**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549**

**FORM 10-Q**
| (Mark One)                                        |                                                                                   |
|---------------------------------------------------|----------------------------------------------------------------------------------------|
|                                              |                                                                                   |
| x                                                 | **Quarterly report under Section 13 or 15(d) of  the Securities Exchange Act of 1934** |
|                                              | ** **                                                                             |
| **For the  quarterly period ended June 30, 2007** |
|                                              |                                                                                   |
| o                                                 | **Transition report under Section 13 or 15(d) of  the Exchange Act**                   |
|                                                   |                                                                                        |  |

 

**For thetransition period from           to**

**Commission File Number 000-51518**

** **

**Paramount Acquisition Corp.**(Exact Name of Registrant as Specified in Its Charter)

| **Delaware**                                              |   | **20-2938469**       |
|-----------------------------------------------------------|--------|----------------------|
| (State or other  Jurisdiction of                          |   | (I.R.S. Employer     |
| Incorporation or  Organization)                           |   | Identification  No.) |
|                                                      |   |                 |
| **787 7th  Avenue, 48th Floor, New York, New York 10019** |
| (Address of  Principal Executive Office)                  |
|                                                      |
| **(212)  554-4300**                                       |
| (Issuer’s  Telephone Number, Including Area Code)    |
|                                                      |

Indicate by check mark whether the registrant: (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the ExchangeAct during the past 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x  No o

Indicate by check mark whether the Registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act (Check one). 

| Large accelerated  filer  o |   | Accelerated  filer  o |   | Non-accelerated  filer  x |
|---------------------------------------|--------|---------------------------------|--------|-------------------------------------|

 

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

As of August 14,2007, 11,900,000 shares of common stock, par value $.0001 per share, wereissued and outstanding.

 

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**ParamountAcquisition Corp.(a development stage enterprise)**

Contents
|                                                                                                                                                          |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                          | Page   |
|                                                                                                                                                          |   |
| Part  I: Financial Information:                                                                                                                               | 3      |
|                                                                                                                                                          |   |
| Item 1 —Financial Statements (Unaudited):                                                                                                                | 3      |
|                                                                                                                                                          |   |
| Condensed  Balance Sheets as of June 30, 2007 and December 31, 2006                                                                                           | 3      |
|                                                                                                                                                          |   |
| Condensed Statements of Income for the Three and Six  Months Ended June 30, 2007 and 2006, and for the Period from June 1, 2005  (inception) to June 30, 2007 | 4      |
|                                                                                                                                                          |   |
| Condensed Statement of Changes in Stockholders’ Equity  for the Period from June 1, 2005 (Inception) to June 30, 2007                                    | 5      |
|                                                                                                                                                          |   |
| Condensed Statements of Cash Flows for the Six Months  Ended June 30, 2007 and 2006, and for the Period from June 1, 2005  (Inception) to June 30, 2007       | 6      |
|                                                                                                                                                          |   |
| Notes to Condensed Financial Statements                                                                                                                       | 7      |
|                                                                                                                                                          |   |
| Item 2 — Management’s Discussion and Analysis or Plan  of Operation                                                                                 | 12     |
|                                                                                                                                                          |   |
| Item 3 — Quantitative and Qualitative Disclosures  about Market Risk                                                                                     | 15     |
|                                                                                                                                                          |   |
| Item 4 — Controls and Procedures                                                                                                                         | 15     |
|                                                                                                                                                          |   |
| Part II. Other  Information                                                                                                                                   | 16     |
|                                                                                                                                                          |   |
| Item 2 — Unregistered Sales of Equity Securities and  Use of Proceeds                                                                                    | 16     |
|                                                                                                                                                          |   |
| Item 6 — Exhibits                                                                                                                                        | 16     |
|                                                                                                                                                          |   |
| Signatures                                                                                                                                                    | 17     |
|                                                                                                                                                          |   |
| Exhibit  Index                                                                                                                                                | 18     |

 

2

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** **

**Part I: Financial Information**

**Item1 — Financial Statements (Unaudited)**

**Paramount Acquisition Corp.(a development stage enterprise)Condensed Balance Sheets**

 
| ** **                                                                                                                                             | ** ** | **June 30, 2007** | ** ** | **December 31, 2006** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                             | ** ** | **(unaudited)**             | ** ** | **(Note 1)**               | ** ** |
| **Assets**                                                                                                                                             |       |                        |       |                            |       |
| Current assets:                                                                                                                                        |       |                        |       |                            |       |
| Cash and cash  equivalents                                                                                                                             |       | $                           | 4,112      |                            | $          | 54,209 |   |
| Investments held  in Trust Fund                                                                                                                        |       | 55,439,968                  |       | 54,470,015                      |       |
| Prepaid expenses  and other current assets                                                                                                             |       | 137,277                     |       | 135,375                         |       |
| Total current  assets                                                                                                                                  |       | 55,581,357                  |       | 54,659,599                      |       |
| Deferred acquisition  costs                                                                                                                            |       | 1,020,697                   |       | —                          |       |
| Total assets                                                                                                                                           |       | $                           | 56,602,054 |                            | $          | 54,659,599 |   |
| **Liabilities and Stockholders’  Equity**                                                                                                         |       |                        |       |                            |       |
| Current liabilities:                                                                                                                                   |       |                        |       |                            |       |
| Note Payable - related  party                                                                                                                          |       | $                           | 364,578    |                            | $          | — |   |
| Due to related  party - accrued expenses                                                                                                               |       | 67,500                      |       | 24,989                          |       |
| Accounts payable  and accrued expenses                                                                                                                 |       | 1,809,163                   |       | 967,699                         |       |
| Total current  liabilities                                                                                                                             |       | 2,241,241                   |       | 992,688                         |       |
| Common stock subject to  possible conversion, 1,954,999 shares at conversion value                                                                     |       | 11,087,987                  |       | 10,888,556                      |       |
| Commitment and  Contingencies                                                                                                                          |       |                        |       |                            |       |
| Stockholders’ equity:                                                                                                                             |       |                        |       |                            |       |
| Preferred stock,  $.0001 par value, Authorized 1,000,000 shares; none issued                                                                           |       | —                      |       | —                          |       |
| Common stock,  $.0001 par value Authorized 40,000,000 shares issued and outstanding  11,900,000 shares (less 1,954,999 subject to possible conversion) |       | 996                         |       | 996                             |       |
| Additional  paid-in capital                                                                                                                            |       | 42,409,483                  |       | 42,608,914                      |       |
| Earnings  accumulated during development stage                                                                                                         |       | 862,347                     |       | 168,445                         |       |
| Total stockholders’  equity                                                                                                                       |       | 43,272,826                  |       | 42,778,355                      |       |
| Total liabilities and stockholders’ equity                                                                                                        |       | $                           | 56,602,054 |                            | $          | 54,659,599 |   |

 

The accompanyingnotes are an integral part of these unaudited condensed financial statements.

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** **

**Paramount Acquisition Corp.(a development stage enterprise)Condensed Statements of Income(unaudited)For the Three and Six Months Ended June 30, 2007 and 2006And for the Period from June 1, 2005 (inception) to June 30, 2007**

 
| ** **                                                                       | ** ** | **For the three months  ended June 30,** | ** ** | **For the six months  ended June 30,** | ** ** | **Period from**

**June 1, 2005  (inception) to  June 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2007**                                                          | ** ** | **2006**                                                        | ** ** | **2007**                                                                        | ** ** | **2006** | ** ** | **2007** | ** ** |
| Revenue                                                                          |       | $                                                                 | —     |                                                            | $          | —                                                                          |       | $ | — |   | $ | — |   | $ | — |   |
| General, selling and  administrative expenses                                    |       | (109,102                                                          | )          | (276,615                                                        | )          | (275,810                                                                        | )          | (726,794 | ) | (2,441,670 | ) |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Operating loss                                                                   |       | (109,102                                                          | )          | (276,615                                                        | )          | (275,810                                                                        | )          | (726,794 | ) | (2,441,670 | ) |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Interest income                                                                  |       | 500,878                                                           |       | 479,594                                                         |       | 970,312                                                                         |       | 1,025,783 |   | 3,306,517 |   |
| Income before income  taxes                                                      |       | 391,776                                                           |       | 202,979                                                         |       | 694,502                                                                         |       | 298,989 |   | 864,847 |   |
| Provision for income  taxes                                                      |       | —                                                            |       | —                                                          |       | (600                                                                            | )          | — |   | (2,500 | ) |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Net income                                                                       |       | 391,776                                                           |       | 202,979                                                         |       | 693,902                                                                         |       | 298,989 |   | 862,347 |   |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Accretion of Trust Fund  relating to common stock subject to possible conversion |       | (105,657                                                          | )          | (94,531                                                         | )          | (199,431                                                                        | )          | (201,652 | ) | (660,303 | ) |
| Net income attributable  to other common stockholders                            |       | $                                                                 | 286,119    |                                                            | $          | 108,448                                                                         |       | $ | 494,471 |   | $ | 97,337 |   | $ | 202,044 |   |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Weighted average shares  outstanding                                             |       | 9,945,001                                                         |       | 9,945,001                                                       |       | 9,945,001                                                                       |       | 9,945,001 |   |   |   |
|                                                                             |       |                                                              |       |                                                            |       |                                                                            |       |   |   |   |   |
| Basic and diluted  income per share                                              |       | $                                                                 | 0.03       |                                                            | $          | 0.01                                                                            |       | $ | 0.05 |   | $ | 0.01 |   |   |   |

 

*The accompanying notes are anintegral part of these unaudited condensed financial statements.*

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** **

**ParamountAcquisition Corp(a development stage enterprise)Condensed Statement of Changes in Stockholders’ Equity (unaudited)For the Period of June 1, 2005 (inception) to June 30, 2007**

 
| ** **                                                                                                                                                             | ** ** | ** **            | ** ** | ** **                | ** ** | ** **          | ** ** | **Earnings**               | ** ** | ** **  | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------|------------|---------------------|------------|----------------------------|------------|-------------|------------|
| ** **                                                                                                                                                             | ** ** | ** **            | ** ** | ** **                | ** ** | ** **          | ** ** | **accumulated**            | ** ** | **Total**   | ** ** |
| ** **                                                                                                                                                             | ** ** | **Common Stock** | ** ** | **Additional paid-** | ** ** | **during**          | ** ** | **stockholders’**     | ** ** |
| ** **                                                                                                                                                             | ** ** | **Shares**            | ** ** | **Amount**                | ** ** | **in capital** | ** ** | **development stage** | ** ** | **equity**  | ** ** |
| Balance, June 1, 2005  (inception)                                                                                                                                     |       | —                |       | $                         | —     |                | $          | —                     |       | $           | —     |   | $ | — |   |
| Issuance of stock to  initial stockholders                                                                                                                             |       | 2,125,000             |       | 213                       |       | 24,787              |       | —                     |       | 25,000      |       |
| Sale of 9,775,000  units, net of underwriters’ discount and offering expenses amounting to  $5,176,634 (includes 1,954,999 shares subject to possible conversion) |       | 9,775,000             |       | 978                       |       | 53,472,388          |       | —                     |       | 53,473,366  |       |
| Proceeds subject to  possible conversion of 1,954,999 shares                                                                                                           |       | —                |       | (195                      | )          | (10,427,488         | )          | —                     |       | (10,427,683 | )          |
| Proceeds from issuance  of option                                                                                                                                      |       | —                |       | —                    |       | 100                 |       | —                     |       | 100         |       |
| Accretion of Trust Fund  relating to common stock subject to possible conversion                                                                                       |       | —                |       | —                    |       | (71,711             | )          | —                     |       | (71,711     | )          |
| Net income for the  period from June 1, 2005 (inception) to December 31, 2005                                                                                          |       | —                |       | —                    |       | —              |       | 185,122                    |       | 185,122     |       |
|                                                                                                                                                                   |       |                  |       |                      |       |                |       |                       |       |        |       |
| Balance, December 31,  2005                                                                                                                                            |       | 11,900,000            |       | 996                       |       | 42,998,076          |       | 185,122                    |       | 43,184,194  |       |
| Accretion of Trust Fund  relating to common stock subject to possible conversion                                                                                       |       | —                |       | —                    |       | (389,162            | )          | —                     |       | (389,162    | )          |
| Net loss for the year  ended December 31, 2006                                                                                                                         |       | —                |       | —                    |       | —              |       | (16,677                    | )          | (16,677     | )          |
|                                                                                                                                                                   |       |                  |       |                      |       |                |       |                       |       |        |       |
| Balance, December 31,  2006                                                                                                                                            |       | 11,900,000            |       | 996                       |       | 42,608,914          |       | 168,445                    |       | 42,778,355  |       |
|                                                                                                                                                                   |       |                  |       |                      |       |                |       |                       |       |        |       |
| Accretion of Trust Fund  relating to common stock subject to possible conversion                                                                                       |       | —                |       | —                    |       | (199,431            | )          | —                     |       | (199,431    | )          |
| Net income for the six  months ended June 30, 2007                                                                                                                     |       | —                |       | —                    |       | —              |       | 693,902                    |       | 693,902     |       |
|                                                                                                                                                                   |       |                  |       |                      |       |                |       |                       |       |        |       |
| Balance, June 30, 2007 (unaudited)                                                                                                                                     |       | 11,900,000            |       | $                         | 996        |                | $          | 42,409,483                 |       | $           | 862,347    |   | $ | 43,272,826 |   |

 

*The accompanying notes are an integralpart of these unaudited condensed financial statements.*

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**Paramount Acquisition Corp. (a development stage enterprise)Condensed Statements of Cash Flows (unaudited)**

**For the Six Months Ended June 30,2007 and 2006and For the Period from June 1, 2005 (inception) to June 30, 2007**

 
| ** **                                                                       | ** ** | **For the Six Months  Ended June 30, 2007** | ** ** | **For the Six Months  Ended June 30, 2006** | ** ** | **Period from June 1,  2005 (inception) to  June 30, 2007** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|
| **Cash  Flows from Operating Activities**                                        |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Net income                                                                       |       | $                                                                         | 693,902    |                                                                      | $          | 298,989                                                                                        |       | $ | 862,347 |   |
| Changes in Operating Assets and Liabilities:                                     |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Prepaid expenses and other current assets                                        |       | (1,902                                                                    | )          | (237,147                                                                  | )          | (137,277                                                                                       | )          |
| Accounts payable and accrued expenses                                            |       | 841,464                                                                   |       | 305,108                                                                   |       | 1,809,163                                                                                      |       |
| Due to related party - accrued expenses                                          |       | 45,000                                                                    |       | —                                                                    |       | 67,500                                                                                         |       |
| Income taxes payable                                                             |       | —                                                                    |       | (78,800                                                                   | )          | —                                                                                         |       |
| Net cash provided by operating activities                                        |       | 1,578,464                                                                 |       | 288,150                                                                   |       | 2,601,733                                                                                      |       |
| **Cash  Flows from Investing Activities**                                        |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Deferred  Acquisition costs                                                      |       | (1,020,697                                                                | )          | —                                                                    |       | (1,020,697                                                                                     | )          |
| Investments held in Trust Fund                                                   |       | (969,953                                                                  | )          | (1,008,762                                                                | )          | (55,439,968                                                                                    | )          |
| Net cash used in investing activities                                            |       | (1,990,650                                                                | )          | (1,008,762                                                                | )          | (56,460,665                                                                                    | )          |
| **Cash  Flows from Financing Activities**                                        |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Proceeds from sale of Common Stock to initial  stockholders                      |       | —                                                                    |       | —                                                                    |       | 25,000                                                                                         |       |
| Gross proceeds from initial public offering                                      |       | —                                                                    |       | —                                                                    |       | 58,650,000                                                                                     |       |
| Proceeds from issuance of option                                                 |       | —                                                                    |       | —                                                                    |       | 100                                                                                            |       |
| Proceeds or advances from note payable from related  party                       |       | 362,089                                                                   |       | —                                                                    |       | 364,578                                                                                        |       |
| Payments of deferred offering costs                                              |       | —                                                                    |       | —                                                                    |       | (5,176,634                                                                                     | )          |
| Net cash provided by financing activities                                        |       | 362,089                                                                   |       | —                                                                    |       | 53,863,044                                                                                     |       |
| Net (decrease)  increase in cash                                                 |       | (50,097                                                                   | )          | (720,612                                                                  | )          | 4,112                                                                                          |       |
| Cash at  beginning of the period                                                 |       | 54,209                                                                    |       | 1,122,290                                                                 |       | —                                                                                         |       |
|                                                                             |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Cash at end of  the period                                                       |       | $                                                                         | 4,112      |                                                                      | $          | 401,678                                                                                        |       | $ | 4,112 |   |
| Supplemental  disclosure of cash flow information:                               |       |                                                                      |       |                                                                      |       |                                                                                           |       |
| Accretion of Trust Fund relating to Common Stock  subject to possible conversion |       | $                                                                         | 199,431    |                                                                      | $          | 201,652                                                                                        |       | $ | 660,303 |   |
| Income taxes paid                                                                |       | 600                                                                       |       | 85,651                                                                    |       | 93,909                                                                                         |       |

 

*The accompanying notes are anintegral part of these unaudited condensed financial statements.*

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** **

**ParamountAcquisition Corp.(a development stage enterprise)Notes to Unaudited Condensed Financial Statements**

# **1.****              InterimFinancial Information, Organization and Business Operations**

These unaudited condensed financial statements as ofJune 30, 2007, for the three and six months ended June 30, 2007, for the threeand six months ended June 30, 2006, and for the period from June 1, 2005(Inception) to June 30, 2007 have been prepared in accordance with accountingprinciples generally accepted in the United States of America for interimfinancial information and with the instructions to Form 10-Q. Accordingly, theydo not include all of the information and footnotes required by accountingprinciples generally accepted in the United States of America for completefinancial statements. Certain prior year amounts have been reclassified toconform to current year presentation. In the opinion of management, alladjustments (consisting of normal recurring accruals) considered necessary fora fair presentation have been included. Operating results for the interimperiods presented are not necessarily indicative of the results to be expectedfor any other interim period or for the full year.

These unaudited condensed financial statements shouldbe read in conjunction with the financial statements and notes thereto for thefiscal year ended December 31, 2006 included in Paramount Acquisition Corp.’s(the “Company”) Form 10-KSB for the fiscal year ended December 31, 2006, whichwas filed on April 2, 2007. The accounting policies used in preparing theseunaudited condensed financial statements are consistent with those described inthe December 31, 2006 financial statements.

Paramount Acquisition Corp. (the “Company”) wasincorporated in Delaware on June 1, 2005 as a blank check company whoseobjective is to acquire an operating business in the healthcare industry.

All activity from June 1, 2005 through October 27,2005 related to the Company’s formation and initial public offering isdescribed below. Since October 28, 2005, the Company has been searching for atarget business to acquire. The Company has selected December 31 as its fiscalyear end.

The registration statement for the Company’s initialpublic offering (“Offering”) was declared effective October 21, 2005 with respectto the 8,500,000 units (“Units”) sold at $6 per unit. The Company consummatedthe Offering on October 27, 2005. In addition, on October 31, 2005 and November1, 2005, the Company sold an additional 1,275,000 Units at $6 per unit pursuantto an over-allotment option for the Offering, receiving total gross proceeds of$58,650,000 for the entire offering.

The Company’s management has broad discretion withrespect to the specific application of the net proceeds of the Offering,although substantially all of the net proceeds of the Offering are intended tobe generally applied toward consummating a business combination with anoperating business in the healthcare industry (“Business Combination”).

Furthermore, there is no assurance that the Companywill be able to successfully effect a Business Combination. An aggregate of$52,164,500 (including the over-allotment option described in Note 3), beforeany interest earned, has been deposited in an interest-bearing trust account (“TrustAccount”) until the earlier of (i) the consummation of a Business Combinationor (ii) liquidation of the Company. Under the agreement governing the TrustAccount, funds will only be invested in United States “government securities”within the meaning of Section 2(a)(16) of the Investment Company Act of 1940with a maturity of 180 days or less or in money market funds meeting certainconditions under Rule 2a-7 promulgated under the Investment Company Act of1940. The remaining net proceeds of $1,308,866 (initial amount not held in theTrust Account) may be used to pay for business, legal and accounting duediligence on prospective acquisitions and continuing general and administrativeexpenses.

The Company, after signing a definitive agreement forthe acquisition of a target business, will submit such transaction forstockholder approval. In the event that stockholders owning 20% or more of theshares sold in the Offering vote against the Business Combination and exercisetheir conversion rights described below, the Business Combination will not beconsummated.

All of the Company’s stockholders prior to theOffering, including all of the officers and directors of the Company (“InitialStockholders”), have agreed to vote their 2,125,000 founding shares of commonstock in accordance with the vote of the majority in interest of all otherstockholders of the Company (“Public Stockholders”) with respect to 

7

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any Business Combination. After consummation of aBusiness Combination, these voting safeguards will no longer be applicable.

With respect to a Business Combination that isapproved and consummated, any Public Stockholder who voted against the BusinessCombination may demand that the Company convert his shares. The per shareconversion price will equal the amount in the Trust Account, calculated as oftwo business days prior to the consummation of the proposed BusinessCombination, divided by the number of shares of common stock held by PublicStockholders at the consummation of the Offering. Accordingly, PublicStockholders holding up to 1,954,599 shares may seek conversion of their sharesin the event of a Business Combination. Such Public Stockholders are entitledto receive their per share interest in the Trust Account computed withoutregard to the shares held by Initial Stockholders.

The Company’s Certificate of Incorporation providesfor mandatory liquidation of the Company in the event that the Company does notconsummate a Business Combination within 18 months from the date of theconsummation of the Offering, or 24 months from the consummation of theOffering if certain extension criteria have been satisfied. On April 25, 2007,the Company announced that, pursuant to the provisions of its certificate ofincorporation, it has until October 27, 2007 to complete its businesscombination, having satisfied the criteria for extension set forth in thecertificate of incorporation. In the event of liquidation, it is likely thatthe per share value of the residual assets remaining available for distribution(including Trust Account assets) will be less than the initial public offeringprice per Unit in the Offering due to costs related to the Offering and sinceno value would be attributed to the Warrants (as defined in Note 3, below)contained in the Units sold.

# **2.****              GoingConcern and Management Plans**

As of June 30, 2007, excluding investments held in theTrust Fund, the Company had a working capital deficiency of $2,099,852. To fundcertain operating costs of the Company, an officer of the Company has advancedfunds to the Company from, and made payments on behalf of the Company by one ofhis affiliates, Paramount BioCapital Asset Management, Inc. (See Note 4 —Related Party Transactions). There can be no assurance that the Company willconsummate a business combination prior to October 27, 2007. Pursuant to itsCertificate of Incorporation, the Company would have to liquidate pursuant to aplan of dissolution and return the funds held in the trust account to theholders of shares issued in the offering as described in Note 3 if a businesscombination is not completed prior to October 27, 2007.

These conditions raise substantial doubt about theCompany’s ability to continue as a going concern. The financial statements donot include any adjustments that might result from the outcome of thisuncertainty.

# **3.****              InitialPublic Offering**

On October 27, 2005, the Company sold 8,500,000 Unitsin the Offering at $6.00 per Unit. On October 31, 2005 and November 1, 2005 theCompany sold an additional aggregate 1,275,000 Units pursuant to anover-allotment option of the Offering. The total gross proceeds from the totaloffering including the over-allotment amounted to $58,650,000. After paymentsof all offering costs, the net proceeds to the Company amounted to $53,473,366.Each Unit consists of one share of the Company’s common stock, $.0001 parvalue, and two Redeemable common stock Purchase Warrants (“Warrants”). EachWarrant entitles the holder to purchase from the Company one share of commonstock at an exercise price of $5.00 commencing the later of the completion of aBusiness Combination or one year from the effective date of the Offering andexpiring four years from the effective date of the Offering. The Warrants willbe redeemable by the Company, upon prior written consent of the Representative,at a price of $.01 per Warrant upon 30 days’ notice after the Warrants becomeexercisable, only in the event that the last sale price of the common stock isat least $8.50 per share for any 20 trading days within a 30 trading day periodending on the third day prior to the date on which notice of redemption isgiven. In connection with this Offering, the Company issued an option, for$100, to the Representative (as defined in Note 5) to purchase 425,000 Units atan exercise price of $7.50 per Unit. The Warrants underlying such Units areexercisable at $6.25 per share. The Company has accounted for the fair value ofthe option, inclusive of the receipt of the $100 cash payment, as an expense ofthe public offering resulting in a charge directly to stockholders’ equity. TheCompany estimates that the fair value of this option is approximately $922,250($2.17 per Unit) using a Black-Scholes option-pricing model. The fair value ofthe option granted to the Representative is estimated as of the date of grantusing the following assumptions: (1) 

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expected volatility of 42.875%, (2) risk-free interestrate of 4.03% and (3) expected life of 5 years. The option may be exercised forcash or on a “cashless” basis at the holder’s option, such that the holder mayuse the appreciated value of the option (the difference between the exerciseprices of the option and the underlying Warrants and the market price of theUnits and underlying securities) to exercise the option without the payment ofany cash. The holders of such Warrants shall not be entitled to receive netcash settlement of the Warrants and in no event will the Company be required tonet cash settle the Warrants.

The Company’s Warrants will not be exercisable and theCompany will not be obligated to issue shares of common stock upon the Warrants’exercise unless at the time a Warrant holder seeks to exercise a Warrant,either a registration statement under the Securities Act of 1933 with respectto the Company’s common stock is effective or an exemption from theregistration requirements of the Securities Act is available. Under the termsof the Warrant agreement the Company entered into with Continental Stock Transfer& Trust Company (as agent for the Warrant holders), the Company has agreedto use its best efforts to meet these conditions and to maintain theeffectiveness of such a registration statement until the expiration of theWarrants. If the Company is unable to do so, holders of the Warrants may beunable to exercise the Warrants and the Company will not be required to settleany exercise of the Warrants. In that case, the Warrants may have no value, themarket for such Warrants may be limited and such Warrants may expire worthless.

# **4.****              RelatedParty Transactions**

The Company presently occupies office space providedby an affiliate of the Company’s chairman. Such affiliate has agreed that,until the acquisition of a target business by the Company, it will make suchoffice space, as well as certain office and secretarial services, available tothe Company, as may be required by the Company from time to time. The Companyhas agreed to pay such affiliate $7,500 per month for such services commencingon October 21, 2005 and ending upon the consummation of a Business Combination.For the three and six months ended June 30, 2006, the three and six monthsended June 30, 2006 and for the period from June 1, 2005 (inception) to June30, 2007 the Company has incurred expense totaling $22,500, $45,000, $22,500,$45,000 and $152,500, respectively, to such affiliate pursuant to thisagreement. As of June 30, 2007, $67,500 is due to such affiliate pursuant tothis office service agreement.

Additionally, such affiliate has advanced monies tothe Company or made payments to vendors on behalf of the Company pursuant to anon-interest bearing note that is payable on demand. As of June 30, 2007, totalamounts due to such affiliate for monies advanced or paid on behalf of theCompany totaled $364,578. Amounts borrowed from, or advanced on our behalf by,such affiliate are repayable on demand without interest.

# **5.****              Commitmentand Contingencies**

Pursuant to letter agreements dated July 25, 2005 withthe Company and EarlyBirdCapital, Inc., the representative of the underwritersin the Offering (“Representative”), the Initial Stockholders have waived theirright to receive distributions with respect to their founding shares upon theCompany’s liquidation.

The Company’s directors agreed with the Representativethat, after consummation of the Offering and within the first three monthperiod after separate trading of the Warrants has commenced, they or certain oftheir affiliates or designees will collectively purchase up to $1,750,000 ofWarrants in the public marketplace at prices not to exceed $0.70 per Warrant.Pursuant to this commitment, the directors purchased an aggregate of 883,000Warrants at prices ranging from $.667 to $.70 per Warrant.

In January 2007, two of the Company’s directorsentered into a new personal Warrant purchase plan to collectively purchase upto an additional 1,000,000 Warrants in the public marketplace at prices not toexceed $.64 per Warrant. The purchase plan was completed during February 2007,resulting in the purchase of 1,000,000 Warrants pursuant to such purchase plan.

The Initial Stockholders are entitled to registrationrights with respect to their founding shares pursuant to an agreement datedOctober 21, 2005. The holders of the majority of these shares are entitled tomake up to two demands that the Company register these shares at any timecommencing three months prior to October 21, 2008. In 

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addition, the Initial Stockholders have certain “piggy-back”registration rights on registration statements filed subsequent to October 21,2008.

# **6.****              PreferredStock**

The Company is authorized to issue 1,000,000 shares ofpreferred stock with such designations, voting and other rights and preferencesas may be determined from time to time by the Board of Directors

# **7.****              CommonStock**

At June 30, 2007, 825,000 shares of common stock werereserved for issuance upon exercise of redeemable Warrants and the underwriters’Unit purchase option.

# **8.****              ContributionAgreement**

On August 25, 2006, the Company and BioValve Technologies,Inc. (“BioValve”), a privately-held innovator in life sciences, announced thatthey entered into a definitive agreement (“Contribution Agreement”) whereby theCompany agreed to acquire a majority interest in Valeritas, LLC (“Valeritas”),the medical technologies subsidiary of BioValve.

On January 22, 2007, the Company and BioValveannounced that they had agreed to terminate the Contribution Agreement andmutually release both parties from further claims. In connection therewith,approximately $898,000 of capitalized deferred acquisition costs were chargedto operating expense during the year ended December 31, 2006.

# **9.****              StockPurchase Agreement**

On June 1, 2007, theCompany entered into a Stock Purchase Agreement (the “*Stock Purchase Agreement*”) among theCompany, B.J.K. Inc., a New York corporation doing business as Chem Rx (“*Chem Rx*”), and the stockholders of Chem Rx(each a “*Seller*” andcollectively, the “*Sellers*”). Pursuant to the Stock Purchase Agreement, on the closing date, subject to stockholderapproval, the Company will acquire 100% of the issued and outstanding commonstock of Chem Rx (the “*Stock Purchase*”).  Chem Rx is an innovative provider ofinstitutional pharmacy services in the New York area.  Paramount hasagreed that, in connection with the closing, the Company will change its nameto “Chem Rx Corporation.”

At the closing of thetransactions contemplated by the Stock Purchase Agreement, the Company will pay$133 million in cash to the Sellers less (i) the amount of net indebtedness andtransaction expenses in excess of thresholds set forth in the Stock PurchaseAgreement as of the closing date, (ii) the amount payable to Steven Silva underthe payment agreement described below and (iii) any amounts paid to BennySalerno in connection with the acquisition by Chem Rx of the minority interestin Chem Rx/Salerno’s, LLC.  The cash portion of the purchase price is alsosubject to adjustment based on Chem Rx’s net worth as of the closing date.

At the closing, theCompany will issue an aggregate of 1,500,000 newly issued shares of the Company’scommon stock to the Sellers, and an additional 1,000,000 shares of the Company’scommon stock in connection with the acquisition of Chem Rx New Jersey, LLC, anaffiliated operating company of which 90% of the equity is owned by certainshareholders of Chem Rx.

The Company will pay theSellers an additional amount of cash up to $12,500,000 and issue up to anaggregate of 9,000,000 newly issued shares of the Company’s common stocksubject to the achievement of certain milestones with respect to Paramount’sEBITDA and share price following the closing under the Stock PurchaseAgreement.

The Sellers will not havethe right to acquire shares of the Company’s common stock as contingent stockconsideration to the extent that after giving effect to any such issuance, theSellers (together with their affiliates) would beneficially own in excess of20% (the “*Maximum Percentage*”) ofthe number of shares of the Company’s common stock outstanding immediatelyafter giving effect to such issuance.  If the Company is obligated underthe terms of the 

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Stock Purchase Agreementto issue to the Sellers shares of its common stock that would result in theSellers owning more than the Maximum Percentage, then in lieu of issuing suchshares, the Company may pay each Seller an amount in cash equal to the numberof shares to which such Seller was entitled, multiplied by the average of theclosing price for the Company’s common stock for a period of 30 consecutivetrading days immediately preceding the date such shares became issuable to theSellers.

As of June 30, 2007 atotal of $1,020,697 has been capitalized as deferred acquisition costs relatedto the Stock Purchase Agreement.  Thisamount primarily consists of legal fees and other professional fees related tothe negotiation, valuation and due diligence for the contemplated StockPurchase Agreement.

# **10.****       UncertainTax Positions**

Effective January 1,2007, the Company adopted the provisions of the Financial Accounting StandardsBoard (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes — an interpretation of FASB Statement No. 109” (“FIN 48”). There were nounrecognized tax benefits as of January 1, 2007 and as of June 30, 2007. FIN 48prescribes a recognition threshold and a measurement attribute for thefinancial statement recognition and measurement of tax positions taken orexpected to be taken in a tax return. For those benefits to be recognized, atax position must be more-likely-than-not to be sustained upon examination bytaxing authorities. The Company has identified its federal tax return, New YorkCity tax return and state tax return in New York as “major” tax jurisdictions,as defined in FIN 48. The Company’s evaluations were performed for tax yearsended 2005 and 2006 and the six months ended June 30, 2007. The Companybelieves that its income tax positions and deductions would be sustained onaudit and does not anticipate any adjustments that would result in a materialchange to its financial position. The Company recognizes accrued interest andpenalties related to unrecognized tax benefits as income tax expense. Noamounts were accrued for the payment of interest and penalties at January 1,2007. There was no change to this balance at June 30, 2007.  As of June 30, 2007, Management believes thatapproximately $200,000 of potential tax liability could be due if the taxingauthorities disagree with tax positions expected to be taken in our taxreturns.

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**ITEM2—MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

The following discussion should be read in conjunctionwith our Condensed Financial Statements and footnotes thereto contained in thisreport.

**Forward LookingStatements**

All statements other than statements of historicalfact included in this Form 10-Q including, without limitation, statements under“Management’s Discussion and Analysis or Plan of Operation” regarding ourfinancial position, business strategy and the plans and objectives of managementfor future operations, are forward looking statements. When used in this Form10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” andsimilar expressions, as they relate to us or our management, identify forwardlooking statements. Such forward looking statements are based on the beliefs ofmanagement, as well as assumptions made by, and information currently availableto, our management. Actual results could differ materially from thosecontemplated by the forward looking statements as a result of certain factorsdetailed in our filings with the Securities and Exchange Commission. Allsubsequent written or oral forward looking statements attributable to us orpersons acting on our behalf are qualified in their entirety by this paragraph.

**Overview**

We were formed on June 1, 2005, to serve as a vehicleto effect a merger, capital stock exchange, asset acquisition or other similarbusiness combination with an operating business in the healthcare industry. Weintend to utilize cash derived from the proceeds of our public offering, ourcapital stock, debt or a combination of cash, capital stock and debt, ineffecting a business combination.

On October 27, 2005, we sold 8,500,000 units in ourinitial public offering at $6.00 per unit. On October 31, 2005 and November 1,2005 we sold an additional aggregate 1,275,000 units pursuant to anover-allotment option of the offering. The total gross proceeds from the totaloffering including the over-allotment amounted to $58,650,000. After paymentsof all offering costs, the net proceeds to us amounted to $53,473,366. Eachunit consists of one share of our common stock, $.0001 par value, and tworedeemable common stock purchase warrants. Each warrant entitles the holder topurchase from us one share of common stock at an exercise price of $5.00commencing the later of the completion of a business combination or one yearfrom the effective date of the offering and expiring four years from theeffective date of the offering. The warrants will be redeemable by us, uponprior written consent of the representative of the underwriters in the offering(the “Representative”), at a price of $.01 per warrant upon 30 days’ noticeafter the warrants become exercisable, only in the event that the last sale priceof the common stock is at least $8.50 per share for any 20 trading days withina 30 trading day period ending on the third day prior to the date on whichnotice of redemption is given. In connection with our initial public offering,we issued an option, for $100, to the Representative to purchase 425,000 unitsat an exercise price of $7.50 per unit. The warrants underlying such units areexercisable at $6.25 per share. We have accounted for the fair value of theoption, inclusive of the receipt of the $100 cash payment, as an expense of thepublic offering resulting in a charge directly to stockholders’ equity. Weestimate that the fair value of this option is approximately $922,250 ($2.17per unit) using a Black-Scholes option-pricing model. The fair value of theoption granted to the Representative is estimated as of the date of grant usingthe following assumptions: (1) expected volatility of 42.875%, (2) risk-freeinterest rate of 4.03% and (3) expected life of 5 years. The option may beexercised for cash or on a “cashless” basis at the holder’s option, such thatthe holder may use the appreciated value of the option (the difference betweenthe exercise prices of the option and the underlying warrants and the marketprice of the units and underlying securities) to exercise the option withoutthe payment of any cash. All activity from June 1, 2005 through October 27,2005 was related to our formation and our initial public offering. SinceOctober 28, 2005, we have been seeking to complete a business combination witha company in the healthcare industry.

On August 25, 2006, we and BioValve Technologies, Inc.(“BioValve”), a privately-held innovator in life sciences, announced that wehad entered into a definitive agreement (“Contribution Agreement”) whereby weagreed to acquire a majority interest in Valeritas, LLC (“Valeritas”), themedical technologies subsidiary of BioValve. On January 22, 2007, we andBioValve announced that we had agreed to terminate the Contribution Agreementand mutually release each other from further claims. In connection therewith,all of the capitalized 

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expenses in connectionwith the Valeritas transaction amounting to approximately $898,000 were chargedto expense for the year ended December 31, 2006.

On April 25, 2007, we announced that, pursuant to theprovisions of our certificate of incorporation, we have until October 27, 2007to complete a business combination, having satisfied the criteria for extensionset forth in our certificate of incorporation.

On June 1, 2007, we enteredinto a Stock Purchase Agreement (the “*StockPurchase Agreement*”) among Paramount, B.J.K. Inc., a New Yorkcorporation doing business as Chem Rx (“*ChemRx*”), and the stockholders of Chem Rx (each a “*Seller*” and collectively, the “*Sellers*”).  Pursuant to the StockPurchase Agreement, on the closing date, subject to Paramount stockholderapproval, we will acquire 100% of the issued and outstanding common stock ofChem Rx (the “*Stock Purchase*”).  Chem Rx is an innovative provider ofinstitutional pharmacy services in the New York area.  We have agreedthat, in connection with the closing, we will change our name to “Chem RxCorporation”

At the closing of thetransactions contemplated by the Stock Purchase Agreement (the “Transaction”), wewill pay $133 million in cash to the Sellers less (i) the amount of netindebtedness and transaction expenses in excess of thresholds set forth in theStock Purchase Agreement as of the closing date, (ii) the amount payable toSteven Silva under the payment agreement described below and (iii) any amountspaid to Benny Salerno in connection with the acquisition by Chem Rx of theminority interest in Chem Rx/Salerno’s, LLC.  The cash portion of thepurchase price is also subject to adjustment based on Chem Rx’s net worth as ofthe closing date.   We will requireadditional financing in order to consummate the transactions contemplated by theStock Purchase Agreement and pay out any shareholders who elect to exercisetheir IPO conversion rights and convert their shares to cash.  In connection therewith, we have received acommitment from a bank for up to $177 million of debt financing.  The bank’s commitment to lend us the funds wewill need to close the Transaction is subject to the satisfaction of a numberof conditions, including the Transaction having closed by October 27,2007; the Transaction having been consummated pursuant to the terms of theStock Purchase Agreement with no provision thereof having been waived, amended,supplemented or otherwise modified in a manner adverse to the lenders; therepayment of all of our and Chem Rx's pre-existing indebtedness forborrowed money; and there having not occurred any event, development orcircumstance since December 31, 2006 that has caused or could reasonablybe expected to have a “material adverse effect” on Chem Rx.  If we fail to satisfy these or any of theother conditions set forth in the commitment letter, we may not receive thenecessary financing at the closing and we would be unable to close theTransaction.

At the closing, Paramountwill issue an aggregate of 1,500,000 newly issued shares of Paramount commonstock to the Sellers, and an additional 1,000,000 shares of Paramount commonstock in connection with the acquisition of Chem Rx New Jersey, LLC, anaffiliated operating company of which 90% of the equity is owned by certainshareholders of Chem Rx. In addition, we will pay the Sellers up to anadditional $12,500,000 in cash and issue to them up to 9,000,000 additionalshares of our common stock subject to achievement of certain EBITDA and stockprice milestones following the closing.

**Results of Operations forthe Three Months Ended June 30, 2006 compared to the Three Months Ended June30, 2007**

For the three months ended June 30, 2006, we had netincome of $202,979 consisting of $479,594 of interest income on the trust fundand operating account offset by $276,615 of general, selling and administrativeexpense. The components of the general, selling and administrative expensesinclude $24,486 of travel related diligence expense for potential targetcompany acquisitions, $9,556 for research database subscriptions for diligenceon potential target company acquisitions, $124,490 of consulting fees for duediligence expenses pertaining to potential target company acquisitions, $39,518of directors and officers liability insurance expense, $22,500 for office spaceand administrative expenses payable to Paramount BioCapital, approximately$17,819 of legal and accounting expenses pertaining to the SEC filings andother matters, $25,280 of expenses payable in connection with public relationsand $12,966 for general corporate overhead.

For the three months ended June 30, 2007, we had netincome of $391,776 consisting of $500,878 of interest income on the trust fundand operating account offset by $109,102 of general, selling and administrativeexpense. The components of the general, selling and administrative expensesinclude $21,243 of patent due diligence expenses pertaining to potential targetcompany acquisitions, $33,270 of directors and officers liability insuranceexpense, $22,500 for office space and administrative expenses payable toParamount BioCapital,  $29,863 ofexpenses payable in connection with public relations and $2,226 for generalcorporate overhead.

The overall net income for the three months ended June30, 2007 increased by $188,797 compared to the three months ended June 30,2006. This increase is mainly attributable to a decrease of approximately $137,000of due diligence expense on potential targets for a business combination. Thisdecrease in due diligence expense was the result of the Company focusing itsdue diligence on three acquisition candidates during the 2nd quarter of 2007. Upon the announcement of the StockPurchase Agreement on June 1, 2007 all diligence expense was completed.  Certain expenses incurred during duediligence have been capitalized since the Company has identified an acquisitiontarget.  Additionally, interest incomeearned for the trust and operating account increased by approximately $21,000during the quarter as a result of higher interest rates earned.

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**Results of Operations forthe Six Months Ended June 30, 2006 compared to the Six Months Ended June 30,2007**

For the six months ended June 30, 2006, we had netincome of $298,989 consisting of $1,025,783 of interest income on the trustfund and operating account offset by $726,794 of general, selling andadministrative expense. The components of the general, selling andadministrative expenses include $109,284 of travel related diligence expensefor potential target company acquisitions, $46,938 for research databasesubscriptions for diligence on potential target company acquisitions, $203,472of consulting fees for due diligence expenses pertaining to potential targetcompany acquisitions, $78,601 of directors and officers liability insuranceexpense, $45,000 for office space and administrative expenses payable toParamount BioCapital, approximately $145,086 of legal and accounting expensespertaining to the SEC filings and other matters, $25,280 of expenses payable inconnection with public relations and $73,133 of franchise tax expense andgeneral corporate overhead.

For the six months ended June 30, 2007, we had netincome of $693,902 consisting of $970,312 of interest income on the trust fundand operating account offset by $275,810 of general, selling and administrativeexpense and $600 for income tax expense. The components of the general, selling and administrative expensesinclude $21,243 of patent due diligence expense pertaining to potential targetcompany acquisitions, $13,350 for research database subscriptions for diligenceon potential target company acquisitions, $72,353 of directors and officersliability insurance expense, $45,000 for office space and administrativeexpenses payable to Paramount BioCapital, $38,053 of expenses payable in connection with public relations, $30,400of accounting fees in  connection withSEC reporting obligations and $55,411 of franchise tax expense and generalcorporate overhead.

The overall net income for the six months ended June30, 2007 increased by $394,913 compared to the three months ended June 30,2006. This increase is mainly attributable to a decrease of approximately$325,000 of due diligence expense on potential targets for a businesscombination. This decrease in due diligence expense was the result of theCompany focusing its due diligence on three acquisition candidates during theperiod.  Upon the announcement of thecontemplated Stock Purchase Agreement on June 1, 2007 all diligence expense wascompleted.  Certain expenses incurredduring due diligence have been capitalized since the Company has identified anacquisition target.  Additionally,interest income earned for the trust and operating account decreased byapproximately $55,000 during the period as a result of lower interest ratesearned.

**Off-Balance SheetArrangements**

We have not entered into any off-balance sheetfinancing arrangements, established any special purpose entities, guaranteedany debt or commitments of other entities, or entered into any options onnon-financial assets.

**Contractual Obligations**

We do not have any long-term debt, capital leaseobligations, operating lease obligations, purchase obligations or otherlong-term liabilities.

**Critical AccountingPolicies**

Our significant accounting policies are more fullydescribed in Note 1 to the condensed consolidated financial statements and Note1 of the Company’s Form 10-K filed for the fiscal year ended December 31, 2006on April 2, 2007, which is referenced herewith. However certain accountingpolicies are particularly important to the portrayal of financial position andresults of operations and require the application of significant judgments bymanagement. As a result, the condensed consolidated financial statements aresubject to an inherent degree of uncertainty. In applying those policies,management uses its judgment to determine the appropriate assumptions to beused in the determination of certain estimates. These estimates are based onour historical experience, terms of existing contracts, observance of trends inthe industry and information available from outside sources, as appropriate.Except for our adoption of  FinancialAccounting Standards Board (“FASB”) Interpretation No. 48, “Accounting forUncertainty in Income Taxes – an interpretation of FASB Statement No. 109”(“FIN 48”) in 2007 as described in Note 10, our significant accounting policieshave remained unchanged from those used during its fiscal year ended December31, 2006.

**Liquidity and CapitalResources**

$52,164,500 of the net proceeds of our initial publicoffering were deposited in trust, with the remaining net proceeds of $1,308,866becoming available to pay for business, legal and accounting due diligence onprospective acquisitions and continuing general and administrative expenses. Weused substantially all of the net proceeds of our initial public offering notheld in trust to identify, evaluate and negotiate with prospective acquisitioncandidates (including with respect to the negotiating and structuring of theContribution Agreement with BioValve, BTI and Valeritas).

We intend to utilize our cash, including the fundsheld in the trust fund, capital stock, debt or a combination of the foregoing toeffect a business combination. To the extent that our capital stock or debtsecurities are used in whole or in part as consideration to effect a businesscombination, the proceeds held in the trust fund as well as any other availablecash will be used to finance the operations of the target business.  At June 30, 2007, we had cash outside of thetrust fund of $4,112 and other current assets of $137,277 and total liabilitiesof $2,241,241. Our working capital deficiency (excluding investments held intrust) amounted to $2,099,852. In order to continue operations, an affiliate ofour chairman, Paramount BioCapital, has advanced money to us and has madepayments on our behalf.  As of June 30,2007, the Company owed Paramount BioCapital $432,078, which consists of $67,500accrued for administrative services and $364,578 of loans (including $9,578 ofpayments made on our behalf to our vendors). Amounts borrowed from, or advanced on our behalf by, ParamountBioCapital, are repayable on demand without interest.

We have received commitments for a total of $177 millionof debt financing from CIBC Inc. and CIBC World Markets Corp. (together, “CIBC”)consisting of a $90 million senior secured first lien term loan facility,a $20 million senior secured first lien delayed draw term loan facility, a $25 millionsenior secured first lien revolving credit facility and a $42 millionsenior secured second lien term loan facility. We will use the proceeds of thefirst lien term loans, along with the proceeds from the second lien term loansand the funds currently held by us in our trust account to finance the cashportion of the purchase price payable to the Sellers in the Transaction, torepay existing indebtedness of Chem Rx and to pay fees and expensesrelated to the Transaction and the financing. We expect that the totalborrowings we will require at the time of closing will be approximately $127 million,assuming that none of our stokholders exercise their IPO conversion rights andapproximately $138 million if the holders of 1,954,999 shares exercisetheir conversion rights (which is the maximum number of shares that may beconverted). The loans will be secured by substantially all of our assets and Chem Rx's(and its subsidiaries’) assets. The credit facilities will also containcustomary affirmative and negative covenants. The first lien credit facilitieswill contain a covenant regarding a minimum fixed charge coverage ratio and amaximum total leverage ratio (with step-ups and step-downs to be agreed). Thesecond lien term loan facility will be limited to a covenant regarding amaximum total leverage ratio, which shall be less stringent than thatapplicable to the first lien credit facilities.

Our Certificate ofIncorporation requires that we will take all actions necessary to liquidate inthe event that we do not consummate a business combination within 18 monthsfrom the date of the consummation of our initial public offering (April 27,2007), or 24 months from the consummation of our initial public offering(October 27, 2007) if certain criteria have been satisfied. On April 25, 2007,we announced that, pursuant to the provisions of our certificate ofincorporation, we satisfied the criteria for extension set forth in thecertificate of incorporation and 

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accordingly we have until October 27, 2007 to completea business combination.  We intend toconsummate the Stock Purchase Agreement with Chem Rx prior to October 27, 2007.

Given our working capitaldeficiency, we would not be able to search for, negotiate or complete abusiness combination other than the proposed transaction with Chem Rx withoutobtaining additional funding.  Althoughan affiliate of our chairman, Paramount BioCapital, had advanced us money topay certain of our operating expenses, Paramount BioCapital is under noobligation to continue to do so.  Wecould try to raise any required funds via a private offering of debt or equitysecurities, however, we have no current intention to enter into such a transactionand there is no guarantee that we would be successful in completing such fundraising on terms acceptable to us, or at all.

In the event of a liquidation, it is likely that theper share value of the residual assets remaining available for distribution(including assets deposited in the trust fund) will be less than the offeringprice per unit in our initial public offering due to costs related to theinitial public offering and since no value would be attributed to the warrantscontained in the units sold. Lindsay A. Rosenwald, our chairman of the board,has agreed that, if we liquidate prior to the consummation of a businesscombination, he will be personally liable to pay debts and obligations totarget businesses or vendors or other entities that are owed money by us forservices rendered or contracted for or for products sold to us to the extentthey have claims against the funds in our trust account. In connectiontherewith, an affiliate of Lindsay A. Rosenwald, Paramount BioCapital, hasagreed to pay such debts and obligations if necessary.

**ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Market risk is thesensitivity of income to changes in interest rates, foreign exchanges,commodity prices, equity prices, and other market-driven rates or prices. Weare not presently engaged in and, until the completion of a businesscombination, we will not engage in, any substantive commercial business.Accordingly, we are not and, until such time as we consummate a businesscombination, we will not be, exposed to risks associated with foreign exchangerates, commodity prices, equity prices or other market-driven rates or prices.The net proceeds of our initial public offering held in the trust fund havebeen invested only in “government securities” within the meaning of Section2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days orless or in money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act of 1940. Given our limited risk inour exposure to government securities and money market funds, we do not viewthe interest rate risk to be significant. Thus, we are subject to market riskprimarily through the effect of changes in interest rates on governmentsecurities.  The effect of other changes,such as foreign exchange rates, commodity prices and/or equity prices, does notpose significant market risk to us.  Ifthe effective interest rate were to decrease by 100 basis points, our potentialearnings would decrease by approximately $46,000 per month.  We are not engaged in any hedgingtransactions as of June 30, 2007.

**ITEM4. CONTROLS AND PROCEDURES.**

Disclosure controls and procedures are controls andother procedures that are designed to ensure that information required to bedisclosed in company reports filed or submitted under the Securities ExchangeAct of 1934 (the “Exchange Act”) is recorded, processed, summarized andreported, within the time periods specified in the Securities and ExchangeCommission’s rules and forms. Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed in company reports filed or submitted under theExchange Act is accumulated and communicated to management, including our chiefexecutive officer, as appropriate to allow timely decisions regarding requireddisclosure.

As required by Rules 13a-15 and 15d-15 under theExchange Act, our chief executive officer carried out an evaluation of theeffectiveness of our disclosure controls and procedures as of June 30,2007. His evaluation was carried out with the participation of other members ofour management. Based upon their evaluation, he concluded that our disclosurecontrols and procedures were effective.

Our internal control over financial reporting is aprocess designed by, or under the supervision of, our chief executive officerand effected by our board of directors, management and other personnel, toprovide reasonable assurance regarding the reliability of our financialreporting and the preparation of our financial statements for external purposesin accordance with generally accepted accounting principles (United States).Internal control over financial reporting includes policies and procedures thatpertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of our assets; providereasonable assurance that transactions are recorded as necessary to permitpreparation of our financial statements in accordance with generally acceptedaccounting principles (United States), and that our receipts and expendituresare being made only in accordance with the authorization of our board ofdirectors and management; and provide reasonable assurance regarding preventionor timely detection of unauthorized acquisition, use or disposition of ourassets that could have a material effect on our financial statements.

During the most recentlycompleted fiscal quarter, there has been no change in our internal control overfinancial reporting that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

 

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**PART II**

**OTHER INFORMATION**

**ITEM2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

On October 27, 2005, we closed our initial publicoffering of 8,500,000 units with each unit consisting of one share of ourcommon stock and two warrants, each to purchase one share of our common stockat an exercise price of $5.00 per share. On October 31, 2005 and November 1,2005, we consummated the closing of an aggregate of 1,275,000 additional unitswhich were subject to the over-allotment option. The units were sold at anoffering price of $6.00 per unit, generating total gross proceeds of$58,650,000. The managing underwriter in the offering was EarlyBirdCapital,Inc. The securities sold in the offering were registered under the SecuritiesAct of 1933 on a registration statement on Form S-1 (No. 333-127149). TheSecurities and Exchange Commission declared the registration statementeffective on October 21, 2005.

We paid a total of $4,105,500 in underwritingdiscounts and commissions and $1,071,134 for other costs and expenses relatedto the offering, including $510,000 for the underwriters’ non-accountableexpense allowance of 1% of the gross proceeds on the initial closing only.

After deducting the underwriting discounts andcommissions and the offering expenses, the total net proceeds to us from theoffering were $53,473,366, of which $52,164,500 was deposited into the trustaccount and the remaining proceeds of $1,308,866 became available to be used toprovide for business, legal and accounting due diligence on prospectivebusiness combinations and continuing general and administrative expenses.

**ITEM6: EXHIBITS**
| Exhibit Number | ** ** | **Description**                                                                                                                                                                                                                                                                           |
|----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                                                                                                                                                                                                      |
| 2.1            |       | Stock Purchase Agreement, dated June 1, 2007, among Paramount  Acquisition Corp. (“Paramount”), B.J.K. Inc. and the stockholders of B.J.K.  Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form  8-K filed on June 4, 2007).                           |
|           |       |                                                                                                                                                                                                                                                                                      |
| 2.2            |       | Agreement and Plan of Merger by and among Paramount,  Paramount Merger Sub (NJ), Inc., Chem Rx New Jersey, LLC, B.J.K. Inc. and the  members of Chem Rx New Jersey, LLC, dated as of June 15, 2007 (incorporated  by reference to the Current Report on Form 8-K filed on June 21, 2007). |
|           |       |                                                                                                                                                                                                                                                                                      |
| 4.1            |       | Promissory Note, dated April 1, 2007.                                                                                                                                                                                                                                                     |
|           |       |                                                                                                                                                                                                                                                                                      |
| 10.1           |       | Letter Agreement, dated April 21, 2007, between  Paramount and EarlyBirdCapital, Inc. (incorporated by reference to Exhibit  10.1 to the Quarterly Report on Form 10-Q filed on May 15, 2007).                                                                                       |
|           |       |                                                                                                                                                                                                                                                                                      |
| 10.2           |       | Employment Agreement, dated June 1, 2007, among  Paramount and Jerry Silva   (incorporated by reference to Exhibit 10.1 to the Current Report on  Form 8-K filed on June 4, 2007).                                                                                                   |
|           |       |                                                                                                                                                                                                                                                                                      |
| 10.3           |       | Employment Agreement, dated June 1, 2007, among  Paramount and Steven Silva  (incorporated  by reference to Exhibit 10.2 the Current Report on Form 8-K filed on June 4,  2007).                                                                                                     |
|           |       |                                                                                                                                                                                                                                                                                      |
| 10.4           |       | Employment Agreement,  dated June 15, 2007, among Paramount and Chuck Kelly  (incorporated by reference to Exhibit 10.1  to the Current Report on Form 8-K filed on June 21, 2007).                                                                                             |
|           |       |                                                                                                                                                                                                                                                                                      |
| 10.5           |       | Employment Agreement,  dated June 15, 2007, among Paramount and Michael Segal  (incorporated by reference to Exhibit 10.2 the  Current Report on Form 8-K filed on June 21, 2007).                                                                                              |
|           |       |                                                                                                                                                                                                                                                                                      |
| 31             |       | Certification of Chief Executive Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                      |
|           |       |                                                                                                                                                                                                                                                                                      |
| 32             |       | Certification of Chief Executive Officer pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                      |

 

16

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**SIGNATURES**

In accordance with the requirements of the ExchangeAct, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.
|                   | PARAMOUNT ACQUISITION CORP.            |
|------------------------|----------------------------------------|
|                   |                                   |
|                   |                                   |
| Dated: August 14, 2007 |                                   |
|                   |                                   |
|                   | /s/ J. Jay  Lobell                     |   |
|                   | J. Jay Lobell                          |
|                   | Chief Executive Officer (Principal     |
|                   | Executive and Financial and Accounting |
|                   | Officer)                               |

 

17

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**Exhibit Index**
| Exhibit Number | ** ** | **Description**                                                                                                                                                                                                                                                                                 |
|----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                                                                                                                                                                                                            |
| 2.1            |       | Stock Purchase Agreement, dated June 1, 2007, among Paramount  Acquisition Corp. (“Paramount”), B.J.K. Inc. and the stockholders of B.J.K.  Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form  8-K filed on June 4, 2007).                                 |
|           |       |                                                                                                                                                                                                                                                                                            |
| 2.2            |       | Agreement and Plan of Merger by and among Paramount,  Paramount Merger Sub (NJ), Inc., Chem Rx New Jersey, LLC, B.J.K. Inc. and the  members of Chem Rx New Jersey, LLC, dated as of June 15, 2007  (incorporated by reference to the Current  Report on Form 8-K filed on June 21, 2007). |
|           |       |                                                                                                                                                                                                                                                                                            |
| 4.1            |       | Promissory Note, dated April 1, 2007.                                                                                                                                                                                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                            |
| 10.1           |       | Letter Agreement, dated April 21, 2007, between  Paramount and EarlyBirdCapital, Inc. (incorporated by reference to Exhibit  10.1 to the Quarterly Report on Form 10-Q filed on May 15, 2007).                                                                                             |
|           |       |                                                                                                                                                                                                                                                                                            |
| 10.2           |       | Employment Agreement, dated June 1, 2007, among  Paramount and Jerry Silva   (incorporated by reference to Exhibit 10.1 to the Current Report on  Form 8-K filed on June 4, 2007).                                                                                                         |
|           |       |                                                                                                                                                                                                                                                                                            |
| 10.3           |       | Employment Agreement, dated June 1, 2007, among  Paramount and Steven Silva  (incorporated  by reference to Exhibit 10.2 the Current Report on Form 8-K filed on June 4,  2007).                                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                            |
| 10.4           |       | Employment Agreement,  dated June 15, 2007, among Paramount and Chuck Kelly  (incorporated by reference to Exhibit 10.1  to the Current Report on Form 8-K filed on June 21, 2007).                                                                                                   |
|           |       |                                                                                                                                                                                                                                                                                            |
| 10.5           |       | Employment Agreement,  dated June 15, 2007, among Paramount and Michael Segal  (incorporated by reference to Exhibit 10.2 the  Current Report on Form 8-K filed on June 21, 2007).                                                                                                    |
|           |       |                                                                                                                                                                                                                                                                                            |
| 31             |       | Certification of Chief Executive Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                            |
|           |       |                                                                                                                                                                                                                                                                                            |
| 32             |       | Certification of Chief Executive Officer pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                            |

 

18

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