**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 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 March 31, 2008




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   001-33426





NEURO-HITECH,
                INC.**(Exact
                name of Registrant as Specified in its Charter)**Delaware
            
            20-4121393**(State
                or Other Jurisdiction of**
            
            **(I.R.S.
                Employer****Incorporation
                or Organization)**
            
            **Identification
                No.)**One
                Penn Plaza, Suite 1503, New York, NY 10019**(Address
                of Principal Executive Offices)**(212)
                594-1215**(Issuer’s
                Telephone Number, Including Area Code)**(Former
                Name, Former Address and Former Fiscal Year
              If
                Changed Since Last Report)




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large Accelerated Filero
              Accelerated Filero
              Non-Accelerated Filero
              Smaller Reporting Companyx(Do Not Check if a smaller reporting company)


Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


o Yes x No





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: May 5, 2008





Common
      Stock   14,004,853









**PART
      I. FINANCIAL INFORMATION**





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




**Neuro-Hitech,
                Inc. and Subsidiaries****Consolidated
                Balance Sheets**




**March 31, 2008****(Unaudited**)****
            
            **December 31, 2007****ASSETS:**Current
                Assets:Cash
                and Cash Equivalents
            
            $
            4,165,383
            
            $
            6,137,592Accounts
                Receivable
            
            
            164,250
            
            
            63,300Inventory
            
            
            25,008
            
            
            33,821Prepaid
                Expenses
            
            
            103,943
            
            
            11,861Total
                Current Assets
            
            
            4,458,584
            
            
            6,246,574Property
                and Equipment, net
            
            
            3,501
            
            
            4,248Other
                Assets:Security
                Deposit
            
            
            13,226
            
            
            13,226**Total
                Assets**
            
            **$**
            **4,475,311**
            
            **$**
            **6,264,048****LIABILITIES
                AND STOCKHOLDERS' EQUITY:**Current
                Liabilities:Accounts
                Payable and Accrued Expenses
            
            $
            738,478
            
            $
            1,000,399Total
                Current Liabilities
            
            
            738,478
            
            
            1,000,399Stockholders'
                Equity:Common
                Stock $.001 Par Value, Authorized: 44,999,900, Issued and Outstanding:
                14,004,853
            
            
            14,005
            
            
            14,005Common
                Stock - Class A $.001 Par Value, Authorized: 100, Issued and Outstanding:
                0
            
            
            -
            
            
            -Additional
                Paid-in Capital
            
            
            39,781,967
            
            
            39,270,951Deferred
                Compensation
            
            
            (1,158,785
            )
            
            (1,190,654
            )Accumulated
                Deficit
            
            
            (34,900,354
            )
            
            (32,830,653
            )Total
                Stockholders' Equity
            
            
            3,736,833
            
            
            5,263,649**Total
                Liabilities and Stockholders' Equity**
            
            **$**
            **4,475,311**
            
            **$**
            **6,264,048**




The
                accompanying notes are an integral part of these consolidated financial
                statements





2




**Neuro-Hitech,
        Inc. and Subsidiaries**


**Consolidated
        Statements of Operations**
 **(Unaudited)**




**For
                the Three Months Ended March 31,****2008**
            
            **2007******Sales
            
            
            
            
            $
            190,827
            
            $
            194,400Cost
                of Goods Sold
            
            
            
            
            
            99,357
            
            
            100,555Gross
                Profit
            
            
            
            
            
            91,470
            
            
            93,845Operating
                Expenses:Selling,
                General and Administrative Expenses
            
            
            
            
            
            556,411
            
            
            662,322Research
                and Development Costs
            
            
            
            
            
            1,100,664
            
            
            735,781Share-Based
                Compensation
            
            
            
            
            
            511,017
            
            
            188,732Amortization
                of Deferred Compensation
            
            
            
            
            
            31,869
            
            
            15,935Total
                Operating Expenses
            
            
            
            
            
            2,199,961
            
            
            1,602,770(Loss)
                from Operations
            
            
            
            
            
            (2,108,491
            )
            
            (1,508,925
            )Other
                Income:Interest
                and Dividend Income
            
            
            
            
            
            38,788
            
            
            61,206Total
                Other Income
            
            
            
            
            
            38,788
            
            
            61,206(Loss)
                Before Provision for IncomeTaxes
            
            
            
            
            
            (2,069,703
            )
            
            (1,447,719
            )Provision
                for Income Taxes
            
            
            
            
            
            -
            
            
            -**Net
                (Loss)**
            
            
            
            
            **$**
            **(2,069,703**
            **)**
            **$**
            **(1,447,719**
            **)****Basic
                and Diluted (Loss) per Weighted Average Common Shares
                Outstanding**
            
            
            
            
            **$**
            **(0.15**
            **)**
            **$**
            **(0.12**
            **)****Weighted
                Average - Common Shares Outstanding**
            
            
            
            
            
            **14,004,853**
            
            
            **12,118,777**The
                accompanying notes are an integral part of these consolidated financial
                statements





3






**Neuro-Hitech,
        Inc. and Subsidiaries**
 **Consolidated
          Statements of Cash Flows**
 **(Unaudited)**


**For
                The Three Months EndedYears Ended****March
                31,****2008**
            
            **2007**Cash
                flows from operating activities:Net
                (Loss)
            
            $
            (2,069,703
            )
            $
            (1,447,719
            )Adjustments
                to Reconcile Net (Loss) to Net Cash (Used In) Operating
                Activities:Share-Based
                Compensation Expense
            
            
            511,017
            
            
            188,732Amortization
                of Deferred Compensation
            
            
            31,869
            
            
            15,935Depreciation
                Expense
            
            
            747
            
            
            749Change
                in operating assets and liabilities:(Increase)
                Decrease in Assets:Accounts
                Receivable
            
            
            (100,951
            )
            
            (282,674
            )Inventory
            
            
            8,812
            
            
            (9,920
            )Prepaid
                Expenses
            
            
            (92,081
            )
            
            (128,904
            )Deferred
                Charges
            
            
            -
            
            
            11,910Increase
                (Decrease) in Liabilities:Accounts
                Payable and Accrued Expenses
            
            
            (261,919
            )
            
            (227,339
            )Net
                cash (used in) Operating activities
            
            
            (1,972,209
            )
            
            (1,879,230
            )Cash
                flows from investing activities:Net
                cash (used in) Investing activities
            
            
            -
            
            
            -Cash
                flows from financing activities:Net
                Proceeds from Private Placement Offering of Common Stock
            
            
            -
            
            
            2,220,755Proceeds
                from the Exercise of Stock Options
            
            
            -
            
            
            15,276Net
                cash provided by Financing activities
            
            
            -
            
            
            2,236,031Net
                (decrease) increase in cash and cash equivalents
            
            
            (1,972,209
            )
            
            356,801Cash
                and cash equivalents, beginning of period
            
            
            6,137,592
            
            
            4,705,195Cash
                and cash equivalents, end of period
            
            $
            4,165,383
            
            $
            5,061,996**Cash
                Paid For:**Income
                Taxes
            
            $
            -
            
            $
            -Interest
            
            $
            -
            
            $
            -





**Supplemental
        Disclosure of Non-Cash Investing and Financing
        Activities:**
  During
        the three months ended March 31, 2008, options held by the Company's executive
        officers and board of directors vested as to 181,342 and 124,791 shares of
        the
        Company's common stock. The Company recognized an aggregate compensation
        cost of
        $511,017 and $188,732 for the vesting of the aforementioned options for the
        three months ended March 31, 2008 and 2007.
 
 The
        Company entered into a service agreement and issued 100,000 warrants measured
        at
        fair value as of February 14, 2007, the date the service agreement was ratified
        by the Company's board of directors. The fair value of these warrants
        approximated $255,000 and was recognized as Deferred Compensation in the
        Stockholders' Equity section of the Balance Sheet. During the first quarter
        of
        2008 and 2007, the Company ratably recognized approximately $32,000 and $16,000
        of expenses for the amortization of Deferred Compensation in accordance with
        the
        service term.
 
 In
        connection with a private placement offering of the Company’s securities that
        occurred between January through March 15, 2007, the Company entered into
        a
        stock subscription agreement for the issuance of 30,000 shares of common
        stock
        and share purchase warrants for an additional 15,000 shares. The transaction
        totaled $144,525 and was fully collected by the Company in April
        2007.
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements





4




NEURO-HITECH,
        INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


[1]
      Nature of Operations





Neuro-Hitech,
      Inc. (the “Company” or “Neuro-Hitech”) is an early stage pharmaceutical company
      focused on developing innovative drugs for the treatment of degenerative
      neurological diseases. The Company’s most advanced product candidate, Huperzine
      A, recently completed a Phase II clinical trial in the U.S. which tested
      Huperzine A for efficacy and safety in the treatment of mild to moderate
      Alzheimer’s disease. The Company has also studied the transdermal delivery of
      Huperzine A. The Company believes that Huperzine A can effectively be delivered
      transdermally because of its low dosage requirement and low molecular weight.





After
      receiving the results of the Phase II clinical trial of Huperzine A, the Company
      conducted a detailed review of those results. Based on its review, the Company
      believes that there is substantial support within the results that Huperzine
      A
      can become a safe and effective treatment for Alzheimer’s disease. In order to
      validate the current information on the compound and review the Company’s
      analysis of the results, in March 2008 the Company entered into an
      agreement with Numoda Corporation (“Numoda”) pursuant to which Numoda will
      review the results and will provide a report to the Company on its findings.





In
      view
      of the results of the Phase II clinical trial, the Company is currently
      reviewing its options for moving forward with its business, including the
      potential development of collaborative, joint and strategic alliances and
      licensing arrangements with one or more pharmaceutical companies for the further
      development of Huperzine A and its pipeline of other compounds. Additionally,
      the Company is evaluating merger and/or acquisition opportunities.





In
      addition to Huperzine A, the Company has worked on two pre-clinical development
      programs: one for second generation anti-amyloid compounds or disease modifying
      drugs for Alzheimer’s disease and, secondly, development of a series of
      compounds targeted to treat and prevent epilepsy. The Company’s efforts however,
      have principally focused on its primary product.





The
      Company has imported and sold inventories of natural Huperzine to vitamin and
      supplement suppliers to generate revenues. However, the majority of the
      Company’s operations to date have been funded through Company’s private
      placement of equity securities.





The
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and with the instructions to Form 10-Q and
      Article 8-03 of Regulation S-X. Accordingly, they do not include all of the
      information and footnotes required by accounting principles generally accepted
      in the United States of America for complete financial statements. In the
      opinion of management, all adjustments (consisting of normal recurring accruals)
      considered necessary in order to make the interim financials not misleading
      have
      been included and all such adjustments are of normal recurring nature. The
      operating results for the three months ended March 31, 2008 are not necessarily
      indicative of the results that can be expected for the year ending December
      31,
      2008.





Liquidity





The
      accompanying consolidated financial statements have been prepared on a
      going-concern basis, which contemplates the continuation of operations,
      realization of assets, and liquidation of liabilities in the ordinary course
      of
      business. For the three months ending March 31, 2008, the Company generated
      a
      net loss of approximately $2.1 million. As of March 31, 2008, the Company has
      funded its working capital requirements primarily through the sale of equity
      to
      founders, institutional and individual investors. Management intends to fund
      future operations through entrance into the commercial marketplace as well
      as
      additional equity or debt offerings.





There
      can
      be no assurance that the Company will be successful in obtaining financing
      at
      the level needed for long-term operations or on terms acceptable to the Company.
      In addition, there can be no assurance, assuming the Company is successful
      in
      commercializing its product, realizing revenues and obtaining new equity or
      debt
      offerings that the Company will achieve profitability or positive operating
      cash
      flow. The Company is incurring significant losses, which give rise to questions
      about its ability to continue as a going concern. The accompanying financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.




5


NEURO-HITECH,
        INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


[2]
      Summary of Significant Accounting Policies




Principles
      of Consolidation





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiaries. All inter-company balances and transactions have
      been
      eliminated. Approximately $191,000 and $4,475,000 of consolidated revenue and
      assets, after eliminations, respectively, are based upon the accounts of the
      parent and $0 and $0 of consolidated revenue and assets, after eliminations
      respectively, of the subsidiaries.





Cash
      and
      Cash Equivalents




Cash
      and
      cash equivalents consist of highly liquid financial instruments with an original
      maturity of three months or less from the date acquired.





Revenue
      Recognition





Revenues
      from product sales are recognized when products are shipped to the customer
      and
      risk of loss and transfer of title has passed over to the customer.




Research
      and Development Costs




All
      research and development costs are expensed as incurred and include costs paid
      to sponsored third parties to perform research and conduct clinical
      trials.





Share-Based
      Compensation





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123(R), (“SFAS No. 123(R)”), “Share-Based Payment,” which requires
      the Company to record as an expense in its financial statements the fair value
      of all stock-based compensation awards. The Company currently utilizes the
      Black-Scholes option pricing model to measure the fair value of stock options
      granted to employees using the “modified prospective” method. Under the
“modified prospective” method, compensation cost is recognized in the financial
      statements beginning with the effective date, based on the requirements of
      SFAS
      No. 123(R) for all share-based payments granted after that date, and based
      on
      the requirements of SFAS No. 123(R) for all unvested awards granted prior to
      the
      effective date of SFAS No. 123(R).





The
      Company recognized an aggregate share-based compensation cost of $511,017 for
      the three months ended March 31, 2008 and $188,732 for the three months ended
      March 31, 2007, in accordance with the vesting of the aforementioned options
      granted during such interim periods. ****




[3]
      Common Stock





Private
      Placement Offerings





Between
      January 2007 and March 2007, the Company received total gross proceeds of
      $2,379,005 from the private placement with accredited investors of an aggregate
      of 464,196 shares of the Company’s common stock and warrants to purchase 232,098
      shares of the Company’s common stock. The common stock was sold in the offering
      at $5.125 per share and the exercise price of the warrants was $7.00 per share.
      The warrants expire on November 29, 2011.





Option
      Exercises





In
      addition to the aforementioned private placements, the Company received
      approximately $15,000 from the exercise of stock options to purchase 4,020
      shares during the three months ended March 31, 2007.  There were no options
      exercised during the first quarter of 2008.





6




NEURO-HITECH,
        INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


[4]
      Research and License Agreements





Georgetown
      University




In
      December 2003, the Company entered into a clinical research agreement, which
      was
      amended in November 2005 and October 2007, with Georgetown pursuant to which
      Georgetown provided the Company with Phase II research. The costs associated
      with this agreement totaled $5,336,842 and were partially funded by the National
      Institutes of Health. The Company’s portion of the total cost is $4,036,842, and
      paid in installments upon the achievement of certain milestones.





For
      the
      three months ended March 31, 2008 and 2007, the payments made by the Company
      to
      Georgetown under the terms of the clinical research agreement were approximately $ 529,400
      and $250,000, respectively, and the total payments made by the Company to
      Georgetown since inception of the agreement were approximately $3,665,697.
      These
      costs are reflected in the Research and Development caption of the Statement
      of
      Operations.





The
      Company expects to make additional payments in 2008 to Georgetown of $371,145
      related to an open label extension which extension will expire in June
      2008.





Org
      Syn
      Laboratory, Inc.





On
      February 1, 2006, the Company entered into an exclusive development agreement
      with Org Syn for the development of synthetic Huperzine A. Org Syn received
      an
      aggregate of $175,894 upon the execution of the Agreement. For the three months
      ended March 31, 2008 and 2007, the payments made by the Company to Org Syn
      were
      approximately $0 and $176,000, respectively. These payments are reflected in
      the
      Research and Development caption of the Statement of Operations.





Xel
      Herbaceuticals, Inc.





On
      March
      15, 2006, the Company entered into a development agreement with Xel
      Herbaceuticals, Inc. (“XEL”) for the development of the Huperzine A Transdermal
      Delivery System (“Delivery Product”). Under the terms of the agreement, the
      Company paid XEL a $250,000 fee upon the execution of the agreement and paid
      XEL
      $92,500 per month during the development of the Delivery Product, including
      the
      first six months of 2007. The Delivery Product was completed in July 2007.
      The
      $250,000 signing fee paid upon the execution of the agreement was amortized
      ratably over the 16 month term of the agreement.




If
      the
      Company elects to exercise its right to license the Delivery Product in the
      U.S.
      and Canada (“North America”) and to develop the Delivery Product on its own, the
      Company will pay XEL an initial license fee of $400,000 and up to an aggregate
      of $2.4 million in additional payments upon the achievement of certain
      milestones, including completion of a prototype, initial submission to the
      Food
      and Drug Administration (“FDA”), completion of phases of clinical studies and
      completion of the FDA submission and FDA approval. Similarly, if the Company
      elects to exercise its option to license the Delivery Product worldwide
      excluding China, Taiwan, Hong Kong, Macau and Singapore (“Worldwide”), and
      develop the Delivery Product on its own, the Company will pay XEL an additional
      initial license fee of $400,000 and up to an aggregate of $2.4 million in
      additional payments upon the achievement of comparable milestones. If XEL fails
      to obtain a U.S. or international patent, the corresponding license fee and
      milestone payments will be reduced by 50% until such time as XEL obtains such
      patent, at which time the unpaid 50% of all such milestone payments previously
      not made will be due. If the Company elects to exercise the licensing rights
      described above, the additional payments that the Company has made to XEL to
      further develop the Product would be applied toward the additional payments
      payable to XEL upon the achievement of certain milestones.





If
      the
      Company elects to exercise its right to license the Delivery Product in North
      America and to develop the Delivery Product with a third party, the Company
      will
      pay XEL 50% of any initial signing fees and milestone fees (excluding any
      research and development fees) paid by such third party. Similarly, in the
      event
      that the Company decides to exercise its option to license the Product Worldwide
      and to develop the Product with a third party, the Company will pay XEL 50%
      of
      any initial signing fees and milestone fees (excluding any research and
      development fees) paid by such third party. If XEL fails to obtain a U.S. or
      international patent, the percentage of the corresponding fees will be reduced
      to 25%. The Company will pay XEL 20% of any royalty payments received by the
      Company from third-party sublicensees, or if the Product is not protected by
      at
      least one patent, 10% of any royalty received by the Company from
      sublicensees.





7


NEURO-HITECH,
        INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)




If
      the
      Company elects not to exercise its right to license the Delivery Product and
      XEL
      elects to further develop the Delivery Product without the Company, XEL will
      be
      obligated to pay the Company 30% of any net profits realized up to a maximum
      of
      two times the amount paid by the Company to XEL during development, excluding
      the initial $250,000 signing fee. Upon such election, XEL will be entitled
      to
      full ownership of the intellectual property of the Delivery Product. If the
      Company elects to exercise its rights to license the Delivery Product in North
      America, but not Worldwide, XEL will have certain rights to obtain intellectual
      property protection in any country outside North America upon payment to the
      Company for such rights, such fees to be negotiated in good faith by the
      parties.





The
      Company will also be obligated to pay XEL royalty payments of between 7% and
      10%
      of net sales, with such royalty payments subject to reduction upon the
      expiration of the patent or the launch of a generic product in the applicable
      territory. If a patent has not been issued in either the U.S. or Canada, the
      royalty payments will be subject to reduced rates of between 3% and 5% of net
      sales. Royalty payments for sales in the Worldwide territory will be subject
      to
      good faith negotiations between the parties.





For
      the
      three months ended March 31, 2008 and 2007, the total payments made by the
      Company to XEL under this agreement were approximately $92,500 and $277,500,
      respectively, and are reflected in the Research and Development caption of
      the
      Statement of Operations.





Dalhousie
      License Agreements (PARTEQ)





As
      part
      of the acquisition of Q-RNA, the Company assumed exclusive License Agreements
      with PARTEQ Research and Development Innovations (“PARTEQ”), the technology
      licensing arm of Queens University, Kingston, Ontario, Canada.





The
      Exclusive Patent License Agreement with PARTEQ (the “Alzheimer’s Agreement”)
      grants the Company an exclusive worldwide license to all innovations and
      developments, including the patent applications and additional filings, related
      to specified patents related to research on Alzheimer’s disease. The Company
      made a one-time license fee of C$25,000 when it entered into the Alzheimer’s
      Agreement in 2005 and will be required to make quarterly royalty payments of
      3%
      of net sales of the licensed products (as such term is defined in Alzheimer’s
      Agreement), with a minimum annual royalty of C$10,000 for 2007, C$20,000 for
      2008, C$30,000 for 2009 and C$40,000 for 2010 and each subsequent calendar
      year.
      The Company is also obligated to make the following milestone payments:
      C$100,000 upon completion of a Phase I trial of a licensed product, C$250,000
      upon completion of a Phase II trial of a licensed product, and C$1,000,000
      upon
      the first FDA approval (as such term is defined in the Alzheimer’s Agreement).
      The Company also has the right to sub-license with the payment of 20% of all
      non-royalty sublicensing consideration.




Under
      the
      terms of the Alzheimer’s Agreement which was amended in early 2007, the Company
      will pay fixed annual fees of C$282,944.





The
      Exclusive Patent License Option Agreement with PARTEQ (the “Epilepsy Agreement”)
      grants the Company an option to acquire an exclusive worldwide license to all
      innovations and developments, including the patent applications and additional
      filings, related to specified patents related to research on Epilepsy. The
      Company made a non-refundable, non-creditable option payment of $10,000 when
      it
      entered into the Epilepsy Agreement in 2006. If the Company exercises its
      option, the Company will make a non-refundable, non-creditable license payment
      of C$17,500 at the time of such exercise. If the Company exercises its option,
      it will be required to make quarterly royalty payments of 3% of net sales of
      the
      licensed products (as such term is defined in Epilepsy Agreement), with a
      minimum annual royalty of C$10,000 through the second anniversary of the
      license, C$20,000 through the third anniversary of the license, C$30,000 through
      the fourth anniversary of the license and C$40,000 through the fifth anniversary
      of the license and each subsequent anniversary. If the Company exercises its
      option, the Company is also obligated to make the following milestone payments:
      C$100,000 upon completion of a Phase I trial of a licensed product, C$250,000
      upon completion of a Phase II trial of a licensed product, and C$1,000,000
      upon
      the first FDA approval (as such term is defined therein). If the Company
      exercises its option, the Company also has the right to sub-license with the
      payment of 20% of all non-royalty sublicensing consideration. ****





Under
      the
      terms of the Epilepsy Agreement which was amended in early 2007, the Company
      will pay fixed annual fees of C$150,800.





For
      the
      three months ended March 31, 2008 and 2007, the payments made by the Company
      to
      PARTEQ under these agreements have been approximately $121,000 and $135,000,
      respectively, and are reflected in the Research and Development caption of
      the
      Statement of Operations.





8




NEURO-HITECH,
        INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)




Numoda
      Corporation





On
      March
      3, 2008, the Company entered into an agreement with Numoda corporation
      (“Numoda”) pursuant to which Numoda will review the results of the Company’s
      recently completed Phase II clinical trial of Huperzine A. Under the terms
      of
      its agreement with Numoda, the Company made an initial payment to Numoda of
      $100,000. The Company will pay Numoda an additional $100,000 upon the delivery
      of their analysis. Deferred payments of up to $400,000 will be payable to Numoda
      (a “Deferred Payment”) if the Company enters into an agreement for the sale or
      license of the Company’s products, or an agreement to merge or sell the Company
      (each a “Transaction”). If the aggregate consideration paid to the Company in
      such a Transaction is $1,000,000 or less, the Deferred Payment will be $200,000.
      If the aggregate consideration paid to the Company in a Transaction is more
      than
      $1,000,000 but less than $5,000,000, the Deferred Payment will be $250,000.
      If
      the aggregate consideration paid to the Company in a Transaction is more than
      $5,000,000 but less than $10,000,000, the Deferred Payment will be $300,000.
      If
      the aggregate consideration paid to the Company in the Transaction is more
      than
      $10,000,000, the Deferred Payment will be $400,000. Additionally, the Company
      will be obligated to pay Numoda a fee equal to 3.5% of the aggregate
      consideration paid to the Company in a Transaction, provided that the
      Transaction is completed at any time during the term of the agreement, or prior
      to March 3, 2011, and Numoda has either introduced such party to the Company
      or
      materially assisted the Company in facilitating such a Transaction.





After
      completing its review and delivering a report of its findings to the Company,
      the Company will consider its options for moving forward and Numoda will assist
      the Company in interpreting and presenting the results to potential licensing
      partners, purchasers and/or acquisition or merger candidates.





The
      following chart estimates the fixed annual research and development costs of
      the
      Company, excluding any exercise of the option under the Epilepsy Agreement
      and
      any milestone payments to Numoda or XEL.





Year
              
              Amount2009
              
              $
              861,2952010
              
              
              20,0002011
              
              
              30,0002012
              
              
              40,000Total
              
              $
              951,295




[5]
      Recent Accounting Pronouncements





In
      March
      2008, the Financial Accounting Standards Board (FASB) issued FASB Statement
      No.
      161, Disclosures about Derivative Instruments and Hedging Activities. The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The company is currently evaluating the impact of
      adopting SFAS. No. 161 on its financial statements.





In
      May
      2008, the Financial Accounting Standards Board (FASB) issued Statement of
      Financial Accounting Standards (SFAS) No. 162, "The Hierarchy of Generally
      Accepted Accounting Principles." The new standard is intended to improve
      financial reporting by identifying a consistent framework, or hierarchy, for
      selecting accounting principles to be used in preparing financial statements
      that are presented in conformity with U.S. generally accepted accounting
      principles (GAAP) for non-governmental entities. We are currently evaluating
      the
      effects, if any, that SFAS No. 162 may have on our financial
      reporting.





9




**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**





**FORWARD-LOOKING
      STATEMENTS**




This
      Quarterly Report on Form 10-Q contains forward-looking statements (as defined
      in
      Section 27A of the Securities Act and Section 21E of the Exchange Act). To
      the
      extent that any statements made in this Report contains information that is
      not
      historical, these statements are essentially forward-looking. Forward-looking
      statements can be identified by the use of words such as “expects,” “plans”
“will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,”
“projects” and other words of similar meaning. These statements are subject to
      risks and uncertainties that cannot be predicted or quantified and consequently,
      actual results may differ materially from those expressed or implied by such
      forward-looking statements. Such risks and uncertainties include those outlined
      in “Risk Factors” found within our Annual Report on Form 10-KSB and include,
      without limitation, the Company’s limited cash and ability to raise capital to
      finance the growth of the Company’s operations, the ability of the Company to
      develop its products and obtain necessary governmental approvals, the Company’s
      ability to protect its proprietary information, the Company’s ability to attract
      or retain qualified personnel, including scientific and technical personnel,
      and
      other risks detailed from time to time in the Company’s filings with the SEC, or
      otherwise.





All
      references to the “Company” refer to Neuro-Hitech, Inc. and its
      subsidiaries.




THE
      FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED
      IN
      THE FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS QUARTERLY
      REPORT ON FORM 10-Q .




**History**




The
      Company is an early stage pharmaceutical company focused on developing
      innovative drugs for the treatment of degenerative neurological diseases. The
      Company’s most advanced product candidate, Huperzine A, recently completed a
      Phase II clinical trial in the U.S. which tested Huperzine A for efficacy and
      safety in the treatment of mild to moderate Alzheimer’s disease.





The
      Phase
      II clinical trial compared the safety, tolerability and efficacy of either
      200
      or 400 micrograms of Huperzine A on cognitive function, activities of daily
      living and behavior. Results showed that there was no statistical difference
      in
      the mean change AD Assessment Scale-Cognitive (ADAS-Cog) scores, the primary
      endpoint, after 16 weeks treatment with Huperzine A 200 micrograms bid compared
      to placebo (p=0.81). However, data demonstrated that the higher dose tested,
      400
      micrograms bid, showed cognitive enhancement on the ADAS-Cog versus placebo.
      The
      maximum cognitive improvement was observed at week 11 of treatment (p=0.001).
      Over 16 weeks Huperzine A (400 micrograms bid) improved cognition compared
      to
      placebo (p=0.03) and there was a trend to cognitive improvement over placebo
      at
      week 16 (p=0.069). In this clinical trial, there was an unexpected improvement
      in cognition in the placebo group at week 16 versus baseline. On other secondary
      endpoints, including clinical global impression of change (ADCS-CGIC) and the
      Neuropsychiatric Inventory (NPI) there was no statistical difference between
      placebo and either 200 or 400 micrograms bid after four months treatment.
      However, there was a trend to improvement on activities of daily living
      (ADCS-ADL) with 400 micrograms bid (p=0.077). Huperzine A was safe and well
      tolerated. Overall the incidence of adverse events during the study was similar
      between both doses of Huperzine A and placebo. Following completion of the
      double-blind part of this clinical trial, subjects were invited to receive
      Huperzine A treatment in an open-label fashion for up to one year: 82% of
      subjects accepted this invitation.





After
      receiving the results of the Phase II clinical trial of Huperzine A, the Company
      conducted a detailed review of those results. Based on its review, the Company
      believes that there is substantial support within the results that Huperzine
      A
      can become a safe and effective treatment for Alzheimer’s disease. In order to
      validate the current information on the compound and review the Company’s
      analysis of the results, in March 2008 the Company entered into an
      agreement with Numoda Corporation (“Numoda”) pursuant to which Numoda will
      review the results and will provide a report to the Company on its findings.
      The
      Company also expects that Numoda will assist the Company in interpreting and
      presenting the results of the Phase II clinical trial to potential partners,
      licensees and merger or acquisition candidates. In view of the results of the
      Phase II clinical trial, the Company is currently reviewing its options for
      moving forward with its business, including the potential development of
      collaborative, joint and strategic alliances and licensing arrangements with
      one
      or more pharmaceutical companies for the further development of Huperzine A
      and
      its pipeline of other compounds. Additionally, the Company is evaluating merger
      and/or acquisition opportunities.





The
      Company has also studied the transdermal delivery of Huperzine A. The Company
      believes that Huperzine A can effectively be delivered transdermally because
      of
      its low dosage requirement and low molecular weight. The Company believes that
      a
      transdermal patch could be a better way to deliver Huperzine A because the
      patch
      may provide the drug for transdermal delivery for up to between three and five
      days while avoiding the gastrointestinal tract. Although the Company initially
      expected to begin Phase I clinical trials in the first quarter of 2008, the
      Company has elected to postpone any decision or expenditures related to such
      a
      trial until after Numoda has delivered its report and the Company has considered
      its options.




10




Worldwide
      research thus far suggests that, in addition to Alzheimer’s Disease, Huperzine A
      may be effective in treating other dementias and myasthenia gravis. Also,
      research suggests that it has potential neuroprotective properties that may
      render it useful as a protection against neurotoxins, and it has an anti-oxidant
      effect.





In
      addition to Huperzine A, the Company has worked on two pre-clinical development
      programs: one for second generation anti-amyloid compounds or disease modifying
      drugs for Alzheimer’s disease and, secondly, development of a series of
      compounds targeted to treat and prevent epilepsy. The Company’s efforts however,
      have principally focused on its primary product.





The
      Company has imported and sold inventories of natural Huperzine to vitamin and
      supplement suppliers to generate revenues. However, the majority of the
      Company’s operations to date have been funded through Company’s private
      placement of equity securities.




**Results
      of Operations**





In
      view
      of the results of the Phase II clinical trial, the Company is currently
      reviewing its options for moving forward with its business, including the
      potential development of collaborative, joint and strategic alliances and
      licensing arrangements with one or more pharmaceutical companies for the further
      development of Huperzine A and its pipeline of other compounds. Additionally,
      the Company is evaluating merger and/or acquisition opportunities.





The
      following discussion provides comparisons of the Company’s results of operations
      for the quarter ended March 31, 2008 with the quarter ended March 31, 2007.





The
      Company had revenues from operations of $190,827 for the quarter ended March
      31,
      2008, a 1.8% decrease from the $194,400 in revenue achieved for the quarter
      ended March 31, 2007. The decrease in revenue was the result of a decrease
      in
      product sales to the Company’s sole customer.





Cost
      of
      goods sold as a percentage of the Company’s revenue was 52.0% for the quarter
      ended March 31, 2008, compared with 51.7% for the quarter ended March 31,
      2007.





The
      Company’s total selling, general and administrative expenses for the quarter
      ended March 31, 2008 were $556,411, a 16.0% decrease from $662,322 for the
      quarter ended March 31, 2007. This decrease was the result of the implementation
      of certain reductions following the Company’s receipt of the Phase II clinical
      trial for Huperzine A.





The
      Company’s research and development costs for the quarter ended March 31, 2008
      was $1,100,664, an increase of 49.6% from $735,781 for the quarter ended March
      31, 2007. The increase in research and development expenses is attributable
      to
      an increase in the payments made to Georgetown related to the expansion in
      the
      size of the Phase II clinical trial and an expansion of the Company’s clinical
      development portfolio for Huperzine A and preclinical research in compounds
      acquired from Q-RNA.





The
      Company’s share based compensation costs increased to $511,017 for the quarter
      ended March 31, 2008 from $188,732 for the quarter ended March 31, 2007, an
      increase of 170.8%. The increase in share based compensation expenses is
      attributable to stock options and warrants granted to employees, directors,
      and
      advisors during the second half of 2007.





In
      December 2003, the Company entered into a clinical research agreement, which
      was
      amended in November 2005 and October 2007, with Georgetown pursuant to which
      Georgetown will provide the Company with Phase II research on Huperzine A.
      The
      costs associated with this agreement originally totaled $3,146,667 and was
      partially funded by the National Institutes of Health. The Company’s portion of
      the total cost was $1,846,667, payable in installments upon the achievement
      of
      certain milestones. On December 8, 2006, the Company announced the expansion
      in
      the size of the Phase II clinical trial by 60 participants, an increase of
      40%.
      The Company’s portion of the total cost increased by an additional $2,190,175
      and is payable in installments. For the quarters ended March 31, 2008 and 2007,
      the Company made payments to Georgetown of $529,400 and $250,000, respectively.
      These costs are reflected in the Research and Development caption of the
      Statement of Operations.





On
      February 1, 2006, the Company entered into an exclusive development agreement
      with Org Syn for the development by Org Syn of synthetic Huperzine A, in
      accordance with the terms of the Agreement. Org Syn received an aggregate of
      $175,894 upon the execution of the Agreement. For the quarters ended March
      31,
      2008 and 2007, the Company made payments to Org Syn of $0 and $175,894,
      respectively. These payments are reflected in the Research and Development
      caption of the Statement of Operations.




11




For
      the
      quarters ended March 31, 2008 and 2007, the Company made payments to XEL of
      $92,500 and $277,500, respectively. These payments are reflected in the Research
      and Development caption of the Statement of Operations. The decrease is
      attributable to the Company’s implementation of certain cost reductions
      following the receipt of the results of the Phase II clinical trial of Huperzine
      A, including the delay of certain expenditures relating to the study of the
      transdermal delivery system of Huperzine A.





As
      part
      of the acquisition of Q-RNA, the Company assumed exclusive license agreements
      with PARTEQ. Under the terms of the exclusive PARTEQ Licensing Agreement the
      Company made an initial one-time license fee of C$25,000 and since January
      1,
      2008 has been obligated to pay fixed annual fees of C$283,000 for the
      Alzheimer’s research in equal quarterly installments. The Company may also be
      required to make quarterly royalty payments of 3% of net sales of the licensed
      products, with a minimum annual royalty of C$10,000 for 2007, C$20,000 for
      2008,
      C$30,000 for 2009 and C$40,000 for 2010 and each subsequent calendar year.
      Until
      such time as the Company has a licensed product, the Company will not have
      to
      make any quarterly payments. The Company is also obligated to make the following
      milestone payments: C$100,000 upon completion of a Phase I trial of a licensed
      product, C$250,000 upon completion of a Phase II trial of a licensed product,
      and C$1,000,000 upon the first FDA approval (as such term is defined in the
      PARTEQ Licensing Agreement). The Company does not currently anticipate having
      a
      licensed product in the near term. The Company also has the right to sub-license
      with the payment of 20% of all non-royalty sublicensing
      consideration.





Under
      the
      terms of the Exclusive Patent License Option Agreement with PARTEQ (the
“Epilepsy Agreement”) grants the Company a three-year option to acquire an
      exclusive worldwide license to all innovations and developments, including
      the
      patent applications and additional filings, related to specified patents for
      research on Epilepsy. The Company made a non-refundable, non-creditable option
      payment of $10,000 when it entered into the Epilepsy Agreement in 2006. The
      Company made an additional payment of $45,000 to PARTEQ in the year ended
      December 31, 2007 for expenses that should have been paid by Q-RNA in the year
      ended December 31, 2005. The Company also began to pay fixed annual fees of
      C$150,800 in quarterly installments of C$37,700 beginning on March 1, 2008.
      If
      the Company exercises its option, the Company will make a non-refundable,
      non-creditable license payment of C$17,500 at the time of such exercise. If
      the
      Company exercises its option, it will be required to make quarterly royalty
      payments of 3% of net sales of the licensed products (as such term is defined
      in
      Epilepsy Agreement), with a minimum annual royalty of C$10,000 through the
      second anniversary of the license, C$20,000 through the third anniversary of
      the
      license, C$30,000 through the fourth anniversary of the license and C$40,000
      through the fifth anniversary of the license and each subsequent anniversary.
      If
      the Company exercises its option, it is also obligated to make the following
      milestone payments: C$100,000 upon completion of a Phase I trial of a licensed
      product, C$250,000 upon completion of a Phase II trial of a licensed product,
      and C$1,000,000 upon the first FDA approval (as such term is defined therein).
      If the Company exercises its option, the Company also has the right to
      sub-license with the payment of 20% of all non-royalty sublicensing
      consideration.





For
      the
      quarters ended March 31, 2008 and 2007, the payments made by the Company to
      PARTEQ under these agreements have been approximately $121,000 and $135,000,
      respectively.




The
      Company invests any cash and cash equivalents not used for working capital
      in
      short-term, interest-bearing, investment-grade securities or accounts. In the
      three months ended March 31, 2008, the Company generated $38,788 from interest
      and dividend income, compared to $61,206 generated in the three months ended
      March 31, 2007. The decrease is attributable partly to a decrease in the balance
      of the Company’s cash and cash equivalents during the current three month period
      and a decrease in the rate of interest paid on the Company’s cash and cash
      equivalents.





**Liquidity
      and Capital Resources**




The
      Company has generated limited revenue from operations to date, and expects
      to
      continue generating limited operating revenue from the sale of natural
      Huperzine. Substantially all of the Company’s operations to date have been
      funded through the sale of its securities, and the Company expects this to
      continue in the foreseeable future.





Historically,
      the principal uses of the Company’s cash and cash equivalents have been
      concluding the Phase II clinical trials, developing alternative delivery
      technologies, improving on the synthetic processes, and continuing to fund
      pre-clinical compounds associated with the agreements with PARTEQ. Although
      the
      Company has developed plans related to its operations, management continues
      to
      retain significant flexibility for the uses of Company funds. In addition to
      meeting its working capital needs, the Company may also use its cash and cash
      equivalents to acquire additional products or technologies. Currently, the
      principal uses of the Company’s cash and cash equivalents are investigating the
      results of the Phase II clinical trials.




During
      the three months ended March 31, 2008, the Company experienced an increase
      in
      selling, general and administrative expenses compared to the three months ended
      March 31, 2007. The increases were largely attributable to increases in salaries
      and employee benefit expenses and the employment of a new Chief Executive
      Officer. To improve its liquidity and ensure that it has sufficient cash and
      cash equivalents for the next 12 months, the Company implemented certain cost
      reductions in the first quarter of 2008 and delayed the implementation of
      certain research programs, including the previously planned Phase I trial for
      the transdermal patch.




12




The
      Company expects to make additional payments by June 30, 2008 to Georgetown
      of
      $396,775 related to an open label extension which extension will expire in
      June
      2008. The Company also expects to continue making payments to PARTEQ of
      C$108,000 each quarter as a result of the renewal of the Alzheimer’s Agreement
      and Epilepsy Agreement with PARTEQ. The Company may also incur additional
      expenses if it pursues certain contractual rights or activities that are at
      its
      discretion, including exercising its option to license the Product in North
      America from XEL, pursuant to which it would pay XEL an initial license fee
      of
      $400,000 and up to an aggregate of $2.8 million in additional payments upon
      the
      achievement of certain milestones.





The
      Company may also incur additional expenses in connection with its agreement
      with
      Numoda Corporation (“Numoda”). Following Numoda’s delivery of its analysis of
      the Phase II clinical trials, the Company will pay Numoda $100,000. The Company
      may be obligated to pay Numoda up to $400,000 of additional payments (a
“Deferred Payment”) if the Company enters into an agreement for the sale or
      license of the Company’s products, or an agreement to merge or sell the Company
      (each a “Transaction”). If the aggregate consideration paid to the Company in
      such a Transaction is $1,000,000 or less, the Deferred Payment will be $200,000.
      If the aggregate consideration paid to the Company in a Transaction is more
      than
      $1,000,000 but less than $5,000,000, the Deferred Payment will be $250,000.
      If
      the aggregate consideration paid to the Company in a Transaction is more than
      $5,000,001 but less than $10,000,000, the Deferred Payment will be $300,000.
      If
      the aggregate consideration paid to the Company in the Transaction is more
      than
      $10,000,000, the Deferred Payment will be $400,000. Additionally, the Company
      will be obligated to pay Numoda a fee equal to 3.5% of the aggregate
      consideration paid to the Company in a Transaction, provided that the
      Transaction is completed at any time during the term of the agreement, or prior
      to March 3, 2011, and Numoda has either introduced such party to the Company
      or
      materially assisted the Company in facilitating such a Transaction.





To
      fund
      the implementation of its business plan, the Company has historically engaged
      in
      equity financing through existing investors and potential new investors. If
      the
      Company does not enter into a Transaction that provides it substantial
      liquidity, it may engage in additional financing efforts. Additional funds
      may
      not be available or not available on acceptable terms, if at all. Given the
      anticipated cash expenditures, the potential cash requirements and the lack
      of
      sufficient cash to fully fund those expenses, the Company is continually
      analyzing alternative ways in which it can preserve its cash and cash
      equivalents, including the potential delay, reduction in scope of or elimination
      of some of its research or development programs. If the Company is unable to
      raise additional financing and is forced to take such measures, they may
      materially harm the Company’s prospects, financial condition and future
      operations.





**Critical
      Accounting Policies**





Our
      financial statements are prepared in accordance with accounting principles
      generally accepted in the United States of America. Preparing financial
      statements in accordance with U.S. generally accepted accounting principles
      requires management to make estimates and assumptions which affect the reported
      amounts of assets and liabilities and the disclosure of contingent assets and
      liabilities at the balance sheet dates, and the recognition of revenues and
      expenses for the reporting periods. These estimates and assumptions are affected
      by management’s application of its accounting policies.





Research
      and Development Costs




All
      research and development costs are expensed as incurred and include costs paid
      to sponsored third parties to perform research and conduct clinical
      trials.





Share-Based
      Compensation





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123(R), (“SFAS No. 123(R)”), “Share-Based Payment,” which requires
      the Company to record as an expense in its financial statements the fair value
      of all stock-based compensation awards. The Company currently utilizes the
      Black-Scholes option pricing model to measure the fair value of stock options
      granted to employees using the “modified prospective” method. Under the
“modified prospective” method, compensation cost is recognized in the financial
      statements beginning with the effective date, based on the requirements of
      SFAS
      No. 123(R) for all share-based payments granted after that date, and based
      on
      the requirements of SFAS No. 123(R) for all unvested awards granted prior to
      the
      effective date of SFAS No. 123(R).





Deferred
      Compensation





In
      accordance with EITF Abstract No. 96-18, “Accounting for Equity Instruments That
      Are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling, Goods or Services,” the Company initially measures the fair value of
      any equity granted to consultants on the date of grant and subsequently
      remeasures such grants in accordance with promulgated accounting principles
      using the Black-Scholes pricing model. Amounts are initially recorded as
      Deferred Compensation in the Stockholders’ Equity section of the balance sheet
      and are subsequently charged to the appropriate expense over the period to
      which
      the service relates.




13




New
      Authoritative Pronouncements





In
      March
      2008, the Financial Accounting Standards Board (FASB) issued FASB Statement
      No.
      161, Disclosures about Derivative Instruments and Hedging Activities. The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The company is currently evaluating the impact of
      adopting SFAS. No. 161 on its financial statements.





In
      May
      2008, the Financial Accounting Standards Board (FASB) issued Statement of
      Financial Accounting Standards (SFAS) No. 162, "The Hierarchy of Generally
      Accepted Accounting Principles." The new standard is intended to improve
      financial reporting by identifying a consistent framework, or hierarchy, for
      selecting accounting principles to be used in preparing financial statements
      that are presented in conformity with U.S. generally accepted accounting
      principles (GAAP) for non-governmental entities. We are currently evaluating
      the
      effects, if any, that SFAS No. 162 may have on our financial
      reporting.





**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**





Not
      applicable.





**Item
      4.**  **Controls
      and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





Based
      on
      management’s evaluation (with the participation of our Chief Executive Officer
      (“CEO”) and Chief Financial Officer (“CFO”)), as of the end of the period
      covered by this report, our CEO and CFO have concluded that our disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are
      effective to provide reasonable assurance that information required to be
      reported and disclosed by us in reports that we file or submit under the
      Exchange Act is recorded, processed, summarized, and reported within the time
      periods specified in SEC rules and forms, and is accumulated and communicated
      to
      management, including our principal executive officer and principal financial
      officer, as appropriate to allow timely decisions regarding required disclosure.





**Changes
      in Internal Control Over Financial Reporting**





There
      were no changes to our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during
      the period covered by this report that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





**Inherent
      Limitations on Effectiveness of Controls**





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




14




**PART
      II.**  **OTHER
      INFORMATION**





**Item
      6.****Exhibits.**




10.1
            
            BAU
                Analysis and Partnering Letter of Intent dated March 3, 2008†31.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of the Chief Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer Pursuant
                to 18
                U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley
                Act
                of 2002.





† Incorporated by reference to Form 8-K filed with the Securities and Exchange
      Commission on March 7, 2008.




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**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**Neuro-Hitech,
                Inc.**(Registrant)Date:
                May 14, 2008
            By:
            /s/
                Gary T. ShearmanGary
                T. ShearmanPresident
                and Chief Executive OfficerDate:
                May 15, 2008
            By:
            /s/
                David J. BarrettDavid
                J. BarrettChief
                Financial Officer




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