue to increaseas we incur costs relating to our operations as a public company and increaseour investment in business development required to support our research anddevelopment efforts.

*Interest Expense. *Interest expense was $26,000 for the three months ended June 30, 2007 comparedto $120,000 for the three months ended June 30, 2006.  In May 2006, weentered into a convertible debt financing agreement with certain of ourinvestors, which provided for $4.1 million in funding.  In addition to theissuance of 5% secured promissory notes, our investors received warrants topurchase additional shares of our stock.  We allocated the proceeds fromthe financing between the notes and the warrants based on their relative fairvalues.  The fair value of the warrants were recorded against the carryingvalue of the notes as an original issue discount (OID) which was beingamortized as interest expense over a one-year period from the original issuancedate of the notes.  During the three months ended June 30, 2006, werecognized a non-cash charge to interest expense of $55,000 for the amortizationof the OID, which was fully expensed upon the completion of the first closingof our private placement when the promissory notes were converted to commonstock.

During 2005, we borrowed $2.0 million to finance thepurchase of laboratory and office equipment at interest rates ranging between9.4% and 10.4%.  Interest expense on these borrowings was $26,000 and$36,000 for the three months ended June 30, 2007 and 2006, respectively.

**Six months ended June 30, 2007compared to June 30, 2006**

*Research and Grant Revenue*. We recorded revenue of $0.7 million, including $0.1 million attributable to theupfront fee which is being recognized as revenue over the initial term of theagreement and $0.6 million of research funding, during the six months endedJune 30, 2007 from the commencement of the Givaudan Agreement, which began onMarch 27, 2007, for the development and commercialization of compounds thatenhance sweetness or savory sensation as well as compounds that block ordesensitize bitter taste for use in the food and beverage

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industry.  During the six months ended June 30,2006 we did not generate any research and grant revenue, as we focused ourefforts on advancing our technologies and did not enter into any discoverycollaborations.

*Research and Development Expenses.*  Our research and development expenses were $3.8 million for the sixmonths ended June 30, 2007 compared to $1.8 million for the six months endedJune 30, 2006.  The increase was primarily attributable to a $1.6 millionnon-cash charge in connection with the issuance of approximately 2.0 millionshares of our common stock related to anti-dilution protection for Dr.Margolskee, the Company’s founder.  Dr. Margolskee’s anti-dilutionprotection terminated upon completion of the final closing of the PrivatePlacement on April 6, 2007.  In addition, we experienced increased costsassociated with our investment in our bitter blocker and taste enhancerresearch programs as well as amounts paid to third parties to conduct researchon our behalf.  In particular, ourfacilities costs increased as a result of our move to our new location inEwing, New Jersey effective in May 2007. Our new, state-of-the-art facility in Ewing, New Jersey will enable usto move ahead with the planned build-out of our research and developmentoperations.  In addition, salaries andrelated benefits, depreciation on laboratory equipment and R&D relatedsoftware costs increased.

*General and Administrative Expenses.*Our general and administrative expenses were $2.1 million for the six monthsended June 30, 2007 compared to $1.4 million for the six months ended June 30,2006.  The increase of $0.7 million was related to costs associated withRedpoint becoming a public company, such as increases in accounting, legal andinvestor relations fees, as well as expenses associated with our move to ournew facility.  During the six monthsended June 30, 2007 we also incurred an expense of approximately $0.1 millionas a result of the write-off of the remaining lease obligation on our priorfacility which we no longer occupy. Approximately $0.2 million of the increasewas related to executive severance in connection with a separation agreementthat we entered into with a former officer during the six months ended June 30,2007.  In addition, during the six monthsended June 30, 2007 we recognized non-cash compensation expense ofapproximately $0.1 million pursuant to SFAS 123R.

*Interest Expense. *Interest expense was $1.7 million for the six months ended June 30, 2007compared to $0.2 million for the six months ended June 30, 2006.  In May2006, we entered into a convertible debt financing agreement with certain ofour investors, which provided for $4.1 million in funding.  In addition tothe issuance of 5% secured promissory notes, our investors received warrants topurchase additional shares of our stock.  We allocated the proceeds fromthe financing between the notes and the warrants based on their relative fairvalues.  The fair value of the warrants were recorded against the carryingvalue of the notes as an original issue discount (OID) which was beingamortized as interest expense over a one-year period from the original issuancedate of the notes.  During the six months ended June 30, 2007 and June 30,2006, we recognized a non-cash charge to interest expense of $0.3 million and$55,000, respectively, for the amortization of the OID, which was fullyexpensed upon the completion of the first closing of our private placement whenthe promissory notes were converted to common stock.  Furthermore, in accordancewith Emerging Issues Task Force (EITF) No. 00-27, *Application of Issue No. 98-5 to CertainConvertible Instruments* , and EITF No. 98-5, *Accounting for Convertible Securities with BeneficialConversion Features or Contingently Adjustable Ratios* , afterconsidering the allocation of the proceeds to the promissory notes, the Companydetermined that the promissory notes contained a contingent beneficialconversion feature (Contingent BCF). The Contingent BCF existed at the date ofthe issuance of the promissory notes due to the fact that the original carryingvalue of promissory notes, after allocation of the proceeds, would be less thanthe purchase price of the new series of stock paid by investors in the newseries.  In accordance with EITF No. 98-5, the Contingent BCF of $1.2million was recognized as additional non-cash interest expense when thepromissory notes were converted into shares of common stock.

During 2005, we borrowed $2.0 million to finance thepurchase of laboratory and office equipment at interest rates ranging between9.4% and 10.4%.  Interest expense on these borrowings was $52,000 and$77,000 for the six months ended June 30, 2007 and 2006, respectively.

**Liquidity and Capital Resources**

At June 30, 2007, we had cash and cash equivalents of$28.5 million and working capital of $24.9 million.  Since inception, wehave used $16.1 million of cash to fund our operating activities and $1.9million for capital expenditures.  Through June 30, 2007, we have fundedsubstantially all of our operations and capital expenditures through privateplacements of equity and convertible debt securities totaling $45.7 million,cash received from corporate collaborations totaling $4.9 million, governmentgrants totaling $1.8 million, and capital equipment financing totaling $2.1million.

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On March 12, 2007, we completed the first closing ofour Private Placement of shares of common stock and warrants to purchase sharesof common stock raising approximately $17.2 million of net proceeds.  OnApril 6, 2007 we completed the final closing of our Private Placement raisingan additional $11.2 million of net proceeds, bringing the total privateplacement net proceeds to $28.4 million.  On March 27, 2007, we enteredinto the Givaudan Agreement for the development and commercialization of compoundsthat enhance sweetness or savory sensation as well as compounds that block ordesensitize bitter taste for use in the food and beverage industry. Pursuant to the Givaudan Agreement, Givaudan agreed to pay us an upfronttechnology fee in the amount of $1.3 million and provide research funding to usover the initial 3.5 year term of the Givaudan Agreement of up to $11.6million.  We believe that the net proceeds of approximately $28.4 millionreceived from the private placement, and the funding we are receiving fromGivaudan, should be sufficient to meet our operating and capital requirementsat least through December 2008.

We expect that substantially all of our revenue forthe foreseeable future will come from corporate collaborations, licenseagreements and interest earned on the proceeds from our sales ofsecurities.  In the next six months (through December 31, 2007), we expectto recognize $1.4 million as revenue from the Givaudan Agreement, whichincludes $0.2 million of the upfront technology fee which is being recognizedas revenue over the related performance period and $1.2 million pursuant toresearch funding.  We are subject to those risks associated with anybiotechnology company that has substantial expenditures for research anddevelopment.  There can be no assurance that our research and developmentprojects will be successful, that products developed will obtain necessaryregulatory approval, or that any approved product will be commerciallyviable.  In addition, we operate in an environment of rapid technologicalchange and we are largely dependent on the services of our employees andconsultants.  For us to fund our operations and to commercially developour products, additional equity and/or debt financing will be required. There is no assurance that such financing will be available to us as needed.

**Summary of Contractual Obligations**

The following table summarizes our obligations to makefuture payments under our current contractual obligations as of June 30, 2007:
| ** **       | ** ** | **Payments Due by Period** | ** ** |
|------------------|------------|-------------------------------------------|------------|
| ** **       | ** ** | **Total**                                 | ** ** | **Less than 1  year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **After 5 years** | ** ** |
| Operating leases |       | $                                         | 8,461,000  |   | $ | 963,000 |   | $ | 2,492,000 |   | $ | 1,692,000 |   | $ | 3,314,000 |   |
| Long-term debt   |       | 929,000                                   |       | 543,000 |   | 386,000 |   | — |   | — |   |
| License payments |       | 325,000                                   |       | 25,000 |   | 75,000 |   | 50,000 |   | 175,000 |   |
|             |       | $                                         | 9,715,000  |   | $ | 1,531,000 |   | $ | 2,953,000 |   | $ | 1,742,000 |   | $ | 3,489,000 |   |

 

**CriticalAccounting Policies**

Our discussion and analysis of our financial conditionand results of operations are based on our financial statements, which havebeen prepared in accordance with U.S. generally accepted accounting principles,or GAAP. The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets,liabilities, the disclosure of contingent assets and liabilities at the date ofthe financial statements, and reported amount of revenue and expenses duringthe reporting period. On an ongoing basis, we evaluate our judgments andestimates, including those related to revenue recognition, long-lived assets,accrued liabilities, share-based payments and income taxes. We base ourjudgment and estimates on historical experience and various other factors thatwe believe to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying values of assetsand liabilities. Actual results may differ from these estimates underdifferent assumptions or conditions.

While our significant accounting policies aredescribed in more detail in Note 3 to our financial statements, we believe thefollowing accounting policies to be critical to the judgments and estimatesused in the preparation of our financial statements:

***Revenue Recognition***

Revenue from corporate collaborations and licensingagreements consist of up-front fees, research and development funding, andmilestone payments.  Nonrefundable up-front fees are deferred andrecognized as revenue over the related performance period.  We estimatethe performance period based on the specific terms of each

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collaborative agreement, but the actual performancemay vary.  We adjust the performance periods based on available facts andcircumstances.  Revenue from research and development agreements andgovernment grants is recognized pursuant to the related agreements as work isperformed and related costs are incurred.  Revenue resulting from theachievement of substantive milestone events as defined in the agreements isrecognized when the milestone is achieved.

***Stock-BasedCompensation***

We follow SFAS No. 123 (revised 2004), Share-BasedPayment (SFAS 123R) under which we recognize compensation cost for awards toemployees and non-employee board members based on the grant-date fair value ofstock-based awards over the period during which an award holder is required toprovide service in exchange for the award.  No compensation is recognizedfor awards for which the award holder does not tender the requisiteservice.  At June 30, 2007, total unrecognized compensation expenserelated to non-vested stock options granted prior to that date was $2.0million, which is expected to be recognized over a weighted average period of3.7 years.

Prior to 2006, we applied the intrinsic-value-basedmethod of accounting prescribed by Accounting Principles Board (APB) OpinionNo. 25, Accounting for Stock Issued to Employees, and related interpretations,to account for fixed-plan stock options granted to employees anddirectors.  Under APB Opinion No. 25, we did not record compensationexpense for stock options since the current fair value of the underlying stockequaled the exercise price of the options.

In estimating the fair value of stock options, we usethe Black-Scholes option-pricing model which requires us to make estimatesabout certain inputs regarding the volatility of our common stock and the expectedterm of our options.  Until there is significant public trading activityin our common stock, we will use the average historical volatility of a groupof pubic company peers.  In addition, we have used the “simplified” methodas described in SEC Staff Accounting Bulletin No. 108 to determine the expectedlife of our options.

**ITEM3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK**

Our carrying values of cash and cash equivalents,accounts receivable, accounts payable, accrued expenses and debt are areasonable approximation of their fair value.  The estimated fair valuesof financial instruments have been determined by us using available marketinformation and appropriate valuation methodologies.

We have not entered into and do not expect to enterinto, financial instruments for trading or hedging purposes.  We do notcurrently anticipate entering into interest rate swaps and/or similarinstruments.  Our primary market risk exposure with regard to financialinstruments is to changes in interest rates, which would impact interest incomeearned on such instruments.  We have no material currency exchange orinterest rate risk exposure as of June 30, 2007.  Therefore, there will beno ongoing exposure to a potential material adverse effect on our business,financial condition or results of operation for sensitivity to changes ininterest rates or to changes in currency exchange rates.

**ITEM 4T.    CONTROLS AND PROCEDURES**

(a)           *Disclosure Controls and Procedures:* We maintain controls and procedures designed to ensure that (i)information required to be disclosed in an issuer’s reports filed under theExchange Act is recorded, processed, summarized and disclosed within the timeperiods specified in the rules promulgated by the SEC, and (ii) information isaccumulated and communicated to management, including the Chief ExecutiveOfficer and Chief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosures.  Our Chief Executive Officer and ChiefFinancial Officer are responsible for establishing and maintaining thesedisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act, referred to herein as the Exchange Act) and,as required by SEC rules, to evaluate their effectiveness.  Based on theirevaluation of our disclosure controls and procedures as of the end of theperiod covered by this Quarterly Report on Form 10-Q, our Chief ExecutiveOfficer and Chief Financial Officer believe that these procedures are effectiveto ensure that we are able to collect, process and disclose the information weare required to disclose in the reports we file with the SEC within therequired time periods.

(b)           *Changes in Internal Controls Over FinancialReporting.*   There were no significant changes in ourinternal control over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act), identified in connection with the evaluationof such internal control that occurred during our last fiscal quarter, thathave materially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

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We are not currently required to comply with Section404 (Management’s Annual Report on Internal Control Over Financial Reporting)of the Sarbanes-Oxley Act of 2002 because we are not an “accelerated filer,” asdefined by Rule 12b-2 under the Exchange Act.  We will be required tocomply with Section 404 for the first time, and will be required to provide amanagement report on internal control over financial reporting, in connectionwith our Annual Report on Form 10-K for the year ending December 31,2007.  In addition, we will be required to provide both a managementreport and an independent registered public accounting firm attestation reporton internal controls in connection with our Annual Report on Form 10-K for theyear ending December 31, 2008.  While we are not yet required to complywith Section 404 for this reporting period, we are preparing for futurecompliance with Section 404 by strengthening, assessing and testing our systemof internal controls to provide the basis for our report.

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**PARTII.  OTHER INFORMATION**

**ITEM 1.     LEGALPROCEEDINGS**

The Company’s management knows of no material existingor pending legal proceedings or claims against the Company, nor is the Companyinvolved as a plaintiff in any material proceeding or pending litigation. To the Company’s knowledge, no director, officer or affiliate of the Company,and no owner of record or beneficial owner of more than five percent (5%) ofthe Company’s securities, or any associate of any such director, officer orsecurity holder is a party adverse to the Company or any of its subsidiaries orhas a material interest adverse to the Company or any of its subsidiaries inreference to pending litigation.

**ITEM1A.     RISK FACTOR**S

*Youshould carefully consider the following risks and all of the other informationset forth in this Quarterly Report before deciding to invest in shares of ourcommon stock. The risks described below are not the only ones facing us.Additional risks not presently known to us or that we currently deem immaterialmay also impair our business operations.*

*Ifany of the following risks actually occurs, our business, financial conditionor results of operations would likely suffer. In such case, the market price ofour common stock would likely decline due to the occurrence of any of theserisks, and you may lose all or part of your investment.*

**RisksRelated To Our Business and Our Industry**

***Redpoint is adevelopment-stage company.  We have incurred losses since inception andexpect to incur significant net losses in the foreseeable future and may neverbecome profitable.***

Since our inception we have incurred significantlosses and negative cash flows from operations.  As of June 30, 2007, wehad an accumulated deficit of $29.2 million, and anticipate incurringadditional losses for at least the next several years.  We expect to spendsignificant resources over the next several years to enhance our technologiesand to fund research and development of our pipeline of potentialproducts.  We have not generated significant revenues in any particularyear since our inception.  To date, substantially all of our revenue hasbeen derived from corporate collaborations, license agreements, and governmentgrants.  In order to achieve profitability, we must develop products andtechnologies that can be commercialized by us or through futurecollaborations.  Our ability to generate revenues and become profitablewill depend on our ability, alone or with potential collaborators, to timely,efficiently and successfully complete the development of our productcandidates, which may include conducting pre-clinical and clinical tests,obtaining necessary regulatory approvals, and manufacturing and marketing ourproduct candidates.  There can be no assurance that any such events willoccur or that we will ever become profitable.  Even if we do achieveprofitability, we cannot predict the level of such profitability.  If wesustain losses over an extended period of time, we may be unable to continueour business.

***We will needsubstantial additional funding to develop our products and for our futureoperations.  If we******are unable to obtain the funds necessary to do so, wemay be required to delay, scale back or eliminate our product development ormay be unable to continue our business.***

The development of our product candidates will requirea commitment of substantial funds to conduct the costly and time-consumingresearch, which may include pre-clinical and clinical testing, necessary toobtain regulatory approvals and bring our products to market.  We believeour current capital resources will satisfy our planned capital needs throughDecember 2008.  Our future capital requirements will depend on manyfactors, including:

·                 the progress ofour research and development programs, including our ability to discover anddevelop taste enhancers and aversive taste blockers;

·                 our ability, orour partners’ ability and willingness, to formulate these taste enhancers andaversive taste blockers into food, beverage and pharmaceutical products;

·                 the cost ofprosecuting, defending and enforcing patent claims and other intellectualproperty rights;

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·                 the progress,scope and results of our pre-clinical and clinical testing of any futurepharmaceutical products;

·                 the time and costinvolved in obtaining regulatory approvals;

·                 the cost ofmanufacturing our product candidates;

·                 competingtechnological and market developments; and

·                 our ability to establishand maintain collaborative and other arrangements with third parties to assistin bringing our products to market and the cost of such arrangements.

There can be no assurance that we will not needadditional capital sooner than currently anticipated.

We will need to raise substantial additional capitalto fund our future operations.  We cannot be certain that additionalfinancing will be available on acceptable terms, or at all.  In recentyears, it has been difficult for companies to raise capital due to a variety offactors, which may or may not continue.  To the extent we raise additionalcapital through the sale of equity securities, the ownership position of ourexisting stockholders could be substantially diluted.  If additional fundsare raised through the issuance of preferred stock or debt securities, thesesecurities are likely to have rights, preferences and privileges senior to ourcommon stock.  Fluctuating interest rates could also increase the costs ofany debt financing we may obtain.

Failure to successfully address ongoing liquidityrequirements will have a material adverse effect on our business.  If weare unable to obtain additional capital on acceptable terms when needed, we maybe required to take actions that harm our business and our ability to achievecash flow in the future, including possibly the surrender of our rights to sometechnologies or product opportunities, delaying our clinical trials orcurtailing or ceasing operations.

***We are an earlystage company and currently have no products available for sale, license oruse.  Our product candidates require additional research, development,testing, expert reviews and/or and regulatory approvals before marketing. We may be unable to develop, obtain regulatory approval or market any of ourproduct candidates.  If our product candidates are delayed or fail, ourfinancial condition will be negatively affected, and we may have to curtail orcease our operations.***

We are in the early stage of product development andwe are dependent on new discoveries.  We currently do not sell or licenseany products to third parties and do not expect to have any productscommercially available for several years, if at all.  You must evaluate usin light of the uncertainties and complexities affecting an early stagebiotechnology company. Our product candidates require additional research anddevelopment, pre-clinical testing, clinical testing (for our pharmaceuticalproducts) and regulatory review and/or approvals clearances before marketing.There are many reasons that our product candidates may fail or not advance tocommercialization, including the possibility that:

·                 our productcandidates may be ineffective, unsafe or associated with unacceptable sideeffects;

·                 our productcandidates may fail to receive the necessary regulatory approvals or otherwisefail to meet applicable regulatory standards;

·                 experts may notagree that our food product candidates are generally recognized as safe;

·                 our productcandidates may be too expensive to develop, manufacture or market;

·                 other parties mayhold or acquire proprietary rights that could prevent us or our potentialcollaborators from developing or marketing our product candidates;

·                 physicians,patients, third-party payers or the medical community in general may not acceptor use our contemplated pharmaceutical products;

·                 our potentialcollaborators may withdraw support for or otherwise impair the development andcommercialization of our product candidates; or

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·                 others maydevelop equivalent or superior products.

In addition, we may not succeed in developing tasteenhancers and aversive taste blockers with the appropriate attributes requiredfor use in successful commercial products. Successful taste enhancers andaversive taste blockers require, among other things, appropriate biologicalactivity, including the correct taste enhancer and aversive taste blockerproperties for the product application, an acceptable safety profile, includinglack of toxicity or allergenicity, and appropriate physical or chemicalproperties, including relative levels of stability, volatility and resistanceto heat. Successful taste enhancers and aversive taste blockers must also becost-efficient. We may not be able to develop taste enhancers and aversivetaste blockers that meet these criteria.

If our product candidates are delayed or we fail tosuccessfully develop and commercialize our product candidates, our financialcondition may be negatively affected, and we may have to curtail or cease ouroperations.

***We may not successfullyestablish and maintain collaborative and licensing arrangements, which couldadversely affect our ability to develop and commercialize our productcandidates.***

A key element of our food and beverage strategy is tocommercialize our taste enhancers through product discovery and developmentcollaborations with major ingredient suppliers and/or end users.  Ourpharmaceutical strategy includes developing our own taste-improved drugformulations as well as establishing collaborations and licensing agreementswith major pharmaceutical, over-the-counter and generic companies, such as theGivaudan Agreement.  We may not be able to maintain or expand theselicenses and collaborations or establish additional licensing and collaborationarrangements necessary to develop and commercialize our productcandidates.  Even if we are able to maintain or establish licensing orcollaboration arrangements, these arrangements may not be on favorable termsand may contain provisions that will restrict our ability to develop, test andmarket our product candidates.  Any failure to maintain or establishlicensing or collaboration arrangements on favorable terms could adverselyaffect our business prospects, financial condition or ability to develop andcommercialize our product candidates.

We expect to rely at least in part on third partycollaborators to perform a number of activities relating to the development andcommercialization of our product candidates, including the manufacturing ofproduct materials, the design and conduct of clinical trials for ourpharmaceutical formulations, and potentially the obtaining of regulatoryapprovals and marketing and distribution of any successfully developedproducts.  Our collaborative partners may also have or acquire rights tocontrol aspects of our product development and clinical programs.  As aresult, we may not be able to conduct these programs in the manner or on thetime schedule we currently contemplate. In addition, if any of thesecollaborative partners withdraw support for our programs or product candidatesor otherwise impair their development, our business could be negativelyaffected.  To the extent we undertake any of these activities internally,our expenses may increase.

In addition, our success depends on the performance ofour collaborators of their responsibilities under these arrangements. Some potential collaborators may not perform their obligations in a timelyfashion or in a manner satisfactory to us. ** **Because such agreements may be exclusive, we may not be able to enter into acollaboration agreement with any other company covering the same product fieldduring the applicable collaborative period.  In addition, ourcollaborators’ competitors may not wish to do business with us at all due toour relationship with our collaborators.  If we are unable to enter intoadditional product discovery and development collaborations, our ability tosustain or expand our business will be significantly diminished.

***If we or our collaborators are unable to obtain and maintainthe GRAS determination or regulatory approval required before any tasteenhancers or aversive taste blockers can be incorporated into products that aresold, we would be unable to commercialize our taste enhancers and aversivetaste blockers and our business would be adversely affected.***

In the United States, the development, sale andincorporation of our taste enhancers and aversive taste blockers into productsare subject to regulation by the FDA, and in some instances, other governmentbodies.  Obtaining and maintaining a GRAS determination or regulatoryapproval is typically costly and can take many years.

Depending on the amount or intended use of aparticular taste enhancer or aversive taste blocker added to a product and thenumber of product categories in which the flavor or flavor enhancer will beincorporated, specific testing, safety assessment protocols, and regulatoryprocesses must be satisfied before we or our collaborators can commerciallymarket and sell products containing any taste enhancers and aversive tasteblockers that we may

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discover.  A key element of our strategy is todevelop flavors and flavor enhancers that will be evaluated by the FEMA (Flavorand Extracts Manufacturers Association) GRAS Panel, which we expect will take18 to 24 months and which is less expensive than the alternative of filing afood additive petition with the FDA, which can take eight years or more. The FEMA GRAS review process may take longer than 24 months and cost more thanwe currently anticipate if additional safety studies are requested by the FEMAGRAS Panel or are necessary to explain unexpected safety study findings. There is a risk that one or more of our product candidates may not qualify fora FEMA GRAS determination.  This may occur for a variety of reasons,including the taste enhancer’s or aversive taste blocker’s intended use, theamount of the taste enhancer or aversive taste blocker intended to be added topackaged foods and beverages, the number of product categories in which thetaste enhancers or aversive taste blockers will be incorporated, whether thetaste enhancer imparts sweetness, the safety profile of the taste enhancers oraversive taste blockers and the FEMA GRAS Panel’s interpretation of the safetydata.  Even if we obtain a GRAS determination with respect to a tasteenhancer or aversive taste blocker, the FDA has the ability to challenge suchdetermination, which could materially adversely affect our ability to marketproducts on schedule or at all.  In the event that a particular tasteenhancer or aversive taste blocker does not qualify for a FEMA GRASdetermination, we may be required to pursue a lengthy FDA approval process toreach the U.S. market, or dedicate our development efforts to alternativecompounds, which would further delay commercialization.  In addition,laws, regulations or FDA practice governing the regulatory approval process,the availability of the GRAS determination process or the manufacture orlabeling of such products, may change in a manner that could adversely affectour ability to commercialize products on schedule or at all.

Sales of our taste enhancers and aversive tasteblockers outside of the United States will be subject to foreign regulatoryrequirements.  In most cases, whether or not a GRAS determination or FDAapproval has been obtained, approval of a product by the comparable regulatoryauthorities of foreign countries must still be obtained prior to manufacturingor marketing the product in those countries.  A GRAS determination or FDAapproval in the United States or in any other jurisdiction does not ensureapproval in other jurisdictions because the requirements from jurisdiction tojurisdiction may vary widely.  Obtaining foreign approvals could result insignificant delays, difficulties and costs for us and require additional safetystudies and additional expenses. If we fail to comply with these regulatoryrequirements or to obtain and maintain required approvals, our ability togenerate revenue will be diminished.

We and our collaborators may not be successful inovercoming these regulatory hurdles, which could result in product launchdelays, unanticipated expenses, termination of collaborations, and flavors andflavor enhancers not being approved for incorporation into consumer products. These consequences would have a material adverse effect on our businessfinancial condition and results of operations.

***Even if we or ourcollaborators receive a GRAS determination or regulatory approval andincorporate our taste enhancers or aversive taste blockers into products, thoseproducts may never be commercially successful.***

Even if we discover and develop taste enhancers andaversive taste blockers that obtain the necessary GRAS determination orregulatory approval, our success depends to a significant degree upon thecommercial success of packaged food and beverage products and pharmaceuticalproducts incorporating those taste enhancers or aversive taste blockers. Ifthese products fail to achieve or subsequently maintain market acceptance orcommercial viability, our business would be significantly harmed because ourroyalty revenue is dependent upon consumer sales of these products. In additionwe could be unable to maintain our existing collaborations or attract newproduct discovery and development collaborators. Many factors may affect themarket acceptance and commercial success of any potential productsincorporating taste enhancers or aversive taste blockers that we may discover,including:

·                 health concerns,whether actual or perceived, or unfavorable publicity regarding our tasteenhancers and aversive taste blockers or those of our competitors;

·                 the timing ofmarket entry as compared to competitive products;

·                 the rate ofadoption of products by our collaborators and other companies in the flavorindustry; and

·                 any productlabeling that may be required by the FDA or other United States or foreignregulatory agencies for products incorporating our taste enhancers and aversivetaste blockers.

***We may experiencedelays in clinical trials and regulatory approval relating to our products thatcould adversely affect our financial results and our commercial prospects forour pharmaceutical products.***

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Our pharmaceutical strategy is to incorporate ourtaste enhancers and aversive taste blockers into proprietary formulations ofmedicines that potentially offer improved acceptability and compliance, thusenhancing efficacy and possibly providing broader indications or patientpopulations.  In addition to the regulatory or other requirements for ourtaste enhancers and aversive taste blockers, we will also require regulatoryapprovals of our pharmaceutical formulations.  In such case, we may berequired to conduct clinical trials to demonstrate safety and efficacy of thenew formulation.  For product candidates that advance to clinical testing,we cannot be certain that we or a collaborator will successfully complete theclinical trials necessary to receive regulatory product approvals.  Thisprocess is lengthy and expensive.

We intend to seek approval for our pharmaceuticalformulations through the FDA 505(b)(2) approval process.  If we are unableto approve our pharmaceutical formulations through the 505(b)(2) process, wemay be required to pursue the more expensive and time consuming 505(b)(1) approvalprocess.  Section 505(b) of the Federal Food, Drug, and Cosmetic Actdescribes two types of NDA applications that an applicant may submit forapproval of innovator medicines.  The first type of NDA, described undersection 505(b)(1), consists of a full report of investigations of safety andeffectiveness conducted by or for the applicant or for which the applicant hasthe right of reference for the information.  The second type of NDA,described under section 505(b)(2), consists of a full report of investigationsof safety and effectiveness where at least some portion of the informationsubmitted for approval comes from sources other than studies performed orsponsored by the applicant.  Drugs that may be approved via the 505(b)(2)process include drugs that have the same active ingredients as previouslyapproved products, but now are formulated in a different delivery mechanism orother new dosage forms or with different indications.  The basis for the505(b)(2) application is that there already is a certain amount of informationthat is known about the active ingredient. As such, repeating all the clinicalstudies required for a505(b)(1) application would be significantly more expensive and time consumingthan the 505(b)(2) process.

To obtain regulatory approvals, we must, among otherrequirements, complete clinical trials showing that our products are safe andeffective for a particular indication.  Under the 505(b)(2) approvalprocess, although we may not have performed some of the studies ourselves, wemust submit clinical and non-clinical data to demonstrate the medication issafe and effective.  We also must be able to provide data and information,including bioavailability or comparative bioavailability studies, to establishsufficiently the appropriateness of relying on material without the right ofreference.

We do not know when clinical trials for our productswill commence or whether we will complete any of our clinical trials onschedule or at all.  There can be no assurance that clinical trials will infact demonstrate that our products are safe or effective.

Additionally, we may not be able to find acceptablepatients or may experience delays in enrolling patients for our clinicaltrials.  The FDA or we may suspend our clinical trials at any time if eitherbelieves that we are exposing the subjects participating in the trials tounacceptable health risks.  The FDA or institutional review boards and/orinstitutional biosafety committees at the medical institutions and healthcarefacilities where we seek to sponsor clinical trials may not permit a trial toproceed or may suspend any trial indefinitely if they find deficiencies in theconduct of the trials.

Product development costs to us and our potentialcollaborators will increase if we have delays in testing or approvals or if weneed to perform more or larger clinical trials than planned.  We expect tocontinue to rely on third party clinical investigators at medical institutionsand healthcare facilities to conduct our clinical trials, and, as a result, wemay face additional delaying factors outside our control.  Significantdelays may adversely affect our financial results and the commercial prospectsfor our product candidates and delay our ability to become profitable.

***If ourpharmaceutical product candidates do not successfully complete the clinicaltrial process, we will not be able to market them. Even successful clinicaltrials may not result in a marketable product and may not be entirelyindicative of a product’s safety or efficacy.***

Many factors, known and unknown, can adversely affectclinical trials and the ability to evaluate a product’s efficacy.  Duringthe course of treatment, patients can die or suffer other adverse events forreasons that may or may not be related to the proposed product beingtested.  Even if unrelated to our product, certain events can neverthelessadversely impact our clinical trials.  As a result, our ability toultimately develop and market the products and obtain revenues would suffer.

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Even promising results in pre-clinical studies andinitial clinical trials do not ensure successful results in later clinicaltrials, which test broader human use of our products.  Many companies inour industry have suffered significant setbacks in advanced clinical trials,despite promising results in earlier trials.  Even successful clinicaltrials may not result in a marketable product or be indicative of the efficacyor safety of a product. Many factors or variables could affect the results of clinicaltrials and cause them to appear more promising than they may otherwisebe.  Product candidates that successfully complete clinical trials couldultimately be found to be unsafe or ineffective.

In addition, our ability to complete clinical trialsdepends on many factors, including obtaining adequate clinical supplies andhaving a sufficient rate of patient recruitment.  For example, patientrecruitment is a function of many factors, including:

·                  thesize of the patient population;

·                  theproximity of patients to clinical sites;

·                  theeligibility criteria for the trial;

·                  theperceptions of investigators and patients regarding safety; and

·                  theavailability of other treatment options.

Even if patients are successfully recruited, we cannotbe sure that they will complete the treatment process.  Delays in patientenrollment or treatment in clinical trials may result in increased costs,program delays or both.

With respect to markets in other countries, we or apartner will also be subject to regulatory requirements governing clinicaltrials in those countries.  Even if we complete clinical trials, we maynot be able to submit a marketing application.  If we submit anapplication, the regulatory authorities may not review or approve it in atimely manner, if at all.

***Because we cannotpredict whether or when we will obtain regulatory approval to commercialize ourpharmaceutical product candidates, we cannot predict the timing of any futurerevenue from these product candidates.***

We cannot commercialize any of our pharmaceuticalproduct candidates to generate revenue until the appropriate regulatoryauthorities have reviewed and approved the applications for our productcandidates.  We cannot assure you that the regulatory agencies willcomplete their review processes in a timely manner or that we will obtainregulatory approval for any product candidate we or our potential collaboratorsdevelop.  Satisfaction of regulatory requirements typically takes manyyears, is dependent upon the type, complexity and novelty of the product andrequires the expenditure of substantial resources.  Regulatory approvalprocesses outside the United States include all or many of the risks associatedwith the FDA approval process and potentially others as well.  Inaddition, we may experience delays or rejections based upon additionalgovernment regulation from future legislation or administrative action orchanges in FDA policy, or the policies of other relevant governmental ornongovernmental entities during the period of product development, pre-clinicaland clinical trials and FDA regulatory review.

***We will rely onthird parties to manufacture taste enhancers, aversive taste blockers andpharmaceutical product candidates. There can be no guarantee that we can obtainsufficient and acceptable quantities of our taste enhancers or aversive tasteblockers or pharmaceutical product candidates on acceptable terms, which maydelay or impair our ability to develop, test and market such products.***

Our business strategy relies on third parties to manufactureand produce our taste enhancers and aversive taste blockers and pharmaceuticalproduct candidates in accordance with good manufacturing practices establishedby the FDA, or similar regulations in other countries.  Our tasteenhancers and aversive taste blockers and pharmaceutical product candidates maybe in competition with other products for access to these facilities and may besubject to delays in manufacture if third parties give other products greaterpriority than our product candidates. These third parties also may not deliversufficient quantities of our taste enhancers and aversive taste blockers andpharmaceutical product candidates, manufacture our taste enhancers and aversivetaste blockers and pharmaceutical product candidates in accordance withspecifications, or comply with applicable government regulations. Additionally,if the manufactured products fail to perform as specified, our business andreputation could be severely impacted.

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We expect to enter into manufacturing agreements forthe production of product materials.  If any manufacturing agreement isterminated or any third party collaborator experiences a significant problemthat could result in a delay or interruption in the supply of product materialsto us, there are very few contract manufacturers who currently have thecapability to produce our taste enhancers and aversive taste blockers andpharmaceutical product candidates on acceptable terms, or on a timely andcost-effective basis.  There can be no assurance that manufacturers onwhom we will depend will be able to successfully produce our taste enhancersand aversive taste blockers and pharmaceutical product candidates on acceptableterms, or on a timely or cost-effective basis.  There can also be noassurance that manufacturers will be able to manufacture our products inaccordance with our product specifications, or will meet FDA or otherrequirements. We must have sufficient and acceptable quantities of our productmaterials to conduct our clinical trials and to market our product candidates,if and when such products have been approved by the FDA for marketing.  Ifwe are unable to obtain sufficient and acceptable quantities of our productmaterial, we may be required to delay the clinical testing and marketing of ourproducts.

***If we do not complywith applicable regulatory requirements in the manufacture and distribution ofour product candidates, we may incur penalties that may inhibit our ability tocommercialize our products and adversely affect our revenue.***

Our failure or the failure of our potentialcollaborators or third party manufacturers to comply with applicable FDA orother regulatory requirements including manufacturing, quality control,labeling, safety surveillance, promoting and reporting may result in criminalprosecution, civil penalties, recall or seizure of our products, total orpartial suspension of production or an injunction, as well as other regulatoryaction against our product candidates or us.  Discovery of previouslyunknown problems with a product, supplier, manufacturer or facility may resultin restrictions on the sale of our products, including a withdrawal of suchproducts from the market.  The occurrence of any of these events wouldnegatively impact our business and results of operations.

***If we are unable tocreate and maintain sales, marketing and distribution capabilities or enterinto agreements with third parties to perform those functions, we will not beable to commercialize our product candidates.***

We currently have no sales, marketing or distributioncapabilities.  Therefore, to commercialize our product candidates, if andwhen such products have been approved and are ready for marketing, we expect tocollaborate with third parties to perform these functions.  We have noexperience in developing, training or managing a sales force and will incursubstantial additional expenses if we decide to market any of our futureproducts directly.  Developing a marketing and sales force is also timeconsuming and could delay launch of our future products.  In addition, wewill compete with many companies that currently have extensive and well-fundedmarketing and sales operations.  Our marketing and sales efforts may beunable to compete successfully against these companies.

***Many potential competitors,including those who have greater resources and experience than we do, maydevelop products or technologies that make ours obsolete or noncompetitive.***

We believe our taste technology approach is applicableto a wide range of food and pharmaceutical products representing many anddiverse competitive companies and approaches.  The life sciences and othertechnology industries are characterized by rapid technological change, and thearea of sensory or taste research is a rapidly evolving field.  Our futuresuccess will depend on our ability to maintain a competitive position withrespect to technological advances. Technological developments by others mayresult in our taste enhancers or aversive taste blockers and technologies, aswell as our pharmaceutical formulations, becoming obsolete.

We face substantial competition from companiespursuing the commercialization of products and services relevant to taste usingvarious methods for the discovery of taste enhancers and aversive tasteblockers.  These competitors include leading flavor companies, such asInternational Flavors & Fragrances Inc., Givaudan SA, Symrise andFirmenich.  Among food manufacturers, at least Nestlé has an activeprogram cloning and expressing receptors for in vitro screening assays. In addition, Senomyx, Inc. is a public biotechnology company taking abiochemical approach to taste modulation, both in foods and pharmaceuticalproducts.  Senomyx is principally focused in the area of taste enhancementfor food products and uses high throughput screening technology and syntheticand natural products chemistry to discover novel flavor enhancers, which itlicenses to end users in the food industry.  Senomyx was initially focusedon sweetness, savory and salty flavor enhancers, but is now also developingprograms to discover bitter blockers for food and pharmaceuticalproducts.  Chemcom is another company that is developing a biotechnologyapproach to finding novel taste enhancers.  We currently compete and willcontinue to compete in the 

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future with thesecompanies in collaborating with and selling flavor products and technologies tomanufacturers of packaged food and beverage products.

We also face substantial competition from a number ofcompanies in the pharmaceutical formulations industry. Taste masking has a longhistory in the pharmaceutical industry.  A traditional method of tastemasking for pharmaceutical products is to mix the active pharmaceuticalingredient with flavorings and sugar syrup to mask unpleasant taste.  Thisapproach is most commonly used for pediatric liquid formulations as well asmany over-the-counter cough-cold remedies.  FlavorRx supplies flavors atdrug store pharmacies that can be compounded by the pharmacist to make certainliquid formulations more palatable.  In the pharmaceutical sector thereare a number of drug delivery companies that have developed proprietary tastemasking technologies.  These competing technologies and companies includeOraSolv and DuraSolv from CIMA Labs (recently acquired by Cephalon), MicroCapsand Liquitard from Eurand, FlavorTech and MicroMask from KV Pharmaceuticals,EnVel from Cardinal Health and WOWTab from Yamanouchi.  Virtually all ofthese approaches including OralSolv, DuraSolv, MicroCap, Liquitard, EnVel andthe technology used in Zydis products utilize a physical approach to sequesterthe active drug substance away from the taste receptors on the tongue. Theseinclude coating the drug, microencapsulation, immobilization, use ofcyclodextran carriers, or stabilization of the drug in a micellar or insolublephase, as the principle means of taste masking.

Many of these companies have substantially greatercapital resources, research and development resources and experience,manufacturing capabilities, regulatory expertise, sales and marketingresources, established relationships with consumer products companies andproduction facilities.

We may in the future face competition from lifesciences and other technology companies and other commercial enterprises. These entities engage as we do in biotechnology, biology or chemistry and couldapply this technology to the discovery and development of taste enhancers andaversive taste blockers and new formulations of pharmaceutical products. Wecannot guarantee that products developed as a result of our competitors’existing or future collaborations will not compete with our taste enhancers andaversive taste blockers and new pharmaceutical formulations.

Universities and public and private researchinstitutions are also potential competitors.  While these organizationsprimarily have educational objectives, they may develop proprietarytechnologies related to the sense of taste or secure patent protection that wemay need for the development of our technologies and products.  We mayattempt to license these proprietary technologies, but these licenses may notbe available to us on acceptable terms, if at all.

Our competitors, either alone or with theircollaborative partners, may succeed in developing technologies or discoveringtaste enhancers and aversive taste blockers that are more effective, safer,more affordable or more easily commercialized than ours, and our competitorsmay obtain intellectual property protection or commercialize products soonerthan we do.  Developments by others may render our product candidates orour technologies obsolete.  In addition, our current product discovery anddevelopment collaborators are not prohibited from entering into research anddevelopment collaboration agreements with third parties in any productfield.  Our failure to compete effectively would have a significantadverse effect on our business, financial condition and results of operations.

***If we are unable toattract and retain key personnel and advisors, it may adversely affect ourability to obtain financing, pursue collaborations or develop our productcandidates.***

We are highly dependent on F. Raymond Salemme, Ph.D.,our Chief Executive Officer and President, as well as other executive andscientific officers, including Scott Horvitz, Chief Financial Officer andRobert Bryant, Ph.D., Vice President, Discovery Research.

Our future success depends on our ability to attract,retain and motivate highly qualified management and scientific, development andcommercial personnel and advisors.  To pursue our business strategy, wewill need to hire or otherwise engage qualified personnel and managers,including personnel with expertise in discovery, development, clinical trials,government regulation, manufacturing, marketing and sales.  Competitionfor qualified personnel is intense among companies, academic institutions andother organizations.  If we are unable to attract and retain key personneland advisors, it may negatively affect our ability to successfully develop,test and commercialize our product candidates.

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***We use hazardousand biological materials in our business.  Any claims relating to improperhandling, storage or disposal of these materials could be time consuming andcostly.***

Our products and processes will involve the controlledstorage, use and disposal of certain hazardous and biological materials andwaste products.  We and our suppliers and other collaborators are subjectto federal, state and local regulations governing the use, manufacture,storage, handling and disposal of materials and waste products.  Even ifwe and these suppliers and collaborators comply with the standards prescribedby law and regulation, the risk of accidental contamination or injury fromhazardous materials cannot be completely eliminated. In the event of anaccident, we could be held liable for any damages that result, and anyliability could exceed the limits or fall outside the coverage of any insurancewe may obtain and exceed our financial resources.  We may not be able tomaintain insurance on acceptable terms, or at all.  We may incursignificant costs to comply with current or future environmental laws andregulations.

***We may be sued forproduct liability, which could adversely affect our business.***

Because our business strategy involves the developmentand sale by either us or our collaborators of commercial products incorporatingour taste enhancers or aversive taste blockers, we may be sued for productliability. We may be held liable if any product we develop and commercialize,or any product our collaborators commercialize that incorporates any of ourtaste enhancers or aversive taste blockers, causes injury or is found otherwiseunsuitable during product testing, manufacturing, marketing, sale or consumeruse. In addition, the safety studies we must perform and the FEMA GRASdetermination we must obtain prior to incorporating our taste enhancers andaversive taste blockers into a commercial product, and the regulatory approvalsrequired to commercialize our pharmaceutical products, will not protect us fromany such liability.

If we and our collaborators commence sale ofcommercial products we will need to obtain product liability insurance, andthis insurance may be prohibitively expensive, or may not fully cover ourpotential liabilities.  Inability to obtain sufficient insurance coverageat an acceptable cost or otherwise to protect against potential productliability claims could prevent or inhibit the commercialization of productsdeveloped by us or our product discovery and development collaborators. We may be obligated to indemnify our product discovery and developmentcollaborators for product liability or other losses they incur as a result ofour taste enhancers and aversive taste blockers.  Any indemnification wereceive from such collaborators for product liability that does not arise fromour taste enhancers or aversive taste blockers may not be sufficient to satisfyour liability to injured parties. If we are sued for any injury caused by ourtaste enhancers or aversive taste blockers or products incorporating our tasteenhancers or aversive taste blockers or any other products we develop, ourliability could exceed our total assets.

**Risks Related To IntellectualProperty**

***If our productcandidates are not effectively protected by valid, issued patents or if we arenot otherwise able to protect our proprietary information, it could harm ourbusiness.***

The success of our operations will depend in part onour ability and that of our licensors to:

·                  obtainpatent protection for our taste screening technology and our taste enhancersand aversive taste blockers both in the United States and in other countrieswith substantial markets;

·                  obtainpatent protection for our pharmaceutical formulations including those createdusing our taste enhancers;

·                  defendpatents once obtained;

·                  maintaintrade secrets and operate without infringing upon the patents and proprietaryrights of others; and

·                  obtainappropriate licenses upon reasonable terms to patents or proprietary rightsheld by others that are necessary or useful to us in commercializing ourtechnology, both in the United States and in other countries with substantialmarkets.

In the event we are not able to protect ourintellectual property and proprietary information, our business will bematerially harmed.

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***We may not haveadequate protection for our unpatented proprietary information, which couldadversely affect our competitive position.***

In addition to patents, we will substantially rely ontrade secrets, know-how, continuing technological innovations and licensingopportunities to develop and maintain our competitive position.  However,others may independently develop substantially equivalent proprietaryinformation and techniques or otherwise gain access to our trade secrets ordisclose our technology.  To protect our trade secrets, we may enter intoconfidentiality agreements with employees, consultants and potentialcollaborators.  However, these agreements may not provide meaningfulprotection of our trade secrets or adequate remedies in the event ofunauthorized use or disclosure of such information.  Likewise, our tradesecrets or know-how may become known through other means or be independentlydiscovered by our competitors.  Any of these events could prevent us fromdeveloping or commercializing our product candidates.

***Our ability tocompete in the ingredient, food and beverage market and the pharmaceuticalmarket may decline if we do not adequately protect our proprietarytechnologies.***

Because of the substantial length of time and expenseassociated with the development of new products, we, along with the rest of theingredient, food and beverage industry and pharmaceutical industry, placeconsiderable importance on obtaining and maintaining patent protection for newtechnologies, products and processes.  Our success depends in part on ourability to obtain and maintain intellectual property that protects ourtechnologies, taste enhancers or aversive taste blockers and our pharmaceuticalproducts.  Patent positions may be highly uncertain and may involvecomplex legal and factual questions, including the ability to establishpatentability of sequences relating to taste receptors, proteins, chemicalsynthesis techniques, compounds and methods for using them to modulate tastefor which we seek patent protection.  No consistent standard regarding theallowance or enforceability of claims in many of our pending patentapplications has emerged to date.  As a result, we cannot predict thebreadth of claims that will ultimately be allowed in our patent applications,if any, including those we have in-licensed or the extent to which we mayenforce these claims against our competitors. The degree of future protectionfor our proprietary rights is therefore highly uncertain and we cannot assureyou that:

·                  wewere the first to file patent applications or to invent the subject matterclaimed in patent applications relating to the technologies upon which we rely;

·                  otherswill not independently develop similar or alternative technologies or duplicateany of our technologies;

·                  othersdid not publicly disclose our claimed technology before we conceived thesubject matter included in any of our patent applications;

·                  anyof our patent applications will result in issued patents;

·                  anyof our patent applications will not result in interferences or disputes withthird parties regarding priority of invention;

·                  anypatents that may be issued to us, our collaborators or our licensors willprovide a basis for commercially viable products or will provide us with anycompetitive advantages or will not be challenged by third parties;

·                  wewill develop additional proprietary technologies that are patentable;

·                  thepatents of others will not have an adverse effect on our ability to dobusiness; or

·                  newproprietary technologies from third parties, including existing licensors, willbe available for licensing to us on reasonable commercial terms, if at all.

In addition, patent law outside the United States isuncertain and in many countries intellectual property laws are undergoingreview and revision. The laws of some countries do not protect intellectualproperty rights to the same extent as domestic laws. It may be necessary oruseful for us to participate in opposition proceedings to determine thevalidity of our competitors’ patents or to defend the validity of any of our orour licensor’s future patents, which could result in substantial costs andwould divert our efforts and attention from other aspects of our business.

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Technologies licensed to us by others, or in-licensedtechnologies, are important to our business. In particular, we depend oncertain technologies relating to taste biology licensed from the Mount SinaiSchool of Medicine.  In addition, we may in the future acquire rights toadditional technologies by licensing such rights from existing licensors orfrom third parties.  Such in-licenses may be costly.  Also, wegenerally do not control the patent prosecution, maintenance or enforcement ofin-licensed technologies.  Accordingly, we are unable to exercise the samedegree of control over this intellectual property as we do over our internallydeveloped technologies. Moreover, some of our academic institution licensors,collaborators and scientific advisors have rights to publish data andinformation to which we have rights.  If we cannot maintain theconfidentiality of our technologies and other confidential information inconnection with our collaborations, our ability to protect our proprietaryinformation or obtain patent protection in the future may be impaired, whichcould have a significant adverse effect on our business, financial conditionand results of operations.

***Many of the patentapplications we and our licensors have filed have not yet been substantivelyexamined and may not result in patents being issued.***

Many of the patent applications filed by us and ourlicensors were filed recently with the United States Patent and TrademarkOffice and most have not been substantively examined and may not result inpatents being issued.  It is difficult to predict whether any of our orour licensors’ applications will ultimately be found to be patentable or, ifso, to predict the scope of any allowed claims.  In addition, thedisclosure in our or our licensors’ patent applications, particularly inrespect of the utility of our claimed inventions, may not be sufficient to meetthe statutory requirements for patentability in all cases.  As a result,it is difficult to predict whether any of our or our licensors’ applicationswill be allowed, or, if so, to predict the scope of any allowed claims or theenforceability of the patents.  Even if enforceable, others may be able todesign around any patents or develop similar technologies that are not withinthe scope of such patents.  Our and our licensors’ patent applications maynot issue as patents that will provide us with any protection or competitiveadvantage.

***Disputes concerningthe infringement or misappropriation of our proprietary rights or theproprietary rights of others could be time consuming and extremely costly andcould delay our research and development efforts.***

Our commercial success, if any, will be significantlyharmed if we infringe the patent rights of third parties or if we breach anylicense or other agreements that we have entered into with regard to ourtechnology or business.

We are aware of other companies and academicinstitutions that have been performing research in the areas of tastemodulation and taste enhancers and aversive taste blockers.  Inparticular, other companies and academic institutions have announced that theyhave conducted taste-receptor research and have published data on tastereceptor sequence information and taste receptors or filed patent applicationsor obtained patent protection on taste modulation or taste receptors and theiruses.  To the extent any of these companies or academic institutionscurrently have, or obtain in the future, broad patent claims, such patentscould block our ability to use various aspects of our discovery and developmentprocess and might prevent us from developing or commercializing newlydiscovered taste enhancers and aversive taste blockers or otherwise conductingour business.  In addition, it is possible that some of the tasteenhancers or aversive taste blockers that are discovered using our technologymay not be patentable or may be covered by intellectual property of thirdparties.

We are not currently a party to any litigation,interference, opposition, protest, reexamination or any other potentiallyadverse governmental, ex parte or inter-party proceeding with regard to ourpatent or trademark positions.  However, the life sciences and othertechnology industries are characterized by extensive litigation regardingpatents and other intellectual property rights.  Many life sciences andother technology companies have employed intellectual property litigation as away to gain a competitive advantage.  If we become involved in litigation,interference proceedings, oppositions, reexamination, protest or otherpotentially adverse intellectual property proceedings as a result of allegedinfringement by us of the rights of others or as a result of priority ofinvention disputes with third parties, we might have to spend significantamounts of money, time and effort defending our position and we may not besuccessful.  In addition, any claims relating to the infringement ofthird-party proprietary rights or proprietary determinations, even if notmeritorious, could result in costly litigation, lengthy governmentalproceedings, divert management’s attention and resources, or require us toenter into royalty or license agreements that are not advantageous to us.

Should any person have filed patent applications orobtained patents that claim inventions also claimed by us, we may have toparticipate in an interference proceeding declared by the relevant patentregulatory agency to 

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determine priorityof invention and, thus, the right to a patent for these inventions in theUnited States.  Such a proceeding could result in substantial cost to useven if the outcome is favorable.  Even if successful on priority grounds,an interference action may result in loss of claims based on patentabilitygrounds raised in the interference action.  Litigation, interferenceproceedings or other proceedings could divert management’s time andefforts.  Even unsuccessful claims could result in significant legal feesand other expenses, diversion of management’s time and disruption in ourbusiness.  Uncertainties resulting from initiation and continuation of anypatent proceeding or related litigation could harm our ability to compete andcould have a significant adverse effect on our business, financial conditionand results of operations.

An adverse ruling arising out of any intellectualproperty dispute, including an adverse decision as to the priority of ourinventions, could undercut or invalidate our intellectual propertyposition.  An adverse ruling could also subject us to significantliability for damages, including possible treble damages, prevent us from usingtechnologies or developing products, or require us to negotiate licenses todisputed rights from third parties.  Although patent and intellectualproperty disputes in the technology area are often settled through licensing orsimilar arrangements, costs associated with these arrangements may besubstantial and could include license fees and ongoing royalties. Furthermore, necessary licenses may not be available to us on satisfactoryterms, if at all.  Failure to obtain a license in such a case could have asignificant adverse effect on our business, financial condition and results ofoperations.

**RisksRelated to Our Fluctuating Operating Results, Possible Acquisitions andManagement of Growth**

***We expect that ourresults of operations will fluctuate from period to period, and thisfluctuation could cause our stock price to decline, causing investor losses.***

Our operating results have fluctuated in the past andare likely to vary significantly in the future based upon a number of factors,many of which we have little or no control over.  We operate in a highlydynamic industry and future results could be subject to significantfluctuations.  These fluctuations could cause us to fail to meet or exceedfinancial expectations of securities analysts or investors, which could causeour stock price to decline rapidly and significantly.  Revenue andexpenses in future periods may be greater or less than revenue and expenses inthe immediately preceding period or in the comparable period of the prioryear.  Therefore, period-to-period comparisons of our operating resultsare not necessarily a good indication of our future performance.  Some ofthe factors that could cause our operating results to fluctuate include:

·                  ourability to discover and develop taste enhancers and aversive taste blockers;

·                  ourability or the ability of our product discovery and development collaboratorsto incorporate our taste enhancers and aversive taste blockers into packagedfood and beverage products and pharmaceutical products;

·                  ourreceipt of milestone payments in any particular period;

·                  theability and willingness of collaborators to commercialize productsincorporating our taste enhancers and aversive taste blockers on expectedtimelines, or at all;

·                  ourability to enter into product discovery and development collaborations andtechnology collaborations, or to extend the terms of any existing collaborationagreements, and our payment obligations, expected revenue and other terms ofany other agreements of this type;

·                  ourability, or our collaborators’ ability, to successfully satisfy all pertinentregulatory requirements;

·                  thedemand for our future products and our collaborators’ products containing ourtaste enhancers or aversive taste blockers; and

·                  generaland industry specific economic conditions, which may affect our collaborators’research and development expenditures.

***If we acquireproducts, technologies or other businesses, we will incur a variety of costs,may have integration difficulties and may experience numerous other risks thatcould adversely affect our business.***

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To remain competitive, we may decide to acquireadditional businesses, products and technologies.  We currently have nocommitments or agreements with respect to, and are not actively seeking, anymaterial acquisitions.  We have limited experience in identifyingacquisition targets, successfully acquiring them and integrating them into ourcurrent infrastructure.  We may not be able to successfully integrate anybusinesses, products, technologies or personnel that we might acquire in thefuture without a significant expenditure of operating, financial and managementresources, if at all.  In addition, future acquisitions could requiresignificant capital infusions and could involve many risks, including, but not limitedto, the following:

·                  wemay have to issue convertible debt or equity securities to complete anacquisition, which would dilute our stockholders and could adversely affect themarket price of our common stock;

·                  anacquisition may negatively impact our results of operations because it mayrequire us to incur large one-time charges to earnings, amortize or write downamounts related to goodwill and other intangible assets, or incur or assumesubstantial debt or liabilities, or it may cause adverse tax consequences,substantial depreciation or deferred compensation charges;

·                  wemay encounter difficulties in assimilating and integrating the business,technologies, products, personnel or operations of companies that we acquire;

·                  certainacquisitions may disrupt our relationship with existing collaborators who arecompetitive to the acquired business;

·                  acquisitionsmay require significant capital infusions and the acquired businesses, productsor technologies may not generate sufficient revenue to offset acquisitioncosts;

·                  anacquisition may disrupt our ongoing business, divert resources, increase ourexpenses and distract our management;

·                  acquisitionsmay involve the entry into a geographic or business market in which we havelittle or no prior experience; and

·                  keypersonnel of an acquired company may decide not to work for us.

Any of the foregoing risks could have a significantadverse effect on our business, financial condition and results of operations.

***To the extent weenter markets outside of the United States, our business will be subject topolitical, economic, legal and social risks in those markets, which couldadversely affect our business.***

There are significant regulatory and legal barriers inmarkets outside the United States that we must overcome to the extent we enteror attempt to enter markets in countries other than the United States.  Wewill be subject to the burden of complying with a wide variety of national andlocal laws, including multiple and possibly overlapping and conflictinglaws.  We also may experience difficulties adapting to new cultures,business customs and legal systems.  Any sales and operations outside theUnited States would be subject to political, economic and social uncertaintiesincluding, among others:

·                  changesand limits in import and export controls;

·                  increasesin custom duties and tariffs;

·                  changesin currency exchange rates;

·                  economicand political instability;

·                  changesin government regulations and laws;

·                  absencein some jurisdictions of effective laws to protect our intellectual propertyrights; and

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·                  currencytransfer and other restrictions and regulations that may limit our ability tosell certain products or repatriate profits to the United States.

Any changes related to these and other factors couldadversely affect our business to the extent we enter markets outside the UnitedStates.

***We may encounterdifficulties managing our growth, which could adversely affect our business.***

Our strategy includes entering into and working onsimultaneous taste enhancer and aversive taste blocker discovery and developmentprograms across multiple markets that include both the food and beverageindustry and the pharmaceutical industry.  We expect to continue to growto meet our strategic objectives. If our growth continues, it will continue toplace a strain on us, our management and our resources. Our ability toeffectively manage our operations, growth and various projects requires us tocontinue to improve our operational, financial and management controls,reporting systems and procedures and to attract and retain sufficient numbersof talented employees.  We may not be able to successfully implement thesetasks on a larger scale and, accordingly, we may not achieve our research,development and commercialization goals.  If we fail to improve our operational,financial and management information systems, or fail to effectively monitor ormanage our new and future employees or our growth, our business would suffersignificantly. In addition, no assurance can be made that we will be able tosecure adequate facilities to house our staff, conduct our research or achieveour business objectives.

**Risks Related to our Common Stock;Liquidity Risks**

***A significantnumber of our shares of common stock will be eligible for sale, and their salecould depress the market price of common stock.***

The sale of a significant number of shares of ourcommon stock in the public market could harm the market price of our commonstock.  As additional shares of commonstock become available for resale in the public market pursuant to the registrationstatement and releases of lock-up agreements, the market supply of shares ofcommon stock will increase, which could decrease its market price.  The number of shares which may be sold intothe marketplace pursuant to the registration statement is significant.  We believe that such sales may severelydepress the market price of our common stock. In addition, some or all of the shares of common stock may be offeredfrom time to time in the open market pursuant to Rule 144 (or pursuant toan additional registration statement, if one is effective), and these sales mayalso have a depressive effect on the market for the shares of commonstock.  In general, a person who has heldrestricted shares for a period of one year may, upon filing of a notificationon Form 144 with the SEC, sell into the market common stock in an amountup to the greater of 1% of the outstanding shares or the average weekly numberof shares sold in the last four weeks before such sale.  Such sales may be repeated once each threemonths, and any of the restricted shares may be sold by a non-affiliate afterthey have been held two years.  TheCompany’s officers, directors, employees and most stockholders currently owninggreater than 4% of our issued and outstanding common stock are subject tolock-up provisions relating to shares of our common stock that they owned priorto the Reverse Merger that prevent the sale or transfer of common stock fromthe date of the initial closing of the Private Placement until 180 days afterthe effective date of the resale registration statement.

***The price of ourcommon stock is expected to be volatile.***

The market price of our common stock, and the marketprices for securities of biotechnology companies in general, are expected to behighly volatile.  The following factors, in addition to other risk factorsdescribed in this Quarterly Report on Form 10-Q, and the potentially low volumeof trades in our common stock, may have a significant impact on the marketprice of our common stock, some of which are beyond our control:

·                  announcementsof technological innovations and discoveries by the Company or its competitors;

·                  developmentsconcerning any research and development, clinical trials, manufacturing, andmarketing collaborations;

·                  newproducts or services that the Company or its competitors offer;

·                  actualor anticipated variations in operating results;

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·                  theinitiation, conduct and/or outcome of intellectual property and/or litigationmatters;

·                  changesin financial estimates by securities analysts;

·                  conditionsor trends in bio-pharmaceutical or other healthcare industries;

·                  regulatorydevelopments in the United States and other countries;

·                  changesin the economic performance and/or market valuations of other biotechnology andflavor companies;

·                  theCompany’s announcement of significant acquisitions, strategic partnerships,joint ventures or capital commitments;

·                  additionsor departures of key personnel;

·                  globalunrest, terrorist activities, and economic and other external factors; and

·                  salesor other transactions involving common stock.

The stock market in general has recently experiencedrelatively large price and volume fluctuations.  In particular, marketprices of securities of biotechnology companies have experienced fluctuationsthat often have been unrelated or disproportionate to the operating results ofthese companies.  Continued market fluctuations could result in extremevolatility in the price of our common stock, which could cause a decline in thevalue of our common stock.  Investors should also be aware that pricevolatility may be worse if the trading volume of our common stock is low.

***We do not expect topay cash dividends in the foreseeable future.***

We currently intend to retain any future earnings tofinance the growth and development of our business; therefore, we do not expectto pay any cash dividends in the foreseeable future. Any future dividends willdepend on our earnings, if any, and our financial requirements.

***Because Redpointbecame a public company as a result of the Reverse Merger and ReincorporationMerger and not through a traditional underwritten initial public offering ofsecurities, the Company may not attract the attention of major brokeragefirms.  Additionally, as a public company, we will incur substantial expenses.***

As a result of the Reverse Merger and ReincorporationMerger, Redpoint became a publicly-traded company and, accordingly, will besubject to the information and reporting requirements of the United Statessecurities laws.  The costs to public companies of preparing and filingannual and quarterly reports, proxy statements and other information with theSEC and furnishing audited reports to stockholders will cause the Company’sexpenses to be higher than they would be if it were a privately-held company. In addition, the Company will incur substantial expenses in connection with thepreparation of the registration statement and related documents with respect tothe registration of the common stock issued in the Private Placement and theReverse Merger.  Security analysts of major brokerage firms may notprovide coverage of the Company.  No assurance can be given that brokeragefirms will want to conduct any secondary offerings on behalf of the Company inthe future.

***We have discretionon how we use any proceeds we receive from the exercise of warrants.***

Our management has broad discretion on how to use andspend any proceeds we receive as a result of selling security holdersexercising their warrants. Our stockholders may not agree with our decision onhow to use such proceeds. If we fail to spend the proceeds effectively, ourbusiness and financial condition could be harmed and we may need to seekadditional financing sooner than expected.

***It is notanticipated that there will be an active public market for shares of our commonstock in the near term and stockholders may have to hold their shares of commonstock for an indefinite period of***

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***time.  Stockholders may be unable to resell a largenumber of their shares of common stock within a short time frame or at or abovetheir purchase price.***

To have purchased shares of our common stock andwarrants to purchase common stock in the Private Placement, an investor musthave represented that it was acquiring such shares and warrants for investmentand not with a view to distribution or resale, that the investor understoodthat neither the common stock nor the warrants are readily transferable and, inany event, that it must bear the economic risk of an investment in the commonstock for an indefinite period of time because neither the common stock nor thewarrants have been registered under the Securities Act of 1933, as amended (theSecurities Act), or applicable state “Blue Sky” or securities laws, and thatneither the common stock nor the warrants can be sold unless they aresubsequently registered or an exemption from such registration is available. Because our common stock is thinly traded, an investor cannot expect tobe able to liquidate its investment in case of an emergency or if it otherwisedesires to do so.  Large transactions in common stock may be difficult toconduct in a short period of time.  Further, the sale of shares of commonstock may have adverse federal income tax consequences.

***If we do not complywith registration rights granted to certain holders of our restrictedsecurities, we may be required to pay damages to such holders.***

We filed a “resale” registration statement with theSEC covering all shares of common stock issued in connection with the PrivatePlacement, including shares of common stock into which any warrants areexercisable, within 60 days after the final closing of the Private Placement. Suchregistration statement has been declared effective by the SEC. We will use ourbest efforts to have such “resale” registration statement maintain itseffectiveness until such time as all securities registered under theregistration statement have been sold or are otherwise able to be sold underRule 144 of the Securities Act without regard to volume limitations,whichever is earlier. We cannot assure you that we will be able to obtain ormaintain such effective registration statement.

***Our common stock may be considered “a penny stock” and maybe difficult to sell.***

The SEC has adopted regulations that generally define “pennystock” to be an equity security that has a market or exercise price of lessthan $5 per share, subject to specific exemptions. Initially, the market priceof our common stock is likely to be less than $5 per share and therefore may bedesignated a “penny stock” under SEC rules.  This designation requires anybroker or dealer selling our common stock to disclose certain information aboutthe transaction, obtain a written agreement from the investor and determinethat the investment in our common stock by the investor is a reasonablysuitable investment for such investor.  These rules may restrict theability of brokers or dealers to sell our common stock and, as a result, mayaffect the ability of investors to sell their shares. In addition, unless anduntil our common stock is listed for trading on the American Stock Exchange orNASDAQ Capital Market or similar market, investors may experience a lack ofbuyers to purchase such stock or a lack of market makers to support the stockprice. Resale restrictions on transferring “penny stocks” are sometimes imposedby some states, which may make transactions in our stock more difficult and mayreduce the value of your investment.

***Substantial futureissuances of******our******common stock could depress our stock price.***

The market price for our common stock could decline,perhaps significantly, as a result of issuances of a large number of shares ofour common stock in the public market or even the perception that suchissuances could occur.  Under our Registration Rights Agreement, certainholders of our outstanding shares of our common stock and other securities havedemand and Form S-3 registration rights.  Sales of a substantial number ofthese shares of common stock, or the perception that holders of a large numberof shares intend to sell their shares, could depress the market price of ourcommon stock.  The existence of such registration rights could also makeit more difficult for us to raise funds through future offerings of our equitysecurities.

***Our stockholdersmay experience additional dilution upon the exercise of warrants or options.***

As of the final closing of the Private Placement, weissued warrants to investors to acquire approximately 10.2 million shares ofcommon stock and warrants to the placement agents to acquire approximately 3.6million shares of common stock in the Private Placement,  There are also additional warrants topurchase approximately 0.2 million shares of common stock which in addition tothe warrants issued to investors and the placement agents in connection 

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with the PrivatePlacement, is an aggregate of 14.0 million shares of common stock underlyingsuch warrants that, if exercised or converted, could decrease the net tangiblebook value of our common stock.  In addition, there are 17.6 millionshares of common stock underlying options that have been or may be grantedpursuant to the Redpoint Bio Corporation 2007 Omnibus Equity CompensationPlan.  If the holders of those options exercise those options, you mayexperience dilution in the net tangible book value of our common stock.

***Directors andofficers of the Company have a high concentration of******our******common stock ownership.***

Based on the aggregate number of shares of our commonstock that are outstanding as of June 22, 2007, our officers and directorsbeneficially own approximately 36.26% of our outstanding common stock. Such a high level of ownership by such persons may have a significant effect indelaying, deferring or preventing any potential change in control of theCompany.  Additionally, as a result of their high level of ownership, ourofficers and directors might be able to strongly influence the actions of theCompany’s board of directors, and the outcome of actions brought to ourstockholders for approval. Such a high level of ownership may adversely affectthe voting and other rights of our stockholders.

**ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

On March 12, 2007, we completed the first closing of aprivate placement, which we refer to as the Private Placement, of an aggregateof 24,729,060 shares of unregistered common stock of Robcor at a price of $0.81per share, together with three-year warrants to buy 25% of the number of sharesof common stock of Robcor purchased at a cash exercise price of $1.35 pershare, referred to herein as the Investor Warrants, raising approximately $20.0million of gross proceeds.

On April 6, 2007, we completed the second and finalclosing of the Private Placement of an aggregate of 16,060,203 unregisteredshares of common stock of Robcor at a price of $0.81 per share, together withInvestor Warrants, raising an additional $13 million of gross proceeds,bringing the total Private Placement gross proceeds to $33 million.

No underwriters were used for the sale of commonstock.  The securities were sold pursuant to an exemption fromregistration under Rule 506 of Regulation D.

We filed a “resale” registration statement with theSEC covering all shares of unregistered common stock issued in connection withthe Private Placement, including shares of common stock into which certainwarrants are exercisable, and the “resale” registration statement was declaredeffective by the SEC on July 20 , 2007. We will use our best efforts to have such “resale” registrationstatement maintain its effectiveness until such time as all securitiesregistered under the registration statement have been sold or are otherwiseable to be sold under Rule 144 of the Securities Act without regard to volumelimitations, whichever is earlier.  We cannot provide assurance that wewill be able to obtain or maintain such effective registration statement.

**ITEM 3.    DEFAULTS UPON SENIOR SECURITIES**

Not applicable.

**ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

On May 3, 2007, the holders of a majority(approximately 61.1%) of the 78,668,675 shares of Robcor common stockoutstanding as of May 3, 2007 executed a written consent approving theReincorporation Merger described earlier. The Reincorporation Merger was deemed effective on June 15, 2007 andresulted in:

·       thechange in our state of incorporation from Florida to Delaware via the merger ofRobcor into Redpoint, pursuant to the Agreement and Plan of Merger, dated May3, 2007, between Redpoint and Robcor, which means that we, as the survivingcorporation in the Reincorporation Merger, are now governed by the laws of theState of Delaware;

·       thechange of Robcor’s duly registered name from “Robcor Properties, Inc.” to “RedpointBio Corporation”;

·       Redpoint’sThird Amended and Restated Certificate of Incorporation becoming thecertificate of incorporation of the surviving corporation, under which theauthorized number of shares of common stock was decreased from 1,000,000,000shares of common stock, no par value per share, as authorized under Robcor’sarticles of 

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incorporation, to150,000,000 shares of common stock, $0.0001 par value per share, and theauthorized number of shares of preferred stock was decreased from 20,000,000shares of preferred stock, no par value per share, as authorized under Robcor’sarticles of incorporation, to 10,000,000 shares of preferred stock, $0.0001 parvalue per share;

·       Redpoint’sAmended and Restated By-laws became our by-laws as the surviving corporation;and

·       a4,132,705 share increase to the maximum number of shares of common stockreserved for issuance under our 2007 Omnibus Equity Compensation Plan, from13,511,562 to 17,644,267 shares.

On May 23, 2007, a Definitive Information Statement onSchedule 14C, referred to herein as the Information Statement, was filed withthe SEC and mailed to all holders of Robcor common stock outstanding as ofApril 9, 2007.  The Information Statementwas distributed for informational purposes only and was not distributed forpurposes of soliciting the consent or vote of any holder of Robcor commonstock.

**ITEM 6.    EXHIBITS**
| Exhibit  No. | ** ** | ** **                                                                                                                                                                                                                                                                    |
|--------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                                                                                                                          |
| 3.1          |       | Third Amended and Restated Certificate of  Incorporation of Redpoint Bio Corporation (Incorporated by reference to  Exhibit 3.1 of the Registrant’s Amendment No. 1 to the Registration Statement  on Form S-1 (Registration No. 333-143507) filed on July 2, 2007).     |
|         |       |                                                                                                                                                                                                                                                                          |
| 3.2          |       | Amended and Restated By-laws of Redpoint Bio  Corporation (Incorporated by reference to Exhibit C of the Registrant’s Definitive  Information Statement on Schedule 14C filed with the Commission on May 3,  2007).                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.1         |       | Separation Agreement and General Release, dated as  of April 25, 2007, by and between Redpoint Bio Corporation and Susan Welsh  (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on  Form 8-K filed on April 26, 2007).                        |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.2         |       | Agreement and Plan of Merger, dated May 3, 2007,  between Robcor Properties, Inc. and Redpoint Bio Corporation (Incorporated by  reference to Exhibit A of the Registrant’s Definitive Information Statement  on Schedule 14C filed with the Commission on May 3, 2007). |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.3         |       | Redpoint Bio Corporation 2007 Omnibus Equity  Compensation Plan (Incorporated by reference to Exhibit D of the Registrant’s  Definitive Information Statement on Schedule 14C filed with the Commission on  March 16, 2007).                                             |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.4         |       | Form of Subscription Agreement, by and between  Robcor Properties, Inc. and certain accredited investors (Incorporated by  reference to Exhibit 10.3 of the Current Report on Form 8-K filed on April 9,  2007).                                                              |
|         |       |                                                                                                                                                                                                                                                                          |
| 31.1         |       | Certification of Chief Executive Officer pursuant to  Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 31.2         |       | Certification of Chief Financial Officer pursuant to  Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 32.1         |       | Certifications of Chief Executive Officer and Chief  Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (furnished herewith).                                                                                                                       |

 

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

 
|                 | REDPOINT BIO CORPORATION                         |
|-----------------|--------------------------------------------------|
|            |                                             |
| August 14, 2007 | By:                                              | /s/ F.  Raymond Salemme |
|            | F. Raymond Salemme                               |
|            | President and Chief Executive Officer            |
|            | (Principal Executive Officer)                    |
|            |                                             |
|            |                                             |
| August 14, 2007 | By:                                              | /s/ Scott M.  Horvitz |
|            | Scott M. Horvitz                                 |
|            | Chief Financial Officer, Treasurer and Secretary |
|            | (Principal Financial and Accounting Officer)     |
|            |                                             |

 

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**EXHIBITINDEX**

 
| Exhibit  No. | ** ** | ** **                                                                                                                                                                                                                                                                    |
|--------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                                                                                                                          |
| 3.1          |       | Third Amended and Restated Certificate of  Incorporation of Redpoint Bio Corporation (Incorporated by reference to  Exhibit 3.1 of the Registrant’s Amendment No. 1 to the Registration Statement  on Form S-1 (Registration No. 333-143507) filed on July 2, 2007).     |
|         |       |                                                                                                                                                                                                                                                                          |
| 3.2          |       | Amended and Restated By-laws of Redpoint Bio  Corporation (Incorporated by reference to Exhibit C of the Registrant’s  Definitive Information Statement on Schedule 14C filed with the Commission on  May 3, 2007).                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.1         |       | Separation Agreement and General Release, dated as  of April 25, 2007, by and between Redpoint Bio Corporation and Susan Welsh  (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on  Form 8-K filed on April 26, 2007).                        |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.2         |       | Agreement and Plan of Merger, dated May 3, 2007,  between Robcor Properties, Inc. and Redpoint Bio Corporation (Incorporated by  reference to Exhibit A of the Registrant’s Definitive Information Statement  on Schedule 14C filed with the Commission on May 3, 2007). |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.3         |       | Redpoint Bio Corporation 2007 Omnibus Equity  Compensation Plan (Incorporated by reference to Exhibit D of the Registrant’s  Definitive Information Statement on Schedule 14C filed with the Commission on  March 16, 2007).                                             |
|         |       |                                                                                                                                                                                                                                                                          |
| 10.4         |       | Form of Subscription Agreement, by and between  Robcor Properties, Inc. and certain accredited investors (Incorporated by  reference to Exhibit 10.3 of the Current Report on Form 8-K filed on April 9,  2007).                                                              |
|         |       |                                                                                                                                                                                                                                                                          |
| 31.1         |       | Certification of Chief Executive Officer pursuant to  Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 31.2         |       | Certification of Chief Financial Officer pursuant to  Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                      |
|         |       |                                                                                                                                                                                                                                                                          |
| 32.1         |       | Certifications of Chief Executive Officer and Chief  Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (furnished herewith).                                                                                                                       |

 

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