**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, 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 March 31, 2007** |
| ** **                            |   | ** ** |
| **o**                                 |   | **Transition report under Section 13 or 15(d) of  the Exchange Act** |
| ** **                            |   | ** ** |
| ** **                            |   | **For the transition period from                to              ** |
| ** **                            |   | ** ** |
| **Commission  File Number 000-51518** |

 

**Paramount Acquisition Corp.**

(Exact Name of Registrant as Specified inIts Charter)

| **Delaware**                                                               |   | **20-2938469**       |
|----------------------------------------------------------------------------|--------|----------------------|
| (State or other  Jurisdiction of                                           |   | (I.R.S. Employer     |
| Incorporation or  Organization)                                            |   | Identification  No.) |
|                                                                       |
| **787 7****th Avenue, 48****th 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 theregistrant:  (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Act during the past12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes x  No o

Indicate by check mark whether the Registrant isa large accelerated filer, an accelerated filer, or a non-acceleratedfiler.  See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act (Checkone).

Large accelerated filer o     Acceleratedfiler o     Non-acceleratedfiler x

Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct).  Yes x  No o

As of May 14, 2007, 11,900,000 shares of commonstock, par value $.0001 per share, were issued and outstanding.

 

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Paramount Acquisition Corp.

(a development stage enterprise)

Contents
|                                 | ** ** | ** **                                                                                                                                                  | ** ** | **Page** |
|---------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|
| Part  I: Financial Information: |       |                                                                                                                                                        |
|                            |       |                                                                                                                                                        |
|                            |       | Item 1 –Financial Statements (Unaudited):                                                                                                              |       |     |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Condensed Balance Sheets  as of March 31, 2007 and December 31, 2006                                                                                        |       | 4        |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Condensed  Statements of Operations for the Three Months Ended March 31, 2007 and 2006,  and for the Period from June 1, 2005 (inception) to March 31, 2007 |       | 5        |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Condensed  Statement of Changes in Stockholders’ Equity for the Period from June 1, 2005  (Inception) to March 31, 2007                      |       | 6        |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Condensed  Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006,  and for the Period from June 1, 2005 (Inception) to March 31, 2007 |       | 7        |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Notes to  Unaudited Condensed Financial Statements                                                                                                          |       | 8        |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Item 2 – Management’s Discussion and Analysis or Plan  of Operation                                                                               |       | 14       |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Item 3 – Quantitative and Qualitative Disclosures  about Market Risk                                                                                   |       | 16       |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Item 4 – Controls and Procedures                                                                                                                       |       | 16       |
|                            |       |                                                                                                                                                        |       |     |
| Part II. Other Information      |       |                                                                                                                                                        |
|                            |       |                                                                                                                                                        |
|                            |       | Item 2 – Unregistered Sales of Equity Securities and  Use of Proceeds                                                                                  |       | 17       |
|                            |       |                                                                                                                                                        |       |     |
|                            |       | Item 6 – Exhibits                                                                                                                                      |       | 18       |
|                            |       |                                                                                                                                                        |
| Signatures                      |       | 19                                                                                                                                                          |
|                            |       |                                                                                                                                                        |
| Exhibit Index                   |       | 20                                                                                                                                                          |
|                                 |            |                                                                                                                                                             |            |          |  |  |

 

3

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**Part I: Financial Information**

**Item 1 –Financial Statements (Unaudited)**

**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**Condensed Balance Sheets**
| ** **                                                                                | ** ** | **March 31, 2007** | ** ** | **December 31, 2006** | ** ** |
|-------------------------------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                                                                                | ** ** | **(unaudited)**              | ** ** | **(Note 1)**               | ** ** |
| **Assets**                                                                                |       |                         |       |                            |       |
| Current assets:                                                                           |       |                         |       |                            |       |
| Cash and cash  equivalents                                                                |       | $                            | 23,998     |                            | $          | 54,209 |   |
| Investments held in  Trust Fund                                                           |       | 54,939,119                   |       | 54,470,015                      |       |
| Prepaid expenses and  other current assets                                                |       | 96,101                       |       | 135,375                         |       |
|                                                                                      |       |                         |       |                            |       |
| Total assets                                                                              |       | $                            | 55,059,218 |                            | $          | 54,659,599 |   |
|                                                                                      |       |                         |       |                            |       |
| **Liabilities and Stockholders’  Equity**                                            |       |                         |       |                            |       |
| Current liabilities:                                                                      |       |                         |       |                            |       |
| Due to related  party – accrued expenses                                             |       | $                            | 75,346     |                            | $          | 24,989 |   |
| Accounts payable  and accrued expenses                                                    |       | 1,014,835                    |       | 967,699                         |       |
|                                                                                      |       |                         |       |                            |       |
| Total current  liabilities                                                                |       | 1,090,181                    |       | 992,688                         |       |
|                                                                                      |       |                         |       |                            |       |
| Common stock subject to  possible conversion, 1,954,023 shares at conversion value        |       | 10,982,330                   |       | 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 1,954,023 subject to possible conversion) |       | 996                          |       | 996                             |       |
| Additional  paid-in capital                                                               |       | 42,515,140                   |       | 42,608,914                      |       |
| Earnings  accumulated during development stage                                            |       | 470,571                      |       | 168,445                         |       |
| Total stockholders’  equity                                                          |       | 42,986,707                   |       | 42,778,355                      |       |
| Total liabilities and stockholders’ equity                                           |       | $                            | 55,059,218 |                            | $          | 54,659,599 |   |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements.*

4

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**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**CondensedStatements of Operations**

**(unaudited)**

**For the Three Months Ended March31, 2007 and 2006**

**And forthe Period from June 1, 2005 (inception) to March 31, 2007**
| ** **                                                                       | ** ** | **For the three  months ended  March 31, 2007** | ** ** | **For the three  months ended  March 31, 2006** | ** ** | **Period from  June 1, 2005  (inception) to  March 31, 2007** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|------------|
| Revenue                                                                          |       | $                                                                        | —     |                                                                     | $          | —                                                                                      |       | $ | — |   |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| General, selling  and administrative expenses                                    |       | (166,708                                                                 | )          | (404,328                                                                 | )          | (2,332,568                                                                                  | )          |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Operating loss                                                                   |       | (166,708                                                                 | )          | (404,328                                                                 | )          | (2,332,568                                                                                  | )          |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Interest income                                                                  |       | 469,434                                                                  |       | 546,189                                                                  |       | 2,805,639                                                                                   |       |
| Income before  income taxes                                                      |       | 302,726                                                                  |       | 141,861                                                                  |       | 473,071                                                                                     |       |
| Provision for  income taxes                                                      |       | (600                                                                     | )          | (45,851                                                                  | )          | (2,500                                                                                      | )          |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Net income                                                                       |       | 302,126                                                                  |       | 96,010                                                                   |       | 470,571                                                                                     |       |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Accretion of  Trust Fund relating to common stock subject to possible conversion |       | (93,774                                                                  | )          | (107,122                                                                 | )          | (554,646                                                                                    | )          |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Net income  (loss) attributable to other common stockholders                     |       | $                                                                        | 208,352    |                                                                     | $          | (11,112                                                                                     | )          | $ | (84,075 | ) |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Weighted average  shares outstanding                                             |       | 9,945,977                                                                |       | 9,945,977                                                                |       |                                                                                        |       |
|                                                                             |       |                                                                     |       |                                                                     |       |                                                                                        |       |
| Basic and diluted  income (loss) per share                                       |       | $                                                                        | 0.02       |                                                                     | $          | (0.00                                                                                       | )          |   |   |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements.*

5

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**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**CondensedStatement of Changes in Stockholders’ Equity (unaudited)**

**For thePeriod of June 1, 2005 (inception) to March 31, 2007**
| ** **                                                                                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional**              | ** ** | **Earnings**               | ** ** | **Total**   | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|-----------------------------|------------|----------------------------|------------|-------------|------------|
| ** **                                                                                                                                                              | ** ** | **Common Stock** | ** ** | **paid-in** | ** ** | **accumulated during** | ** ** | **stockholders’**     | ** ** |
| ** **                                                                                                                                                              | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **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 1,954,023 shares subject to possible  conversion) |       | 9,775,000             |       | 978         |       | 53,472,388                  |       | —                     |       | 53,473,366  |       |
| Proceeds subject  to possible conversion of 1,954,023 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                                                                                        |       | —                |       | —      |       | (93,774                     | )          | —                     |       | (93,774     | )          |
| Net income for  the three months ended March 31, 2007                                                                                                         |       | —                |       | —      |       | —                      |       | 302,126                    |       | 302,126     |       |
|                                                                                                                                                                    |       |                  |       |        |       |                        |       |                       |       |        |       |
| Balance, March 31, 2007                                                                                                                                                 |       | 11,900,000            |       | $           | 996        |                        | $          | 42,515,140                 |       | $      | 470,571    |   | $ | 42,986,707 |   |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements.*

6

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**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**CondensedStatements of Cash Flows (unaudited)**

**For the Three Months Ended March31, 2007 and 2006**

**and Forthe Period from June 1, 2005 (inception) to March 31, 2007**
| ** **                                                                       | ** ** | **For the Three  Months  Ended  March 31, 2007** | ** ** | **For the Three  Months  Ended  March 31, 2006** | ** ** | **Period from  June 1, 2005  (inception)  to  March 31, 2007** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | ** **                                                           | ** ** | ** **                                                           | ** ** | ** **                                                                              | ** ** |
| **Cash  Flows from Operating Activities**                                        | ** ** | ** **                                                           | ** ** | ** **                                                           | ** ** | ** **                                                                              | ** ** |
| Net income                                                                       |       | $                                                                    | 302,126    |                                                                 | $          | 96,010                                                                                  |       | $ | 470,571 |   |
| Changes in Operating Assets and Liabilities:                                     |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| Prepaid expenses and other current assets                                        |       | 39,274                                                               |       | 25,044                                                               |       | (96,101                                                                                 | )          |
| Accounts payable and accrued expenses                                            |       | 47,136                                                               |       | (1,675                                                               | )          | 1,106,735                                                                               |       |
| Due to related party – accrued expenses                                     |       | 50,357                                                               |       | 60,850                                                               |       | 75,346                                                                                  |       |
| Income taxes payable                                                             |       | —                                                               |       | (12,800                                                              | )          | (91,900                                                                                 | )          |
| Net cash provided by operating activities                                        |       | 438,893                                                              |       | 167,429                                                              |       | 1,464,651                                                                               |       |
|                                                                             |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| **Cash  Flows from Investing Activities**                                        | ** ** | ** **                                                           | ** ** | ** **                                                           | ** ** | ** **                                                                              | ** ** |
| Investments held in Trust Fund                                                   |       | (469,104                                                             | )          | (535,879                                                             | )          | (54,939,119                                                                             | )          |
| Net cash used in investing activities                                            |       | (469,104                                                             | )          | (535,879                                                             | )          | (54,939,119                                                                             | )          |
|                                                                             |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| **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                                                                                     |       |
| Payments of deferred offering costs                                              |       |                                                                 |       |                                                                 |       | (5,176,634                                                                              | )          |
| Net cash provided by financing activities                                        |       | —                                                               |       | —                                                               |       | 53,498,466                                                                              |       |
|                                                                             |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| Net (decrease)  increase in cash                                                 |       | (30,211                                                              | )          | (368,450                                                             | )          | 23,998                                                                                  |       |
| Cash at  beginning of the period                                                 |       | 54,209                                                               |       | 1,122,290                                                            |       | —                                                                                  |       |
|                                                                             |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| Cash at end of  the period                                                       |       | $                                                                    | 23,998     |                                                                 | $          | 753,840                                                                                 |       | $ | 23,998 |   |
|                                                                             |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| Supplemental  disclosure of cash flow information:                               |       |                                                                 |       |                                                                 |       |                                                                                    |       |
| Accretion of Trust Fund relating to Common Stock  subject to possible conversion |       | 93,774                                                               |       | 107,122                                                              |       | 554,647                                                                                 |       |
| Income taxes  paid                                                               |       | 600                                                                  |       | 85,651                                                               |       | 93,909                                                                                  |       |

 

*Theaccompanying notes are an integral part of these unaudited condensed financialstatements.*

7

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**ParamountAcquisition Corp.**

**(adevelopment stage enterprise)**

**Notes to Unaudited CondensedFinancial Statements**

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

Theseunaudited condensed financial statements as of March 31, 2007, for the threemonths ended March 31, 2007, for the three months ended March 31, 2006, and forthe period from June 1, 2005 (Inception) to March 31, 2007 have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America for interim financial information and with the instructionsto Form 10-Q.  Accordingly, they do notinclude all of the information and footnotes required by accounting principlesgenerally accepted in the United States of America for complete financialstatements. Certain prior year amounts have been reclassified to conform tocurrent year presentation.  In theopinion of management, all adjustments (consisting of normal recurringaccruals) considered necessary for a fair presentation have been included.  Operating results for the interim periodspresented are not necessarily indicative of the results to be expected for anyother interim period or for the full year.

Theseunaudited condensed financial statements should be read in conjunction with thefinancial statements and notes thereto for the fiscal year ended December 31,2006 included in Paramount Acquisition Corp.’s (the “Company”) Form 10-KSB forthe fiscal year ended December 31, 2006, which was filed on April 2, 2007. Theaccounting policies used in preparing these unaudited condensed financialstatements are consistent with those described in the December 31, 2006financial statements. 

ParamountAcquisition Corp. (the “Company”) was incorporated in Delaware on June 1, 2005as a blank check company whose objective is to acquire an operating business inthe healthcare industry.

Allactivity from June 1, 2005 through October 27, 2005 related to the Company’sformation and initial public offering is described below.  Since October 28, 2005, the Company has beensearching for a target business to acquire. The Company has selected December31 as its fiscal year end.

Theregistration statement for the Company’s initial public offering (“Offering”)was declared effective October 21, 2005 with respect to the 8,500,000 units(“Units”) sold at $6 per unit.  TheCompany consummated the 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.

TheCompany’s management has broad discretion with respect to the specificapplication of the net proceeds of the Offering, although substantially all ofthe net proceeds of the Offering are intended to be generally applied towardconsummating a business combination with an operating business in thehealthcare industry (“Business Combination”).

8

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Furthermore,there is no assurance that the Company will be able to successfully effect aBusiness 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(“Trust Account”) until the earlier of (i) the consummation of a BusinessCombination or (ii) liquidation of the Company. Under the agreement governingthe Trust Account, funds will only be invested in United States “governmentsecurities” within the meaning of Section 2(a)(16) of the Investment CompanyAct of 1940 with a maturity of 180 days or less or in money market fundsmeeting certain conditions under Rule 2a-7 promulgated under the InvestmentCompany Act of 1940.  The remaining netproceeds of $1,308,866 (initial amount not held in the Trust Account) may beused to pay for business, legal and accounting due diligence on prospectiveacquisitions and continuing general and administrative expenses.

TheCompany, after signing a definitive agreement for the acquisition of a target business,will submit such transaction for stockholder approval.  In the event that stockholders owning 20% ormore of the shares sold in the Offering vote against the Business Combinationand exercise their conversion rights described below, the Business Combinationwill not be consummated. 

All of the Company’s stockholdersprior to the Offering, including all of the officers and directors of theCompany (“Initial Stockholders”), have agreed to vote their 2,125,000 foundingshares of common stock in accordance with the vote of the majority in interestof all other stockholders of the Company (“Public Stockholders”) with respectto any Business Combination.  Afterconsummation of a Business Combination, these voting safeguards will no longerbe applicable. 

With respect to a BusinessCombination which is approved and consummated, any Public Stockholder who votedagainst the Business Combination may demand that the Company convert hisshares.  The per share conversion pricewill equal the amount in the Trust Account, calculated as of two business daysprior to the consummation of the proposed Business Combination, divided by thenumber of shares of common stock held by Public Stockholders at theconsummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate numberof shares owned by all Public Stockholders may seek conversion of their sharesin the event of a Business Combination. Such Public Stockholders are entitled to receive their per shareinterest in the Trust Account computed without regard to the shares held byInitial Stockholders.

The Company’s Certificate ofIncorporation provides for mandatory liquidation of the Company in the eventthat the Company does not consummate a Business Combination within 18 monthsfrom the date of

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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 announcedthat, pursuant to the provisions of its certificate of incorporation, it hasuntil October 27, 2007 to complete its business combination, having satisfiedthe criteria for extension set forth in the certificate of incorporation.  In the event of liquidation, it is likelythat the per share value of the residual assets remaining available fordistribution (including Trust Account assets) will be less than the initialpublic offering price per Unit in the Offering due to costs related to theOffering and since no value would be attributed to the Warrants (as defined inNote 3, below) contained in the Units sold.

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

As of March 31, 2007, excluding investments held in the TrustFund, the Company had a working capital deficiency of $970,082.  To fund certain operating costs of theCompany, an officer of the Company has advanced funds to the Company from, andmade payments on behalf of the Company by one of his affiliates, ParamountBioCapital Asset Management, Inc. (See Note 4 – Related PartyTransactions).  There can be no assurancethat the Company will consummate a business combination prior to October 27,2007.   Pursuant to its Certificate ofIncorporation, the Company would have to liquidate pursuant to a plan ofdissolution and return the funds held in the trust account to the holders ofshares issued in the offering as described in Note 3 if a business combinationis not completed prior to October 27, 2007.

These conditions raise substantial doubt about the Company’sability to continue as a going concern. The financial statements do not include any adjustments that mightresult from the outcome of this uncertainty.

**3.   InitialPublic Offering**

OnOctober 27, 2005, the Company sold 8,500,000 Units in the Offering at $6.00 perUnit.  On October 31, 2005 and November1, 2005 the Company sold an additional aggregate 1,275,000 Units pursuant to anover-allotment option of the Offering. The total gross proceeds from the total offering including theover-allotment amounted to $58,650,000. After payments of all offering costs, the net proceeds to the Companyamounted to $53,473,366.  Each Unitconsists of one share of the Company’s common stock, $.0001 par value, and twoRedeemable common stock Purchase Warrants (“Warrants”).  Each Warrant entitles the holder to purchasefrom the Company 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.  TheWarrants will be redeemable by the Company, upon prior written consent of theRepresentative, at a price of $.01 per Warrant upon 30 days’ notice after theWarrants become exercisable, only in the event that the last sale price of thecommon stock is at least $8.50 per share for any 20 trading days within a 30trading day period ending on the third day prior to the date on which notice ofredemption is given.  In connection withthis

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Offering,the Company issued an option, for $100, to the Representative (as defined inNote 5) to purchase 425,000 Units at an exercise price of $7.50 per Unit.  The Warrants underlying such Units areexercisable at $6.25 per share.  TheCompany has accounted for the fair value of the option, inclusive of thereceipt of the $100 cash payment, as an expense of the public offeringresulting in a charge directly to stockholders’ equity.  The Company estimates that the fair value ofthis option is approximately $922,250 ($2.17 per Unit) using a Black-Scholesoption-pricing model.  The fair value ofthe option granted to the Representative is estimated as of the date of grantusing the following assumptions: (1) expected volatility of 42.875%, (2)risk-free interest rate of 4.03% and (3) expected life of 5 years.  The option may be exercised for cash or on a“cashless” basis at the holder’s option, such that the holder may use theappreciated value of the option (the difference between the exercise prices ofthe option and the underlying Warrants and the market price of the Units andunderlying securities) to exercise the option without the payment of anycash.  The holders of such Warrants shallnot be entitled to receive net cash settlement of the Warrants and in no eventwill the Company be required to net cash settle the Warrants.

TheCompany’s Warrants will not be exercisable and the Company will not beobligated to issue shares of common stock upon the Warrants’ exercise unless atthe time a Warrant holder seeks to exercise a Warrant, either a registrationstatement under the Securities Act of 1933 with respect to the Company’s commonstock is effective or an exemption from the registration requirements of theSecurities Act is available.  Under theterms of the Warrant agreement the Company entered into with Continental StockTransfer & Trust Company (as agent for the Warrant holders), the Companyhas agreed to 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 doso, holders of the Warrants may be unable to exercise the Warrants and theCompany will not be required to settle any exercise of the Warrants.  In that case, the Warrants may have no value,the market for such Warrants may be limited and such Warrants may expire worthless.

**4.   RelatedParty Transactions**

The Company presently occupies office space provided by anaffiliate of the Company’s chairman. Such affiliate has agreed that, until theacquisition of a target business by the Company, it will make such office space,as well as certain office and secretarial services, available to the Company,as may be required by the Company from time to time. The Company has agreed topay such affiliate $7,500 per month for such services commencing on October 21,2005 and ending upon the consummation of a Business Combination.  For the three months ended March 31, 2007,the three months ended March 31, 2006 and for the period from June 1, 2005(inception) to March 31, 2007 the Company has incurred expense totaling$22,500, $22,500 and $130,000, respectively, to such affiliate pursuant to thisagreement.  As of March 31, 2007, $45,000

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is due to such affiliate pursuant to this office serviceagreement.

Additionally, such affiliate has advanced monies to theCompany or made payments to vendors on behalf of the Company.  As of March 31, 2007, total amounts due tosuch affiliate for  monies advanced orpaid on behalf of the Company total $30,346.

**5.   Commitmentand Contingencies**

Pursuant to letter agreements dated July 25, 2005 with theCompany and EarlyBirdCapital, Inc., the representative of the underwriters inthe 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 Representative that,after consummation of the Offering and within the first three month periodafter separate trading of the Warrants has commenced, they or certain of theiraffiliates or designees will collectively purchase up to $1,750,000 of Warrantsin the public marketplace at prices not to exceed $0.70 per Warrant.  Pursuant to this commitment, the directorspurchased an aggregate of 883,000 Warrants at prices ranging from $.667 to $.70per Warrant.

In January 2007, two of the Company’s directors entered intoa new personal Warrant purchase plan to collectively purchase up to anadditional 1,000,000 Warrants in the public marketplace at prices not to exceed$.64 per Warrant.  The purchase plan wascompleted during February 2007, resulting in the purchase of 1,000,000 Warrantspursuant to such purchase plan.

The Initial Stockholders are entitled to registration rightswith respect to their founding shares pursuant to an agreement dated October21, 2005.  The holders of the majority ofthese shares are entitled to make up to two demands that the Company registerthese shares at any time commencing three months prior to October 21,2008.  In addition, the InitialStockholders have certain “piggy-back” registration rights on registrationstatements 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.   Common Stock**

At March 31, 2007, 825,000 shares of common stock werereserved for issuance upon exercise of redeemable Warrants and theunderwriters’ Unit purchase option.

**8.   ContributionAgreement**

OnAugust 25, 2006, the Company and BioValve Technologies, Inc. (“BioValve”),a privately-held innovator in life sciences, announced that they entered into adefinitive agreement (“Contribution Agreement”)

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wherebythe Company agreed to acquire a majority interest in Valeritas, LLC(“Valeritas”), the medical technologies subsidiary of BioValve.

OnJanuary 27, 2007, the Company and BioValve announced that they had agreed toterminate the Contribution Agreement and mutually release both parties fromfurther claims. In connection therewith, approximately $898,000 of capitalizeddeferred acquisition costs were charged to operating expense during the yearended December 31, 2006.

**9.****   ****Subsequent Events**

On April 25, 2007, the Company announced that, pursuant to the provisions of its certificate of incorporation, it has until October 27, 2007 to complete its business combination, having satisfied the criteria for extension set forth in the certificate of incorporation.

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# **ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS ORPLAN OF OPERATION**

The following discussion should beread in conjunction with our Condensed Financial Statements and footnotesthereto contained in this report.

**ForwardLooking Statements**

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 ofmanagement for future operations, are forward looking statements.  When used in this Form 10-Q, words such as “anticipate,”“believe,” “estimate,” “expect,” “intend” and similar expressions, as theyrelate to us or our management, identify forward looking statements.  Such forward looking statements are based onthe beliefs of management, as well as assumptions made by, and informationcurrently available to, our management. Actual results could differ materially from those contemplated by theforward looking statements as a result of certain factors detailed in ourfilings with the Securities and Exchange Commission.  All subsequent written or oral forwardlooking statements attributable to us or persons acting on our behalf arequalified in their entirety by this paragraph.

**Overview**

We were formed on June 1, 2005, to serve as a vehicle toeffect a merger, capital stock exchange, asset acquisition or other similarbusiness combination with an operating business in the healthcareindustry.  We intend to utilize cashderived from the proceeds of our public offering, our capital stock, debt or acombination of cash, capital stock and debt, in effecting a businesscombination.

OnOctober 27, 2005, we sold 8,500,000 units in our initial public offering at$6.00 per unit.  On October 31, 2005 andNovember 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 total offering including theover-allotment amounted to $58,650,000. After payments of all offering costs, the net proceeds to us amounted to$53,473,366.  Each unit consists of oneshare of our common stock, $.0001 par value, and two redeemable common stockpurchase warrants.  Each warrant entitlesthe holder to purchase from us one share of common stock at an exercise priceof $5.00 commencing the later of the completion of a business combination orone year from the effective date of the offering and expiring four years fromthe effective date of the offering.  Thewarrants will be redeemable by us, upon prior written consent of therepresentative of the underwriters in the offering (the “Representative”), at aprice 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 our initialpublic offering, we issued an option, for $100, to the Representative topurchase 425,000 units at an exercise price of $7.50 per unit.  The warrants underlying such units areexercisable at $6.25 per share.  We haveaccounted for the fair value of the option, inclusive of the receipt of the$100 cash payment, as an expense of the public offering resulting in a chargedirectly 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 the option granted to theRepresentative is estimated as of the date of grant using the followingassumptions: (1) expected volatility of 42.875%, (2) risk-free interest rate of4.03% and (3) expected life of 5 years. The option may be exercised for cash or on a “cashless” basis at the holder’soption, such that the holder may use the appreciated value of the option (thedifference between the exercise prices of the option and the underlyingwarrants and the market price of the units and underlying securities) toexercise the option without the payment of any cash.  All activity from June 1, 2005 throughOctober 27, 2005 was related to our formation

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and our initial public offering.  Since October 28, 2005, we have been seekingto complete a business combination with a company in the healthcare industry.

On August 25,2006, we and BioValve Technologies, Inc. (“BioValve”), a privately-heldinnovator in life sciences, announced that we had entered into a definitiveagreement (“Contribution Agreement”) whereby we agreed to acquire a majority interestin Valeritas, LLC (“Valeritas”), the medical technologies subsidiary ofBioValve.  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 thecapitalized expenses in connection with the Valeritas transaction amounting toapproximately $898,000 were charged to expense for the year ended December 31,2006.

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

**Resultsof Operations for the Three Months Ended March 31, 2006 compared to the ThreeMonths Ended March 31, 2007**

For the three months ended March 31, 2006, we had net incomeof $96,010 consisting of $546,189 of interest income on the trust fund andoperating account offset by $404,328 of general, selling and administrativeexpenses and $45,851 of estimated income tax expense.  General, selling and administrative expensemainly consisted of approximately $201,161 of due diligence expense onpotential targets for a business combination, legal and accounting fees totaling$127,267, approximately $39,083 of directors and officers liability insuranceexpense, $22,500 for office space and administrative expenses paid to ParamountBioCapital, and $14,317 of general corporate overhead.

For the three months ended March 31, 2007, we had net incomeof $302,126 consisting of $469,434 of interest income on the trust fund andoperating account offset by $166,708 of general, selling and administrativeexpense.  The main components of the general,selling and administrative expenses include approximately $39,083 of directorsand officers liability insurance expense, $22,500 for office space andadministrative expenses payable to Paramount BioCapital, approximately $55,000of legal expenses and other professional fees pertaining to the termination ofthe Valeritas transaction and the related fees for the 2006 Form 10-KSBfiling, approximately $21,636 of due diligence expense on potential targets fora business combination, approximately $11,465 of accrued Delaware franchise taxexpense, and approximately $17,024 of general corporate overhead.

The overall net income for the three months ended March 31,2007 increased by $206,116 compared to the three months ended March 31,2006.  This increase is mainlyattributable to a decrease of approximately $179,000 of due diligence expenseon potential targets for a business combination. This decrease in due diligenceexpense was the result of the Company not seeking a potential businesscombination until after the Contribution Agreement with BioValve was terminatedon January 22,2007.

**Liquidity and Capital Resources**

$52,164,500 of thenet proceeds of our initial public offering were deposited in trust, with theremaining net proceeds of $1,308,866 becoming available to pay for business,legal and accounting due diligence on prospective acquisitions and continuinggeneral and administrative expenses. We have used substantially all of the netproceeds of our initial public offering not held in trust to identify, evaluateand negotiate with prospective acquisition candidates (including with respectto the negotiating and structuring of the Contribution Agreement with BioValve,BTI and Valeritas).

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We intend toutilize our cash, including the funds held in the trust fund, capital stock,debt or a combination of the foregoing to effect 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 March 31, 2007, we had cash outside of thetrust fund of $23,998 and other current assets of $96,101 and total liabilitiesof $1,090,181.  Our working capitaldeficiency (excluding investments held in trust) amounted to $970,082.  An affiliate of our chairman, ParamountBioCapital, has advanced money to us and has made payments on our behalf.  As of March 31, 2007, Paramount BioCapitalhas loaned us (or made payments on our behalf of) approximately $30,346.  Additionally, we may potentially raiseadditional funds through a private offering of debt or equity securities ifsuch funds are required to consummate a business combination that is presentedto us.  We would only consummate such afinancing simultaneously with the combination of a business combination.

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 months fromthe 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 ourcertificate of incorporation, we satisfied the criteria for extension set forthin the certificate of incorporation and accordingly we have until October 27,2007 to complete a business combination.

In the event of aliquidation, it is likely that the per share value of the residual assetsremaining available for distribution (including assets deposited in the trustfund) will be less than the offering price per unit in our initial publicoffering due to costs related to the initial public offering and since no valuewould be attributed to the warrants contained in the units sold.  Lindsay A. Rosenwald, our chairman of theboard, 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 connection therewith, an affiliate ofLindsay A. Rosenwald, Paramount BioCapital, has agreed to pay such debts andobligations if necessary.

**ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK**

Market risk is thesensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and othermarket-driven rates or prices.  We arenot presently engaged in and, until the completion of a businesscombination,  we will not engage in, anysubstantive 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 orprices.  The net proceeds of our initialpublic offering held in the trust fund have been invested only in “governmentsecurities” within the meaning of Section 2(a)(16) of the Investment CompanyAct of 1940 having a maturity of 180 days or less or in money market fundsmeeting certain conditions under Rule 2a-7 promulgated under theInvestment  Company Act of 1940.  Given our limited risk in our exposure togovernment securities and money market funds, we do not view the interest raterisk to be significant.

**ITEM 4.  CONTROLS AND PROCEDURES.**

Disclosurecontrols and procedures are controls and other procedures that are designed toensure that information required to be disclosed in company reports filed orsubmitted under the Securities Exchange Act of 1934 (the “Exchange Act”) isrecorded, processed, summarized and reported, within the time periods specifiedin the Securities and Exchange Commission’s rules and forms. Disclosurecontrols and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be

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disclosed incompany reports filed or submitted under the Exchange Act is accumulated andcommunicated to management, including our chief executive officer, asappropriate to allow timely decisions regarding required disclosure.

Asrequired by Rules 13a-15 and 15d-15 under the Exchange Act, our chiefexecutive officer carried out an evaluation of the effectiveness of ourdisclosure controls and procedures as of March 31, 2007. His evaluation wascarried out with the participation of other members of our management. Basedupon their evaluation, he concluded that our disclosure controls and procedureswere effective.

Ourinternal control over financial reporting is a process designed by, or underthe supervision of, our chief executive officer and effected by our board ofdirectors, management and other personnel, to provide reasonable assuranceregarding the reliability of our financial reporting and the preparation of ourfinancial statements for external purposes in accordance with generallyaccepted accounting principles (United States). Internal control over financialreporting includes policies and procedures that pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect thetransactions and dispositions of our assets; provide reasonable assurance thattransactions are recorded as necessary to permit preparation of our financialstatements in accordance with generally accepted accounting principles (UnitedStates), and that our receipts and expenditures are being made only inaccordance with the authorization of our board of directors and management; andprovide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of our assets that could have amaterial effect on our financial statements.

During the most recently completed fiscal quarter,there has been no change in our internal control over financial reporting thathas materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

**PART II**

**OTHERINFORMATION**

# **ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIESAND 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 ofan aggregate of 1,275,000 additional units which were subject to theover-allotment option.  The units weresold at an offering price of $6.00 per unit, generating total gross proceeds of$58,650,000.  The managing underwriter inthe offering was EarlyBirdCapital, Inc. The securities sold in the offeringwere registered under the Securities Act of 1933 on a registration statement onForm S-1 (No. 333-127149). The Securities and Exchange Commission declared theregistration statement effective on October 21, 2005.

We paid a total of $4,105,500 in underwriting discountsand commissions and $1,071,134 for other costs and expenses related to theoffering, including $510,000 for the underwriters’ non-accountable expenseallowance of 1% of the gross proceeds on the initial closing only.

After deductingthe underwriting discounts and commissions and the offering expenses, the totalnet proceeds to us from the offering were $53,473,366, of which $52,164,500 wasdeposited into the trust account and the remaining proceeds of $1,308,866became available to be used to provide for business, legal and accounting duediligence on prospective business combinations and continuing general andadministrative expenses.

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# **ITEM 6: EXHIBITS**

| Exhibit Number | ** ** | **Description**                                                                                                |
|----------------|------------|----------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                           |
| 10.1           |       | Letter Agreement,  dated April 21, 2007, between the Issuer and EarlyBirdCapital, Inc.                         |
|           |       |                                                                                                           |
| 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. |

 

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**SIGNATURES**

In accordance with the requirements ofthe Exchange Act, the registrant caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.
|                           | **PARAMOUNT  ACQUISITION CORP.**                                                      |
|---------------------------|---------------------------------------------------------------------------------------|
|                      |                                                                                  |   |
|                      |                                                                                  |   |
| Dated:  May 15, 2007 |                                                                                  |   |
|                      | /s/ J. Jay  Lobell                                                                    |   |
|                      | J. Jay Lobell                                                                         |
|                      | Chief Executive  Officer (Principal  Executive and Financial and Accounting  Officer) |

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**Exhibit Index**
| **Exhibit  Number** |   | **Description**                                                                                       |
|---------------------|--------|-------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                  |
| 10.1                |   | Letter Agreement,  dated April 21, 2007, between the Issuer and EarlyBirdCapital, Inc.                |
|                |   |                                                                                                  |
| 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. |

 

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