UNITED
      STATES


***SECURITIES
      AND EXCHANGE COMMISSION***


WASHINGTON,
      D.C. 20549


**______________________**





**FORM
      10-KSB**


**______________________**





x
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                (THE “EXCHANGE ACT”)**




**For
      the fiscal year ended September 30, 2007**





o
                **TRANSITION
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF 1934**


**For
          the transition period from ______ to ______**




Commission
      file number: 000-1174228





**NURX
      PHARMACEUTICALS, INC.**


(Name
      of
      small business issuer in its charter)





**Nevada**
            
            87-0681500(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                Number)**18
                Technology, Suite 130**
              **Irvine,
                CA**
            
            **92618**(Address
                of principal executive offices)
            
            (Zip
                Code)Issuer’s
                telephone number:**(949)
                336-7111**





Securities
      registered under Section 12(b) of the Exchange Act: None




Securities
      registered under Section 12(g) of the Exchange Act: Common Stock, par value
      $0.001 per share




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act.  ̈




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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to the best of the registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [__]




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




The
      Issuer’s had no revenues for its fiscal year ended September 30,
      2007.




Aggregate
      market value of the common stock held by non-affiliates of the Issuer as of
      December 21, 2007 was approximately $44,265,200.




There
      were 113,576,927 shares of the Company’s common stock outstanding on December
      21, 2007.




Documents
      Incorporated by Reference: Information Statement filed on Form 14C on October
      1,
      2007.




Transitional
      Small Business Disclosure Format: Yes o No x









**TABLE
      OF CONTENTS**


PART
                  I
              
              1ITEM1.
              DESCRIPTION
                  OF BUSINESS
              1ITEM2.
              DESCRIPTION
                  OF PROPERTY
              20ITEM3.
              LEGAL
                  PROCEEDINGS
              20ITEM4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              20PART
                  II
              
              21ITEM5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                  ISSUER PURCHASES OF EQUITY SECURITIES
              21ITEM6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              23ITEM7.
              FINANCIAL
                  STATEMENTS
              27ITEM8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              28ITEM8A.
              CONTROLS
                  AND PROCEDURES
              28ITEM8B.
              OTHER
                  INFORMATION
              28PART
                  III
              
              29ITEM9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(a) OF THE EXCHANGE ACT
              29ITEM10.
              EXECUTIVE
                  COMPENSATION
              32ITEM11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
              37ITEM12.
              CERTAIN
                  RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR
                  INDEPENDENCE
              41ITEM13.
              EXHIBITS
              43ITEM14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              45
  i




**PART
      I**




**Introductory
      Comment**




*Throughout
      this Annual Report on Form 10-KSB, the terms “we,” “us,” “our,” “our company,”
“Company” and “NuRx” refer to NuRx Pharmaceuticals, Inc., a Nevada corporation* *formerly
      known as Quest Group International, Inc.*




***Forward
      Looking and Cautionary Statements***





*This
      Form 10-KSB contains certain forward-looking statements. For example, statements
      regarding our financial position, business strategy and other plans and
      objectives for future operations, and assumptions and predictions about future
      product demand, supply, manufacturing, costs, marketing and pricing factors
      are
      all forward-looking statements. These statements are generally accompanied
      by
      words such as “intend,” “anticipate,” “believe,” “estimate,” “potential(ly),”
“continue,” “forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,”
“should,” “expect” or the negative of such terms or other comparable
      terminology. We believe that the assumptions and expectations reflected in
      such
      forward-looking statements are reasonable, based on information available to
      us
      on the date hereof, but we cannot assure you that these assumptions and
      expectations will prove to have been correct or that we will take any action
      that we may presently be planning. However, these forward-looking statements
      are
      inherently subject to known and unknown risks and uncertainties. Actual results
      or experience may differ materially from those expected or anticipated in the
      forward-looking statements. Factors that could cause or contribute to such
      differences include, but are not limited to, regulatory policies, competition
      from other similar businesses, and market and general policies, competition
      from
      other similar businesses, and market and general economic factors. This
      discussion should be read in conjunction with the condensed consolidated
      financial statements and notes thereto included in this Annual
      Report.*




*If
      one or more of these or other risks or uncertainties materialize, or if our
      underlying assumptions prove to be incorrect, actual results may vary materially
      from what we project. Any forward-looking statement you read in this Annual
      Report reflects our current views with respect to future events and is subject
      to these and other risks, uncertainties and assumptions relating to our
      operations, results of operations, growth strategy, and liquidity. All
      subsequent forward-looking statements attributable to us or individuals acting
      on our behalf are expressly qualified in their entirety by this paragraph.
      You
      should specifically consider the factors identified in this Annual Report,
      which
      would cause actual results to differ before making an investment decision.
      We
      are under no duty to update any of these forward-looking statements after the
      date of this Annual Report or to conform these statements to actual
      results.*




**ITEM****1.**
            **DESCRIPTION
                OF BUSINESS**




**Company
      Overview**




We
      plan
      to develop innovative therapies that change the paradigm of disease management
      by redirecting gene regulation for the treatment of cancer,
      chemotherapy-associated neutropenia (low white cell count), bone marrow
      function, bone metabolism and lipid metabolism. Our mission is to make progress
      towards individualized medicine allowing development of designer drugs for
      precise disease therapies and to produce drugs that are cost effective thus
      allowing the population at large to gain their benefits.









**Company
      History**




We
      were
      formed as a Nevada corporation on August 14, 2001 as Quest Group International,
      Inc. We became a reporting company in March 2003. From our inception in 2001
      until earlier this year, we were in the business of selling nutritional products
      to independent distributors and consumers in the United States and Japan. As
      a
      result of our entering into of a licensing agreement with Vitae Pharmaceuticals,
      Inc. (“Vitae”) in May, 2007, we spun off our nutritional products business line
      and operate as a pharmaceutical company with a focus on nuclear receptor target
      therapeutics. In connection with this change in business focus, we have changed
      our name to NuRx Pharmaceuticals, Inc.




**Vitae
      License Agreement**




On
      May
      11, 2007, we entered into a license agreement with Vitae, a privately held
      company, under which we have acquired an exclusive, worldwide sublicense, with
      the right to grant further sublicenses, to certain compounds and technology
      for
      all human and veterinary use. The indications for the lead compounds are acute
      myeloid leukemia, solid cancers (lung and breast) and chemotherapy-induced
      neutropenia (low white cell count).




Vitae
      originally licensed these compounds in May 2004 from Allergan, Inc., an Allergan
      affiliate and Ligand Pharmaceuticals Incorporated. These compounds and
      technology are covered by a number of issued U.S. and foreign patents and patent
      applications, and the term of our sublicense will extend in each country until
      the later of the last to expire of any patents that are issued covering this
      technology or ten years from the first commercial sale of a product agreement.
      Vitae will retain its exclusive license from the existing licensors for certain
      excluded licensed compounds.




In
      connection with the license agreement, we paid Vitae out of the net proceeds
      of
      our private placement offering an upfront licensing fee of $2,100,000, and
      an
      additional $50,000 on August 15, 2007. We also agreed to issue Vitae 5.66%
      of
      our fully diluted common stock, as of the date of the agreement, upon receiving
      investigational new drug application (“IND”) approval for clinical trials of any
      of the transferred compounds that had not already received IND approval. This
      milestone was met on October 31, 2007 and the Company issued Vitae 7,026,927
      shares (representing 5.66% after issuance of these shares). We will be required
      on Vitae’s behalf to pay the existing licensors additional specified milestone
      payments if we receive marketing approval from the U.S. Food and Drug
      Administration (“FDA”) for a product containing a licensed
      compound.




In
      addition to the foregoing fees and milestone payments, we have agreed to pay
      Allergan (as well as its cross-licensee) and Vitae specified percentages of
      our
      net sales of products based on the licensed technology, which vary from product
      to product but which combined may total as much as 12% of our net sales. We
      have
      also agreed to pay Vitae a specified percentage of any sublicense revenues
      that
      we receive from our sublicensees. To maintain our rights to the licensed
      technology, we must meet certain development milestones under the original
      license agreements with the existing licensors. These milestones include, among
      others, filing at least one new drug application (“NDA”) in the U.S. or another
      major market for a product by May 10, 2011.




**The
      Opportunity**




We
      have
      acquired a large portfolio of intellectual property, know how, library of small
      molecule compounds, and three clinical or pre-clinical stage therapeutic
      compounds pursuant to the license agreement with Vitae. Such technologies
      represent nearly 20 years of research and development work in the fields of
      retinoids, rexinoids, cancer biology, medicinal chemistry, manufacturing,
      pre-clinical and clinical drug development. The opportunities are four-fold:
      (1)
      a leukemia therapy that is based on established mechanisms of action that is
      a
      more selective entrant into an established class of cancer therapy, (2) an
      early
      candidate for solid tumors (particularly lung and breast cancer), (3) a novel
      therapeutic approach to addressing the impact of chemotherapy associated
      neutropenia (a large, well established therapeutic need), and (4) a large
      library of other retinoid and rexinoid compounds that represent an internal
      pipeline.




2




We
      plan
      to implement a research and development plan for three lead compounds. Each
      compound represents a unique chemical structure, unique class of therapy and
      biological function. One compound will be developed for the treatment of
      leukemia, a second compound will be tested for safety in humans followed by
      efficacy studies in some of the most common cancers including lung cancer and
      breast cancer, and the third compound will be developed as a therapy to reduce
      the toxicity of chemotherapy to the bone marrow, in particular, diminish the
      risk of infection as consequence of reduction in white blood cell count. A
      platform of technology, intellectual property, and a large library of small
      molecules, will be used for later implementation of additional discoveries
      to
      make novel therapeutics. We believe we have the necessary skills and chemical
      resources to produce novel therapies for other human diseases such as slow
      bone
      repair and healing, cartilage loss, lipid metabolic defects, and diabetes
      mellitus.




We
      do not
      currently anticipate that we will derive any revenues from either product sales
      or licensing during the foreseeable future. We do not have any bank credit
      lines
      and have financed all of our prior operations through the sale of securities.
      The estimated cost of completing the development of our current product
      candidate and of obtaining all required regulatory approvals to market that
      product candidate is substantially greater than the amount of funds we currently
      have available. We believe that our existing cash balances will be sufficient
      to
      fund completion of our planned Phase I clinical trial and to fund our
      currently planned level of operations through at least May 2009. We will seek
      to
      obtain additional funds through various financing sources, including possible
      sales of our securities, and in the longer term through strategic alliances
      with
      other pharmaceutical or biopharmaceutical companies, but there is no assurance
      that we will be able to obtain any additional funding from any potential
      financing sources, or create any such alliances, or that the terms under which
      we would obtain any funding will be sufficient to fund our
      operations.




Our
      principal executive offices are located at 18 Technology, Suite 130, Irvine,
      California 92618, and our telephone number at that address is (949) 336-7111.




**Private
      Placements**




On
      or
      about May 16, 2007, we sold an aggregate of 40,000,000 shares of common stock
      and received aggregate proceeds of $20,000,000. In July, we filed a registration
      statement for the issued shares. Also in connection with the May 16, 2007
      private placement, we paid to Hunter World Markets, Inc. as placement agent,
      a
      commission of 10% on the gross proceeds of the private placement and issued
      a
      six-year warrant to purchase common stock equal to 30% of the number of shares
      sold in the private placement offering, exercisable at $1.00 per share. For
      a
      period of two years, ending on May 16, 2009, we will appoint a designee of
      Hunter World Markets to our Board of Directors at Hunter World Markets’ request.
      Hunter World Markets has the right to replace such director and appoint a
      substitute director. In connection with and concurrently with the private
      placement on May 16, 2007, stockholders holding common shares prior to
      April 27, 2007 holding an aggregate of 7,759,000 shares of our common stock
      cancelled their shares in consideration for an aggregate amount of
      $750,000.




During
      the period between May 30, 2007 and June 27, 2007, we sold an aggregate of
      1,000,000 shares of our common stock and received aggregate proceeds of
      $500,000. In connection with the aforementioned sales, Hunter World Markets
      received a commission of 5% on half the gross proceeds and received a six-year
      warrant to purchase common stock equal to 300,000 shares, or 30% of the number
      of shares sold, exercisable at $1.00 per share.




3




**Corporate
      Business Strategy**




A
      key
      element of our strategy is to develop and commercialize a portfolio of new
      drugs. We are seeking to do so through our internal research programs. A
      significant portion of the research that we are conducting involves new
      strategies and targets, some based on previously established pharmacology and
      some that is novel. Our research staff has over 20 years of experience in
      creating novel compounds with subsequent optimization of the compound from
      the
      perspective of biological function, clinical monitoring, and cost-effective
      manufacturing. We believe we have the expertise needed in taking new cancer
      therapeutics from discovery to approval, including regulatory compliance,
      clinical trial design and execution. Research programs to identify new disease
      targets and product candidates require substantial technical, financial and
      human resources whether or not any candidates or technologies are ultimately
      identified. Our research programs may initially show promise in identifying
      potential product candidates, yet fail to yield product candidates for clinical
      development due to harmful side effects or other characteristics that indicate
      they are unlikely to be effective drugs.




We
      currently have 6 employees, 2 of whom are part time. We do not expect
      significant changes in the number of our employees over the next
      year.




**Intellectual
      Property**




We
      have
      acquired exclusive worldwide rights from Vitae to the compounds described
      herein. Our lead licensed compounds are covered by issued patents in the United
      States and certain foreign countries. In November of 2007, we entered into
      an
      Annuity Payment Service Agreement with Computer Packages Inc. in order to help
      maintain and service our patent library.




**Government
      Regulation**




The
      United States and other developed countries extensively regulate the preclinical
      and clinical testing, manufacturing, labeling, storage, record-keeping,
      advertising, promotion, export, marketing and distribution of drugs and biologic
      products. The FDA under the Federal Food, Drug, and Cosmetic Act, the Public
      Health Service Act and other federal statutes and regulations, regulates
      pharmaceutical and biologic products.




To
      obtain
      approval of our product candidates from the FDA, we must, among other
      requirements, submit data supporting safety and efficacy for the intended
      indication as well as detailed information on the manufacture and composition
      of
      the product candidate. In most cases, this will require extensive laboratory
      tests and preclinical and clinical trials. The collection of this data, as
      well
      as the preparation of applications for review by the FDA involve significant
      time and expense. The FDA also may require post-marketing testing to monitor
      the
      safety and efficacy of approved products or place conditions on any approvals
      that could restrict the therapeutic claims and commercial applications of these
      products. Regulatory authorities may withdraw product approvals if we fail
      to
      comply with regulatory standards or if we encounter problems at any time
      following initial marketing of our products.




The
      first
      stage of the FDA approval process for a new biologic or drug involves completion
      of preclinical studies and the submission of the results of these studies to
      the
      FDA. This data, together with proposed clinical protocols, manufacturing
      information, analytical data and other information must be submitted to the
      FDA
      in an IND. The IND must become effective before human clinical trials may
      commence. Preclinical studies generally involve FDA regulated laboratory
      evaluation of product characteristics and animal studies to assess the efficacy
      and safety of the product candidate.




4




After
      the
      IND becomes effective, a company may commence human clinical trials. These
      are
      typically conducted in three sequential phases, but the phases may overlap.
      Phase I trials consist of testing of the product candidate in a small number
      of
      patients or healthy volunteers, primarily for safety at one or more doses.
      Phase
      I trials in cancer are often conducted with patients who are not healthy and
      who
      have end-stage or metastatic cancer. Phase II trials, in addition to safety,
      evaluate the efficacy of the product candidate in a patient population somewhat
      larger than Phase I trials. Phase III trials typically involve additional
      testing for safety and clinical efficacy in an expanded population at multiple
      test sites. A company must submit to the FDA a clinical protocol, accompanied
      by
      the approval of the Institutional Review Boards at the institutions
      participating in the trials, prior to commencement of each clinical trial.




To
      obtain
      FDA marketing authorization, a company must submit to the FDA the results of
      the
      preclinical and clinical testing, together with, among other things, detailed
      information on the manufacture and composition of the product candidate, in
      the
      form of a NDA.




The
      amount of time taken by the FDA for approval of an NDA will depend upon a number
      of factors, including whether the product candidate has received priority
      review, the quality of the submission and studies presented, the potential
      contribution that the compound will make in improving the treatment of the
      disease in question, and the workload at the FDA.




The
      FDA
      may, during its review of an NDA, ask for additional test data that may require
      the conduct of additional clinical trials. If the FDA does ultimately approve
      the product candidate for marketing, it may require post-marketing testing
      to
      monitor the safety and effectiveness of the product. The FDA also may in some
      circumstances impose restrictions on the use of the product, which may be
      difficult and expensive to administer and may require prior approval of
      promotional materials.




The
      FDA
      may, in some cases, confer upon an investigational product the status of a
      Fast
      Track product. A Fast Track product is defined as a new drug or biologic
      intended for the treatment of a serious or life-threatening condition that
      demonstrates the potential to address unmet medical needs for this condition.
      The FDA can base approval of an NDA for a Fast Track product on an effect on
      a
      surrogate endpoint, or on another endpoint that is reasonably likely to predict
      clinical benefit. If a preliminary review of clinical data suggests that a
      Fast
      Track product may be effective, the FDA may initiate review of entire sections
      of a marketing application for a Fast Track product before the sponsor completes
      the application.




We
      will
      also be subject to a variety of regulations governing clinical trials and sales
      of our products outside the United States. Whether or not FDA approval has
      been
      obtained, approval of a product candidate by the comparable regulatory
      authorities of foreign countries and regions must be obtained prior to the
      commencement of marketing the product in those countries. The approval process
      varies from one regulatory authority to another and the time may be longer
      or
      shorter than that required for FDA approval. In the European Union, Canada
      and
      Australia, regulatory requirements and approval processes are similar, in
      principle, to those in the United States.




We
      also
      will be subject to federal regulation by the Occupational Safety and Health
      Administration and the Environmental Protection Agency and to regulation under
      the Toxic Substances Control Act, the Resource Conservation and Recovery Act
      and
      other federal and state regulatory statutes, and may in the future be subject
      to
      other federal, state or local regulations.




5




**Commercial
      Markets**




Because
      we are a development stage company, it is unclear what commercial markets may
      be
      available for the products we develop, if any. The Company plans to make
      progress towards individualized medicine allowing development of designer drugs
      for precise disease causation and to produce drugs that are cost effective
      thus
      allowing population at large to gain their benefits. Our research programs
      may
      initially show promise in identifying potential product candidates, yet fail
      to
      yield product candidates for clinical development due to harmful side effects
      or
      other characteristics that indicate they are unlikely to be effective drugs.
      While our research may lead to extremely marketable products, we are unable
      to
      measure such marketability in commercial terms at this time.




**Competition**




The
      pharmaceutical and biopharmaceutical industry is characterized by intense
      competition and rapid and significant technological changes and advancements.
      Many companies, research institutions and universities are doing research and
      development work in a number of areas similar to those that we focus on that
      could lead to the development of new products which could compete with and
      be
      superior to our product candidates.




Most
      of
      the companies with which we compete have substantially greater financial,
      technical, manufacturing, marketing, distribution and other resources than
      those
      of ours. A number of these companies may have or may develop technologies for
      developing products for treating various diseases that could prove to be
      superior to ours. We expect technological developments in the pharmaceutical
      and
      biopharmaceutical and related fields to occur at a rapid rate, and we believe
      competition will intensify as advances in these fields are made. Accordingly,
      we
      will be required to continue to devote substantial resources and efforts to
      research and development activities in order to potentially achieve and maintain
      a competitive position in this field. Products that we develop may become
      obsolete before we are able to market them or to recover all or any portion
      of
      our research and development expenses. We will be competing with respect to
      our
      products with companies that have significantly more experience in undertaking
      preclinical testing and human clinical trials with new or improved therapeutic
      products and obtaining regulatory approvals of such products. A number of these
      companies already market and may be in advanced phases of clinical testing
      of
      various drugs that may compete with our lead product candidate or any future
      product candidates. Our competitors may develop or commercialize products more
      rapidly than we do or with significant advantages over any products we develop.
      Our competitors may therefore be more successful in commercializing their
      products than we are, which could adversely affect our competitive position
      and
      business.




Colleges,
      universities, governmental agencies and other public and private research
      organizations are becoming more active in seeking patent protection and
      licensing arrangements to collect royalties for use of technologies that they
      have developed, some of which may be directly competitive with our lead product
      candidate or any future product candidates. The governments of a number of
      foreign countries are aggressively investing in cellular therapy research and
      promoting such research by public and private institutions within those
      countries. These domestic and foreign institutions and governmental agencies,
      along with pharmaceutical and specialized biotechnology companies, can be
      expected to compete with us in recruiting qualified scientific personnel.




Our
      competitive position will be significantly impacted by the following factors,
      among others:




·
            our
                ability to obtain FDA marketing approval for our product candidates
                on a
                timely basis;




6




·
            the
                level of acceptance of our products by physicians, compared to those
                of
                competing products or therapies;




·
            our
                ability to have our products manufactured on a commercial
                scale;




·
            the
                effectiveness of sales and marketing efforts on behalf of our
                products;




·
            our
                ability to meet demand for our
                products;




·
            our
                ability to secure insurance reimbursement for our products
                candidates;




·
            the
                price of our products relative to competing products or
                therapies;




·
            our
                ability to recruit and retain appropriate management and scientific
                personnel; and




·
            our
                ability to develop a commercial scale research and development,
                manufacturing and marketing infrastructure either on our own or with
                one
                or more future strategic partners.




**RISK
      FACTORS**




An
      investment in our securities involves a high degree of risk. You should
      carefully consider the risks described below before deciding to invest in or
      maintain your investment in our Company. The risks described below are not
      intended to be an all-inclusive list of all of the potential risks relating
      to
      an investment in our securities. If any of the following or other risks actually
      occur, our business, financial condition or operating results and the trading
      price or value of our securities could be materially adversely
      affected.




Our
      actual results could differ materially from those anticipated in these
      forward-looking statements as a result of certain factors, including the risks
      faced by us described below and elsewhere in this Annual Report.




**RISKS
      RELATED TO OUR BUSINESS**




***We
      are a development stage company with no operating history and, accordingly,
      you
      will not have any basis on which to evaluate our ability to achieve our business
      objective.***




We
      are a
      development stage company and our ability to begin operations is dependent
      upon
      our ability in developing marketable and profitable products. Since we do not
      have an operating history related to the pharmaceutical business and the
      development of pharmaceutical drugs, you will have no basis upon which to
      evaluate our ability to achieve our business objectives. We have no present
      revenues and will not generate any revenues in the near future.




***We
      are a development stage company that has no financial statements related to
      the
      new business we plan to pursue. Our prior history is not indicative of the
      new
      business, and there is no guarantee that we will commercialize our products
      or
      generate any revenue in our new business.  You may lose all of your
      investment in our Company.***




You
      cannot rely on the financial statements that have been previously reported
      with
      the Securities and Exchange Commission (the “SEC”) as they do not reflect the
      new  and
      untested business that we are embarking on. The amounts raised from the sale
      of
      our securities in the private placements may prove to be inadequate for the
      capital-intensive nature of our operations. Our prior history is not indicative
      of the new and speculative plan of operation that we intend to pursue, and
      there
      is no guarantee that we will generate revenue and be profitable in our new
      business. You may lose all of your investment in our Company.




7




***We
      will be engaged in early stage research and as such may not be successful in
      our
      efforts to develop a portfolio of commercially viable
      products.***




A
      key
      element of our strategy is to develop and commercialize a portfolio of new
      drugs. We are seeking to do so through our internal research programs. A
      significant portion of the research that we are conducting involves new
      strategies and targets, some based on previously established pharmacology and
      some that is novel. Research programs to identify new disease targets and
      product candidates require substantial technical, financial and human resources,
      whether or not any product candidates or technologies are ultimately identified.
      Our research programs may initially show promise in identifying potential
      product candidates, yet fail to yield product candidates for clinical
      development due to harmful side effects or other characteristics that indicate
      they are unlikely to be effective drugs.




Although
      we have identified potential product candidates in the areas of acute myeloid
      leukemia, solid cancers (lung and breast), and chemotherapy associated
      neutropenia (low white cell count), the work needed to demonstrate their
      commercial viability is at a very early stage. The follow-up research needed
      to
      demonstrate the viability of the product is costly and time-consuming, and
      may
      reveal that the product does not function as expected or that it is otherwise
      not commercially viable.




If
      we are
      unable to confirm efficacy and safety of these candidates through internal
      research programs, license suitable products or deliver technologies on
      acceptable business terms, our business prospects will suffer.




***We
      do not expect to obtain any revenues for several years and there is no assurance
      that we will ever generate revenue or be profitable. If we do not generate
      revenues and achieve profitability, we will be forced to cease or substantially
      curtail our operations and you may lose your entire investment.***




Because
      we are currently engaged in research at a very early stage, significant time
      may
      be required to develop any product or intellectual property capable of
      generating revenues. As such, our business is unlikely to generate any revenue
      in the next several years, and may never do so. Even if we are able to generate
      revenues in the future through licensing our technologies or through product
      sales, there is no assurance that our revenues will exceed our expenses. Should
      we fail to achieve profitability, you may lose your entire investment.




***If
      we are unable to secure licenses to technologies or materials vital to our
      business, or if the rights to technologies that we have licensed terminate,
      our
      commercialization efforts could fail or be delayed.***




Since
      the
      initial target therapies are compounds that have been licensed to us, the
      failure to secure and maintain these licenses may cause the delay or termination
      of our development plans. While we do not anticipate any challenges, unforeseen
      events can occur. Intellectual property allowing for the exclusive development
      of therapies has a finite lifespan. Prolonged delays in the successful
      development of therapies can lead to loss of exclusive, or even non-exclusive,
      marketing. The development of our current clinical products is not subject
      to
      the need for additional licenses, however unforeseen blockades can
      occur.




8




***If
      we were to materially breach our present collaboration agreement or any future
      license or collaboration agreements, we could lose our ability to commercialize
      the related technologies, and our business could be materially and adversely
      affected.***




We
      are
      party to intellectual property licenses and agreements which will be integral
      to
      our business. Even once we have all necessary agreements and patent licenses
      in
      place to develop the compounds, subsequent unforeseen events may cause a
      deviation from the current business plan. These licenses and agreements impose
      various research, development, commercialization, sublicensing, royalty,
      indemnification, insurance and other obligations on us. If we or our
      collaborators fail to perform under these agreements or otherwise breach
      obligations imposed by them, we could lose intellectual property rights that
      are
      important to our business.




***We
      may not be successful in establishing additional strategic collaborations,
      which
      could adversely affect our ability to develop and commercialize products.***




We
      may
      seek opportunities to establish new collaborations, joint ventures and strategic
      collaborations for the development and commercialization of products we discover
      and/or develop. We face significant competition in seeking appropriate
      collaborators and the negotiation process is time-consuming and complex. We
      may
      not be successful in our efforts to establish additional strategic
      collaborations or other alternative arrangements. Even if we are successful
      in
      our efforts to establish a collaboration or agreement, the terms that we
      establish may not be favorable to us. We will also be dependent on several
      contractual services, the loss of which could result in delays in product
      development. Finally, such strategic alliances or other arrangements may not
      result in successful products and associated revenue.




***The
      biotechnology and pharmaceutical industry is highly competitive and subject
      to
      rapid technological change.***




The
      biotechnology and pharmaceutical industry is highly competitive and subject
      to
      rapid and profound technological changes. Our present and potential competitors
      include major pharmaceutical companies, as well as specialized biotechnology
      and
      life sciences firms in the United States and in other countries. Most of these
      companies have considerably greater financial, technical and marketing resources
      than us. Additional mergers and acquisitions in the pharmaceutical and
      biotechnology industries may result in even more resources being concentrated
      in
      our competitors. Our existing or prospective competitors may develop processes
      or products that are more effective than ours or may be more effective at
      implementing their technologies to develop commercial products faster. Our
      competitors may succeed in obtaining patent protection and/or receiving
      regulatory approval for commercializing products before us. Developments by
      our
      competitors may render our product candidates obsolete or
      non-competitive.




We
      also
      experience competition from universities and other research institutions, and
      we
      are likely to compete with others in acquiring technology from those sources.
      There can be no assurance that others will not develop technologies with
      significant advantages over those that we are seeking to develop, which could
      harm our business.




***We
      may be unable to compete successfully with our
      competitors.***




We
      face
      competition from other companies seeking to identify and commercialize cancer
      biomarkers. We also compete with universities and other research institutions
      engaged in research in these areas. Many of our competitors have greater
      technical and financial resources than us.




Our
      ability to compete successfully is based on numerous factors, including: the
      cost-effectiveness of any product we ultimately commercialize relative to
      competing products; the ease of use and ready availability of any product we
      bring to market; and the relative speed with which we are able to bring any
      product resulting from our research to market in our target
      markets.




9




If
      we are
      unable to distinguish our products from competing products, or if competing
      products reach the market first, we may be unable to compete successfully with
      current or future competitors. This would cause our revenues to decline and
      affect our ability to achieve profitability.




***We
      depend on certain key scientific personnel for our success. The loss of any
      such
      personnel could adversely affect our business, financial condition and results
      of operations.***




The
      scientific team is composed of individuals who have been involved in the
      development of the patents upon which the three initial target therapies are
      based. The skill sets required to execute the development of therapies is
      dependent upon the unique skills, knowledge in the field, and knowledge around
      the specific technologies that represent the core of this business. Skilled
      individuals who headed the discovery and development of many of our core
      programs, in particular Dr. Gill, the Chairman of our Scientific Board, and
      Dr.
      Chandraratna, our Chief Scientific Officer, are a crucial part of this business.
      The loss of any of these individuals, especially early in the life of this
      business can slow the progress. Loss of one or more of these individuals may
      have a detrimental effect on our abilities to continue the development programs
      in a timely fashion.




***We
      expect to rely heavily on third parties for the conduct of clinical trials
      of
      our product candidates. If these clinical trials are not successful, or if
      we or
      our collaborators are not able to obtain the necessary regulatory approvals,
      we
      will not be able to commercialize our product candidates.***




In
      order
      to obtain regulatory approval for the commercial sale of our product candidates,
      we and our collaborators will be required to complete extensive preclinical
      studies as well as clinical trials in humans to demonstrate to the FDA and
      foreign regulatory authorities that our product candidates are safe and
      effective.




Clinical
      development is a long, expensive and uncertain process. Accordingly, preclinical
      testing and clinical trials, if any, of our product candidates under development
      may not be successful. We could experience delays in preclinical or clinical
      trials of any of our product candidates, obtain unfavorable results in a
      development program, or fail to obtain regulatory approval for the
      commercialization of a product. Preclinical studies or clinical trials may
      produce negative, inconsistent or inconclusive results, and we or our
      collaborators may decide, or regulators may require us, to conduct additional
      preclinical studies or clinical trials. The results from early clinical trials
      may not be statistically significant or predictive of results that will be
      obtained from expanded, advanced clinical trials.




Furthermore,
      the timing and completion of clinical trials, if any, of our product candidates
      depend on, among other factors, the number of patients we will be required
      to
      enroll in the clinical trials and the rate at which those patients are enrolled.
      Any increase in the required number of patients, decrease in recruitment rates,
      or difficulties retaining study participants, may result in increased costs,
      program delays or both.




Also,
      our
      products under development may not be effective in treating any of our targeted
      disorders or may prove to have undesirable or unintended side effects,
      toxicities or other characteristics that may prevent or limit their commercial
      use. Institutional review boards or regulators, including the FDA, may hold,
      suspend or terminate our clinical research or the clinical trials of our product
      candidates for various reasons, including non-compliance with regulatory
      requirements or if, in their opinion, the participating subjects are being
      exposed to unacceptable health risks. Additionally, the failure of third parties
      conducting or overseeing the operation of the clinical trials to perform their
      contractual or regulatory obligations in a timely fashion could delay the
      clinical trials. Failure of clinical trials can occur at any stage of testing.
      Any of these events could adversely affect our ability to market a product
      candidate.




10




***We
      may be subject to product liability and other claims that could have a material
      negative effect on our operations and on our financial
      condition.***




The
      development and sale of medical products in general expose us to the risk of
      significant damages from product liability and other claims. Product liability
      claims could delay or prevent completion of our clinical development programs.
      If we succeed in marketing our proposed lead product candidate or any future
      product candidates, such claims could result in an FDA investigation of the
      safety and effectiveness of our products or our marketing programs, and
      potentially a recall of our products or more serious enforcement action, or
      limitations on the indications for which they may be used, or suspension or
      withdrawal of approval. We plan to obtain and maintain product liability
      insurance for coverage of our clinical trial activities. There is no assurance
      that we will be able to secure such insurance in the amounts we are seeking,
      or
      at all, for any of the trials for our proposed lead product candidate or any
      future product candidates. We intend to obtain coverage for our products when
      they enter the marketplace (as well as requiring the manufacturers of our
      products to maintain insurance), but we do not know if insurance will be
      available to us at all or at acceptable costs. The costs for many forms of
      liability insurance have risen substantially in recent years, and such costs
      may
      continue to increase in the future, which could materially impact our costs
      for
      clinical or product liability insurance. If the cost is too high, we will have
      to self-insure, and we may have inadequate financial resources to pay the costs
      of any claims. A successful claim in excess of our product liability coverage
      could have a material adverse effect on our business, financial condition and
      results of operations.




***Before
      we can market our lead product candidate or any future product candidates,
      we
      must obtain governmental approval for each product candidate, the application
      and receipt of which is time-consuming, costly and
      uncertain.***




Our
      lead
      product candidate and any future product candidates that we will be developing
      will require approval of the FDA before they can be marketed in the United
      States. Although our focus at this time is primarily on the U.S. market, in
      the
      future similar approvals will need to be obtained from foreign regulatory
      agencies before we can market our current or proposed product candidates in
      other countries. The process for filing and obtaining FDA approval to market
      therapeutic products is both time-consuming and costly, with no certainty of
      a
      successful outcome. The historical failure rate for companies seeking to obtain
      FDA approval of therapeutic products is high. This process includes conducting
      extensive pre-clinical research and clinical testing, which may take longer
      and
      cost more than we initially anticipate due to numerous factors, including
      without limitation, difficulty in securing appropriate centers to conduct
      trials, difficulty in enrolling patients in conformity with required protocols
      in a timely manner, unexpected adverse reactions to our proposed product
      candidates by patients in the trials and changes in the FDA’s requirements for
      our testing during the course of that testing. The FDA may require additional
      pre-clinical work for our lead product candidate, which could necessitate
      significant expenditures that we have not budgeted and which could significantly
      delay the commencement of clinical trials. The formulation of our lead product
      candidate has not been previously tested in patients, and we may encounter
      unexpected and adverse immune responses or other side effects in the patients
      whom we test with this vaccine product candidate.




The
      time
      required to obtain FDA and other approvals is unpredictable but often can exceed
      five years following the commencement of clinical trials, depending upon the
      complexity of the product. Any analysis we perform of data from preclinical
      and
      clinical activities is subject to confirmation and interpretation by regulatory
      authorities, which could delay, limit or prevent regulatory approval. We may
      also encounter unexpected delays or increased costs due to a variety of reasons,
      including new government regulations from future legislation or administrative
      action, or from changes in FDA policy during the period of product development,
      clinical trials and FDA regulatory review.




11




Any
      delay
      or failure in our clinical trial program and in obtaining required approvals
      would have a material adverse effect on our ability to generate revenues from
      the particular product. Furthermore, any regulatory approval to market a product
      may be subject to limitations on the indicated uses for which we may market
      the
      product. These limitations may limit the size of the market for the
      product.




***The
      Fast Track designation for development of our lead product candidate or any
      other potential product candidate may not lead to a faster development,
      regulatory review or approval process, and it does not increase the likelihood
      that our product candidate will receive marketing
      approval.***




If
      a drug
      is intended for the treatment of a serious or life-threatening condition and
      the
      drug demonstrates the potential to address unmet medical needs for this
      condition, the drug sponsor may apply for FDA Fast Track designation for a
      particular indication. Marketing applications filed by sponsors of products
      in
      Fast Track development may qualify for priority review under the policies and
      procedures offered by the FDA, but the Fast Track designation does not assure
      any such qualification or ultimate marketing approval by the FDA. Receipt of
      Fast Track designation may not result in a faster development process, review
      or
      approval compared to drugs considered for approval under conventional FDA
      procedures. In addition, the FDA may withdraw any Fast Track designation at
      any
      time. We may seek Fast Track designation for our lead brain tumor vaccine
      candidate or any future product candidates, but there is no assurance that
      the
      FDA will grant this status to any of our proposed product
      candidates.




***Because
      our lead product candidate represents and our other future potential product
      candidates will represent novel approaches to the treatment of disease, there
      are many uncertainties regarding the development, the market acceptance, third
      party reimbursement coverage and the commercial potential of our product
      candidates.***




There
      is
      no assurance that the approaches offered by our lead product candidate or any
      future product candidates will gain broad acceptance among doctors or patients
      or that governmental agencies or third party medical insurers will be willing
      to
      provide reimbursement coverage for our proposed product candidates. Moreover,
      we
      do not have internal marketing data research resources and are not certain
      of
      and have not attempted to independently verify the potential size of the
      commercial markets for our lead product candidates or any future product
      candidates. Since our lead product candidates and any future product candidates
      will represent new approaches to treating various conditions, it may be
      difficult, in any event, to accurately estimate the potential revenues from
      these product candidates. We may spend large amounts of money trying to obtain
      approval for these product candidates, and never succeed in doing so. In
      addition, these product candidates may not demonstrate in large sets of patients
      the pharmacological properties ascribed to them in the laboratory studies or
      smaller groups of patients, and they may interact with human biological systems
      in unforeseen, ineffective or even harmful ways either before or after they
      are
      approved to be marketed. We do not yet have sufficient information to reliably
      estimate what it will cost to commercially manufacture our lead product
      candidate or any future product candidates, and the actual cost to manufacture
      these products could materially and adversely affect the commercial viability
      of
      these products. As a result, we may never succeed in developing a marketable
      product. If we do not successfully develop and commercialize products based
      upon
      our approach, we will not become profitable, which would materially, adversely
      affect the value of our common stock.




12




Other
      factors that are presently unknown to us that we believe will materially affect
      market acceptance of our lead product candidate or any future product candidates
      include:




·
            the
                timing of our receipt of any marketing approvals, the terms of any
                approvals and the countries in which approvals are obtained;




·
            the
                safety, efficacy and ease of administration;




·
            the
                availability of government and third-party payor reimbursement;




·
            the
                pricing of our product candidates, particularly as compared to alternative
                treatments; and




·
            the
                availability of alternative effective forms of treatments, at that
                time,
                for the diseases that the product candidates we are developing are
                intended to treat.




***If
      we or our collaborators, manufacturers or service providers fail to comply
      with
      regulatory laws and regulations, we or they could be subject to enforcement
      actions, which could affect our ability to market and sell our lead product
      candidate and any future product candidates and may harm our reputation.***




If
      we or
      our collaborators, manufacturers or service providers fail to comply with
      applicable federal, state or foreign laws or regulations, we could be subject
      to
      enforcement actions, which could affect our ability to develop, market and
      sell
      our lead product candidate or any future product candidates under development
      successfully and could harm our reputation and lead to reduced or non-acceptance
      of our proposed product candidates by the market. Even technical recommendations
      or evidence by the FDA through letters, site visits, and overall recommendations
      to academia or biotechnology companies may make the manufacturing of a clinical
      product extremely labor intensive or expensive, making the product candidate
      no
      longer viable to manufacture in a cost efficient manner. The very nature of
      the
      product may make the product candidate not commercially viable. The required
      testing of the product candidate may make that candidate no longer commercially
      viable. The conduct of clinical trials may be critiqued by the FDA,
      Institutional Review Board, or the Institutional Biosafety Committee, which
      may
      delay or make impossible clinical testing of a product candidate. The Data
      Safety Monitoring Committee may stop a trial or deem a product unsafe to
      continue testing. This may have significant negative repercussions on the value
      of the product and may have negative repercussions on the Company and on the
      shareholders.




***Even
      if we obtain regulatory approvals, our products will be subject to ongoing
      regulatory review.***




Following
      any initial regulatory approval of any products we may develop, we will also
      be
      subject to continuing regulatory review, including the review of adverse drug
      experiences and clinical results that are reported after our products are made
      commercially available. This would include results from any post-marketing
      tests
      or vigilance required as a condition of approval. The manufacturer and
      manufacturing facilities we use to make any of our products will also be subject
      to periodic review and inspection by the FDA. The discovery of any previously
      unknown problems with the product, manufacturer or facility may result in
      restrictions on the product or manufacturer or facility, including withdrawal
      of
      the product from the market. We do not have, and currently do not intend to
      develop, the ability to manufacture material for our clinical trials or on
      a
      commercial scale. Reliance on third-party manufacturers entails risks, including
      the continuation of a contractual or other relationship with the third party
      manufacturer, and reliance on the third-party manufacturer for regulatory
      compliance. Our product promotion and advertising is also subject to regulatory
      requirements and continuing FDA review.




13




The
      potential ramifications are far-reaching if there are areas identified as out
      of
      compliance by regulatory agencies including, but not limited to, significant
      financial penalties, manufacturing and clinical trial consent decrees,
      commercialization restrictions or other restrictions and
      litigation.




***Failure
      to obtain regulatory approval in foreign jurisdictions will prevent us from
      marketing our products abroad.***




We
      intend
      to market our products in international markets. In order to market our products
      in the European Union and many other foreign jurisdictions, we must obtain
      separate regulatory approvals. The approval procedure varies among countries
      and
      can involve additional testing, and the time required to obtain approval may
      differ from that required to obtain FDA approval. The foreign regulatory
      approval process may include all of the risks associated with obtaining FDA
      approval. We may not obtain foreign regulatory approvals on a timely basis,
      if
      at all. Approval by the FDA does not ensure approval by regulatory authorities
      in other countries, and approval by one foreign regulatory authority does not
      ensure approval by regulatory authorities in other foreign countries or by
      the
      FDA. We may not be able to file for regulatory approvals and may not receive
      necessary approvals to commercialize our products in any market.




***We
      are subject to uncertainty relating to health care reform measures and
      reimbursement policies which, if not favorable to our product candidates, could
      hinder or prevent our product candidates’ commercial
      success.***




The
      continuing efforts of the government, insurance companies, managed care
      organizations and other payors of health care costs to contain or reduce costs
      of health care may adversely affect: (1) our ability to generate revenues and
      achieve profitability; (2) the future revenues and profitability of our
      potential customers, suppliers and collaborators; and (3) the availability
      of
      capital.




In
      certain foreign markets, the pricing of prescription pharmaceuticals is subject
      to government control. In the United States, given recent federal and state
      government initiatives directed at lowering the total cost of health care,
      the
      U.S. Congress and state legislatures will likely continue to focus on health
      care reform, the cost of prescription pharmaceuticals and on the reform of
      the
      Medicare and Medicaid systems. While we cannot predict the full effects of
      the
      implementation of this new legislation or whether any legislative or regulatory
      proposals affecting our business will be adopted, the implementation of this
      legislation or announcement or adoption of these proposals could have a material
      and adverse effect on our business, financial condition and results of
      operations.




Our
      ability to commercialize our product candidates successfully will depend in
      part
      on the extent to which governmental authorities, private health insurers and
      other organizations establish appropriate reimbursement levels for the cost
      of
      our products and related treatments. Third-party payors are increasingly
      challenging the prices charged for medical products and services. Also, the
      trend toward managed health care in the United States, which could significantly
      influence the purchase of health care services and products, as well as
      legislative proposals to reform health care or reduce government insurance
      programs, may result in lower prices for our product candidates or exclusion
      of
      our product candidates from reimbursement programs. The cost containment
      measures that health care payors and providers are instituting and the effect
      of
      any health care reform could materially and adversely affect our results of
      operations.




***If
      physicians and patients do not accept the products that we may develop, our
      ability to generate product revenue in the future will be adversely
      affected.***




The
      product candidates that we may develop may not gain market acceptance among
      physicians, healthcare payors, patients and the medical community. This will
      adversely affect our ability to generate revenue. Market acceptance of and
      demand for any product that we may develop will depend on many factors,
      including: our ability to provide acceptable evidence of safety and efficacy;
      convenience and ease of administration; prevalence and severity of adverse
      side
      effects; cost effectiveness; effectiveness of our marketing strategy and the
      pricing of any product that we may develop; publicity concerning our products
      or
      competitive products; and our ability to obtain third-party coverage or
      reimbursement.




14




***The
      cost of defending against product liability claims brought against us can be
      costly and time consuming, and may harm our business.***




Product
      liability claims brought against the Company could prevent or interfere with
      our
      product commercialization efforts. Interference can be filed by other
      inventors/licensees if they believe they have intellectual property covering
      any
      part of the discovery and development of our therapeutic product. Such
      interference can delay the product development. We currently have no obvious
      interference and do not anticipate any, but unforeseen events can occur, leading
      to delays, or even block of developing a product. Defending a suit, regardless
      of merit, could be costly, could divert management attention and might result
      in
      adverse publicity or reduced acceptance of our products in the
      market.




***If
      we are not able to protect and control our unpatented trade secrets, know-how
      and other technological innovation, we may suffer competitive
      harm.***




We
      also
      rely on proprietary trade secrets and unpatented know-how to protect our
      research and development activities, particularly when we do not believe that
      patent protection is appropriate or available. However, trade secrets are
      difficult to protect. We will attempt to protect our trade secrets and
      unpatented know-how by requiring our employees, consultants and advisors to
      execute a confidentiality and non-use agreement. We cannot guarantee that these
      agreements will provide meaningful protection, that these agreements will not
      be
      breached, that we will have an adequate remedy for any such breach, or that
      our
      trade secrets will not otherwise become known or independently developed by
      a
      third party. Our trade secrets, and those of our present or future collaborators
      that we utilize by agreement, may become known or may be independently
      discovered by others, which could adversely affect the competitive position
      of
      our product candidates.




***We
      may incur substantial costs as a result of litigation or other proceedings
      to
      enforce our patents, defend against third-party patents, invalidate third-party
      patents or license third-party intellectual property.***




We
      may
      not have rights under some patents or patent applications that may cover
      technologies that we use in our research, drug targets that we select, or
      product candidates that we seek to develop and commercialize. Third parties
      may
      own or control these patents and patent applications in the United States and
      abroad. These third parties could bring claims against us or our collaborators
      that would cause us to incur substantial expenses and, if successful against
      us,
      could cause us to pay substantial damages. Further, if a patent infringement
      suit were brought against us or our collaborators, we or they could be forced
      to
      stop or delay research, development, manufacturing or sales of the product
      or
      product candidate that is the subject of the suit. We or our collaborators
      therefore may choose to seek, or be required to seek, a license from the
      third-party and would most likely be required to pay license fees or royalties
      or both. These licenses may not be available on acceptable terms, or at all.
      Even if we or our collaborators were able to obtain a license, the rights may
      be
      nonexclusive, which would give our competitors access to the same intellectual
      property. Ultimately, we could be prevented from commercializing a product
      or
      forced to cease some aspect of our business operations as a result of patent
      infringement claims, which could harm our business.




There
      has
      been substantial litigation and other proceedings regarding patent and other
      intellectual property rights in the pharmaceutical and biotechnology industries.
      Although we are not currently a party to any patent litigation or any other
      adversarial proceeding, including any interference proceeding declared before
      the United States Patent and Trademark Office, regarding intellectual property
      rights with respect to our products and technology, we may become so in the
      future. We are not currently aware of any actual or potential third party
      infringement claim involving our products. The cost to us of any patent
      litigation or other proceeding, even if resolved in our favor, could be
      substantial. The outcome of patent litigation is subject to uncertainties that
      cannot be adequately quantified in advance, including the demeanor and
      credibility of witnesses and the identity of the adverse party, especially
      in
      biotechnology related patent cases that may turn on the testimony of experts
      as
      to technical facts upon which experts may reasonably disagree. Some of our
      competitors may be able to sustain the costs of such litigation or proceedings
      more effectively than we can because of their substantially greater financial
      resources. If a patent or other proceeding is resolved against us, we may be
      enjoined from researching, developing, manufacturing or commercializing our
      products without a license from the other party and we may be held liable for
      significant damages. We may not be able to obtain any required license on
      commercially acceptable terms or at all.




15




Uncertainties
      resulting from the initiation and continuation of patent litigation or other
      proceedings could harm our ability to compete in the marketplace. Patent
      litigation and other proceedings may also absorb significant time from
      management.




***If
      we are unable to protect our intellectual property rights, our competitors
      may
      develop and market products with similar features that may reduce demand for
      our
      potential products.***




The
      following factors are important to our success: receiving patent protection
      for
      our product candidates; preventing others from infringing on our intellectual
      property rights; and maintaining our patent rights and trade
      secrets.




We
      will
      be able to protect our intellectual property rights in patents and trade secrets
      from unauthorized use by third parties only to the extent that such intellectual
      property rights are covered by valid and enforceable patents or are effectively
      maintained as trade secrets.




The
      initial clinical development candidates that we are considering for development
      are covered by issued U.S. New Chemical Entity patents. We anticipate that
      we
      will apply for further patents based on our ongoing research. Because issues
      of
      patentability involve complex legal and factual questions, the issuance, scope
      and enforceability of patents cannot be predicted with certainty. Patents,
      if
      issued, may be challenged, invalidated or circumvented. U.S. patents and patent
      applications may also be subject to interference or reexamination proceedings
      in
      the U.S. Patent and Trademark Office. Foreign patents may be subject to
      opposition or comparable proceedings in corresponding foreign patent offices,
      and such proceedings could result in either loss of the patent or denial of
      the
      patent application, or loss or reduction in the scope of one or more of the
      claims of the patent or patent application. In addition, such interference,
      reexamination and opposition proceedings may be costly. Thus, any patents that
      we own or license from others may not provide any protection against
      competitors. Furthermore, an adverse decision in an interference proceeding
      can
      result in a third-party receiving the patent rights sought by us, which in
      turn
      could affect our ability to market a potential product to which that patent
      filing was directed. Our pending patent applications, those that we may file
      in
      the future, or those that we may license from third parties may not result
      in
      patents being issued. If issued, they may not provide us with proprietary
      protection or competitive advantages against competitors with similar
      technology. Furthermore, others may independently develop similar technologies
      or duplicate any technology that we have developed. Many countries, including
      certain countries in Europe, have compulsory licensing laws under which a patent
      owner may be compelled to grant licenses to third parties. For example,
      compulsory licenses may be required in cases where the patent owner has failed
      to “work” the invention in that country, or the third-party has patented
      improvements. In addition, many countries limit the enforceability of patents
      against government agencies or government contractors. In these countries,
      the
      patent owner may have limited remedies, which could materially diminish the
      value of the patent. Moreover, the legal systems of certain countries,
      particularly certain developing countries, do not favor the aggressive
      enforcement of patent and other intellectual property protection, which makes
      it
      difficult to stop infringement.




16




In
      addition, our ability to enforce our patent rights depends on our ability to
      detect infringement. It is difficult to detect infringers who do not advertise
      the compounds that are used in their products. Any litigation to enforce or
      defend our patent rights, even if we prevail, could be costly and time-consuming
      and would divert the attention of management and key personnel from business
      operations.




We
      will
      also rely on trade secrets, know-how and technology, which are not protected
      by
      patents, to maintain our competitive position. We will seek to protect this
      information by entering into confidentiality agreements with parties that have
      access to it, such as strategic partners, collaborators, employees and
      consultants. Any of these parties may breach these agreements and disclose
      our
      confidential information or our competitors might learn of the information
      in
      some other way. If any trade secret, know-how or other technology not protected
      by a patent were disclosed to or independently developed by a competitor, our
      business, financial condition and results of operations could be materially
      adversely affected.




***The
      patent process is exceedingly time consuming and the loss of patent protection
      may cause a reduction or loss of future revenue
      stream.***




The
      patent process is exceedingly time consuming. The time consumed by development,
      regulatory review, and creation of a market for a drug may significantly intrude
      into the finite patent life of the particular drug. Loss of patent protection
      ultimately enables generic versions of the drug to enter the market, which
      will
      significantly adversely impact future revenue streams of the Company. An
      initially profitable drug may thus become significantly less
      profitable.




**If
      our third-party manufacturers’ facilities do not follow current good
      manufacturing practices, our product development and commercialization efforts
      may be harmed.**




There
      are
      a limited number of manufacturers that operate under the FDA’s and European
      Union’s good manufacturing practices regulations and are capable of
      manufacturing products. Third-party manufacturers may encounter difficulties
      in
      achieving quality control and quality assurance and may experience shortages
      of
      qualified personnel. A failure of third-party manufacturers to follow current
      good manufacturing practices or other regulatory requirements, or to document
      their adherence to such practices, may lead to significant delays in the
      availability of products for commercial use or clinical study, the termination
      of, or hold on, a clinical study, or the delay or prevention of filing or
      approval of marketing applications for our products. In addition, we could
      be
      subject to sanctions, including fines, injunctions and civil penalties. Changing
      manufacturers may require FDA approval or additional clinical trials and the
      revalidation of the manufacturing process and procedures in accordance with
      FDA
      mandated current good manufacturing practices. This revalidation may be costly
      and time consuming. If we are unable to arrange for third-party manufacturing
      of
      our products on commercially reasonable terms, we may not be able to complete
      development or marketing of our products.




Another
      development that may affect the pricing of drugs is regulatory action regarding
      drug reimportation into the United States. The Medicare Prescription Drug,
      Improvement and Modernization Act of 2003, which became law in December 2003,
      requires the Secretary of the U.S. Department of Health and Human Services
      (the
“Secretary”) to promulgate regulations allowing drug reimportation from Canada
      into the United States under certain circumstances. These provisions will become
      effective only if the Secretary certifies that such imports will pose no
      additional risk to the public’s health and safety and will result in significant
      cost savings to consumers. To date, the Secretary has made no such finding,
      but
      he could do so in the future. Proponents of drug reimportation may also attempt
      to pass legislation that would remove the requirement for the Secretary’s
      certification or allow reimportation under circumstances beyond those
      anticipated under current law. If legislation is enacted, or regulations issued,
      allowing the reimportation of drugs, it could decrease the reimbursement we
      would receive for any products that we may commercialize, negatively affecting
      our anticipated revenues and prospects for profitability.




17




**RISKS
      RELATED TO CAPITAL STRUCTURE**




***There
      is no assurance of an established public trading market, and the failure to
      establish one would adversely affect the ability of our investors to sell their
      securities in the public market.***




At
      present, there is no active trading market for the Company’s securities, and
      there can be no assurance that a trading market will develop. Our common stock,
      however, is traded on the OTC Bulletin Board. The National Association of
      Securities Dealers (the “NASD”) has enacted changes that limit quotations on the
      OTC Bulletin Board to securities of issuers that are current in their reports
      filed with the SEC. The OTC Bulletin Board is an inter-dealer, over-the-counter
      market that provides significantly less liquidity than the NASD’s automated
      quotation system (the “NASDAQ Stock Market”). Unlike quotes for the NASDAQ Stock
      Market, quotes for stocks included on the OTC Bulletin Board are not listed
      in
      the financial sections of newspapers. Therefore, prices for securities traded
      solely on the OTC Bulletin Board may be difficult to obtain and holders of
      common stock may be unable to resell their securities at or near their original
      offering price, or at all.




***Factors
      which may adversely affect market prices of the Company’s common
      stock.***




Market
      prices for our common stock will be influenced by a number of factors,
      including:




·
            the
                issuance of new equity securities pursuant to a future offering or
                acquisition;




·
            changes
                in interest rates;




·
            competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;




·
            variations
                in quarterly operating results;




·
            changes
                in financial estimates by securities
                analysts;




·
            the
                depth and liquidity of the market for our common
                stock;




·
            investor
                perceptions of our company and the medical device industry generally;
                and




·
            general
                economic and other national
                conditions.




***Shares
      eligible for future sale may adversely affect the market price of our common
      stock.***




During
      the last fiscal year, we have issued 104,000,000 shares of our Company common
      stock and 12,300,000 warrants to purchase our Company common stock to investors
      through private placement transactions exempt from registration under the
      Securities Act of 1933, as amended (the “Securities Act”). T he
      sale,
      or availability for sale, of substantial amounts of this stock, either pursuant
      to this statement or pursuant to the exemption afforded for the sale of
“restricted” securities by Rule 144 of the Securities Act, could adversely
      affect the future market price of the common stock and could impair our ability
      to raise additional capital through the sale of our equity securities or debt
      financing.




18




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




Our
      common stock is considered to be a “penny stock” since it meets one or more of
      the definitions in Rules 15g-2 through 15g-6 promulgated under
      Section 15(g) of the Exchange Act. The characteristics that define a “penny
      stock” include but are not limited to the following: (i) the stock trades
      at a price less than $5.00 per share; (ii) the stock is NOT traded on a
“recognized” national exchange; (iii) the stock is NOT quoted on the NASDAQ
      Stock Market, or even if so, has a price less than $5.00 per share; or
      (iv) the stock is issued by a company with net tangible assets less than
      $2.0 million, if in business more than a continuous three years, or with
      average revenues of less than $6.0 million for the past three years. The
      principal result or effect of being designated a “penny stock” is that
      securities broker-dealers cannot recommend the stock but must trade in it on
      an
      unsolicited basis.




Additionally,
      Section 15(g) of the Exchange Act and Rule 15g-2 promulgated
      thereunder by the SEC require broker-dealers dealing in penny stocks to provide
      potential investors with a document disclosing the risks of penny stocks and
      to
      obtain a manually signed and dated written receipt of the document before
      effecting any transaction in a penny stock for the investor’s
      account.




Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be “penny stock.”
Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the
      account of any investor for transactions in such stocks before selling any
      penny
      stock to that investor. This procedure requires the broker-dealer to
      (i) obtain from the investor information concerning his or her financial
      situation, investment experience and investment objectives; (ii) reasonably
      determine, based on that information, that transactions in penny stocks are
      suitable for the investor and that the investor has sufficient knowledge and
      experience as to be reasonably capable of evaluating the risks of penny stock
      transactions; (iii) provide the investor with a written statement setting
      forth the basis on which the broker-dealer made the determination in (ii) above;
      and (iv) receive a signed and dated copy of such statement from the
      investor, confirming that it accurately reflects the investor’s financial
      situation, investment experience and investment objectives. Compliance with
      these requirements may make it more difficult for holders of our common stock
      to
      resell their shares to third-parties or to otherwise dispose of them in the
      market or otherwise.




***If
      we fail to maintain effective internal controls over financial reporting, the
      price of our common stock may be adversely affected.***




Our
      internal controls over financial reporting may have weaknesses and conditions
      that need to be addressed, the disclosure of which may have an adverse impact
      on
      the price of our common stock. We are required to establish and maintain
      appropriate internal controls over financial reporting. Failure to establish
      those controls, or any failure of those controls once established, could
      adversely impact our public disclosures regarding our business, financial
      condition or results of operations. In addition, management’s assessment of
      internal controls over financial reporting may identify weaknesses and
      conditions that need to be addressed in our internal controls over financial
      reporting or other matters that may raise concerns for investors. Any actual
      or
      perceived weaknesses and conditions that need to be addressed in our internal
      control over financial reporting, disclosure of management’s assessment of our
      internal controls over financial reporting or disclosure of our public
      accounting firm’s attestation to or report on management’s assessment of our
      internal controls over financial reporting may have an adverse impact on the
      price of our common stock.




19




***Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 are
      uncertain, and if we fail to comply in a timely manner, our business could
      be
      harmed and our stock price could decline.***




Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of
      2002 require annual assessment of our internal controls over financial
      reporting, and attestation of our assessment by our independent registered
      public accountants. On December 15, 2006, the SEC extended the compliance
      date for non-accelerated filers, as defined by the SEC, to provide management’s
      report on internal controls until the company files an annual report for its
      fiscal year ending on or after December 15, 2007. On December 17, 2007, the
      SEC
      announced that it intended to further extend the compliance date for
      non-accelerated filers to file the auditor’s attestation report on internal
      control over financial reporting until it files an annual report for its first
      fiscal year ending on or after December 15, 2009. Accordingly, we believe that
      we will not be required to provide management’s report to our annual report
      until the fiscal year ending September 30, 2008 and the auditor’s attestation
      report until the fiscal year ending September 30, 2010. In any event, the
      standards that must be met for management to assess the internal controls over
      financial reporting as effective are new and complex, and require significant
      documentation, testing and possible remediation to meet the detailed standards.
      We may encounter problems or delays in completing activities necessary to make
      an assessment of our internal controls over financial reporting. In addition,
      the attestation process by our independent registered public accountants is
      new
      and we may encounter problems or delays in completing the implementation of
      any
      requested improvements and receiving an attestation of our assessment by our
      independent registered public accountants. If we cannot assess our internal
      controls over financial reporting as effective, or our independent registered
      public accountants are unable to provide an unqualified attestation report
      on
      such assessment, investor confidence and share value may be negatively
      impacted.




***We
      do not foresee paying cash dividends in the foreseeable
      future.***




We
      have
      not paid cash dividends on our stock and do not plan to pay cash dividends
      on
      our common stock in the foreseeable future.




**ITEM****2.**
            **DESCRIPTION
                OF PROPERTY**




We
      currently maintain our corporate office in 18 Technology, Suite 130, Irvine,
      CA
      92618, **** under
      a
      month-to-month lease at a monthly rental rate of $4,243 through July 31,
      2008 and $4,389 thereafter. We do not own or lease any other property and does
      not have any investment policy with respect to real estate.




**ITEM****3.**
            **LEGAL
                PROCEEDINGS**




We
      are
      not a party to any material legal proceedings.




We
      may
      occasionally become subject to legal proceedings and claims that arise in the
      ordinary course of our business. It is impossible for us to predict with any
      certainty the outcome of any disputes that may arise, and we cannot predict
      whether any liability arising from claims and litigation will be material in
      relation to our financial position or results of operations.




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




On
      September 6, 2007, holders of 52.1% of the Company’s common stock voted by
      written consent in lieu of a special meeting to:




i)  Amend
      our
      Articles of Incorporation to change the Company’s name from Quest Group
      International, Inc. to NuRx Pharmaceuticals, Inc.; and




20




ii)  Approve
      the 2007 Stock Compensation Plan.




A
      total
      of 55,500,000 shares were represented by the written consent out of the
      106,500,000 shares of stock issued and outstanding. The
      Information Statement filed by the Company on October 1, 2007 on Schedule 14C,
      which discussed these matters in greater detail, is incorporated herein by
      reference.




**PART
      II**




**ITEM****5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                ISSUER PURCHASES OF EQUITY
                SECURITIES**




**Market
      Information**




Our
      common stock has been traded on the OTC Bulletin Board over-the-counter market
      since November 10, 2006. Effective October 30, 2007, the Company changed its
      symbol from “QSTG” to “NURX” in connection with the Company’s change in name to
      NuRx Pharmaceuticals, Inc.




There
      is
      little or no trading in our common stock. The following price information
      reflects inter-dealer prices, without retail mark-up, mark-down or commission
      and may not represent actual transactions:




**Quarter
                Ending**
            
            **High**
            
            **Low**Nov.
                10, 2006 - Dec. 31, 2006(1)
            
            $
            0.60
            
            $
            0.12Jan.
                1, 2006 - Mar. 31, 2007
            
            $
            0.70
            
            $
            0.31(2
            )April
                1, 2007 - June 30, 2007
            
            $
            1.40
            
            $
            0.58July
                1, 2007 - Sept. 30, 2007
            
            $
            1.75
            
            $
            0.75





(1)  To
      our
      knowledge, trading activity first commenced during the calendar quarter ended
      December 31, 2006.




(2)  Price
      as
      of the first trading day after March 31, 2007.




**Holders**




As
      of
      December 19, 2007, there were approximately 37 holders of record of our common
      stock. ****




**Dividends**




We
      have
      not paid any dividends on our common stock to date and do not anticipate that
      we
      will be paying dividends in the foreseeable future. **** Any
      payment of cash dividends on our common stock in the future will be dependent
      upon the amount of funds legally available, our earnings, if any, our financial
      condition, our anticipated capital requirements and other factors that the
      Board
      of Directors may think are relevant. However, we currently intend for the
      foreseeable future to follow a policy of retaining all of our earnings, if
      any,
      to finance the development and expansion of our business and, therefore, do
      not
      expect to pay any dividends on our common stock in the foreseeable
      future.




21




**Equity
      Compensation Plan Information**




The
      only
      equity compensation plan approved by our security holders is the 2007 Stock
      Compensation Plan (the “2007 Plan”). The
      Company has also issued equity compensation outside of the 2007 Plan
      i n
      connection with the services provided by Hunter World Markets for the Company’s
      private placement of its common stock. A table of the equity compensation issued
      by the Company is included with *“Item
      11. Security Ownership of Certain Beneficial Owners and Management and related
      Stockholder Matters”* of
      this
      Annual Report.




**Recent
      Sales of Unregistered Securities**




On
      April
      27, 2007, nine accredited investors purchased 63,000,000 shares of the Company’s
      common stock for an aggregate purchaser price of $63,000, or $.001 per share.
      The Company believes that the investors in this transaction acquired the common
      stock with personal funds. The Company did not use an underwriter in connection
      with these transactions.




On
      May
      11, 2007, we entered into a license agreement with Vitae under which we have
      acquired an exclusive, worldwide sublicense, with the right to grant further
      sublicenses, to certain compounds and technology for all human and veterinary
      use. As partial consideration in this agreement, we agreed to issue Vitae
      approximately 5.66% of our fully diluted common stock as of the date of the
      agreement, upon receiving IND approval for clinical trials of any of the
      transferred compounds that had not already received IND approval. This milestone
      was met on October 31, 2007 and the Company issued Vitae 7,026,927 shares
      (representing 5.66% after issuance of these shares).




On
      May
      16, 2007, the Company also issued to four institutional investors 40,000,000
      shares of common stock for an aggregate purchase price of $20,000,000. Hunter
      World Markets acted as the exclusive placement agent in the transaction, and
      received a fee of $2,000,000 (10% of the gross proceeds) and a six-year warrant
      to purchase 12,000,000 shares of the common stock.




In
      connection with this private placement, certain Company shareholders agreed
      to
      cancel an aggregate of 7,759,000 shares of common stock in consideration for
      an
      aggregate of $750,000. The
      cancelled shares were not purchased by the Company pursuant to any publicly
      announced repurchase plan or program.




Pursuant
      to a Subscription Agreement between the Company and the Baradaran Revocable
      Trust, dated May 30, 2007, and a Subscription Agreement between the Company
      and
      City National Bank, Trustee FBO Harin Padma-Nathan IRA, dated June 25, 2007,
      the
      Company issued to each the Baradaran Revocable Trust and City National Bank,
      Trustee FBO Harin Padma-Nathan IRA 500,000 shares of common stock at $0.50
      per
      share, for an aggregate purchase price of $500,000. Hunter World Markets
      received a commission of 5% on half the gross proceeds and received a six-year
      warrant to purchase common stock equal to 300,000 shares, or 30% of the number
      of shares sold, exercisable at $1.00 per share.




On
      July
      20, 2007, the Board of Directors of the Company authorized the issuance of
      a
      warrant to Investor Media Group (“IMG”) to purchase up to 100,000 shares of the
      Company’s common stock, pursuant to a consulting agreement, as amended, dated
      July 12, 2007 between the Company and IMG. The warrant was to vest in four
      periodic installments, subject to the Company’s termination of the agreement.
      The Company terminated the agreement in November, 2007, thus terminating any
      warrants that had not yet vested. At termination, two installments had already
      vested, giving IMG the right to purchase only purchase 50,000 shares. The strike
      price for these warrants is $1.50 per share.




22




The
      Company also issued equity securities to certain individuals in connection
      with
      service arrangements.




On
      May
      31, 2007, in connection with the employment agreement as Chief Executive
      Officer, Dr. Padma-Nathan was issued options to purchase 3,474,000 common shares
      of the Company for an exercise price of $1.00 per share. The option shares
      vest
      in equal installments every 90 days from the date of the agreement over the
      course of his five-year employment agreement. The option expires five years
      from
      the date of grant. Dr. Padma-Nathan’s options are to be treated for tax purposes
      as an incentive stock option to the extent they meet such criteria.




On
      July
      20, 2007, the Company’s Board of Directors authorized the issuance of options to
      purchase 200,000 shares of common stock at $1.00 per share to Sharyar Baradaran
      for his services as a non-employee director. The
      option expires five years from the date of grant.




On
      July
      20, 2007, the Company’s Board of Directors authorized the issuance of 50,000
      shares of common stock to Paul Ketteridge, in consideration for his consulting
      services. T o
      the
      extent that Mr. Ketteridge provides less than 330 hours of service during the
      two-year term of the consulting arrangement, the shares will be subject to
      forfeiture on a pro-rata basis. The Company also issued to Mr. Ketteridge an
      option to purchase 50,000 shares of common stock at an exercise price of $1.00
      per share, 25,000 shares of which will vest on the second year anniversary
      of
      the consulting agreement with Mr. Ketteridge and the remaining 25,000 shares
      of
      which will vest upon receipt by the Company of the second marketing approval
      from the FDA for certain of the Corporation’s licensed compounds, provided
      however that in the event that such approval is received before July 1, 2010,
      this 25,000 shares shall vest on July 1, 2010. The
      option expires five years from the date of grant.




On
      November 27, 2007, the Company’s Board of Directors authorized the issuance of
      options to purchase 200,000 shares of common stock at $1.00 per share to Matt
      Borenzweig for his services as a non-employee director. The
      option expires five years from the date of grant.




All
      the
      aforementioned placements of the Company’s common stock were exempt
      from registration under the Securities Act, pursuant of Section 4(2) of the
      Securities Act as transactions not involving a public offering. Each of the
      above purchasers represented that it was acquiring the shares for investment
      purposes only and the Company placed appropriate restrictions on transfer of
      the
      shares issued. The Company did not engage in any general solicitation or general
      advertising in connection with the offer and sale of any of these
      securities.




**ITEM****6.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION******




*You
      should read the information in this Item 6 together with our financial
      statements and notes thereto that appear elsewhere in this Annual Report. This
      Annual Report contains forward-looking statements that involve risks,
      uncertainties, and assumptions. Actual results may differ materially from those
      anticipated in these forward-looking statements as a result of various factors,
      including, but not limited to, those presented under “Risk Factors “ included in
      Item 1 and elsewhere in this Annual Report.*




23




**Overview**




Since
      our
      inception in 2001, we have been in the business of selling nutritional products.
      As a result of the entering into of a license agreement with Vitae, we spun
      off
      this business and began to pursue a new business plan in the pharmaceuticals
      industry.




On
      or
      about May 16, 2007, we raised approximately $20,000,000 from a small group
      of
      accredited investors from the sale of 40,000,000 shares of common stock at
      a
      price of $.50 per share in a private placement offering. Hunter World Markets,
      Inc. acted as the exclusive placement agent in the private placement offering,
      and received a fee of $2,000,000 (10% of the gross proceeds) and a warrant
      to
      purchase 12,000,000 shares of the Company’s common stock, which is exercisable
      at $1.00 per share, commencing February 18, 2008 and expiring May 16, 2013.
      The
      private placement provides price protection to the accredited investors for
      one
      year from the effective date of the Form SB-2 registration statement (July
      18, 2007) for the 40,000,000 shares issued sold in the offering. If the Company
      issues additional shares at a price less than $.50 per share for financing
      purposes, then the accredited investors may purchase, at par value, such
      additional number of shares so that their effective purchase price per share
      is
      the same per share purchase price of the additional shares sold.




In
      connection with the private offering, stockholders who had acquired our common
      stock prior to April 27, 2007 canceled an aggregate of 7,759,000 shares of
      common stock in consideration for an aggregate amount of $750,000. In connection
      with the private placement offering, Hunter World loaned us $125,000 at an
      interest rate of 6% per annum. This loan together with accrued interest and
      a
      loan fee of $12,500 was repaid from the proceeds of the private
      placement.




In
      connection with the private placement offering, on or about May 30, 2007, we
      issued and sold to the Baradaran Revocable Trust 500,000 shares of our common
      stock for $0.50 per share, for an aggregate purchase price of $250,000. On
      or
      about June 25, 2007, we issued and sold to City National Bank, Trustee FBO
      Harin
      Padma-Nathan, 500,000 shares of common stock for $0.50 per share, for an
      aggregate purchase price of $250,000. In connection with the sale of these
      securities, Hunter World Markets received a placement agent fee of $12,500
      and
      six-year warrants to purchase 300,000 shares of common stock, exercisable at
      $1.00 per share




On
      May
      11, 2007, we entered into a license agreement with Vitae, pursuant to which
      we
      acquired an exclusive, worldwide sublicense, with the right to grant further
      sublicenses, to certain compounds and technology for all human and veterinary
      use. The indications for the lead compounds are acute promyelocytic leukemia,
      solid cancers (lung and breast) and chemotherapy-induced neutropenia (low white
      cell count). On October 31, 2007, we received approval from the FDA for our
      IND
      application to initiate clinical studies with our compound for the treatment
      of
      solid cancers. As a result of this milestone achievement, we are obligated
      to
      issue to Vitae 7,026,927 shares of common stock representing 5.66% of our
      outstanding common stock (after the issuance of these shares) as of the
      effective date of the license.




We
      currently are in active research and clinical development of therapeutic
      compounds relating to our nuclear receptor target technologies.




**Plan
      of Operation**




Beginning
      May 1, 2007, we have begun to pursue a new business plan in the pharmaceuticals
      industry. Our prior history is not indicative of the new business. We expect
      to
      incur significant research, development and administrative expenses before
      any
      of our products from our new business can be launched and revenues generated.




24




During
      the period inception (May 1, 2007) through ended September 30, 2007, our
      activities included completing the acquisition and transfer of the patents,
      patent applications, compounds and related materials pursuant to the license
      agreement with Vitae, securing leased premises in which to conduct our research
      and development activities, and submission of an application for an IND with
      the
      FDA for our compound for the treatment of solid cancers, which was granted
      on
      October 31, 2007. We expect to enter Phase I clinical trials for this compound
      early in 2008.




For
      the
      year ended September 30, 2007 and for period from inception (May 1, 2007)
      through September 30, 2007, we incurred a loss from continuing operations of
      $2,954,723 and a net loss of $130,654 from discontinued operations.




For
      the
      year ended September 30, 2007 and for period from inception (May 1, 2007)
      through September 30, 2007, total operating expenses were $3,205,745, including
      $818,596 in general and administrative costs and $2,387,149 in research and
      clinical development costs. General and administrative costs consisted of
      $207,598 in compensation costs, employee benefits and related payroll taxes
      (including stock based compensation of $65,829), $176,779 in general legal
      and
      accounting fees, $164,523 in intellectual property legal fees and maintenance
      costs, $154,700 in consulting fees, and $114,996 in other operating expenses.
      Research and development costs included $2,150,000 in-process research and
      development costs incurred in connection with the Vitae license, $187,737 in
      research and development salaries and $51,412 in outside product development
      expenses.




For
      the
      year ended September 30, 2007 and for period from inception (May 1, 2007)
      through September 30, 2007 we also generated $251,022 in interest income, net
      of
      $12,625 in interest expense.




We
      believe that the total aggregate net amount of approximately $18,500,000 raised
      in the recent private placement offering provides us with sufficient funds
      for
      clinical development and operations through May 2009. We believe that the
      intellectual property and compounds we have licensed from Vitae have significant
      potential in leading to individualized cancer therapies and the Company will
      focus on these therapies. These therapies would be based on the retinoid and
      rexinoid classes of compounds. Retinoids and rexinoids are small molecule
      hormones that elicit their biological effects by binding to and regulating
      the
      function of two distinct families of nuclear receptors, the Retinoic Acid
      Receptors (RARs) and Retinoid X Receptors (RXRs), respectively. Each family
      consists of three distinct subtypes which separately mediate a broad range
      of
      physiological functions including cell differentiation, proliferation and
      apoptosis, bone and cartilage formation and lipid metabolism. Although this
      biology enables the potential therapeutic application of the retinoid and
      rexinoid classes of drugs in many diseases, the currently used, non-selective
      compounds are not suitable because of complicating toxic effects. A next
      generation of retinoid and rexinoid drugs that have receptor subtype and
      functional selectivity are required to unlock the full therapeutic value of
      these compounds. The portfolio of compounds acquired through the license
      agreement with Vitae has been developed for this receptor and functional
      selectivity and contains three lead “next generation” compounds. We are in
      active research and development of these three lead compounds, two of which
      are
      in the clinical stage of development and one in the preclinical discovery stage.




The
      first
      compound will enter a Phase II study for the treatment of acute promyelocytic
      leukemia. Based on patent protection which specifically covers it as a new
      chemical entity (“NCE”), the Company believes that this compound has a generic
      competition-free product life until 2020.




The
      second lead compound will be tested for safety in cancer patients followed
      by
      efficacy studies in some of the most common cancers, including lung and breast
      cancer. On October 31, 2007, the FDA granted the Company’s IND application for
      this compound permitting it to move into the Phase I stage of clinical
      development and the initial study will characterize its safety, pharmacokinetics
      and pharmacology in advanced cancer patients. Based on patent protection which
      covers it as a NCE, the Company believes that this compound has a generic
      competition-free product life until 2015. Additional patents for specific
      methods of use of this compound could extend the product life of the compound
      until 2026.




25




The
      third
      lead compound is derived from a discovery program directed towards treatments
      for chemotherapy-induced neutropenia (low white cell count). This program is
      intended to evaluate and develop a lead compound as therapy to reduce the
      toxicity of chemotherapy; in particular, diminish the risk of infection as
      consequence of reduction in white blood cell count. Two patents cover this
      compound as a NCE and the Company believes these patents will provide a product
      life free of generic competition till 2016. However, another patent covers
      the
      method of use of this compound in treating chemotherapy-induced neutropenia,
      and
      this patent, if issued, could extend the product life of this compound till
      2026.




Preclinical
      pharmacology studies, including extensive studies in animal models, using the
      above lead compounds as well as other compounds from our library have identified
      alternate therapeutic targets for retinoids and rexinoids including the
      following:




·
            Spinal
                fusion




·
            Osteoarthritis




·
            Hypertriglyceridemia




·
            Diabetes




Development
      activities in these areas are outsourced and are at the preclinical discovery
      stage.




We
      currently have 6 employees, 2 of whom are part time. We do not expect
      significant changes in the number of our employees over the next
      year.




**Revenues**




We
      had no
      revenues related to our new pharmaceuticals business and we do not anticipate
      that we will derive any revenues from either product sales or licensing during
      the foreseeable future. We have no R&D co-development or other agreements
      which provide for future revenue or obligations to transfer rights to any of
      our
      intellectual property to third parties. We have agreed to pay Allergan and
      Vitae
      up to 12% of future net sales of products based on the licensed
      technology.




During
      the fiscal year ending September 30, 2007, we generated a net loss of $130,654
      from discontinued operations.




**Liquidity
      and Capital Resources**




As
      of
      September 30, 2007, we had $14,941,723 of cash and cash equivalents. We have
      no
      significant capital expenditure requirements as of September 30,
      2007.




We
      believe that available cash resources are likely to be sufficient to meet
      anticipated working capital requirements through May 2009.   However, we
      may seek additional funding for possible acquisitions, expansion of existing
      operations or other purposes. Should we seek to raise additional capital, there
      can be no assurances that such capital can be raised on satisfactory terms,
      on a
      timely basis, or at all.




26




**Critical
      Accounting Policies**




Management’s
      discussion and analysis of our financial condition and results of operations
      are
      based on our financial statements, which have been prepared in accordance with
      accounting principles generally accepted in the United States. The preparation
      of these financial statements requires management to make estimates and
      judgments that affect the reported amounts of assets, liabilities, revenues
      and
      expenses, and related disclosure of contingent assets and liabilities. On an
      ongoing basis, management evaluates its estimates, including those related
      to
      impairment of long-lived assets, including finite lived intangible assets,
      accrued liabilities and certain expenses. We base our estimates on historical
      experience and on various other assumptions that we believe to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results may differ materially from
      these estimates under different assumptions or conditions.




**Development
      Stage Enterprise**




We
      are a
      development stage enterprise as defined by the Financial Accounting Standards
      Board’s (“ FASB ”)
      Statement of Financial Accounting Standards (“ SFAS ”)
      No. 7,
“Accounting and Reporting by Development Stage Enterprises.” We are devoting
      substantially all of our present efforts to research and development. All losses
      accumulated will be considered as part of our development stage activities.




**Research
      and Development Costs**




Although
      we believe that our research and development activities and underlying
      technologies have continuing value, the amount of future benefits to be derived
      from them is uncertain. Furthermore, our development activities are in the
      pre-clinical discovery stage. Research and development costs will therefore
      be
      expensed as incurred.




**Stock-Based
      Compensation**




In
      December 2004, the FASB issued SFAS 123R, Share Based Payment (SFAS 123R).
      This
      statement requires that the cost resulting from all share-based payment
      transactions be recognized in our financial statements. In addition, in March
      2005 the SEC (the “ SEC ”)
      released SEC Staff Accounting Bulletin No. 107, Share-Based Payment (SAB 107).
      SAB 107 provides the SEC staff’s position regarding the application of SFAS 123R
      and certain SEC rules and regulations, and also provides the SEC staff’s views
      regarding the valuation of share-based payment arrangements for public
      companies. However, SFAS 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the statement
      of
      operations based on their fair values.




**Off-Balance
      Sheet Arrangements**




We
      are
      not a party to any off-balance sheet arrangements, and we do not engage in
      trading activities involving non-exchange traded contracts. In addition, we
      have
      no financial guarantees, debt or lease agreements or other arrangements that
      could trigger a requirement for an early payment or that could change the value
      of our assets.




**ITEM****7.**
            **FINANCIAL
                STATEMENTS**




Our
      financial statements and notes thereto and the related reports of Gumbiner
      Savett, Inc. (“Gumbiner Savett”) and Jones Simkins, P.C. are attached to this
      Annual Report beginning at page F-1 and are incorporated herein by
      reference.




27




**ITEM****8.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE**




Effective
      June 4, 2007, the Board of Directors of the Company dismissed Jones
      Simkins, P.C. (“Jones Simkins”) as
      the
      Company’s independent accountant. Jones
      Simkins served as our principal independent accountant from our inception on
      August 14, 2001, through June 4, 2007. No report of Jones Simkins on our
      financial statements for either of the past two years contained an adverse
      opinion or a disclaimer of opinion, or was modified as to uncertainty, audit
      scope, or accounting principle. Since August 14, 2001 and through June 4, 2007:
      (i) we had no disagreements with Jones Simkins on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure, which, if not resolved to the satisfaction of Jones Simkins, would
      have caused it to make reference to the subject matter of the disagreement
      in
      connection with its report; and (ii) Jones Simkins did not advise us of any
      of
      the events requiring reporting.




Effective
      June 4, 2007, we engaged Gumbiner Savett as our independent accountant to audit
      our financial statements for our fiscal year ending September 30, 2007. Our
      Board of Directors approved the appointment of Gumbiner Savett. Prior to such
      engagement, we did not consult with Gumbiner Savett regarding either (i) the
      application of accounting principles to a specific, completed or contemplated
      transaction, or the type of audit opinion that might be rendered on the
      Company’s financial statements, and neither a written report nor advice was
      provided to the Company that the Company concluded was an important factor
      considered by the Company in reaching a decision as to the accounting, auditing
      or financial reporting issue, or (ii) any matter that was the subject of a
      disagreement.




**ITEM****8A.**
            **CONTROLS
                AND PROCEDURES**




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms and that such information is accumulated and communicated
      to this Company’s management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow for timely decisions regarding
      required disclosure. In designing and evaluating the disclosure controls and
      procedures, management recognizes that any controls and procedures, no matter
      how well designed and operated, can provide only reasonable assurance of
      achieving the desired control objectives, and management is required to apply
      its judgment in evaluating the cost-benefit relationship of possible controls
      and procedures.




As
      required by SEC Rule 13a-15(b), we carried out an evaluation, under the
      supervision and with the participation of the Company’s management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of
      the design and operation of our disclosure controls and procedures as of the
      end
      of the quarter covered by this Annual Report. Based on the foregoing, our Chief
      Executive Officer and Chief Financial Officer concluded that our disclosure
      controls and procedures are not effective to ensure the information required
      to
      be disclosed in our reports filed or submitted under the Exchange Act is timely
      recorded, processed and reported within the time periods specified in the SEC
      rules and forms. Based on the limited number of employees, the Company is unable
      to segregate accounting procedures over financial activities to provide adequate
      internal controls.




**ITEM****8B.**
            **OTHER
                INFORMATION**




None.




28




**PART
      III**




**ITEM********9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT**




**Executive
      Officers and Directors**




The
      following table sets forth the name, age and position held by each of our
      executive officers and directors. Directors are elected for a period of one
      year
      and thereafter serve until the next annual meeting at which their successors
      are
      duly elected by the stockholders.




**Name**
            
            **Age**
            
            **Position**Kurt
                Brendlinger
            
            45
            
            Director,
                Chairman of the BoardHarin
                Padma-Nathan
            
            51
            
            Director,
                President and Chief Executive OfficerParkash
                Gill
            
            57
            
            DirectorSharyar
                Baradaran
            
            39
            
            Director
                and SecretaryMatt
                Borenzweig
            
            48
            
            DirectorSteven
                Gershick
            
            52
            
            Chief
                Financial Officer




**Business
      Experience and Directorships**




The
      following describes the backgrounds of current executive officers and directors.
      There are no family relationships among any of our directors or
      officers.




***Harin
      Padma-Nathan*** has been
      our president and Chief Executive Officer since May 2007 and has served as
      a
      director since June 2007. He also has been Chief Scientific Officer at Insyght
      Interactive, a medical communications company, since 2004. Dr. Padma-Nathan
      has been a Clinical Professor of Urology at the Keck School of Medicine of
      the
      University of Southern California since 1995, and has also been involved in
      numerous clinical research studies from 1994 to 2006, including erectile
      dysfunction (Principal Investigator for Viagra as well as other compounds listed
      in CV), Hypertension, BPH, Incontinence, Coronary Artery Disease, Female Sexual
      Dysfunction, and Prostate Cancer. His publications include two in the *New
      England Journal of Medicine* .




***Kurt
      Brendlinger*** has been
      a director and our Chairman of the Board of Directors since April 2007. He
      also
      has been a partner of Santa Monica Capital Partners, LLC, a consulting firm
      where he is responsible for corporate and business development and
      strategy, capital raising, and seeking investment opportunities since
      June 2005. Mr. Brendlinger is also a Managing Director of Aaron Fleck &
Associates, LLC, a registered investment advisor where he is responsible for
      deal sourcing, capital raising, venture capital and private equity investments
      and asset management, since July 2004. From January 2002 to June 2004,
      Mr. Brendlinger was Chief Executive Officer and President of Rainmakers,
      Inc., an internet marketing services company for the entertainment industry
      and
      currently serves as its Chief Executive Officer. Since June 2005, Mr.
      Brendlinger has been the Chief Financial Officer and a director of Santa Monica
      Media Corporation (AMEX.MEJ), a blank check company formed for the purpose
      of
      effecting a merger, capital stock exchange, asset or stock acquisition or other
      similar business combination with an operating business in the communications,
      media, gaming and/or entertainment industries. Since October 2006,
      Mr. Brendlinger has been the Secretary and a director of ProElite, Inc.
      (PETE.PK), a company that conducts a mixed martial arts business both live
      and
      on line.




29




***Parkash
      Gill*** has
      been
      a director since June 2007. He also has been a Professor of Medicine
      (Hematology, Oncology and Pathology) at the University of Southern California
      Keck School of Medicine since July 1999, where he holds an endowed chair in
      Cancer Therapeutics since July 2005.  He has been scientific advisor to
      Vasgene since 2002, and chairman of the scientific advisory board of
      Mesothelioma Research Foundation since its inception in 2001. He is an author
      of
      nearly 200 research publications in oncology. Dr. Gill has also demonstrated
      entrepreneurial translation of his research into viable companies, most recently
      Vasgene Therapeutics.




***Sharyar
      Baradaran*** has been
      a director since June 2007. He also **** has
      served as Chief Executive Officer and chairman of BaradaranVentures, a privately
      held investment fund located in Los Angeles, California since January 2001.
      Since November 2003, Dr. Baradaran has served on the board of directors of
      InnerWorkings Inc., (NASDAQ - INWK), a leading provider of print and related
      procurement services to corporate clients utilizing a propriety technology
      and
      database creating a competitive bid process to procure, purchase and deliver
      printed products as part of a comprehensive outsourced enterprise solution
      and
      in individual transactions. Dr. Baradaran has served on the board of
      directors of Rainmakers, Inc., an Internet marketing services company for the
      entertainment industry from November 2002 until the present, on the board of
      directors of MOTA Inc., an Internet-based, used-vehicle remarketing solution
      to
      transact pre-owned cars on line from September 2005 until the present. From
      June
      2002 until December 2004, and subsequently from August, 2006 to the present,
      Dr. Baradaran served on the advisory board of ISENSIX Inc., a propriety
      wireless and web-based system providing safety/quality management solutions
      for
      vital systems in hospital, blood bank, and clinical laboratories.
      Dr. Baradaran has been engaged as a consultant and on the advisory board of
      Echo Global Logistics Inc., a transportation management firm providing superior
      cost savings technology and services for companies ranging from small
      enterprises to the Fortune 100, from August 2005 until the present. Since April
      2006, Dr. Baradaran has been a director of Santa Monica Media Corporation
      (AMEX.MEJ), a blank check company formed for the purpose of effecting a merger,
      capital stock exchange, asset or stock acquisition or other similar business
      combination with an operating business in the communications, media, gaming
      and/or entertainment industries. Dr. Baradaran also served on the advisory
      board of KIYON Inc., a provider of autonomic mesh networking products,
      technology and services for wireless and wired markets, from December 2003
      until
      September 2005.




***Matt
      Borenzweig*** has
      served as a director since November 2007. Mr.
      Borenzweig has been senior vice president of sales and marketing at Cardiomems,
      Inc. since 2006. Prior to that position, he served as Vice President U.S. Sales,
      Endovascular at Medtronic Vascular, a position he held since 2000.




***Steven
      Gershick*** was
      appointed as the Chief Financial Officer of the Company by the Board of
      Directors in September 2007. Mr. Gershick has served as a consultant to the
      Company since June 2007. Mr. Gershick will serve the Company on a part-time
      and non-exclusive basis. Mr. Gershick is also the Chief Financial Officer
      of Santa Monica Capital Partners and a financial and securities regulation
      consultant to Santa Monica Media Corporation. Prior to such positions, he served
      as Chief Financial Officer of PrimeGen Biotech, LLC, a stem cell research
      company, since 2004, and as a financial and securities regulation consultant
      for
      St. Cloud Capital Partners, LP, an SBIC providing mezzanine financing to middle
      market companies, since 2006. From 2002 until 2005, Mr. Gershick served as
      a
      financial and securities regulations consultant for Amazing Global
      Technologies, Ltd. and as Chief Financial Officer of Case Financial, Inc.
      Prior to such engagements, Mr. Gershick served as President and


Chief
      Executive Officer of Spatializer Audio Laboratories, Inc. and its operating
      subsidiaries from 1992 to 1998. Mr. Gershick has been a certified public
      accountant since 1979.


30




**Business
      Experience of Key Employee**




***Rosh
      Chandraratna*** ,
      age 59,
      has been our Chief Scientific Officer since May 2007. He also has served in
      various research and development positions at Allergan, Inc., including Vice
      President, Retinoid Research, from 1984 to May 2004, where he directed a
      multidisciplinary group focused on drug discovery research primarily in the
      areas of dermatology, oncology and metabolic disease. Dr. Chandraratna is the
      sole inventor of tazarotene (Tazorac, Avage), and he led the Tazarotene
      Development Team from its inception through successful NDA and global regulatory
      filings. In addition to tazarotene, he is an inventor of five other drugs which
      are currently in human clinical trial or preclinical development. Dr.
      Chandraratna was subsequently Senior Vice President, R&D, at Vitae
      Pharmaceuticals, Inc. from May 2004 until September, 2006, where he led research
      and development efforts in the cancer, cancer supportive care and dermatology
      areas, and brought 3 compounds into clinical development. Prior to joining
      us,
      Dr. Chandraratna was Senior Vice President, R&D at Acucela from September
      2006 to May, 2007, where he led all discovery research, preclinical development
      and clinical development activities in ophthalmology with particular emphasis
      on
      blinding retinal degenerative diseases. Dr. Chandraratna has published over
      150
      research articles and is an inventor on over 200 issued U.S.
      Patents.




**Committees
      of the Board**




**Audit
      Committee**




We
      do not
      presently have an audit committee. The Board of Directors acts in that capacity
      and has determined that we do not currently have an audit committee financial
      expert serving on our audit committee or Board of Directors. Because of the
      relatively small size of our Board of Directors and our Company, we believe
      that
      a financial expert is unnecessary to monitor our financial operations and it
      is
      in the best interest of the Company for all the members of the Board of
      Directors to be involved in the duties that would be performed by an audit
      committee.




**Scientific
      Board**




We
      have
      established a Scientific Board to assist our management in the areas of
      expertise of the members of our Scientific Board. Dr. Gill has been
      appointed the Chairman of our Scientific Board, and with Dr. Gill, we are
      in the process of identifying and recruiting other individuals to serve on
      this
      board **.**




**Code
      of Ethics**




We
      have a
      code of ethics and insider trading policy that applies to our directors,
      officers and employees. A copy of the Company’s Code of Ethics is attached to
      this Annual Report as an exhibit and incorporated herein by reference. We also
      will provide without charge a copy of the code of ethics to any person who
      so
      requests by a letter addressed to the Corporate Secretary, NuRx Pharmaceuticals,
      Inc., 18 Technology, Suite 130, Irvine, California 92618.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section 16(a)
      of the Exchange Act requires our directors and executive officers, and persons
      who own more than 10% of the outstanding shares of our common
      stock (collectively, “Reporting Persons”) to file reports of ownership and changes in
      ownership with the SEC. Reporting Persons are required by SEC regulations to
      furnish us with copies of all Section 16(a) forms that they file.




Based
      solely on our review of the copies of such forms received or written
      representations from the Reporting Persons, we believe that, with respect to
      the
      fiscal year ended September 30, 2007, all other Reporting Persons complied
      with
      all applicable Section 16 filing requirements on a timely basis except that
      the initial filings for Dr. Padma-Nathan, Dr. Baradaran, Absolute Return Europe
      Fund and Absolute Octane Fund were not filed on a timely basis. To the Company’s
      knowledge, there were no other late reports of any transactions by these
      filers.




31




**ITEM****10.**
            **EXECUTIVE
                COMPENSATION**




**Compensation
      of Executive Officers**




The
      following table summarizes compensation paid or, or earned by our Chief
      Executive Officer and the Chief Financial Officer. No other officer received
      annual compensation in excess of $100,000 for the fiscal year ended September
      30, 2007.




**SUMMARY
      COMPENSATION TABLE**




**Name
                and Principal Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Option**
              **Awards**
              **($)****(1)**
            
            **Non-Equity
                Incentive Plan Compensation**
              **($)**
            
            **Non-qualified
                Deferred Compensation Earnings**
              **($)**
            
            **All**
              **Other
                Compensation**
              **($)**
            
            **Total**
              **($)**Harin
                Padma-Nathan, Chief Executive Officer(2)
            
            
            2007
            
            $
            65,385
            
            
            —
            
            $
            750,000
            
            
            —
            
            
            —
            
            
            —
            
            $
            815,385Steven
                Gershick, Chief Financial Officer(3)
            
            
            2007
            
            $
            30,440
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            30,440Matthew
                Evans, former Chief Executive Officer(4)
            
            
            2007
            
            $
            15,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            15,000Craig
                Davis, formerChief
                Executive Officer and Director
            
            
            2007
            
            $
            79,100
            (5)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            79,1002006
            
            $
            96,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            96,000





(1)  This
      value represents the dollar amount recognized for financial statement reporting
      purposes with respect to the 2007 fiscal year for the fair value of stock
      options granted to the named director in fiscal year 2007, in accordance with
      SFAS 123R. Pursuant to SEC rules, the amounts shown exclude the impact of
      estimated forfeitures related to service-based vesting conditions. For
      additional information on the valuation assumptions with respect to the 2007
      grants, refer to Note 9 of our financial statements in this Annual Report.
      These
      amounts reflect our accounting expense for these awards, and do not correspond
      to the actual value that will be recognized from these awards by the named
      director.




32




(2)  Dr.
      Padma-Nathan was appointed as Chief Executive Officer on May 31, 2007. See
      “ *Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act* ”
of
      this
      Annual Report.




(3)  This
      amount includes $10,594 received by Mr. Gershick for services provided as a
      consultant from May 2007 until July 31, 2007 when he became employed. Mr.
      Gershick was appointed as Chief Financial Officer on September 20, 2007. See
“ *Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act* ”
of
      this
      Annual Report.




(4)  Mr.
      Evans
      served as the sole officer and director of the Company from October 2006 until
      May 2006.




(5)  Mr.
      Davis
      resigned as CEO of the Company in October 2006. From October 2006 until May
      2007, he was compensated as a consultant to the Company.




**Employment
      Agreements and Severance Agreements**




The
      Company entered into several new employment agreements with newly appointed
      executive officers and key employees of the Company.




*Harin
      Padma-Nathan* has
      served as our Chief Executive Officer and President since May 31, 2007. We
      entered a five-year employment agreement with Dr. Padma-Nathan pursuant to
      which
      we agreed to pay Dr. Padma-Nathan an annual salary of $200,000. Thereafter,
      the
      salary will increase by a minimum of 5% on May 31 of each year during the term
      of his employment. Dr. Padma-Nathan’s agreement also provides him an option to
      purchase up to 3,474,000 shares of our common stock at an exercise price of
      $1.00 on the terms and conditions of our 2007 Plan. The agreement provides
      discretion for our Board of Directors to grant a bonus to Dr. Padma-Nathan
      based
      upon our and Dr. Padma-Nathan’s performance. This agreement can be terminated by
      either of us for cause or by Dr. Padma-Nathan for good reason, as such terms
      are
      defined in the agreement.




*Steven
      Gershick* has
      served as our Chief Financial Officer since September 20, 2007. We entered
      into
      a five-year employment agreement with Mr. Gershick pursuant to which the Company
      agreed to pay Mr. Gershick an annual salary of $120,000. Thereafter, the salary
      will increase by a minimum of 5% each year during the term of his employment.
      The agreement provides discretion for the Company’s Board of Directors to grant
      a bonus to Mr. Gershick based upon the performance of the Company and Mr.
      Gershick. This agreement can be terminated by either the Company for cause
      or by
      Mr. Gershick for good reason, as such terms are defined in the
      agreement.




*Dr.
      Rosh Chandraratna* serves
      as
      our Chief Scientific Officer. We entered into a five-year employment agreement
      with Dr. Chandraratna on May 25, 2007, which presently expires on June 4, 2012,
      pursuant to which he receives $250,000 per ye ar,
      subject to annual minimum increases of 5%. The
      agreement provides discretion for our Board of Directors to grant a bonus to
      Dr.
      Chandraratna based upon our and his performance. This agreement can be
      terminated by either of us for cause or by Dr. Chandraratna for good reason,
      as
      such terms are defined in the agreement.




33




**Stock
      Option Grants**




The
      following table sets forth information as of September 30, 2007 concerning
      unexercised options, unvested stock and equity incentive plan awards for the
      executive officers named in the Summary Compensation Table.




**OUTSTANDING
      EQUITY AWARDS AT YEAR ENDED SEPTEMBER 30, 2007**




**Option
                Awards****Name**
            
            **Number
                of Securities Underlying Unexercised Options**
              **(#)
                Exercisable**
            
            **Number
                of Securities Underlying Unexercised Options**
              **(#)
                Unexercisable**
            
            **Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options**
              **(#)**
            
            **Option
                Exercise Price**
              **($)**
            
            **Option
                Expiration Date**Harin
                Padma-Nathan, Chief Executive Officer(1)
            
            
            173,700
            
            
            3,300,300
            
            
            —
            
            $
            1.00
            
            
            5/31/2012Steven
                Gershick, Chief Financial Officer
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Craig
                Davis, formerPresident
                and Director
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —





(1)  On
      May
      31, 2007, in connection with the employment agreement as Chief Executive
      Officer, Dr. Padma-Nathan was issued options to purchase 3,474,000 common shares
      of the Company for an exercise price of $1.00 per share. The option shares
      vest
      in equal installments every 90 days from the date of the agreement over the
      course of his 5 year employment agreement. Dr. Padma-Nathan’s options are to be
      treated for tax purposes as incentive stock option’s to the extent they meet
      such criteria.




**Stock
      Option Plan**




In
      September 2007, we adopted the 2007 Stock Compensation Plan, or the 2007 Plan,
      pursuant to which we are authorized to grant awards of up to 15,000,000 shares
      of common stock to our employees, officers, directors, consultants and advisors,
      subject to adjustment provisions of the 2007 Plan that are applicable in the
      event of a stock dividend, stock split, reverse stock split, recapitalization,
      combination, reclassification, security issuance or similar
      transaction.




The
      2007
      Plan is to be administered by our Board of Directors or a committee to whom
      the
      Board of Directors has delegated some or all of the administration of the 2007
      Plan. As of the date of this Annual Report, the Board of Directors administers
      the 2007 Plan. The Board of Directors may also delegate nondiscretionary
      administrative duties to such employees of the Company as it deems proper.




The
      Board
      of Directors will determine the persons to whom awards shall be made, the number
      of shares to be covered by each award, and the terms thereof. In doing so,
      the
      Board of Directors shall take into account the duties of the respective persons,
      their present and potential contributions to the success of the Company and
      such
      other factors as the Board of Directors shall deem relevant in connection with
      accomplishing the purposes of the 2007 Plan. Under the 2007 Plan, the Board
      of
      Directors can make awards of options, stock appreciation rights (“SARs”),
      performance shares, and restricted stock. Each type of award may be made alone,
      in addition to, or in relation to any other type of award. Unless otherwise
      determined by our Board of Directors, awards granted under the 2007 Plan are
      not
      transferable other than by will or by the laws of descent and distribution.
      No
      award shall have a term exceeding ten years, measured from the date of the
      grant.




34




In
      the
      event that the Company or the division, subsidiary or other affiliated entity
      for which a 2007 Plan participant performs services is sold, merged,
      consolidated, reorganized or liquidated, all unvested options immediately vest.
      Furthermore, the Board of Directors may take any one or more of the following
      actions as to outstanding awards: (i) provide that such awards shall be
      assumed, or substantially equivalent awards shall be substituted, by the
      acquiring or succeeding corporation (or an affiliate thereof) on such terms
      as
      the Board of Directors determines to be appropriate, (ii) upon written notice
      to
      2007 Plan participants, provide that all unexercised options or SARs shall
      terminate immediately prior to the consummation of such transaction unless
      exercised by the 2007 Plan participant within a specified period following
      the
      date of such notice, (iii) in the event of a sale or similar transaction under
      the terms of which holders of the common stock of the Company receive a payment
      for each share surrendered in the transaction, make or provide for a payment
      to
      each option and/or SAR holder equal to the amount such holder would receive
      if
      they had exercised the option or SAR immediately prior to such sale, or (iv)
      make such other adjustments, if any, as the Board of Directors determines to
      be
      necessary or advisable to provide each 2007 Plan participant with a benefit
      substantially similar to that to which the 2007 Plan participant would have
      been
      entitled had such event not occurred.




The
      Board
      of Directors may amend, suspend or terminate the 2007 Plan or any portion
      thereof at any time; provided, however, that no amendment shall be made without
      stockholder approval if such approval is necessary to comply with any applicable
      tax or regulatory requirement. The Board of Directors may amend, modify or
      terminate any outstanding award, including substituting therefor another award
      of the same or a different type, and changing the date of exercise or
      realization, provided that the 2007 Plan participant’s consent to such action
      shall be required unless the Board of Directors determines that the action,
      taking into account any related action, would not materially and adversely
      affect the 2007 Plan participant.




During
      the fourth quarter of 2007, we granted 50,000 shares of restricted stock and
      options under the 2007 Plan to purchase 250,000 shares at an exercise price
      of
      $1.00 per share. As of September 30, 2007, there were outstanding options under
      the 2007 Plan to purchase approximately 3,724,000 shares of our common stock
      at
      a weighted- average exercise price of approximately $1.00 per share, and 50,000
      shares of restricted stock.




**Compensation
      of Directors**




During
      the fiscal year ended September 30, 2007, we did not pay any of our directors
      any cash compensation for serving on the Board of Directors of Directors. We
      did
      however grant Dr. Baradaran an option to purchase 200,000 shares at an exercise
      price of $1.00 per share, as compensation for services as a non-employee
      director. The option was fully vested at the time of grant. The fair value
      of
      the option award is estimated on the date of grant using the Black-Scholes
      option pricing model is $43,200. We made a similar grant to Mr. Borenzweig,
      who
      was appointed on November 27, 2007. The options expire five years from the
      date
      of grant.




The
      following table sets forth information concerning the compensation paid to
      each
      of our directors during 2007 for their services rendered as
      directors.




35


**DIRECTOR
      COMPENSATION FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007**




**Name**
            
            **Fees
                Earned or Paid in Cash**
              **($)**
            
            **Stock
                Awards**
              **($)**
            
            **Option
                Awards ($)****(1)**
            
            **Non-Equity
                Incentive Plan Compensation ($)**
            
            **Nonqualified
                Deferred Compensation Earnings**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Harin
                Padma-Nathan(2)Kurt
                Brendlinger
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3
            )Parkash
                Gill
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4
            )Sharyar
                Baradaran
            
            
            
            
            
            
            
            $
            43,200
            
            
            
            
            
            
            
            
            
            
            $
            43,200Matt
                Borenzweig
            
            
            
            
            
            
            
            
            (5
            )





(1)  This
      column represents the dollar amount recognized for financial statement reporting
      purposes with respect to the 2007 fiscal year for the fair value of stock
      options granted to the named director in fiscal year 2007, in accordance with
      SFAS 123R. Pursuant to SEC rules, the amounts shown exclude the impact of
      estimated forfeitures related to service-based vesting conditions. For
      additional information on the valuation assumptions with respect to the 2007
      grants, refer to Note 9 and Note 12 of our financial statements in this
      Annual Report. These amounts reflect our accounting expense for these awards,
      and do not correspond to the actual value that will be recognized from these
      awards by the named director.




(2)  The
      compensation received by Dr. Padma-Nathan from the Company was disclosed in
      full
      under the Summary Compensation Table. He receives no additional compensation
      for
      his services as a director.




(3)  Mr.
      Brendlinger is an affiliate of Santa Monica Capital Partners, LLC. Santa Monica
      Capital Partners II provides consulting services to the Company. This agreement
      contemplates Mr. Brendlinger’s service as director. See “ *Item
      12. Certain Relationships and Related Transactions* ”
of
      this
      Annual Report.




(4)  Dr.
      Gill
      is an affiliate of SOQ, Inc. SOQ, Inc. provides consulting services to the
      Company. This agreement contemplates Mr. Brendlinger’s service as director. See
“ *Item
      12. Certain Relationships and Related Transactions* ”
of
      this
      Annual Report.




(5)  Mr.
      Borenzweig was not appointed as a director until November 27, 2007, after the
      end of the fiscal year ended September 30, 2007. The fair value of the option
      award is estimated on the date of grant using the Black-Scholes option pricing
      model is $41,800.




36




**Indemnification
      of Directors and Officers**




Under
      Nevada law, we can indemnify our directors and officers against liabilities
      they
      may incur in such capacities, including liabilities under the Securities Act.
      Our articles of incorporation provide that, pursuant to Nevada law, our
      directors shall not be liable for monetary damages for breach of the directors’
fiduciary duty of care to us and our stockholders. This provision in the
      articles of incorporation does not eliminate the duty of care, and in
      appropriate circumstances equitable remedies such as injunctive or other forms
      of nonmonetary relief will remain available under law. In addition, each
      director will continue to be subject to liability for breach of the director’s
      duty of loyalty to us or our stockholders, for acts or omissions not in good
      faith or involving intentional misconduct or knowing violations of the law,
      for
      actions leading to improper personal benefit to the director, and for payment
      of
      dividends or approval of stock repurchases or redemptions that are unlawful
      under law. The provision also does not affect a director’s responsibilities
      under any other law, the federal securities laws or state or federal
      environmental laws.




Our
      Bylaws provide for the indemnification of our directors and officers to the
      fullest extent permitted by Nevada law. Our Bylaws further provide that our
      Board of Directors has discretion to indemnify our other employees. We are
      also
      required to advance, prior to the final disposition of any proceeding, promptly
      on request all expenses incurred by any director or executive officer in
      connection with that proceeding, provided however that if so required by Nevada
      law, the advance of such expenses shall be made only upon delivery to the
      Company of an undertaking by or on behalf of that director or executive officer
      to repay any advanced amounts if it should be determined ultimately that he
      or
      she is not entitled to be indemnified under the our Bylaws or otherwise.




In
      the
      agreement that we entered into with Dr. Padma-Nathan, our President and Chief
      Executive Officer, we agreed to indemnify him for all claims arising out of
      performance of his duties, other than those arising out of his breach of the
      agreement or his gross negligence or willful misconduct.




Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted to directors, officers and controlling persons of the small business
      issuer pursuant to the foregoing provisions, or otherwise, we have been advised
      that in the opinion of the SEC such indemnification is against public policy
      as
      expressed in the Securities Act and is, therefore, unenforceable. In the event
      that a claim for indemnification against such liabilities (other than the
      payment by us for expenses incurred or paid by a director, officer or
      controlling person in the successful defense of any action, suit or proceeding)
      is asserted by such director, officer or controlling person in connection with
      the securities being registered, we will, unless in the opinion of our counsel
      the matter has been settled by controlling precedent, submit to a court of
      appropriate jurisdiction the question whether such indemnification by it is
      against public policy as expressed in the Securities Act and will be governed
      by
      the final adjudication of such issue.




**ITEM****11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS**




Except
      as
      otherwise noted, the following table sets forth certain information with respect
      to the beneficial ownership of our common stock as of December 21, 2007, for:
      (i) each person who is known by us to beneficially own more than five percent
      of
      the our common stock, (ii) each of our directors, (iii) our Named Executive
      Officers, as defined in Regulation S-B Item 402(a), and (iv) all directors
      and
      executive officers as a group.




Beneficial
      ownership is determined according to the rules of the SEC and generally means
      that a person has beneficial ownership of a security if he or she possesses
      sole
      or shared voting or investment power of that security, and includes options
      and
      warrants that are currently exercisable within 60 days. Information with respect
      to beneficial ownership has been furnished to us by each, director, executive
      officer or 5% or more stockholder, as the case may be. Unless otherwise
      indicated, to our knowledge, each stockholder possesses sole voting and
      investment power over the shares listed, except for shares owned jointly with
      that person’s spouse. Percentages are calculated according to 126,324,327 shares
      that are considered to be beneficially owned as of December 21, 2007 according
      to the rules of the SEC. Of these shares, only 113,576,927 shares of common
      stock are issued and outstanding.




37





**Name
                and Address**
              **of
                Beneficial Owner****(1)**
            
            **Shares
                Beneficially****Owned******
            
            **Percentage
                of**
              **Total**Dr.
                Harin Padma-Nathan(2)(3)
              Director,
                CEO and President
            
            
            2,847,400
            
            
            2.3
            %Kurt
                Brendlinger(4)
              Director
            
            
            13,750,000
            
            
            10.8
            %Sharyar
                Baradaran(2)(5)
              Director
                and Secretary
            
            
            700,000
            
            
            *Dr.
                Parkash Gill(2)(6)
              Director
            
            
            24,000,000
            
            
            19.0
            %Matt
                Borenzweig(7)
              Director
            
            
            200,000
            
            
            *Steven
                Gershick
              Chief
                Financial Officer
            
            
            0
            
            
            ***Executive
                Officers and Directors as a Group (six persons)**
            
            
            41,497,400
            
            
            32.8
            %Hunter
                World Markets, Inc.(8)
              Penthouse
                Suite
              9300
                Wilshire Boulevard
              Beverly
                Hills, California 90212
            
            
            21,500,000
            
            
            17.0
            %Santa
                Monica Capital Partners II, LLC(4)
              11845
                W. Olympic Boulevard, # 1125W
              Los
                Angeles, CA 90064
            
            
            13,750,000
            
            
            10.8
            %Absolute
                Return Europe Fund
              c/o
                Hunter World Markets, Inc.
              Penthouse
                Suite
              9300
                Wilshire Boulevard
              Beverly
                Hills, California 90212
            
            
            12,000,000
            
            
            9.5
            %Absolute
                East West Fund
              c/o
                Hunter World Markets, Inc.
              Penthouse
                Suite
              9300
                Wilshire Boulevard
              Beverly
                Hills, California 90212
            
            
            6,000,000
            
            
            4.7
            %Absolute
                Octane Fund
              c/o
                Hunter World Markets, Inc.
              Penthouse
                Suite
              9300
                Wilshire Boulevard
              Beverly
                Hills, California 90212
            
            
            17,000,000
            
            
            13.5
            %Vitae
                Pharmaceuticals, Inc.
              502
                West Office Center Drive
              Fort
                Washington, PA 19034
            
            
            7,026,927
            
            
            5.6
            %





*
      Less
      than 1%.


1)
            Except
                where otherwise indicated, the address of the beneficial owner is
                deemed
                to be the same address as our address.




38




(2)
            On
                June 10, 2007, Mr. Evans resigned as a director and the appointments
                of
                Dr. Padma-Nathan, Dr. Baradaran and Dr. Gill as directors of the
                Company
                became effective.


(3)
            These
                shares include 500,000 shares held in an IRA trust account and Dr.
                Padma-Nathan’s option to purchase 173,700 shares that vested on August 29,
                2007 and 173,700 shares that vested on November 28, 2007. The vested
                options are part of the option to purchase 3,474,000 shares granted
                to Dr.
                Padma-Nathan on May 31, 2007 pursuant to his employment agreement
                with the
                Company. The options vest in installments of 173,700 shares every
                90
                days.


(4)
            These
                shares are owned by Santa Monica Capital Partners II, LLC. Mr. Brendlinger
                owns a one-third membership interest through E’s Holdings, Inc., a
                California corporation. Mr. Brendlinger disclaims beneficial ownership
                of
                the shares owned by Santa Monica Capital Partners II, LLC in excess
                of his
                percentage ownership of Santa Monica Capital Partners II,
                LLC.


(5)
            These
                shares include 500,000 shares that are owned by the Baradaran Revocable
                Trust. Dr. Baradaran is deemed to beneficially own these shares because
                he
                has investment and voting power over the shares. These shares include
                the
                200,000 shares underlying the option granted to Dr. Baradaran on
                July 20,
                2007. This option is 100% vested and expires five years from the
                date of
                grant. The fair value of the option award is estimated on the date
                of
                grant using the Black-Scholes option pricing model is $43,200.




(6)
                Dr.
                    Gill directly owns 20,000,000 shares. The remaining 4,000,000
                    shares are
                    held by Dr. Gill as a custodian for his two minor children. Dr.
                    Gill may
                    be considered the control person of the shares held by his two
                    children.




(7)
              These
                  shares include the 200,000 shares underlying the option granted
                  to Mr.
                  Borenzweig on November 27, 2007. This option is 100% vested and
                  expires
                  five years from the date of
                  grant.




(8)
              These
                  shares include the 12,000,000 shares underlying a six-year warrant
                  to
                  purchase shares which will become exercisable on February 18, 2008,
                  but do
                  not include the 300,000 shares underlying a six-year warrant which
                  cannot
                  be exercised until February 29, 2008.




39





**Equity
      Compensation Plan Information**




The
      following table summarizes as of September 30, 2007, the number of securities
      to
      be issued upon the exercise of outstanding derivative securities (options and
      rights); the weighted-average exercise price of the outstanding derivative
      securities; and the number of securities remaining available for future issuance
      under our equity compensation plans.




Plan
                Category
            
            Number
                of securities to be issued upon exercise of outstanding options,
                and
                rights
            
            Weighted-average
                exercise price of outstanding options, and rights
            
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding column (a))(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            3,774,000
            
            $
            1.00
            
            
            11,226,000Equity
                compensation plans not approved by security holders
            
            
            12,400,000
            
            $
            1.00
            
            
            —Total
            
            
            16,174,000
            
            $
            1.00
            
            
            11,226,000





The
      only
      equity compensation plan approved by our security holders is the 2007 Stock
      Compensation Plan. Under
      the
      2007 Plan, the Board of Directors can make awards of options, stock appreciation
      rights, performance shares, and restricted stock. Under the 2007 Plan, the
      Company has issued an incentive stock option to Dr. Padma-Nathan to purchase
      3,474,000 shares of the Company’s common stock, a nonqualified stock option to
      Dr. Baradaran to purchase 200,000 shares of the Company’s common stock, a
      nonqualified stock option to Mr. Ketteridge to purchase 50,000 shares of the
      Company’s common stock and 50,000 shares of restricted stock to Mr. Ketteridge.
      See “ *Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act* ”
of
      this
      Annual Report.




The
      Company has also issued equity compensation outside of the 2007 Plan to Hunter
      World Markets in connection with the services provided by Hunter World Markets
      for the Company’s private placement of its common stock. Hunter World Markets
      was issued i) a six-year warrant, dated May 16, 2007, to purchase 12,000,000
      shares of the Company’s common stock at a purchase price of $1.00 per share and
      vesting on February 18, 2008; and ii) a six-year warrant, dated June 29, 2007,
      to purchase 300,000 shares of the Company’s common stock at a purchase price of
      $1.00 per share and vesting on February 29, 2008. Both warrants expire in May
      2013. IMG was also given a warrant to purchase 100,000 shares of common stock
      outside the 2007 Plan pursuant to a services agreement with the Company. In
      November 2007, half of these warrants were cancelled in accordance with the
      terms of the agreement with IMG. The warrant for the remaining 50,000 shares
      has
      a strike price of $1.50 per share.




Effective
      October 31, 2007, the Company also issued 7,026,927 shares of common stock
      to
      Vitae in connection with the license agreement between Vitae and the Company,
      dated May 11, 2007. This issuance of stock was not approved by
      stockholders.




40




**Changes
      in Control**




We
      are
      not aware of any arrangements that may, at a subsequent date, result in a change
      in control of the Company.




**ITEM****12.**
            **CERTAIN
                RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE**




During
      the fiscal year ended September 30, 2007, the Company has engaged in the
      following related transactions as described in Item 404 of Regulation
      S-B:




In
      connection with the sale of securities by the Company in April and May of 2007,
      certain Company shareholders agreed to cancel an aggregate of 7,759,000 shares
      of common stock in consideration for an aggregate of $750,000. The
      cancelled shares were not purchased by the Company pursuant to any publicly
      announced repurchase plan or program.




Kurt
      Brendlinger holds a 1/3 membership interest in Santa Monica Capital Partners,
      LLC, a California limited liability company, through E’s Holdings, Inc., a
      California corporation. Santa Monica Capital Partners was retained by us to
      provide consulting services relating to strategic planning, investor relations
      and corporate governance for a monthly fee of $30,000 for a six-month period
      from May 1, 2007 to October 31, 2007, for an aggregate fee of $180,000. The
      consulting agreement has a provision providing for automatic extensions at
      the
      end of each 6-month term, unless either party provides 30-day written notice
      stating that such party does not wish to extend the consulting agreement prior
      to end of such term. The term has been extended to April 30, 2008.




Pursuant
      to a Subscription Agreement between the Company and the Baradaran Revocable
      Trust, dated May 30, 2007, and a Subscription Agreement between the Company
      and
      City National Bank, Trustee FBO Harin Padma-Nathan IRA, dated June 25, 2007,
      the
      Company issued to each the Baradaran Revocable Trust and City National Bank,
      Trustee FBO Harin Padma-Nathan IRA 500,000 shares of common stock at $0.50
      per
      share, for an aggregate purchase price of $500,000. The Baradaran Revocable
      Trust is an affiliate of Dr. Baradaran, and City National Bank, Trustee FBO
      Harin Padma-Nathan IRA is an affiliate of Dr. Padma-Nathan, both of whom are
      members of our Board of Directors.




On
      November 5, 2007, we entered into a five year consulting agreement with SOQ,
      Inc., a life sciences company affiliated with Dr. Gill, a member of the
      Company’s Board of Directors. Under the agreement, SOQ, Inc. will furnish the
      services to the Company to facilitate the clinical trials of NuRx compounds.
      In
      exchange, SOQ, Inc. will receive consideration of $200,000 per year, with a
      minimum increase of 5% each year during the term of the agreement. The agreement
      provides discretion for the Company’s Board of Directors to grant a bonus to
      SOQ, Inc. based upon the performance of the Company and SOQ, Inc.




**Director
      Independence**




As
      of the
      date of this Annual Report, only Dr. Baradaran and Mr. Borenzweig are considered
      “independent” as defined under the Nasdaq Stock Market’s listing standards. In
      determining independence, the Board of Directors reviews whether directors
      have
      any material relationship with us. The Board of Directors considers all relevant
      facts and circumstances. In assessing the materiality of a director's
      relationship to us, the Board of Directors is guided by the standards set forth
      below and considers the issues from the director's standpoint and from the
      perspective of the persons or organizations with which the director has an
      affiliation. The Board of Directors reviews commercial, industrial, banking,
      consulting, legal, accounting, charitable and familial relationships, if
      applicable. An independent director must not have any material relationship
      with
      us, either directly or indirectly as a partner, stockholder or officer of an
      organization that has a relationship with us, or any other relationship that
      would interfere with the exercise of independent judgment in carrying out the
      responsibilities of a director.




41




A
      director will not be considered independent in the following circumstances:




(1)  The
      director is, or has been in the past three years, an employee of the Company,
      or
      a family member of the director is, or has been in the past three years, an
      executive officer of the Company.




(2)  The
      director has received, or has a family member who has received, compensation
      from us in excess of $100,000 in any 12 month period in the past three years,
      other than compensation for board service, compensation received by the
      director's family member for service as a non-executive employee, and benefits
      under a tax-qualified plan or other non-discretionary compensation.




(3)  The
      director is, or has a family member who is, a current partner of our outside
      auditor, or was a partner or employee of our outside auditor, who worked on
      our
      audit at any time during any of the past three years.




(4)  The
      director is a family member of an individual who is, or at any time during
      the
      past three years was, employed by the company as an executive
      officer.




(5)  The
      director is, or has a family member who is, employed as an executive officer
      of
      another entity where, at any time during the past three years, any of our
      executive officers served on the compensation committee of that other
      entity.




(6)  The
      director is, or a family member is, a partner in, or a controlling stockholder
      or an executive officer of, any organization to which we made, or from which
      we
      received, payments for property or services in the current or any of the past
      three fiscal years that exceed the greater of 5% of the recipient's consolidated
      gross revenues for that year, or $200,000.




42




**ITEM****13.**
            **EXHIBITS******




Exhibit
              Number
            
            Description3.1
            
            Amended
                and Restated Articles of Incorporation.(1)3.2
            
            Certificate
                of Designation.(1)3.3
            
            Certificate
                of Amendment to the Certificate of Designation.(1)3.4
            
            Certificate
                of Amendment to the Amended and Restated Articles of Incorporation,
                dated
                April 27, 2007.(2)3.5
            
            Certificate
                of Amendment to the Amended and Restated Articles of Incorporation,
                dated
                October 23, 2007.(3)3.6
            
            Bylaws.(1)4.1
            
            Registration
                Rights Agreement as of May 16, 2007 between the Company and the Purchasers
                named therein.(4)4.2
            
            Placement
                Agent Warrant issued to Hunter World Markets, Inc. on May 16,
                2007.(4)4.3
            
            Lock-up
                Agreement dated as of May 16, 2007, by and among the Company and
                the
                shareholders, Santa Monica Capital Partners II, LLC, Dr. Parkash
                Gill, Dr.
                Parkash Gill, custodian for Dhillon Gill, Dr. Parkash Gill, custodian
                for
                Noorean Gill, Harin Padma-Nathan, Marc Ezralow, David Ficksman, Roshantha
                Chandraratna.(5)4.4
            
            Warrant
                issued to Investor Media Group, Inc., dated July 20, 2007.
                (6)4.5
            
            Placement
                Agent Warrant issued to Hunter World Markets, Inc. on June 29, 2007.
                (7)10.1
            
            Asset
                Purchase Agreement, dated May 31, 2007, by and between Quest Group
                International, Inc. and Quest Group, LLC. (8)10.2
            
            Form
                of Subscription Agreement, dated April 27, 2007, by and between the
                Company and the Purchasers named therein.(2)10.3
            
            Form
                of Subscription Agreement dated as of May 16, 2007, by and among
                the
                Company and the Purchasers named therein.(4)10.4
            
            Form
                of Subscription Agreement dated as of May 30, 2007, by and among
                the
                Company and the Baradaran Revocable Trust.(5)10.5
            
            Securities
                Purchase Agreement dated as of June 25, 2007, by and among the
                Company and City National Bank, Trustee FBO Harin Padma-Nathan
                IRA. (7)




10.5
            
            License
                Agreement between the Company and Vitae Pharmaceuticals, Inc., dated
                May
                11, 2007.(5)*Portions
                of this exhibit have been deleted and filed separately with the Securities
                and Exchange Commission pursuant to a request for a confidential
                treatment.*









10.6
            
            Employment
                Agreement between the Company and Rosh Chandraratna, dated May 25,
                2007.(5)10.7
            
            Employment
                Agreement between the Company and Harin Padma-Nathan, dated May 31,
                2007.(5)10.8
            
            Employment
                Agreement between the Company and Steven Gershick, dated September
                21,
                2007.(9)10.9
            
            Consulting
                Agreement between the Company and Parkash Gill, dated May 31,
                2007.(10)10.10
            
            2007
                Stock Compensation Plan of Company.(5)10.11
            
            Termination
                Agreement dated July 20, 2007, by and between Quest Group International,
                Inc. and Bateman Dynasty, LC.(6)14.1
            
            Code
                of Ethics.19.1
            
            Information
                Statement on Schedule 14C, filed on October 1, 2007.31.1
            
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act31.2
            
            Certification
                of the Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act.32.1
            
            Certifications
                pursuant to Section 906 of the Sarbanes-Oxley
                Act.




(1)  Incorporated
      by reference to the Company’s Registration Statement on Form SB-2 filed June 3,
      2002, File No. 333-89628.




(2)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated April 30,
      2007.




(3)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated October 29,
      2007.




(4)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated May 22,
      2007.




(5)  Incorporated
      by reference to the Company’s Registration Statement on Form SB-2, dated July 3,
      2007.




(6)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated July 26,
      2007.




(7)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated June 29,
      2007.




44




(8)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated June 8,
      2007.




(9)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated September 21,
      2007.




(10)  Incorporated
      by reference to the Company’s Current Report on Form 8-K, dated November 9,
      2007.




**ITEM****14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




Gumbiner
      Savett served
      as our independent registered public accounting firm for the fiscal year ending September
      30, 2007. The
      following table shows the fees that were paid or accrued by us for audit and
      other services provided by Gumbiner
      Savett for the
      2007 fiscal years from their appointment on June 4, 2007.




2007Audit
                Fees (1)
            
            $
            74,567Audit
                Related Fees (2)
            
            $
            0Tax
                Fees (3)
            
            $
            0All
                Other Fees (4)
            
            $
            0Total
            
            $
            74,567




(1)  Audit
      fees represent fees for professional services provided in connection with the
      audit of our annual financial statements and the review of our financial
      statements included in our Form 10-QSB quarterly reports and Form 10-KSB annual
      report and services that are normally provided in connection with statutory
      or
      regulatory filings for the fiscal year ended 2007.




(2)  Audit
      related fees represent fees for assurance and related services that are
      reasonably related to the performance of the audit or review of the financial
      statements and are not otherwise reported.




(3)  Tax
      fees
      represent fees for professional services related to tax compliance, tax advice
      and tax planning.




(4)  All
      other
      fees include services rendered in connection with the review of our Registration
      Statements and Edgarization services for our SEC Edgar filings.




All
      audit
      related services, tax services and other services rendered by Gumbiner
      Savett were
      pre-approved by our Board of Directors. It is the Company’s policy to
      pre-approve all services to be provided by our principal
      accountant.




Prior
      to
      the appointment of Gumbiner Savett, Jones Simpkins, P.C. (“Jones Simpkins”)
      served as our independent registered public accounting firm until June 4, 2007
      and the fiscal year ended September 30, 2006. The following table shows the
      fees
      that were paid or accrued by us for audit and other services provided by Jones
      Simpkins during
      the 2007 and 2006 fiscal years.




45




2006
            
            2007Audit
                Fees (1)
            
            $
            19,296
            
            $
            21,912Audit
                Related Fees (2)
            
            $
            0
            
            $
            0Tax
                Fees (3)
            
            $
            2,038
            
            $
            2,550All
                Other Fees (4)
            
            $
            0
            
            $
            0Total
            
            $
            21,334
            
            $
            24,462





(1)  Audit
      fees represent fees for professional services provided in connection with the
      audit of our annual financial statements and the review of our financial
      statements included in our Form 10-QSB quarterly reports, Form 10-KSB annual
      report, and Form SB-2, and services that are normally provided in connection
      with statutory or regulatory filings for the fiscal year ended
      2007.




(2)  Audit
      related fees represent fees for assurance and related services that are
      reasonably related to the performance of the audit or review of the financial
      statements and are not otherwise reported.




(3)  Tax
      fees
      represent fees for professional services related to tax compliance, tax advice
      and tax planning.




(4)  All
      other
      fees include services rendered in connection with the review of our Registration
      Statements and Edgarization services for our SEC Edgar filings.




All
      audit
      related services, tax services and other services rendered by Jones
      Simpkins were
      pre-approved by our Board of Directors.




46


**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.


NURX
                PHARMACEUTICALS, INC.Date:
                December 26, 2007
            By:
            /s/
              Harin Padma-NathanHarin
                Padma-Nathan
              President
                and Chief Executive Officer




In
      accordance with the Securities Exchange Act of 1934, this Annual Report has
      been
      signed below by the following persons on behalf of the registrant in the
      capacities and on the dates indicated.




Signature
            
            Title
            
            Date/s/
                Harin Padma-Nathan
            
            President
                & Chief Executive Officer
            
            December
                26, 2007Harin
                Padma-Nathan
            
            (Principal
                Executive Officer)/s/
                Steven Gershick
            
            Chief
                Financial Officer (Principal Financial and
            
            December
                  26, 2007Steven
                Gershick
            
            Accounting
                Officer)/s/
                Kurt Brendlinger
            
            Director
            
            December
                  26, 2007Kurt
                Brendlinger/s/
                Parkash Gill
            
            Director
            
            December
                  26, 2007Parkash
                Gill/s/
                Sharyar Baradaran
            
            Director
                & Secretary
            
            December
                  26, 2007Sharyar
                Baradaran/s/
                Matt Borenzweig
            
            Director
            
            December
                  26, 2007Matt
                Borenzweig





47


**Index
      to Financial Statements**


**Page**Reports
                  of Independent Registered Public Accounting Firms
              
              
              F-2Balances
                  Sheets
              
              
              F-4Statements
                  of Operations
              
              
              F-5Statements
                  of Stockholders’ Equity
              
              
              F-6Statements
                  of Cash Flows
              
              
              F-7Notes
                  to Financial Statements
              
              
              F-9




F-1


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      The
      Board of Directors and Stockholders


NuRx
      Pharmaceuticals, Inc.




We
      have
      audited the accompanying balance sheet of NuRx Pharmaceuticals, Inc. (the
“Company”) (a corporation in the development stage) as of September 30, 2007,
      and the related statements of operations, stockholders' equity and cash flows
      for the year then ended. These financial statements are the responsibility
      of
      the Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of NuRx Pharmaceuticals, Inc. as
      of
      September 30, 2007, and the results of its operations and its cash flows for
      the
      year then ended in conformity with United States generally accepted accounting
      principles.




/s/
                GUMBINER SAVETT INC.GUMBINER
                SAVETT INC.


December
      20, 2007





F-2


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      The
      Board of Directors


NuRx
      Pharmaceuticals, Inc.




We
      have
      audited the accompanying balance sheet of NuRx Pharmaceuticals, Inc. (the
“Company”) (a corporation in the development stage) as of September 30, 2006,
      and the related statements of operations, stockholders' equity and cash flows
      for the year then ended. These financial statements are the responsibility
      of
      the Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of NuRx Pharmaceuticals, Inc. as
      of
      September 30, 2006, and the results of its operations and cash flows for the
      year then ended in conformity with United States generally accepted accounting
      principles.




/s/
                JONES SIMKINS, P.C.JONES
                SIMKINS, P.C.


December
      20, 2007





F-3





NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Balance
                SheetsSeptember
                30, 2006 and 2007




2007
            
            2006ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            14,941,723
            
            $
            -Prepaid
                expenses
            
            
            55,832
            
            
            -Assets
                of discontinued operations
            
            
            -
            
            
            401,735Total
                current assets
            
            
            14,997,555
            
            
            401,735Property
                and equipment, net of accumulated depreciation and amortization of
                $1,382
            
            
            27,825
            
            
            -Rent
                deposit
            
            
            27,093
            
            
            -Total
                assets
            
            $
            15,052,473
            
            $
            401,735LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            103,441
            
            $
            -Due
                to related parties
            
            
            36,090
            
            
            -Liabilities
                of discontinued operations
            
            
            -
            
            
            119,081Total
                current liabilities
            
            
            139,531
            
            
            119,081Commitments
                and contingenciesStockholders'
                EquitySeries
                A preferred stock, $.001 par value, 1,000,000 shares designated,
                no shares
                issued and outstanding
            
            
            -
            
            
            -Series
                B preferred stock, $.001 par value, 500,000 shares designated, no
                shares
                issued and outstanding
            
            
            -
            
            
            -Common
                stock, $.001 par value, 150,000,000 and 50,000,000 shares authorized
                respectively, 114,259,000 and 10,259,000 shares issued respectively,
                and
                106,500,000 and 10,259,000 shares outstanding respectively
            
            
            114,309
            
            
            10,259Additional
                paid-in capital
            
            
            18,467,156
            
            
            105,541Treasury
                stock
            
            
            (750,000
            )
            
            -Accumulated
                deficit during development stage
            
            
            (2,954,723
            )
            
            -Retained
                earnings
            
            
            36,200
            
            
            166,854Total
                stockholders' equity
            
            
            14,912,942
            
            
            282,654Total
                liabilities and stockholders' equity
            
            $
            15,052,473
            
            $
            401,735




See
      Notes
      to Financial Statements




F-4





NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Statements
                of OperationsFor
                the years ended September 30, 2007 and 2006, and development stage
                from
                inception (May 1, 2007) through September 30,
                2007




2007
            
            2006
            
            Inception
                (May 1, 2007) through September 30, 2007Operating
                Expenses:General
                and administrative (includes stock based compensation of $65,829,
                $0, and
                $65,829, and related party consulting fees of $164,700, $0, and $164,700
                respectively)
            
            $
            818,596
            
            $
            -
            
            $
            818,596Research
                and clinical development (includes related party consulting fees
                of
                $6,090, $0, and $6,090 respectively)
            
            
            2,387,149
            
            
            -
            
            
            2,387,149Total
                operating expenses
            
            
            3,205,745
            
            
            -
            
            
            3,205,745Other
                income, netInterest
                income
            
            
            263,647
            
            
            -
            
            
            263,647Interest
                expense
            
            
            (12,625
            )
            
            -
            
            
            (12,625
            )Total
                other income, net
            
            
            251,022
            
            
            -
            
            
            251,022Loss
                from continuing operations
            
            
            (2,954,723
            )
            
            -
            
            
            (2,954,723
            )Income
                (Loss) from discontinued operations, net of income tax of $0 and
                $57,000
                respectively
            
            
            (130,654
            )
            
            192,703
            
            
            -Net
                Income (loss)
            
            $
            (3,085,377
            )
            $
            192,703
            
            $
            (2,954,723
            )Income
                (Loss) per common share - basic and dilutedFrom
                continuing operations
            
            $
            (0.06
            )
            $
            (0.00
            )
            $
            (0.03
            )From
                discontinued operations
            
            $
            (0.00
            )
            $
            0.02
            
            $
            (0.02
            )Weighted
                average common shares - basic and diluted
            
            
            49,861,488
            
            
            10,257,000
            
            
            103,088,464





See
      Notes
      to Financial Statements





F-5





NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Statements
                of Stockholders' EquityFor
                the Years Ended September 30, 2007 and
                2006




**Series
                  A Preferred Stock**
              
              
              **Series
                  B Preferred Stock**
              
              
              **Common
                  Stock**
              
              
              **Additional
                  Paid-in**
              
              
              **Treasury
                  Stock**
              
              
              **Retained
                  Earnings**
              
              
              **Accumulated
                  Deficit During the Development****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Capital**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **(Deficit)**
              
              
              **Stage**
              
              
              **Total****Balance
                  at October 1, 2005**
              
              
              -
              
              $
              -
              
              
              5,000
              
              $
              5
              
              
              10,254,000
              
              $
              10,254
              
              $
              105,541
              
              
              -
              
              $
              -
              
              $
              (25,849
              )
              $
              -
              
              $
              89,951Conversion
                  of Series B preferred stock to common stock
              
              
              -
              
              
              -
              
              
              (5,000
              )
              
              (5
              )
              
              5,000
              
              
              5
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              192,703
              
              
              -
              
              
              192,703**Balance
                  at October 1, 2006**
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              10,259,000
              
              $
              10,259
              
              $
              105,541
              
              
              -
              
              $
              -
              
              $
              166,854
              
              $
              -
              
              $
              282,654Private
                  placement April 27, 2007, 63,000,000 common shares at $0.001 per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              63,000,000
              
              
              63,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              63,000Private
                  placement May 16, 2007, 40,000,000 common shares at $0.50 per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              40,000,000
              
              
              40,000
              
              
              19,960,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              20,000,000Private
                  placement June 25, 2007, 1,000,000 common shares at $0.50 per
                  share
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,000,000
              
              
              1,000
              
              
              499,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              500,000Private
                  placement fees, reorganization costs and related registration costs,
                  including fair value of warrants
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,151,228
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,151,228
              )Share-based
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              50,000
              
              
              50
              
              
              65,779
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              65,829Fair
                  value of warrants issued in connection with private
                  placements
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,988,064
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,988,064Repurchase
                  of 7,759,000 common shares, May 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,759,000
              )
              $
              (750,000
              )
              
              -
              
              
              -
              
              
              (750,000
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (130,654
              )
              
              (2,954,723
              )
              
              (3,085,377
              )**Balance
                  at September 30, 2007**
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              114,309,000
              
              $
              114,309
              
              $
              18,467,156
              
              
              (7,759,000
              )
              $
              (750,000
              )
              $
              36,200
              
              $
              (2,954,723
              )
              $
              14,912,942




See
      Notes
      to Financial Statements





F-6


NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Statements
                of Cash FlowsFor
                the Years Ended September 30, 2007 and 2006 and development stage
                from
                inception (May 1, 2007) through September 30,
                2007




2007
            
            2006
            
            Inception
                (May 1, 2007) through September 30, 2007Cash
                flows from operating activities:Net
                loss
            
            $
            (3,085,377
            )
            $
            -
            
            $
            (2,954,723
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Loss
                from discontinued operations
            
            
            130,654
            
            
            -
            
            
            -Depreciation
                and amortization
            
            
            1,382
            
            
            -
            
            
            1,382Share-based
                compensation
            
            
            65,829
            
            
            -
            
            
            65,829Changes
                in operating assets and liabilities:Prepaid
                expenses
            
            
            (55,832
            )
            
            -
            
            
            (55,832
            )Accounts
                payable and accrued expenses
            
            
            139,531
            
            
            -
            
            
            139,531Net
                cash used in continuing operating activities
            
            
            (2,803,813
            )
            
            -
            
            
            (2,803,813
            )Net
                cash provided by discontinued operating activities
            
            
            91,405
            
            
            181,390
            
            
            41,146Net
                cash provided by (used in) operating activities
            
            
            (2,712,408
            )
            
            181,390
            
            
            (2,762,667
            )Cash
                flow from investing activities:Purchase
                of property and equipment
            
            
            (29,207
            )
            
            -
            
            
            (29,207
            )Rent
                deposit
            
            
            (27,093
            )
            
            -
            
            
            (27,093
            )Net
                cash used in continuing investing activities
            
            
            (56,300
            )
            
            -
            
            
            (56,300
            )Net
                cash used in discontinued investing activities
            
            
            (1,500
            )
            
            (13,157
            )
            
            -Net
                cash used in investing activities
            
            
            (57,800
            )
            
            (13,157
            )
            
            (56,300
            )Cash
                flows from financing activities:Private
                placements of common shares
            
            
            20,563,000
            
            
            -
            
            
            20,563,000Private
                placement offering costs
            
            
            (2,163,164
            )
            
            -
            
            
            (2,163,164
            )Proceeds
                of note payable
            
            
            125,000
            
            
            -
            
            
            125,000Repayment
                of note payable
            
            
            (125,000
            )
            
            -
            
            
            (125,000
            )Redemption
                of treasury stock
            
            
            (750,000
            )
            
            -
            
            
            (750,000
            )Net
                cash provided by continuing financing activities
            
            
            17,649,836
            
            
            -
            
            
            17,649,836Net
                cash used in discontinued financing activities
            
            
            -
            
            
            (173,000
            )
            
            -Net
                cash provided by (used in) financing activities
            
            
            17,649,836
            
            
            (173,000
            )
            
            17,649,836Net
                increase (decrease) in cash and cash equivalents
            
            
            14,879,628
            
            
            (4,767
            )
            
            14,830,869Cash
                transferred to discontinued operations
            
            
            (166,463
            )
            
            -
            
            
            (166,463
            )Cash
                and cash equivalents, beginning of period
            
            
            228,558
            
            
            233,325
            
            
            277,317Cash
                and cash equivalents, end of period
            
            $
            14,941,723
            
            $
            228,558
            
            $
            14,941,723


See
      Notes
      to Financial Statements




F-7




NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Statements
                of Cash FlowsFor
                the Years Ended September 30, 2007 and 2006 and development stage
                from
                inception (May 1, 2007) through September 30,
                2007




Supplemental
                disclosure of cash flow informationCash
                paid forIncome
                taxes
            
            $
            -
            
            $
            -
            
            $
            -Interest
            
            $
            12,625
            
            $
            -
            
            $
            12,625In
                2007, the Company incurred $5,151,228 in private placement fees,
                reorganization costs and related registration costs, which included
                the
                issuance of warrants with a fair value of
                $2,988,064.





See
      Notes
      to Financial Statements




F-8


NuRx
                Pharmaceuticals, Inc.(a
                corporation in the development stage)Notes
                to Financial StatementsSeptember 30,
                2007




Note
      1
      - The Company and its significant Account Policies




**General:**




Since
      NuRx Pharmaceuticals, Inc.’s (the “Company”) inception on August 14, 2001, it
      has been primarily engaged in the sale of nutritional products. Beginning in
      May
      2007, the Company entered into a plan of reorganization including a series
      of
      private placements, a change in directors and management, redemption of common
      shares of controlling shareholders prior to May 2007, sale of its nutritional
      products business, and began to pursue a new business plan as a
      development-stage company in the biotechnology and pharmaceuticals industry
      with
      a focus on nuclear receptor target therapeutics for cancer. On October 24,
      2007,
      in recognition of its new business focus, the Company changed its name to NuRx
      Pharmaceuticals, Inc.




**Development
      Stage Enterprise:**




The
      Company is a development stage company as defined in Statement of Financial
      Accounting Standards (“SFAS”) No. 7, *Accounting
      and Reporting by Development Stage Enterprises* .
      The
      Company is devoting substantially all of its present efforts to establish a
      new
      pharmaceutical business, and its planned principal operations have not yet
      commenced. The Company has not generated any revenues from operations and has
      no
      assurance of any future revenues. All losses accumulated since inception (May
      1,
      2007) have been considered as part of the Company's development stage
      activities. The Company will require substantial additional funding for
      continuing research and development, obtaining regulatory approval and the
      commercialization of its products. There is no assurance that the Company will
      be able to obtain sufficient additional funds when needed, or that such funds
      will be obtainable on terms satisfactory to the Company. The Company’s products
      will be governed in the United States by the Federal Food, Drug and Cosmetics
      Act and by the regulations of state agencies and potentially various foreign
      government agencies. There can be no assurance that the Company will obtain
      or
      maintain the regulatory approvals required to market its products.




**Use
      of Estimates:**




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities, the disclosure of
      contingent assets and liabilities at the date of the financial statements,
      and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ materially from those estimates.




**Cash
      and Cash Equivalents:**




Cash
      equivalents are highly liquid investments with original maturities of three
      months or less when purchased. Cash equivalents consist of institutional money
      market funds.




F-9




**Property
      and Equipment:**




Property
      and equipment are stated at cost. Depreciation and amortization are computed
      using the straight-line method over the estimated useful lives of the related
      assets, which range from 3 to 5 years. Leasehold improvements are amortized
      over
      the shorter of the life of the lease or their useful lives.




**Income
      Taxes:**




Deferred
      income taxes are provided in amounts sufficient to give effect to temporary
      differences between financial and tax reporting, principally related to accruals
      and depreciation of property and equipment.




Deferred
      income taxes arise from temporary differences resulting from income and expense
      items reported for financial accounting and tax purposes in different periods.
      Deferred taxes are classified as current or noncurrent, depending on the
      classification of the assets and liabilities to which they relate. Deferred
      taxes arising from temporary differences that are not related to an asset or
      liability are classified as current or noncurrent depending on the periods
      in
      which the temporary differences are expected to reverse.




**Net
      Income (Loss) Per Common Share:**




Statement
      of Financial Accounting Standards No. 128, *Earnings
      Per Share* ,
      requires presentation of basic earnings (loss) per share (“Basic EPS”) and
      diluted earnings (loss) per share (“Diluted EPS”). Basic earnings (loss) per
      share is computed by dividing income (loss) available to common stockholders
      by
      the weighted average number of common shares outstanding during the period.
      Diluted earnings (loss) per share gives effect to all dilutive potential common
      shares outstanding during the period. These potentially dilutive securities
      were
      not included in the calculation of loss per share for the years ended September
      30, 2007 and 2006, and the period inception (May 1, 2007) through September
      30,
      2007, because the Company incurred a loss during such periods and thus their
      effect would have been anti-dilutive. Accordingly, basic and diluted loss per
      share is the same for these periods. There were no dilutive securities for
      the
      year ended September 30, 2006. At September 30, 2007, potentially dilutive
      securities consisted of outstanding warrants and stock options to acquire an
      aggregate of 16,074,000 shares.




**Fair
      Value of Financial Instruments:**




The
      Company’s financial instruments consist of cash, payables and notes payable. The
      carrying amount of cash equivalents and payables approximates fair value because
      of the short-term nature of these items.




**Concentrations
      of Credit Risk:**




Financial
      instruments, which potentially subject the Company to concentrations of credit
      risk, consist primarily of cash and cash equivalents. The Company maintains
      its
      cash and cash equivalents in Standard & Poor’s AAA rated bank deposit and
      money market accounts, which exceed the Federal Deposit Insurance Corporation
      (“FDIC”) $100,000 insurance limit. As of September 30, 2007 and 2006, the
      Company had approximately $14,700,000 and $32,000 respectively of cash in excess
      of the FDIC limits. The Company has not experienced any losses in such accounts
      and believes it is not exposed to any significant credit risk on cash and cash
      equivalents.




**Impairment
      of Long-Lived Assets:**




In
      accordance with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,
      long-lived assets, such as property and equipment and amortizable intangibles,
      are reviewed for impairment whenever events or changes in circumstances indicate
      that the carrying amount of an asset may not be recoverable. The Company’s
      management assesses the recoverability of long-lived assets by determining
      whether the depreciation and amortization of long-lived assets over their
      remaining lives can be recovered through projected undiscounted future cash
      flows. The amount of long-lived asset impairment, if any, is measured based
      on
      fair value and is charged to operations in the period in which long-lived asset
      impairment is determined by management. At September 30, 2007 and 2006, the
      Company’s management believes there is no impairment of its long-lived assets.
      There can be no assurance, however, that market conditions will not change
      which
      could result in impairment of long-lived assets in the future.




F-10




**Adoption
      of New Accounting Policies:**




Effective
      January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123R”), a revision to SFAS No. 123, *Accounting
      for Stock-Based Compensation* .
      SFAS
      No. 123R requires that the Company measure the cost of employee services
      received in exchange for equity awards based on the grant date fair value of
      the
      awards, with the cost to be recognized as compensation expense in the Company's
      financial statements over the vesting period of the awards. Accordingly, the
      Company recognizes compensation cost for equity-based compensation for all
      grants of stock options and warrants.




**Recent
      Accounting Pronouncements:**




In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
      No. 48, *Accounting
      for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109* (“FIN
      48”), which clarifies the accounting for uncertainty in income taxes. FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 requires that the Company recognize in the
      financial statements the impact of a tax position, if that position is more
      likely than not of being sustained on audit, based on the technical merits
      of
      the position. FIN 48 also provides guidance on the recognition, classification,
      interest and penalties, accounting in interim periods and disclosure. The
      provisions of FIN 48 are effective for fiscal years beginning after December
      15,
      2006 with the cumulative effect of the change in accounting principle recorded
      as an adjustment to beginning retained earnings. The Company does not expect
      that the adoption of FIN 48 will have an adverse effect on its financial
      statements for its fiscal year ending September 30, 2008.




In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* .
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      GAAP and expands disclosures about fair value measurements. Specifically, SFAS
      No. 157 sets forth a definition of fair value, and establishes a hierarchy
      prioritizing the inputs to valuation techniques, giving the highest priority
      to
      quoted prices in active markets for identical assets and liabilities and the
      lowest priority to unobservable inputs. The provisions of SFAS No. 157 are
      generally required to be applied on a prospective basis, except to certain
      financial instruments accounted for under SFAS No. 133, *Accounting
      for Derivative Instruments and Hedging Activities* ,
      for
      which the provisions of SFAS No. 157 should be applied retrospectively. SFAS
      No. 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company does not expect that the adoption of SFAS No. 157 will have
      an adverse effect on its financial statements for its fiscal year ending
      September 30, 2008.




F-11


Note
      2
      - Property and Equipment




Property
                and equipment consisted of the following at September 30, 2007 and
                2006:2007
            
            2006Office
                equipment
            
            $
            18,976
            
            $
            —Computer
                equipment
            
            
            9,031
            
            
            —Leasehold
                Improvements
            
            
            1,200
            
            
            —29,207
            
            
            —Accumulated
                depreciation and amortization
            
            
            (1,382
            )
            
            —$
            27,825
            
            $
            —





Depreciation
      expense for the years ended September 30, 2007 and 2006 amounted to $1,382
      and
      $ -0-.




Note
      3
      - Private Placements of Common Stock and Warrants




On
      April
      27, 2007, the Company entered into subscription agreements with nine accredited
      investors to sell 63,000,000 shares of common stock for $63,000, or $.001 per
      share, which closed on May 16, 2007.




On
      May
      11, 2007, the Company issued a Confidential Private Offering Memorandum to
      raise
      between $20 million and $23 million from the issuance of common stock to
      accredited investors, at a per share price of $.50 (the “Offering”).




The
      Company engaged Hunter World Markets, Inc. (“Hunter”) as placement agent for the
      Offering and agreed to pay Hunter a commission of up to 10% of the amount raised
      and to issue to Hunter a warrant to purchase up to 30% of the number of shares
      of common stock sold through the offering, at an exercise price of $1.00 per
      share, for a term of six years. Pursuant to the Subscription Agreement with
      the
      investor, if the Company issued additional shares of common stock or rights
      to
      acquire common stock (with certain exceptions) for less than $0.50 per share
      within one year from the effective date of the registration statement (subject
      to adjustment for splits, recapitalizations, reorganization), then the investors
      would have the right to purchase, at a price equal to the common stock par
      value, such number of shares so that the effective purchase price per share
      payable by the subscriber would be the same per share purchase price of the
      dilutive shares. Pursuant to a Registration Rights Agreement, the Company agreed
      to file a registration statement with the Securities and Exchange Commission
      (“SEC”) covering the issued shares no later than 45 days after the initial
      closing. Hunter also received the same aforementioned registration rights and
      price protection.  The Company filed its registration statement within the
      required period, and such registration statement became effective July 18,
      2007.




In
      connection with the Offering, Hunter loaned the Company $125,000 at an interest
      rate of 6% per annum. This loan, the accrued interest and a loan fee of $12,500
      was paid from the proceeds of the private placement that occurred on May 16,
      2007.




On
      May
      16, 2007, and under the terms of the Offering, the Company entered into
      subscription agreements with four accredited investors (the
“Purchasers”) in which the Company issued and sold 40,000,000 shares of
      common stock for $.50 per share, for an aggregate purchase price of $20 million
      (the “Private Placement”). The Offering closed on June 25, 2007. Hunter
      received a fee of $2 million and a warrant to purchase 12,000,000 shares of
      the
      Company’s common stock, at an exercise price of $1.00 per share. This warrant is
      exercisable commencing February 18, 2008 and expires on May 17, 2013 and was
      valued at $2,914,739, based on a Black-Scholes model valuation using the
      following assumptions: expected volatility of 75%, expected dividends of 0%,
      expected term of 4.75 years, and risk free interest rate of 4.64%. The value
      of
      the warrant was recorded as additional paid-in capital.




F-12




On
      May
      30, 2007, and under the terms of the Offering, the Company entered into a
      subscription agreement with an affiliate of one of its executive officers to
      sell 500,000 shares of common stock for $.50 per share, for an aggregate
      purchase price of $250,000. This subscription agreement does not provide share
      registration rights. In a separate agreement, the officer has agreed to restrict
      the sale of all 500,000 of his shares for 18 months.




On
      June
      25, 2007, and under the terms of the Offering, the Company entered into a
      subscription agreement with an affiliate of another one of its executive
      officers to sell 500,000 shares of common stock for $.50 per share, for an
      aggregate purchase price of $250,000. This subscription agreement does not
      provide share registration rights. The same officer acquired 2,000,000 shares
      in
      the April 27, 2007 private placement as described above. In a separate
      agreement, the executive officer and his affiliate have agreed to restrict
      the
      sale of all 2,500,000 of his shares for 18 months.




In
      connection with the sale of securities on May 30, 2007 and June 25, 2007, Hunter
      received a fee of $12,500 and a 6-year warrant to purchase 300,000 shares of
      common stock exercisable at $1.00 per share, valued at $73,325, based on a
      Black-Scholes model valuation using the following assumptions: expected
      volatility of 75%, expected dividends of 0%, expected term of 4.75 years, and
      risk free interest rate of 5.01%. The value of the warrant was recorded in
      additional paid-in capital.




At
      September 30, 2007, there were warrants to purchase 12,400,000 shares of common
      stock outstanding.




Note
      4
      - Company Shares Repurchased




In
      connection with the Offering, certain Company shareholders (prior to April
      27,
      2007) canceled a total of 7,759,000 shares of common stock in consideration
      of
      $750,000. The transaction has been accounted for as the acquisition of treasury
      stock by the Company.




Note
      5
      - License Agreement




On
      May
      11, 2007, the Company entered into a license agreement with Vitae
      Pharmaceuticals, Inc. (“Vitae”), pursuant to which the Company acquired an
      exclusive, worldwide sublicense (with the right to grant further sublicenses)
      to
      certain compounds and technology for all human and veterinary use, in order
      to
      research, develop and commercialize the compounds. The indications for the
      lead
      compounds are acute myeloid, solid cancers (lung and breast) and
      chemotherapy-induced nuetropenia. The Company paid Vitae out of the net proceeds
      from the Private Placement $2.15 million, comprised of an upfront license fee
      of
      $2.1 million and $50,000 for its inventory of the licensed compounds. The
      Company also agreed to issue 6,650,652 shares of common stock, or such number
      representing 5.66% of the Company’s fully diluted shares, upon reaching the
      first to occur of a) the first acceptance of an Investigational New Drug
      Application by the United States Food and Drug Administration for a licensed
      product containing any licensed compound other than one defined compound (the
      “Excluded Compound”), or b) the date that the first patient is dosed in a
      clinical trial a licensed product containing the Excluded Compound. The Company
      will also be required to pay, on Vitae’s behalf, the existing licensors
      additional milestone payments if it reaches FDA marketing approval for a product
      containing a licensed compound. See Note 12.




In
      addition to the aforementioned fees and milestone payments, the Company agreed
      to pay the original licensor of the compounds and Vitae specified revenue
      percentages of the Company’s net sales of products based on the licensed
      technology. The percentages vary from product to product, but when combined
      may
      total as much as 12% of the Company’s net sales. The Company must meet certain
      development milestones under the original license agreements with the existing
      licensors in order to maintain the rights to the licensed products.




F-13




The
      acquired assets at the date of acquisition were determined to be in the research
      and development stage (the pre-clinical discovery stage). The primary compounds
      underlying the patents and licenses are to be used in ongoing research and
      development activities and are not determined to have any alternative future
      uses. Accordingly, pursuant to the provisions of Statement of Financial
      Accounting Standards No. 2, *Accounting
      for Research and Development Costs* ,
      and
      FASB Interpretation No. 4, *Applicability
      of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase
      Method* ,
      the
      Company has charged the costs of the acquired assets to expense.




Note
      6
      - Disposition of Discontinued Operations




On
      June
      7, 2007, the Company executed an asset purchase agreement with Quest Group,
      LLC
      (the “Buyer”), a Utah limited liability company. The asset purchase agreement is
      dated as of May 31, 2007. Craig Davis, the former Chief Executive Officer and
      director of the Company, is the President of the Buyer.




Pursuant
      to the asset purchase agreement, the Company agreed to dispose and sell all
      of
      its assets which relate to the business line of selling nutritional products
      to
      independent distributors and customers (the “Nutritional Business”). Under the
      asset purchase agreement, the Company agreed to sell all assets related to
      the
      Nutritional Business “AS IS”, in their present condition as of May 31, 2007
      without making any warranty of any kind.




The
      Buyer
      also assumed and agreed to pay or perform all outstanding liabilities and
      obligations of the Company as of May 31, 2007 and all other liabilities and
      obligations that relate directly to the Nutritional Business.




Subject
      to the foregoing, the Company used its outstanding cash balance as of May 15,
      2007 and all proceeds related to the Nutritional Business received through
      May
      31, 2007 to pay and reduce all assumed liabilities.




The
      Company and the Buyer also acknowledged and agreed that Craig Davis would
      continue to manage the Nutritional Business through May 31, 2007 and that he
      be
      authorized to collect receivables and pay liabilities of the Nutritional
      Business in a manner that is consistent with the terms of the asset purchase
      agreement.




The
      Company recognized a loss of $192,991 on the sale of these discontinued
      operations.




As
      a
      result of the sale of the Nutritional Business, the balance sheet as of May
      31,
      2007 and September 30, 2006 and the statements of income and cash flows for
      the
      eight months ended May 31, 2007 and year ended September 30, 2006 have been
      restated to record the necessary adjustments required to reflect the assets,
      liabilities, and operations of the Nutritional Business as discontinued
      operations. Assets and liabilities of the Nutritional Business included as
      assets or liabilities related to discontinued operations as of May 31, 2007
      and
      September 30, 2006, consisted of the following:




May
                31,
            
            September
                30,2007
            
            2006(Unaudited)
            
            (Audited)Current
                assets:Cash
            
            $
            166,463
            
            $
            228,558Accounts
                receivable
            
            
            41,938
            
            
            34,312Inventories
            
            
            142,177
            
            
            105,180Other
                Prepaids
            
            
            1,100
            
            
            —Prepaid
                income taxes
            
            
            2,877
            
            
            14,500Total
                current assets
            
            
            354,555
            
            
            382,550Property
                and equipment, net
            
            
            14,747
            
            
            18,035Deposits
            
            
            1,150
            
            
            1,150Total
                assets related to discontinued operations
            
            $
            370,452
            
            $
            401,735Current
                liabilities:Accounts
                payable
            
            $
            94,308
            
            $
            40,194Accrued
                expenses
            
            
            81,118
            
            
            64,538Related
                party fee payment payable
            
            
            —
            
            
            10,000Deferred
                revenue
            
            
            1,035
            
            
            2,349Total
                current liabilities
            
            
            176,461
            
            
            117,081Deferred
                tax liability
            
            
            1,000
            
            
            2,000Total
                liabilities related to discontinued operations
            
            $
            177,461
            
            $
            119,081




F-14




Summarized
      results of operations for the Nutritional Business included as income from
      discontinued operations, net of tax, for the eight months ended May 31, 2007
      and
      year ended September 30, 2006, were as follows:




2007
            
            2006Sales,
                net
            
            $
            1,588,734
            
            $
            2,422,691Cost
                of goods sold
            
            
            505,291
            
            
            759,481Gross
                profit
            
            
            1,083,443
            
            
            1,663,210Selling,
                general and administrative expenses
            
            
            1,058,103
            
            
            1,411,659Income
                from operations
            
            
            25,340
            
            
            251,551Other
                income (expense):Interest
                income
            
            
            6,973
            
            
            6,465Interest
                expense
            
            
            -
            
            
            (8,313
            )Other
                income
            
            
            40,024
            
            
            -Net
                other income (expense)
            
            
            46,997
            
            
            (
                1,848
            )Income
                (loss) before income taxes
            
            
            72,337
            
            
            249,703Provision
                for income taxes
            
            
            10,000
            
            
            57,000Net
                income
            
            $
            62,337
            
            $
            192,703




F-15




In
      connection with the disposal of the nutritional products business line, the
      Company executed a termination agreement with Bateman Dynasty, LC (“Bateman”), a
      shareholder of the Company, on July 20, 2007, pursuant to which the Company’s
      obligations under a Revolving Loan and Security Agreement dated September 1,
      2001, as amended on February 1, 2002, were terminated, and all promissory notes
      issued in connection with the Loan Agreement were cancelled, effective
      immediately.




In
      accordance with the Termination Agreement, the Company paid to Bateman, and
      Bateman accepted, a sum of $184,631 as payment in full of all promissory notes,
      all accrued and unpaid interest and any payments, liquidated damages and other
      amounts owed to Bateman under the Loan Agreement and the Notes. The Termination
      Agreement further released the Company and its affiliates from any claims
      arising from the Loan Agreement. The Company did not incur any material early
      termination penalties.




Summarized
      cash flow information for the Nutritional Business included as net cash used
      in
      discontinued investing activities and net cash used in discontinued financing
      activities in the statement of cash flows for the year ended September 30,
      2007
      and the year ended September 30, 2006, were as follows:




2007
            
            2006Cash
                flows from investing activities:Purchase
                of property and equipment
            
            $
            (1,500
            )
            $
            (13,157
            )Net
                cash used in investing activities
            
            
            (1,500
            )
            
            (13,157
            )Cash
                flows from financing activities:Principal
                payments on notes payable
            
            
            -
            
            
            (173,000
            )Net
                cash used in financing activities
            
            $
            -
            
            $
            (173,000
            )





Note
      7
      - Related Party Transactions




On
      May 1,
      2007, the Company entered into a consulting agreement with a stockholder, to
      provide consulting services relating to strategic planning, investor relations
      and corporate governance for a monthly fee of $30,000, plus reimbursement of
      expenses, for a six-month period ending on October 31, 2007. The consulting
      agreement provides for automatic extensions at the end of each six-month term,
      unless terminated by either party at least 30 days prior to the end of such
      term. For the year ended September 30, 2007, an aggregate of $150,000 was
      incurred pursuant to this consulting agreement, $30,000 of which was accrued
      at
      that date.




F-16




On
      November 5, 2007, the Company entered into a consulting agreement effective
      May
      31, 2007 with a company 100% owned by a stockholder, to provide the technical
      services of that stockholder along with other employees and resources of the
      consulting company. The consulting agreement superseded an existing employment
      agreement with that stockholder. For the year ended September 30, 2007, the
      company paid $57,212 in salary to the stockholder, and had accrued an additional
      $6,090 under the consulting agreement which was outstanding at September 30,
      2007.




During
      the year ended September 30, 2007, the Company paid $14,700 for the corporate
      ID, web design and event management services of a company 100% owned by the
      spouse of a stockholder.




Note
      8
      - Employment Agreement and Common Stock Options and Warrants




During
      the year ended September 30, 2007, the Company entered into the following
      employment agreements with key employees:




Employee
            
            Title
            
            Term
            
            Annual
                Base Salary
            
            Stock
                CompensationHarin
                Padma-Nathan
            
            
            Chief
                Executive Officer
            
            
            5
                years
            
            $
            200,000
            
            
            3,474,000
                common shares at $1.00 per shareRosh
                Chandraratna
            
            
            Chief
                Scientific Officer
            
            
            5
                years
            
            $
            250,000
            
            
            None
                yet grantedSteven
                Gershick
            
            
            Chief
                Financial Officer
            
            
            5
                years
            
            $
            120,000
            
            
            None
                yet granted





On
      May
      31, 2007, in connection with the employment agreement of Dr. Harin Padma-Nathan
      as Chief Executive Officer, the Company issued options to purchase 3,474,000
      common shares of the Company for an exercise price of $1.00 per share. The
      option shares vest in equal installments every 90 days from the date of the
      agreement for each year during the term of five years until they have been
      fully
      vested. The option shares expire in five years from the date of
      grant.




In
      2007,
      the Company adopted a stock compensation plan, the 2007 Stock Compensation
      Plan,
      pursuant to which it is authorized to grant options, restricted stock and stock
      appreciation rights to purchase up to 15,000,000 shares of common stock to
      the
      Company’s employees, officers, directors, consultants and advisors.




The
      2007
      Stock Plan is administered by the Company’s Board of Directors or a committee
      appointed by the Board, which determines the persons to whom awards will be
      granted, the type of award to be granted, the number of awards to be granted
      and
      the specific terms of each grant, including the vesting thereof, subject to
      the
      provisions of the plan.




The
      2007
      Stock Plan provides that the exercise price of each incentive stock option
      may
      not be less than the fair market value of the Company’s common stock on the date
      of grant (or 110% of the fair market value in the case of a grantee holding
      more
      than 10% of the Company’s outstanding common stock).




F-17




A
      summary
      of activity under the Plan during the year ended September 30, 2007 is as
      follows:




Shares
            
            Weighted-Average
              Exercise
                PriceStock
                options outstanding, beginning of year
            
            
            —
            
            
            —Granted
            
            
            3,724,000
            
            $
            1.00Exercised
            
            
            —
            
            
            —Forfeited
            
            
            —
            
            
            —Total stock
              options
            
            
            3,724,000
            
            $
            1.00Shares
              issued
            
            
            50,000
            
            
            —Total
              options and shares outstanding, end of the
              year
            
            
            3,774,000
            
            
            —Options
                exercisable at year end
            
            
            373,700
            
            $
            1.00Shares
                available for grant under Plan
            
            
            11,226,000
            
            
            —





The
      weighted average remaining option term at September 30, 2007 was 56 months.
      The
      intrinsic value is not greater than the grant price.




A
      summary
      of warrant issuances during the year ended September 30, 2007 is as
      follows:




Shares
            
            Weighted-Average
              Exercise
                PriceOutstanding,
                beginning of year
            
            
            —
            
            
            —Granted
            
            
            12,400,000
            
            $
            1.01Exercised
            
            
            —
            
            
            —Forfeited
            
            
            —
            
            
            —Outstanding,
                end of year
            
            
            12,400,000
            
            $
            1.01Warrants
                exercisable at year end
            
            
            25,000
            
            $
            1.50





The
      weighted average remaining warrant term at September 30, 2007 was 68 months.
      The
      intrinsic value is not greater than the grant price.




Note
      9
      - Share Based Payments




Pursuant
      to the provisions of Statement of Financial Accounting Standards No. 123R *Share
      Based Payment:* (SFAS
      123R), and SEC Staff Accounting Bulletin No. 107, *Share-Based
      Payment (SAB 107)* the
      cost
      resulting from all share-based payment transactions (including, but not limited
      to grants of employee options, and warrants to purchase the Company’s common
      stock) shall be recognized in the statement of operations based on their fair
      values, unless related to capital financing.




F-18




The
      fair
      value of each option award and warrant grant is estimated on the date of grant
      using the Black-Scholes option pricing model using the following
      assumptions:




Options
            
            WarrantsExpected
                Volatility
            
            
            75
            %
            
            75
            %Expected
                Dividends
            
            
            0.0
            %
            
            0.0
            %Expected
                term, in years
            
            
            4.0
            
            
            5.5-6.0Risk-free
                rate
            
            
            4.81-4.87
            %
            
            4.69-4.99
            %




The
      fair
      value of the 3,474,000 option grant to the employee on May 31, 2007 is $750,000
      which resulted in a charge to compensation expense in the amount of $50,240
      for
      the year ended September 30, 2007.




The
      fair
      value of the warrant grants to the private placement agent on May 16, 2007
      and
      June 25, 2007 was $2,988,064 which resulted in an addition to paid-in capital
      upon the issuance of the warrants, and a corresponding reduction of paid-in
      capital as costs incurred in connection with the private placements of common
      stock.




On
      July
      20, 2007, the Board of Directors of the Company authorized the issuance of
      a
      warrant to Investor Media Group (“IMG”) to purchase up to 100,000 shares of the
      Company’s common stock, pursuant to a consulting agreement, as amended, dated
      July 12, 2007 between the Company and IMG. The agreement provides that IMG
      shall
      provide investor relations services to the Company for a period of six months
      beginning July 9, 2007 and ending January 8, 2008 for a monthly fee of $5,000.
      The warrant is divided into 4 tranches as follows:




Tranche
            
            
            Number
                of Shares
            
            
            Vesting
                Date
            
            
            Strike
                Price1
            
            
            25,000
            
            
            Immediately
            
            $
            1.502
            
            
            25,000
            
            
            October
                9, 2007
            
            $
            1.503
            
            
            25,000
            
            
            January
                10, 2008
            
            $
            2.004
            
            
            25,000
            
            
            April
                10, 2008
            
            $
            2.00




The
      shares of common stock in the third and fourth tranches will not vest in the
      event either party gives the other party a thirty-day written notice of
      termination of the consulting agreement prior to January 8, 2008. The estimated
      fair value of the warrant grant was $11,400 on the date of grant using the
      Black-Scholes option pricing model and resulted in a charge to investor
      relations expenses of $2,592 for the year ended September 30, 2007.  On
      November 5, 2007, the Company notified IMG of its intent not to renew the
      agreement beyond its scheduled termination date on January 8, 2008.




On
      July
      20, 2007, the Company’s Board of Directors authorized the issuance of options to
      purchase 200,000 shares of common stock at $1.00 per share to Sharyar Baradaran,
      for his services as a non-employee director. The fair value of the option grant
      was $43,200, estimated on the date of grant, using the Black-Scholes option
      pricing model and resulted in a charge to consulting expense of $8,522 for
      the
      year ended September 30, 2007.




On
      July
      20, 2007, the Company’s Board of Directors authorized the issuance of 50,000
      shares of common stock (the “Consulting Shares”) to Paul Ketteridge, in
      consideration for his consulting services. The shares have a fair value of
      $.50
      per share, or $25,000 and resulted in a charge to expense of $3,125 for the
      year
      ended September 30, 2007. The consulting services will include advising the
      Company regarding compliance with Food and Drug Administration and other agency
      regulations, assisting the Company in obtaining regulatory approval for Company
      products, and advising the Company regarding new government regulations. 
To the extent that Mr. Ketteridge provides less than 330 hours of service during
      the two-year term of the consulting arrangement, the Consulting Shares will
      be
      subject to forfeiture on a pro-rata basis. The Company also issued to Mr.
      Ketteridge an option to purchase 50,000 shares of common stock at an exercise
      price of $1.00 per share, 25,000 shares of which will vest upon the earlier
      of
      receipt by the Company of a second marketing approval from the U.S. Food and
      Drug Administration or July 1, 2010, and the remaining 25,000 shares of which
      will vest on the second year anniversary of the consulting agreement with Mr.
      Ketteridge. The fair value of the option award was $10,800 on the date of grant
      using the Black-Scholes option pricing model and resulted in a charge to
      consulting expense of $1,350 for the year ended September 30, 2007.




F-19




Note
      10 - Lease Commitments




The
      Company entered into a three year lease of approximately 2,960 sq. ft. for
      premises located in Irvine, California in which it conducts operations
      commencing July 15, 2007 and ending July 31, 2008. The base rent is $4,096
      per
      month through July 31, 2007, $4,243 per month through July 31, 2008, and $4,389
      per month thereafter. In addition, the Company entered into a three year
      photocopier equipment lease for $203 per month in September, 2007. Minimum
      payments under operating leases for the next five years are approximately as
      follows:




Years
                ended September 30,
            
            Total2008
            
            $
            52,0002009
            
            
            54,0002010
            
            
            2,000Thereafter
            
            
            —Total
            
            $
            108,000





Note
      11 - Income Taxes




Deferred
      income taxes are provided for the differences between the basis of assets and
      liabilities for financial reporting and income tax purposes. A valuation
      allowance is established when necessary to reduce deferred tax assets to the
      amount expected to be realized. The Company recorded a deferred income tax
      asset
      for the tax effect of net operating loss carryforwards and temporary
      differences, aggregating approximately $1,229,000 at September 30, 2007. In
      recognition of the uncertainty regarding the ultimate amount of income tax
      benefits to be realized, the Company has recorded a full valuation allowance
      at
      September 30, 2007. The effective tax rate differs from the statutory rate
      of
      34% due to the increase in the valuation allowance.




The
      Company has net losses for tax purposes totaling approximately $3,020,000 which
      may be applied against future taxable income and will expire in 2027.
 Accordingly, there is no tax expense for the years ended September 30,
      2007 and 2006 and the period inception (May 1, 2007) through September 30,
      2007.
      The potential tax benefits arising from these losses have not been recorded
      in
      the financial statements. The Company evaluates its valuation allowance
      requirements on an annual basis based on projected future operations. When
      circumstances change and this causes a change in management’s judgment about the
      realizability of deferred tax assets, the impact of the change on the valuation
      allowance is reflected in current operations.




F-20




The
      tax
      effects of temporary difference that gives rise to the Company’s deferred tax
      asset are as follows:




Year
                ended
              September
                30, 2007
            
            Year
                ended September30, 2006
            
            May
                1, 2007 (inception) through
              September
                30, 2007Tax
                loss carryforwards
            
            $
            1,201,000
            
            $
            —
            
            $
            1,201,000Share
                based compensation
            
            
            28,000
            
            
            —
            
            
            28,000Valuation
                allowance
            
            
            (1,229,000
            )
            
            —
            
            
            (1,229,000
            )$
            —
            
            $
            —
            
            $
            —





The
      provision for income taxes differs from the amount computed at federal statutory
      rates as follows:


Year
                  endedSeptember
                  30, 2007
              
              Year
                  ended September 30, 2006
              
              May
                  1, 2007 (inception) throughSeptember
                  30, 2007Provision
                  for income taxes at 34% statutory rate
              
              
              ($1,049,000
              )
              $
              —
              
              
              ($1,049,000
              )State
                  taxes, net of federal benefit
              
              
              (180,000
              )
              
              —
              
              
              (180,000
              )Change
                  in valuation allowance
              
              
              1,229,000
              
              
              —
              
              
              1,229,000Other
              
              
              —
              
              
              —
              
              
              —$
              —
              
              $
              —
              
              $
              —




Note
      12 - Subsequent Events




On
      October 31, 2007, the Company received approval for an Investigational New
      Drug
      with respect to one of its drug candidates. This approval triggered a milestone
      payment under the Vitae license agreement of 7,026,927 common shares,
      representing 5.66% of the Company’s fully diluted common stock (See Note 5). The
      fair market value of these shares at October 31, 2007 was $0.50 per share,
      which
      resulted in a charge of $3,513,000 to in-process research and development
      expenses on that date and an increase in stockholder’s equity.




On
      November 28, 2007, the Company awarded options to purchase 200,000 shares of
      common stock to a new director at an exercise price of $1.00 per share. The
      warrants vest 100% upon grant, and have a five year term. The fair value of
      the
      option award estimated on the date of grant using the Black-Scholes option
      pricing model was $41,800 using the following assumptions:




AssumptionsExpected
                Volatility
            
            
            75
            %Expected
                Dividends
            
            
            0.0
            %Expected
                term, in years
            
            
            4.0Risk-free
                rate
            
            
            3.36
            %





The
      option value will be amortized to expense over the director’s 12 month board
      term.




F-21