**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

**FORM 10-QSB**

**(Mark One)**

**ý**                                 Quarterlyreport under Section 13 or 15(d) of the Securities Exchange Act of 1934 

**                                               **For the quarterly period ended September30, 2006

** ̈**                                 Transitionreport under Section 13 or 15(d) of the Exchange Act

**                                               **For the transition period from                     to                        

**CommissionFile Number 000-51518**

**Paramount Acquisition Corp.**

(Exact Name of Small Business Issuer asSpecified 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, IncludingArea Code)

Check whether the issuer (1) filed allreports required to be filed by Section 13 or 15(d) of the Exchange Act duringthe past 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes x  No o

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

Indicate by check mark whether theRegistrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.  See definition of“accelerated filer and large accelerated filer” in Rule 12b-2 of the ExchangeAct (Check one).

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

Asof November 14, 2006, 11,900,000 shares of common stock, par value $.0001 pershare, were issued and outstanding.

Transitional Small Business Disclosure Format(check one): Yes o No x

 

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Paramount Acquisition Corp.

(a development stage enterprise)

 

 
|                                                                                                                                                                                                                                                                                         | ** ** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| ** **                                                                                                                                                                                                                                                                              | ** ** | ** ** |
| Part I: Financial  Information:                                                                                                                                                                                                                                                         |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Item 1  —Financial Statements (Unaudited):                                                                                                                                                                                                                                         |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Condensed Balance Sheet as  of September 30, 2006                                                                                                                                                                                                                                       |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Condensed  Statements of Operations for the Three and Nine Months Ended September 30,  2006, for the Three Months Ended September 30, 2005, for the Period from June  1, 2005 (Inception) to September 30, 2005 and for the Period from June 1, 2005  (inception) to September 30, 2006 |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Condensed  Statement of Stockholders’ Equity for the Period from June 1, 2005  (inception) to September 30, 2006                                                                                                                                                                   |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Condensed  Statements of Cash Flows for the Nine Months Ended September 30, 2006 and the  Period from June 1, 2005 (inception) to September 30, 2006                                                                                                                                    |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Notes to  Unaudited Condensed Financial Statements                                                                                                                                                                                                                                      |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Item 2 —  Management’s Discussion and Analysis or Plan of Operation                                                                                                                                                                                                           |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Item 4 — Controls  and Procedures                                                                                                                                                                                                                                                  |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Part II.  Other Information                                                                                                                                                                                                                                                             |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Item 2 —  Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                              |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Item 6 — Exhibits                                                                                                                                                                                                                                                                  |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Signatures                                                                                                                                                                                                                                                                              |       |       |
|                                                                                                                                                                                                                                                                                    |       |       |
| Exhibits                                                                                                                                                                                                                                                                                |       |       |

 

2

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** **

**Part I: Financial Information**

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

**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**Condensed Balance Sheet**

 
| ** **                                                                                | ** ** | **September 30, 2006  (unaudited)** | ** ** |
|-------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| **Assets**                                                                                | ** ** | ** **                                    | ** ** |
| Current assets:                                                                           |       |                                          |       |
| Cash and cash  equivalents                                                                |       | $                                             | 194,148    |   |
| Investments held in  Trust Fund                                                           |       | 53,997,064                                    |       |
| Prepaid expenses and  other current assets                                                |       | 89,461                                        |       |
|                                                                                      |       |                                          |       |
| Total current  assets                                                                     |       | 54,280,673                                    |       |
|                                                                                      |       |                                          |       |
| Deferred acquisition  costs                                                               |       | 660,000                                       |       |
| Total assets                                                                              |       | $                                             | 54,940,673 |   |
|                                                                                      |       |                                          |       |
| **Liabilities and Stockholders’  Equity**                                            | ** ** | ** **                                    | ** ** |
| Current liabilities:                                                                      |       |                                          |       |
| Accrued expenses                                                                          |       | 740,914                                       |       |
|                                                                                      |       |                                          |       |
| Common stock subject to  possible conversion, 1,954,023 shares at conversion value        |       | 10,794,013                                    |       |
|                                                                                      |       |                                          |       |
| 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                                           |       |
| Additional  paid-in capital                                                               |       | 42,703,457                                    |       |
| Earnings  accumulated during development stage                                            |       | 701,293                                       |       |
| Total stockholders’  equity                                                          |       | 43,405,746                                    |       |
| Total liabilities and stockholders’ equity                                           |       | $                                             | 54,940,673 |   |

 

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

3

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** **

**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**CondensedStatements of Operations**

**(unaudited)**

**For the Three and Nine Months****Ended September 30, 2006,**

**For theThree Months Ended September 30, 2005,**

**For thePeriod from June 1, 2005 (inception) to September 30, 3005 and**

**For the Period from June 1, 2005(inception) to September 30, 2006**
| ** **                                                                       | ** ** | **For the three  months ended** | ** ** | **For the nine  months ended** | ** ** | **For the three  months ended** | ** ** | **Period from  June 1, 2005  (inception) to** | ** ** | **Period from  June 1, 2005  (inception) to** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------------------------|------------|-----------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **September 30,  2006**                   | ** ** | **September 30,  2006**                  | ** ** | **September 30,  2005**                   | ** ** | **September 30,  2005**                                      | ** ** | **September 30,  2006**                                      | ** ** |
| Revenue                                                                          |       | $                                              | —     |                                          | $          | —                                         |       | $                                                                 | —     |                                                              | $          | — |   | $ | — |   |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| General, selling  and administrative expenses                                    |       | 251,944                                        |       | 978,738                                       |       | 3,280                                          |       | 3,280                                                             |       | 1,049,595                                                         |       |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Operating loss                                                                   |       | (251,944                                       | )          | (978,738                                      | )          | (3,280                                         | )          | (3,280                                                            | )          | (1,049,595                                                        | )          |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Interest income                                                                  |       | 469,126                                        |       | 1,494,909                                     |       | —                                         |       | —                                                            |       | 1,862,054                                                         |       |
| Income (loss)  before income taxes                                               |       | 217,182                                        |       | 516,171                                       |       | (3,280                                         | )          | (3,280                                                            | )          | 812,459                                                           |       |
| Provision for  income taxes                                                      |       | —                                         |       | —                                        |       | —                                         |       | —                                                            |       | (111,166                                                          | )          |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Net income  (loss)                                                               |       | 217,182                                        |       | 516,171                                       |       | (3,280                                         | )          | (3,280                                                            | )          | 701,293                                                           |       |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Accretion of  Trust Fund relating to common stock subject to possible conversion |       | (92,967                                        | )          | (294,619                                      | )          | —                                         |       | —                                                            |       | (366,329                                                          | )          |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Net income (loss)  attributable to other common stockholders                     |       | $                                              | 124,215    |                                          | $          | 221,552                                        |       | $                                                                 | (3,280     | )                                                                 | $          | (3,280 | ) | $ | 334,964 |   |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Weighted average  shares outstanding                                             |       | 11,900,000                                     |       | 11,900,000                                    |       | 2,125,000                                      |       | 2,125,000                                                         |       |                                                              |       |
|                                                                             |       |                                           |       |                                          |       |                                           |       |                                                              |       |                                                              |       |
| Basic and diluted  income (loss) per share                                       |       | 0.01                                           |       | 0.02                                          |       | (0.00                                          | )          | (0.00                                                             | )          |                                                              |       |

 

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

4

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**Paramount Acquisition Corp.**

**(a development stage enterprise)**

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

**For thePeriod of June 1, 2005 (inception) to September 30, 2006**
| ** **                                                                                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | **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                                                                                        |       | —                |       | —      |       | (294,619                          | )          | —                     |       | (294,619    | )          |
|                                                                                                                                                                    |       |                  |       |        |       |                              |       |                       |       |        |       |
| Net income for  the nine months ended September 30, 2006                                                                                                                |       | —                |       | —      |       | —                            |       | 516,171                    |       | 516,171     |       |
|                                                                                                                                                                    |       |                  |       |        |       |                              |       |                       |       |        |       |
| Balance, September 30,  2006                                                                                                                                            |       | 11,900,000            |       | $           | 996        |                              | $          | 42,703,457                 |       | $           | 701,293    |   | $ | 43,405,746 |   |

*Theaccompanying notes are an integral part of these financial statements.*

5

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**Paramount Acquisition Corp.**

**(a development stage enterprise)**

**CondensedStatements of Cash Flows (unaudited)**

**For the Nine Months EndedSeptember 30, 2006 and for the**

**Periodfrom June 1, 2005 (inception) to September 30, 2006**

 
| ** **                                                                         | ** **   | **For the Nine  Months** | ** **   | **Period from  June 1, 2005  (inception)** | ** ** |
|------------------------------------------------------------------------------------|--------------|------------------------------------|--------------|-----------------------------------------------------------|------------|
| ** **                                                                         | ** **   | **Ended**                          | ** **   | **to**                                                    | ** ** |
| ** **                                                                         | ** **   | **September 30,  2006**       | ** **   | **September 30,  2006**                              | ** ** |
| **Cash  Flows from Operating Activities**                                          |         |                               |         |                                                      |       |
| Net income                                                                         |         | $                                  | 516,171      |                                                      | $          | 701,293 |   |
| Adjustments to reconcile net income to net cash  provided by operating activities: |         |                               |         |                                                      |       |
| Prepaid expenses                                                                   |         | 129,611                            |         | (89,461                                                   | )          |
| Accrued expenses                                                                   |         | 651,805                            |         | 740,914                                                   |       |
| Income taxes payable                                                               |         | (91,900                            | )            | —                                                    |       |
| Net cash provided by operating activities                                          |         | 1,205,687                          |         | 1,352,746                                                 |       |
|                                                                               |         |                               |         |                                                      |       |
| **Cash  Flows Used in Investing Activities**                                       |         |                               |         |                                                      |       |
| Deferred acquisition costs                                                         |         | (660,000                           | )            | (660,000                                                  | )          |
| Investments held in Trust Fund                                                     |         | (1,473,829                         | )            | (53,997,064                                               | )          |
| Net cash used in investing activities                                              |         | (2,133,829                         | )            | (54,657,064                                               | )          |
|                                                                               |         |                               |         |                                                      |       |
| **Cash  Flows from Financing Activities**                                          |         |                               |         |                                                      |       |
| Gross proceeds from sale of units                                                  |         |                               |         | 58,650,000                                                |       |
| Proceeds from sale of shares of common stock                                       |         |                               |         | 25,000                                                    |       |
| Proceeds from issuance of option                                                   |         |                               |         | 100                                                       |       |
| Payments of deferred offering costs                                                |         |                               |         | (5,176,634                                                | )          |
| Net cash provided by financing activities                                          | *** *** | ***—***                       | *** *** | 53,498,466                                                |       |
| Net  increase/(decrease) in cash                                                   |         | (928,142                           | )            | 194,148                                                   |       |
|                                                                               |         |                               |         |                                                      |       |
| Cash at  beginning of the period                                                   |         | 1,122,290                          |         | —                                                    |       |
|                                                                               |         |                               |         |                                                      |       |
| Cash at end of  the period                                                         |         | $                                  | 194,148      |                                                      | $          | 194,148 |   |
|                                                                               |         |                               |         |                                                      |       |
| Supplemental  disclosure of cash flow information:                                 |         |                               |         |                                                      |       |
| Accretion of Trust Fund relating to common stock  subject to possible conversion   |         | 294,619                            |         | 366,329                                                   |       |
| Income taxes and  franchise taxes paid                                             |         | 139,438                            |         | 139,438                                                   |       |

* *

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

 

6

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****PARAMOUNT ACQUISITION CORP.****

****NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS****

****(A DEVELOPMENT STAGE ENTERPRISE)****
| **1.**     | **Interim Financial  Information**        | These unaudited condensed financial statements as of  September 30, 2006, for the quarter ended September 30, 2006, for the nine  months ended September 30, 2006, for the three months ended September 30,  2005, for the period from June 1, 2005 (inception) to September 30, 2005 and  for the period from June 1, 2005 (Inception) to September 30, 2006 have been  prepared in accordance with accounting principles generally accepted in the  United States of America for interim financial information and with the  instructions to Form 10-QSB. Accordingly, they do not include all of the  information and footnotes required by accounting principles generally  accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring  accruals) considered necessary for a fair presentation have been included.  Operating results for the interim periods presented are not necessarily  indicative of the results to be expected for any other interim period or for  the full year. 

 

These unaudited condensed financial statements  should be read in conjunction with the financial statements and notes thereto  for the fiscal year ended December 31, 2005 included in Paramount Acquisition  Corp.’s (the “Company”) Form 10-KSB for the fiscal year ended December 31,  2005, which was filed on March 31, 2006. The accounting policies used in  preparing these unaudited condensed financial statements are consistent with  those described in the December 31, 2005 financial statements. |
|------------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **2.**     | **Organization and  Business Operations** | The Company was incorporated in Delaware on June 1,  2005 as a blank check company whose objective is to acquire an operating  business in the healthcare industry. 

 

The registration statement for the Company’s initial  public offering (“Offering”) was declared effective October 21, 2005. The  Company consummated the Offering on October 27, 2005. In addition, on October  31, 2005 and November 1, 2005 the Company issued shares pursuant to an  over-allotment option for the Offering, receiving total gross proceeds of  $58,650,000 for the entire offering. 

 

All activity from June 1, 2005 through October 27,  2005 related to the Company’s formation and initial public offering are  described below. Since October 28, 2005, the Company has been searching for a  target business to acquire. 

 

The Company’s management has broad discretion with  respect to the specific application of the net proceeds of the Offering,  although substantially all of the net proceeds of the Offering are intended  to be generally applied toward consummating a business combination with an  operating business in the healthcare industry (“Business Combination”).  Furthermore, there is no assurance that the Company will be able to  successfully effect a Business Combination. An aggregate of $52,164,500  (including the over-allotment option described in Note 6), 

 

                                                                                                                                                           |

 

7

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|            | ** ** | before any interest earned, has been deposited in an  interest-bearing trust account (“Trust Account”) until the earlier of (i) the  consummation of a Business Combination or (ii) liquidation of the Company.  Under the agreement governing the Trust Account, funds will only be invested  in United States “government securities” within the meaning of Section  2(a)(16) of the Investment Company Act of 1940 with a maturity of 180 days or  less or in money market funds meeting certain conditions under Rule 2a-7  promulgated under the Investment Company Act of 1940. The remaining net  proceeds of $1,308,866 (not held in the Trust Account) may be used to pay for  business, legal and accounting due diligence on prospective acquisitions and  continuing general and administrative expenses. 

 

The Company, 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% or more of the  shares sold in the Offering vote against the Business Combination and  exercise their conversion rights described below, the Business Combination  will not be consummated.                                                                                                                                                                                                                                             |
|------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |       | All of the Company’s stockholders prior to the  Offering, including all of the officers and directors of the Company  (“Initial Stockholders”), have agreed to vote their 2,125,000 founding shares  of common stock in accordance with the vote of the majority in interest of  all other stockholders of the Company (“Public Stockholders”) with respect to  any Business Combination. After consummation of a Business Combination, these  voting safeguards will no longer be applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** ** |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |       | With respect to a Business Combination which is  approved and consummated, any Public Stockholder who voted against the  Business Combination may demand that the Company convert his shares. The per  share conversion price will equal the amount in the Trust Account, calculated  as of two business days prior to the consummation of the proposed Business  Combination, divided by the number of shares of common stock held by Public  Stockholders at the consummation of the Offering. Accordingly, Public  Stockholders holding 19.99% of the aggregate number of shares owned by all  Public Stockholders may seek conversion of their shares in the event of a  Business Combination. Such Public Stockholders are entitled to receive their  per share interest in the Trust Account computed without regard to the shares  held by Initial Stockholders.

 

The Company’s Certificate of Incorporation provides  for mandatory liquidation of the Company in the event that the Company does  not consummate a Business Combination within 18 months from the date of the  consummation of the Offering, or 24 months from the consummation of the  Offering if certain extension criteria have been satisfied. In the event of  liquidation, it is likely that the per share value of the residual assets  remaining available for distribution (including Trust Account assets) will be  less than the initial public offering price per share in the 

  |

 

8

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|            |                              | Offering due to costs related to the Offering and  since no value would be attributed to the Warrants contained in the Units  sold.

 

Management does not  believe that any recently issued, but not yet effective, accounting standards  if currently adopted would have a material effect on the accompanying  condensed unaudited financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|------------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **3.**     | **Management Plans**              | As of September 30, 2006 excluding the Trust  Account, the Company had a working capital deficiency of $457,305.  The  Company intends to pay the majority of its accrued liabilities subsequent to  the consummation of a Business Combination.  We believe that we have  sufficient available funds outside of the Trust Account to operate through  December 15, 2006.  However, we do not currently expect that we will  receive shareholder approval for the Valeritas transaction (see note 7) by  December 15, 2006, and accordingly, we may need to raise additional funds  through a private offering of debt or equity securities. Additionally, we may  also borrow monies from an affiliate of the Company’s executive officers,  Paramount BioCapital Asset Management, Inc.  Under the terms of the  Contribution Agreement (as defined in note 7), we may be required to obtain  the consent of BioValve Technologies, Inc. prior to our issuing any such  equity or debt securities or incurring any such indebtedness. |
| ** ** |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **4.**     | **Related Party  Transactions**   | The Company presently occupies office space provided  by an affiliate of the Company’s executive officers. Such affiliate has  agreed that, until the acquisition 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 to pay 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 and nine months ended  September 30, 2006, the three months ended September 30, 2005, the period  from June 1, 2005 (inception) to September 30, 2005 and for the period from  June 1, 2005 (inception) to September 30, 2006 the Company has paid $22,500,  $67,500, $0, $0 and $85,000 respectively, to such affiliate pursuant to this  agreement.                                                                                                                               |
| ** ** |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **5.**     | **Commitment and  Contingencies** | Pursuant to letter agreements dated July 25, 2005  with the Company and Early Bird Capital, Inc., the representative of the  underwriters in the offering (“Representative”), the Initial Stockholders  have waived their right to receive distributions with respect to their  founding shares upon the Company’s liquidation. 

 

The Company’s directors agreed with the  Representative that, after consummation of the Offering and within the first  three month period after separate trading of the Warrants has commenced, they  or certain of their affiliates or designees will collectively purchase up to  $1,750,000 of Warrants in the public marketplace at prices not to exceed  $0.70 per                                                                                                                                                                                                                                                                                                                            |

 

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|            |                         | Warrant. Pursuant to this commitment, the directors  purchased an aggregate of 883,000 warrants at prices ranging from $.667 to  $.70 per warrant.

 

The Initial Stockholders are entitled to  registration rights with respect to their founding shares pursuant to an  agreement dated October 21, 2005. The holders of the majority of these shares  are entitled to make up to two demands that the Company register these shares  at any time commencing three months prior to October 21, 2008. In addition,  the Initial Stockholders have certain “piggy-back” registration rights on  registration statements filed subsequent to October 21, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| ** ** |                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **6.**     | **Initial Public  Offering** | On October 21, 2005, the Company sold 8,500,000  units (“Units”) in the Offering at $6.00 per Unit. During October 31, 2005  and November 1, 2005 the Company sold an additional aggregate 1,275,000 units  pursuant to an over-allotment option of the Offering. The total gross  proceeds from the total offering including the over-allotment amounted to  $58,650,000. After payments of 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 par value, and two Redeemable Common Stock  Purchase Warrants (“Warrants”). Each Warrant entitles the holder to purchase  from the Company one share of common stock at an exercise price of $5.00  commencing the later of the completion of a Business Combination or one year  from the effective date of the Offering and expiring four years from the  effective date of the Offering. The Warrants will be 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 become exercisable, only  in the event that the last sale price of the common stock is at least $8.50  per share for any 20 trading days within a 30 trading day period ending on  the third day prior to the date on which notice of redemption is given. There  is no cash settlement option for the Warrants. In connection with this  Offering, the Company issued an option, for $100, to the Representative to  purchase 425,000 Units at an exercise price of $7.50 per Unit. The Warrants  underlying such Units are exercisable at $6.25 per share. The Company has  accounted 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 charge  directly to stockholders’ equity. The Company 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 of the option granted to the  Representative is estimated as of the date of grant using 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 the appreciated value of the option (the difference between the  exercise prices of the option and the underlying Warrants and the market  price of the Units and underlying securities) to exercise the option without  the payment of any cash. There is no cash settlement option for the Representative’s  Warrants contained in the units to be purchased by the Representative. |
| ** ** |                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **7.**     | **Contribution  Agreement**  | On August 25, 2006, the Company and BioValve  Technologies, Inc. (“BioValve”), a privately-held innovator in life  sciences, announced that                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

 

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|  | ** ** | they entered into a definitive agreement  (“Contribution Agreement”) whereby the Company will acquire a majority  interest in Valeritas, LLC (“Valeritas”), the recently-formed medical  technologies subsidiary of BioValve. Following the closing, the Company will  change its name to Valeritas, Inc. 

 

Under the terms of the transaction, the Company will  initially receive up to 11,900,000 membership units in Valeritas (the  “Membership Units”), or approximately 58%, and BioValve, together with its  wholly-owned subsidiary corporation, BTI Tech, Inc., will initially  receive 8,633,333 Membership Units, or approximately 42%, in each case  subject to adjustment as provided in the definitive transaction agreement  signed on August 25, 2006. The Membership Units held by BioValve and BTI  may, under certain circumstances and subject to certain limitations, be  redeemed in exchange for shares of Paramount common stock on a one-for-one  basis. In exchange for its equity in Valeritas, the Company will pay BioValve  $10 million in cash and will contribute the balance of its funds (including  funds held in the Trust Account, after giving effect to any redemptions by  Paramount’s Public Stockholders) to Valeritas. The number of Membership Units  issued to the Company will be reduced on a one-for-one basis with the number  of shares of the Company’s common stock, if any, that are redeemed by  Paramount’s Public Stockholders. 

 

In connection with the transaction, the Company will  also receive (A) warrants to acquire 19,550,000 additional Membership  Units, which warrants are mandatorily exercisable on a one-for-one basis upon  the exercise of any of the 19,550,000 Redeemable Common Stock Purchase  Warrants issued by the Company in connection with its initial public  offering, (B) an option to acquire (1) 425,000 Membership Units and  (2) warrants to acquire 850,000 Membership Units, which option is  mandatorily exercisable upon the exercise of the option issued by the Company  to EarlyBird Capital, Inc., and (C) the right to receive a number  of Membership Units equal to the number of shares issued by the Company upon  exchange of the notes or exercise of the warrants issued to the holders of  Valeritas’ senior bridge debt, which is discussed below. Under the terms of  the definitive transaction agreements, all cash received by the Company upon  exercise of the outstanding warrants or options would be contributed to  Valeritas in exchange for the additional Membership Units. 

 

Immediately prior to the execution of the  Contribution Agreement, BioValve and Valeritas entered into a bridge  financing, the purpose of which is to provide working capital to Valeritas  for use in building its medical device business in the period between the  signing of the Contribution Agreement and the Closing. As part of that  financing, BioValve and Valeritas sold Senior Secured Convertible  Exchangeable Notes (the “Bridge  Notes”) in an aggregate principal amount of $6,900,000. On the closing  of the Contribution Agreement, an aggregate of 1,934,579 shares of the  Company’s common stock may become issuable upon the exchange of the Bridge  Notes (at a conversion price of 

  |
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|  | ** ** | $5.35 per share) into 1,289,719 shares of common  stock and the exercise of 644,860 warrants (at an exercise price of $5.35 per  share) issued by Valeritas to holders of the Bridge Notes (the “Bridge Warrants”). The Company will  receive one additional Membership Unit in Valeritas for each share of the  Company’s common stock issued in connection with the exchange of the Bridge  Notes or the exercise of the Bridge Warrants. As of September 30, 2006 none  of the Bridge Notes have been exchanged and none of the Bridge Warrants have  been exercised. 

 

As part of the transaction and subsequent to  the Closing, BioValve will potentially earn an additional $15 million in cash  upon the redemption or exercise of all of the Company’s Redeemable Common  Stock Purchase Warrants. Additionally, BioValve will be entitled to a 4%  royalty on Valeritas’ gross revenues, up to a maximum of $25 million. 

 

In addition, up to 15,750,000 Membership Units  may be issued to BioValve pursuant to certain financial milestones  achieved by Valeritas. 

 

The closing of the transaction is subject to the  Company’s stockholders’ approval as well as customary closing conditions. In  addition, the Closing is conditioned on holders of less than 20% of the  shares the Company issued in its initial public offering electing to convert  the Company’s shares into cash, as permitted by the Company’s certificate of  incorporation. As of September 30, 2006, a preliminary proxy statement had  not yet been filed with the Securities and Exchange Commission with respect  to the special meeting of stockholders and accordingly, the stockholders have  not yet approved the Contribution Agreement. 

 

Legal and accounting fees related to the proposed  transaction totaling $660,000 have been capitalized as deferred acquisition  costs within the Condensed Balance Sheet as of September 30, 2006. |
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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-QSB including, without limitation, statementsunder “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-QSB, 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 cash derived from the proceeds of our publicoffering, our capital stock, debt or a combination of cash, capital stock anddebt, in effecting a business combination. As described in note 7 to our unaudited condensed financial statements,on August 25, 2006 we entered into a Contribution Agreement (the “ContributionAgreement”) with BioValve Technologies, Inc. (“BioValve”), BTI Tech, Inc. andValeritas, LLC (“Valeritas”) pursuant to which we will acquire a majorityinterest in Valeritas.  We filed aCurrent Report on Form 8-K on August 28, 2006 with respect to the Valeritastransaction, which is incorporated herein by reference.  We expect that the majority of our remainingcash will be utilized in connection with the consummation of this transaction.

***Results of Operations***

*For the three months ended*September 30, 2006, we had a net income of $217,182 consisting of $469,126 ofinterest income on the trust fund and operating account offset by $251,944 ofgeneral, selling and administrative expenses. The main components of the $251,944 of general, selling andadministrative expenses include approximately $40,000 amortization of directorsand officers liability insurance premiums, approximately $140,000 for publicrelations expense, $22,500 for office space and administrative expenses paid toParamount BioCapital Asset Management, Inc. and $15,289 of printing expensepertaining to the Form 8-K filing announcing the Valeritas transaction and theprior quarter Form 10-QSB.

*For the nine months ended*September 30, 2006, we had a net income of $516,171 consisting of $1,494,909of interest income on the trust fund and operating account offset by $978,738of general, selling and administrative expenses.  The main components of the $978,738 ofgeneral, selling and administrative expenses included $391,172 of consultingfees and travel expense for various due diligence on potential candidates for abusiness combination, approximately $165,000 for public relations expense,$153,653 for legal and accounting fees, $118,553 amortization of  directors and officers liability insurancepremiums and $67,500 for office space and administrative expenses paid toParamount BioCapital Asset Management, Inc.

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* *

*For the period from June 1, 2005(inception) to*September 30, 2006, we had a netincome of $701,293 consisting of $1,862,054 of interest income on the trust fund andoperating account offset by $1,049,595 of general, selling and administrativeexpenses and $111,166 of income and franchise tax expense.  The general, selling and administrativeexpense of $1,049,595 primarily consists of due diligence expense on potentialbusiness combinations, public relations expense, legal and accounting fees,directors and officers liability insurance, and office space services.

***Financial Condition andLiquidity***

*We consummated our initial publicoffering on October 27, 2005.  Inaddition, on October 31, 2005 and November 1, 2005, the Company issued sharespursuant to an over-allotment option for the offering.  The total gross proceeds of the offering,including the over-allotment option, was $58,650,000.  All activity from June 1, 2005 throughOctober 27, 2005 related to our formation and our initial public offering.  Since October 28, 2005, we have beensearching for prospective target businesses to acquire.  $52,164,500 of the net proceeds of ourinitial public offering were deposited in a trust fund, with the remaining netproceeds of $1,308,866 to pay for business, legal and accounting due diligenceon prospective acquisitions and continuing general and administrativeexpenses.  To date, we have used the netproceeds of our initial public offering not held in trust primarily to pay ouradministrative costs and the costs we incurred in identifying and evaluatingprospective acquisition candidates and structuring and negotiating the proposedValeritas transaction.  At September 30,2006, we had current assets outside of the trust fund of $283,609 and totalliabilities of $740,914, leaving us with a working capital deficit of$457,305.  A significant portion of ourliabilities are deferred acquisition costs, which are not expected to be paiduntil after the closing of the Valeritas transaction (assuming shareholderapproval is received).  We believe thatwe have sufficient available funds outside of the trust fund to operate throughDecember 15, 2006.  However, we do notcurrently expect that we will receive shareholder approval for the Valeritastransaction by December 15, 2006, and accordingly, we may need to raiseadditional funds through a private offering of debt or equity securities.Additionally, we may also borrow monies from an affiliate of the Company’sexecutive officers, Paramount BioCapital Asset Management, Inc.  Under the terms of the ContributionAgreement, we may be required to obtain the consent of BioValve prior to ourissuing any such equity or debt securities or incurring any suchindebtedness.  We are currently incurringa $7,500 monthly fee in exchange for office and administrative servicesprovided by Paramount BioCapital Asset Management, Inc.*

*As described in note 7 to ourunaudited condensed financial statements, at the closing of the Valeritastransaction (assuming shareholder approval is received), we will pay BioValve$10 million in cash and will contribute the balance of our funds (includingfunds held in the trust account after giving effect to any redemptions by ourpublic stockholders) to Valeritas.*

In connection with our initial public offering, we issued an option,for $100, to EarlyBird Capital, Inc. to purchase 425,000 units at an exerciseprice of $7.50 per unit, with each unit consisting of one share of common stockand two warrants.  The warrantsunderlying such units are exercisable at $6.25 per share.  We 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.  We estimated that the fair value of thisoption was approximately $922,250 ($2.17 per Unit) using a Black-Scholesoption-pricing model. The fair value of the option granted to EarlyBirdCapital, Inc. was 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 oron 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 any cash.

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**ITEM 4.  CONTROLS ANDPROCEDURES.**

Disclosure controls and procedures are controls and other proceduresthat are designed to ensure that information required to be disclosed incompany reports filed or submitted under the Securities Exchange Act of 1934(the “Exchange Act”) is recorded, processed, summarized and reported, withinthe time periods specified in the Securities and Exchange Commission’s rulesand forms. Disclosure controls and procedures include, without limitation,controls and procedures designed to ensure that information required to bedisclosed in company reports filed or submitted under the Exchange Act isaccumulated and communicated to management, including our chief executiveofficer and treasurer, as appropriate to allow timely decisions regardingrequired disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, ourchief executive officer carried out an evaluation of the effectiveness of thedesign and operation of our disclosure controls and procedures as of June 30,2006. His evaluation was carried out with the participation of other members ofour management. Based upon their evaluation, he concluded that our disclosure controlsand procedures were effective.

Our internal control over financial reporting is a process designed by,or under the supervision of, our chief executive officer and effected by ourboard of directors, management and other personnel, to provide reasonableassurance regarding the reliability of our financial reporting and thepreparation of our financial statements for external purposes in accordancewith generally accepted accounting principles (United States). Internal controlover financial reporting includes policies and procedures that pertain to themaintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of our assets; provide reasonable assurancethat transactions are recorded as necessary to permit preparation of ourfinancial statements in accordance with generally accepted accountingprinciples (United States), and that our receipts and expenditures are beingmade only in accordance with the authorization of our board of directors and management;and provide 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 nochange in our internal control over financial reporting that has materiallyaffected, or is reasonably likely to materially affect, our internal controlover financial reporting.

**PART II**

**OTHERINFORMATION**

# **ITEM 2:  UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

OnOctober 27, 2005, we closed our initial public offering of 8,500,000 units witheach unit consisting of one share of our common stock and two warrants, each topurchase one share of our common stock at an exercise price of $5.00 pershare.  On October 31, 2005 and November1, 2005, we consummated the closing of an aggregate of 1,275,000 additionalunits which were subject to the over-allotment option.  The units were sold at an offering price of$6.00 per unit, generating total gross proceeds of $58,650,000.  The managing underwriter in the offering wasEarlyBirdCapital, Inc. The securities sold in the offering were registeredunder the Securities Act of 1933 on a registration statement on Form S-1 (No.333-127149). The Securities and Exchange Commission declared the registrationstatement effective onOctober 21, 2005.

We paid a total of $4,105,500 in underwritingdiscounts and commissions and $1,071,134 

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for other costs and expenses related to the offering, including$510,000 for the underwriters’ non-accountable expense allowance of 1% of thegross proceeds on the initial closing only.

Afterdeducting the underwriting discounts and commissions and the offering expenses,the total net proceeds to us from the offering were $53,473,366, of which$52,164,500 was deposited into the trust account and the remaining proceeds of$1,308,866 became available to be used to provide for business, legal andaccounting due diligence on prospective business combinations and continuinggeneral and administrative expenses.

For adescription of the use of the proceeds generated in our initial publicoffering, see Part I, Item 2 of this Form 10-QSB.

# **ITEM 6.  EXHIBITS**

(a)           Exhibits:

2.1           Contribution Agreement, dated August25, 2006, among Paramount Acquisition Corp. (“Paramount”), BioValveTechnologies, Inc. (“BioValve”), BTI Tech, Inc. (“BTI”) and Valeritas, LLC (“Valeritas”)(incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-Kfiled by Paramount on August 28, 2006).

2.2           Form of Amended and Restated LimitedLiability Company Agreement among Paramount, BioValve, BTI and Valeritas(incorporated by reference to Exhibit 2.2 of the Current Report on Form 8-Kfiled by Paramount on August 28, 2006).

4.1           Amendment to Unit Purchase Option,dated as of October 12, 2006, between Paramount and EarlyBird Capital, Inc.

4.2           Warrant Clarification Agreement,dated October 12, 2006, between Paramount and Continental Stock Transfer andTrust Company.

10.1         Employment Agreement, dated August 25,2006, among Paramount, Valeritas and Robert Gonnelli (incorporated by referenceto Exhibit 10.1 of the Current Report on Form 8-K filed by Paramount on August28, 2006).

31            Section 302 Certification by CEO.

32            Section 906 Certification by CEO.

 

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**SIGNATURES**

In accordancewith the requirements of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.
|                          | ** ** | **PARAMOUNT ACQUISITION CORP.**                                                        |
|--------------------------|------------|----------------------------------------------------------------------------------------|
| ** **               | ** ** | ** **                                                                             |
| Dated: November 14, 2006 |       |                                                                                   |
|                     |       | /s/ J. Jay Lobell                                                                      |   |
|                     |       | J. Jay Lobell                                                                          |
|                     |       | Chief Executive Officer (Principal   Executive and Financial and Accounting   Officer) |

** **

** **

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**Exhibit Index**

2.1           ContributionAgreement, dated August 25, 2006, among Paramount Acquisition Corp. (“Paramount”),BioValve Technologies, Inc. (“BioValve”), BTI Tech, Inc. (“BTI”) and Valeritas,LLC (“Valeritas”) (incorporated by reference to Exhibit 2.1 of the CurrentReport on Form 8-K filed by Paramount on August 28, 2006).

2.2           Formof Amended and Restated Limited Liability Company Agreement among Paramount,BioValve, BTI and Valeritas (incorporated by reference to Exhibit 2.2 of theCurrent Report on Form 8-K filed by Paramount on August 28, 2006).

4.1           Amendmentto Unit Purchase Option, dated as of October 12, 2006, between Paramount andEarlyBird Capital, Inc.

4.2           WarrantClarification Agreement, dated October 12, 2006, between Paramount andContinental Stock Transfer and Trust Company.

10.1         EmploymentAgreement, dated August 25, 2006, among Paramount, Valeritas and RobertGonnelli (incorporated by reference to Exhibit 10.1 of the Current Report onForm 8-K filed by Paramount on August 28, 2006).

31            Section302 Certification by CEO.

32            Section906 Certification by CEO.

 

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