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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-6533
 
 BOSTON LIFE SCIENCES, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 
 Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    87-0277826
(IRS Employer
Identification No.)
 85 Main Street, Hopkinton, Massachusetts
(Address of Principal Executive Offices)
    
    01748
(Zip Code)
 (508) 497-2360
(Registrants Telephone Number, Including Area Code)
 Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ




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##### 



BOSTON LIFE SCIENCES, INC.
 INDEX TO FORM 10-Q
  
 PagePart I Financial InformationItem 1 Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2007 and 2006, and for the period from inception (October 16, 1992) to March 31, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2007 and 2006, and for the period from inception (October 16, 1992) to March 31, 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4 Controls and Procedures
    
    
    22Part II Other InformationItem 1A Risk Factors
    
    
    24Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 6 Exhibits
    
    
    43SIGNATURESEX-10.1 FIRST AMENDMENT, EFFECTIVE MARCH 23, 2007, TO LICENSE AGREEMENTEX-10.2 THIRD AMENDMENT, EFFECTIVE APRIL 1, 2007, TO  LICENSE AGREEMENTEX-10.3 SECOND AMENDMENT, EFFECTIVE APRIL 1, 2007, TO LICENSE AGREEMENTEX-10.4 EMPLOYMENT AGREEMENT, DATED APRIL 16, 2007 FRANK BOBEEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO
  ® ®
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##### Table of Contents



Part I  Financial Information
 
 Item 1  Financial Statements
 Boston Life Sciences, Inc.
 
  (Unaudited)March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,526,177
    
    
    $
    1,508,665Other current assets
    
    
    432,282
    
    
    
    342,651Total current assets
    
    
    1,958,459
    
    
    
    1,851,316Fixed assets, net
    
    
    112,327
    
    
    
    136,433Other assets
    
    
    387,392
    
    
    
    381,138Total assets
    
    $
    2,458,178
    
    
    $
    2,368,887LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    3,520,980
    
    
    $
    10,673,898Convertible notes payable (Note 5)
    
    
    10,000,000
    
    
    
    8,000,000Accrued lease (Note 6)
    
    
    32,133
    
    
    
    30,752Total current liabilities
    
    
    13,553,113
    
    
    
    18,704,650Convertible notes payable (Note 5)
    
    
    9,000,000
    
    
    
    Accrued lease, excluding current portion (Note 6)
    
    
    227,656
    
    
    
    236,144Total liabilities
    
    
    22,780,769
    
    
    
    18,940,794Commitments and contingencies (Note 7)Stockholders deficit:Preferred stock, $.01 par value; 1,000,000
shares authorized; 25,000 shares designated
Convertible Series A, 500,000 shares
designated Convertible Series D, and 800
shares designated Convertible Series E; no
shares issued and outstanding at March 31,
2007 and December 31, 2006
    
    
    
    
    
    
    Common stock, $.01 par value; 80,000,000
shares authorized; 16,698,074 and 16,576,034
shares issued and outstanding at March 31,
2007 and December 31, 2006, respectively
    
    
    166,981
    
    
    
    165,760Additional paid-in capital
    
    
    127,095,098
    
    
    
    126,765,862Deficit accumulated during development stage
    
    
    (147,584,670
    )
    
    
    (143,503,529
    )Total stockholders deficit
    
    
    (20,322,591
    )
    
    
    (16,571,907
    )Total liabilities and stockholders deficit
    
    $
    2,458,178
    
    
    $
    2,368,887
  3




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Boston Life Sciences, Inc.
 
 
 From Inception(October 16,Three Months Ended March 31,
    
    
    1992) to2007
    
    
    2006
    
    
    March 31, 2007Revenues
    
    $
    
    
    
    $
    
    
    
    $
    900,000Operating expenses:Research and development
    
    
    2,578,746
    
    
    
    2,220,168
    
    
    
    93,031,793General and administrative
    
    
    1,597,338
    
    
    
    1,827,385
    
    
    
    44,833,656Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Total operating expenses
    
    
    4,176,084
    
    
    
    4,047,553
    
    
    
    150,011,993Loss from operations
    
    
    (4,176,084
    )
    
    
    (4,047,553
    )
    
    
    (149,111,993
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    (1,582,878
    )Interest expense, net
    
    
    77,020
    
    
    
    
    
    
    
    (4,315,147
    )Investment income
    
    
    17,923
    
    
    
    83,111
    
    
    
    7,425,348Net loss
    
    
    (4,081,141
    )
    
    
    (3,964,442
    )
    
    
    (147,584,670
    )Preferred stock beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    (8,062,712
    )Accrual of preferred stock dividends and
modification of warrants held by preferred
stockholders
    
    
    
    
    
    
    
    
    
    
    (1,229,589
    )Net loss attributable to common stockholders
    
    
    (4,081,141
    )
    
    
    (3,964,442
    )
    
    $
    (156,876,971
    )Basic and diluted net loss attributable to
common stockholders per share
    
    $
    (0.25
    )
    
    $
    (0.24
    )Weighted average common shares outstanding
    
    
    16,590,950
    
    
    
    16,501,800
  4




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Boston Life Sciences, Inc.
 
 
 From Inception(October 16,1992) toThree Months Ended March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (4,081,141
    )
    
    $
    (3,964,442
    )
    
    $
    (147,584,670
    )Adjustments to reconcile net loss to net cash used for operating activities:Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Write-off of acquired technology
    
    
    
    
    
    
    
    
    
    
    3,500,000Interest expense settled through issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    350,500Non-cash interest expense
    
    
    
    
    
    
    
    
    
    
    1,648,675Non-cash charges related to options, warrants and common stock
    
    
    324,355
    
    
    
    596,812
    
    
    
    6,478,043Amortization and depreciation
    
    
    31,558
    
    
    
    52,579
    
    
    
    2,612,690Changes in operating assets and liabilities:(Increase) decrease in other current assets
    
    
    (89,631
    )
    
    
    (666,155
    )
    
    
    426,681(Decrease) increase in accounts payable and accrued expenses
    
    
    (7,152,918
    )
    
    
    (162,292
    )
    
    
    2,748,315(Decrease) increase in accrued lease
    
    
    (7,107
    )
    
    
    (48,248
    )
    
    
    259,789Net cash used for operating activities
    
    
    (10,974,884
    )
    
    
    (4,191,746
    )
    
    
    (117,413,433
    )Cash flows from investing activities:Cash acquired through Merger
    
    
    
    
    
    
    
    
    
    
    1,758,037Purchases of fixed assets
    
    
    (7,452
    )
    
    
    (8,352
    )
    
    
    (1,479,542
    )(Increase) decrease in other assets
    
    
    (6,254
    )
    
    
    24,985
    
    
    
    (741,027
    )Purchases of marketable securities
    
    
    
    
    
    
    (305,292
    )
    
    
    (128,645,044
    )Sales and maturities of marketable securities
    
    
    
    
    
    
    3,970,590
    
    
    
    128,645,044Net cash (used for) provided by investing activities
    
    
    (13,706
    )
    
    
    3,681,931
    
    
    
    (462,532
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    6,102
    
    
    
    1,458
    
    
    
    63,589,195Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    35,022,170Preferred stock conversion inducement
    
    
    
    
    
    
    
    
    
    
    (600,564
    )Proceeds from issuance of promissory notes
    
    
    11,000,000
    
    
    
    
    
    
    
    25,585,000Proceeds from issuance of convertible debentures
    
    
    
    
    
    
    
    
    
    
    9,000,000Principal payments of notes payable
    
    
    
    
    
    
    
    
    
    
    (7,146,967
    )Dividend payments on Series E Cumulative Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (516,747
    )Payments of financing costs
    
    
    
    
    
    
    
    
    
    
    (5,529,945
    )Net cash provided by financing activities
    
    
    11,006,102
    
    
    
    1,458
    
    
    
    119,402,142Net increase (decrease) in cash and cash equivalents
    
    
    17,512
    
    
    
    (508,357
    )
    
    
    1,526,177Cash and cash equivalents, beginning of period
    
    
    1,508,665
    
    
    
    578,505
    
    
    
    Cash and cash equivalents, end of period
    
    $
    1,526,177
    
    
    $
    70,148
    
    
    $
    1,526,177
  5




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Boston Life Sciences, Inc.
 
 
 1. Basis of Presentation
       6




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2. Net Loss Per Share
   3. Comprehensive Loss
  4. Accounting for Stock-Based Compensation
     7




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2007
    
    
    2006Research and development
    
    $
    114,959
    
    
    $
    181,950General and administrative
    
    
    208,436
    
    
    
    356,471$
    323,395
    
    
    $
    538,421Impact on basic and diluted net loss attributable to common stockholders per share
    
    $
    (0.02
    )
    
    $
    (0.03
    )
  2007
    
    2006Expected term
    
    6 years
    
    6 yearsRisk-free interest rate
    
    
    4.5% - 4.8
    %
    
    
    4.3
    %Stock volatility
    
    
    90
    %
    
    
    90
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
       Weighted-AverageExerciseShares
    
    
    PriceOutstanding at beginning of year
    
    
    3,512,704
    
    
    $
    3.46Granted
    
    
    110,000
    
    
    
    2.46Exercised
    
    
    
    
    
    
    Forfeited and expired
    
    
    
    
    
    
    Outstanding at end of period
    
    
    3,622,704
    
    
    $
    3.43Options exercisable at end of period
    
    
    2,213,334
    
    
    $
    3.88
  8




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Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted-
    
    
    
    
    
    
    Average
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    Contractual
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Life
    
    
    Price$1.35  $2.00
    
    
    100,500
    
    
    8.4 years
    
    $
    1.97
    
    
    
    58,139
    
    
    8.4 years
    
    $
    1.97$2.01  $3.00
    
    
    2,190,155
    
    
    7.9 years
    
    
    2.39
    
    
    
    1,175,723
    
    
    7.1 years
    
    
    2.35$3.10  $4.65
    
    
    1,013,363
    
    
    8.0 years
    
    
    3.63
    
    
    
    660,786
    
    
    7.9 years
    
    
    3.60$4.99  $6.96
    
    
    132,500
    
    
    2.4 years
    
    
    5.50
    
    
    
    132,500
    
    
    2.4 years
    
    
    5.50$8.95  $13.06
    
    
    80,740
    
    
    1.5 years
    
    
    10.63
    
    
    
    80,740
    
    
    1.5 years
    
    
    10.63$15.62  $22.36
    
    
    105,446
    
    
    1.4 years
    
    
    16.44
    
    
    
    105,446
    
    
    1.4 years
    
    
    16.443,622,704
    
    
    7.4 years
    
    $
    3.43
    
    
    
    2,213,334
    
    
    6.6 years
    
    $
    3.88
   5. Convertible Notes Payable
     9




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6. Relocation and Sublease
  10




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Accrual at
    
    
    Cash Payments,
    
    
    Accrual atDecember 31,
    
    
    Net of Sublease
    
    
    March 31,2006
    
    
    Receipts 2007
    
    
    2007Lease Amendment
    
    $
    266,896
    
    
    $
    7,107
    
    
    $
    259,789Short-term portion of lease accrual
    
    
    30,752
    
    
    
    
    
    
    
    32,133Long-term portion of lease accrual
    
    $
    236,144
    
    
    
    
    
    
    $
    227,656
  7. Commitments and Contingencies
  License Agreements
  11




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Contingencies
  Guarantor Arrangements
   8. Income taxes
   12




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13




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Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Overview
 Description of Company
  
    
    Nerve repair program focused on the functional recovery from CNS disorders resulting from
traumas, such as spinal cord injury, or SCI, stroke and optic nerve injury utilizing
technology referred to as axon regeneration;
    
    Molecular imaging program focused on the diagnosis of Parkinsonian Syndromes, or PS,
including Parkinsons Disease, or PD, and Attention Deficit Hyperactivity Disorder, or ADHD;
and
    
    Neurodegenerative program focused on treating the symptoms of PD and slowing or stopping
the progression of PD.
     14




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Convertible Notes Payable
    15




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Product Development
 Nerve Repair Program
        16




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Molecular Imaging Program
    Neurodegenerative Program
  Sales and Marketing and Government Regulation
  17




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Research and Development
  1st QuarterProgram
    
    2007
    
    CumulativeNerve Repair
    
    $
    705,000
    
    
    $
    21,281,000Molecular Imaging
    
    $
    803,000
    
    
    $
    23,406,000Neurodegenerative
    
    $
    72,000
    
    
    $
    1,062,000
  Critical Accounting Policies and Estimates
  Marketable Securities
  Research Contracts
  18




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Fair Value and Classification of Equity Instruments
    Lease Accrual
  Stock-Based Compensation
     19




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Results of Operations
 Three Months Ended March 31, 2007 and 2006
      Liquidity and Capital Resources
  20




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Date
    
    Net Proceeds Raised
    
    Securities or Debt Instrument IssuedMarch 2007
    
    $ 9.0 million
    
    Convertible Promissory NotesFebruary 2007
    
    $ 2.0 million
    
    Convertible Promissory NotesOctober 2006
    
    $ 6.0 million
    
    Convertible Promissory NotesAugust 2006
    
    $ 2.0 million
    
    Convertible Promissory NotesSeptember 2005
    
    $12.8 million
    
    Common StockMarch 2005
    
    $ 5.0 million
    
    Common Stock
      Contractual Obligations and Commitments
  21




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Recent Accounting Pronouncements
    
 Item 3  Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4  Controls and Procedures
  22




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23




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Part II  Other Information
 
 Item 1A  Risk Factors
    Risks Related to our Financial Results and Need for Additional Financing
 WE ARE A DEVELOPMENT STAGE COMPANY. WE HAVE INCURRED LOSSES FROM OUR OPERATIONS SINCE INCEPTION
AND ANTICIPATE LOSSES FOR THE FORESEEABLE FUTURE. WE WILL NOT BE ABLE TO ACHIEVE PROFITABILITY
UNLESS WE OBTAIN REGULATORY APPROVAL AND MARKET ACCEPTANCE OF OUR PRODUCT CANDIDATES. WE WILL NEED
SUBSTANTIAL ADDITIONAL FUNDING IN ORDER TO CONTINUE OUR BUSINESS AND OPERATIONS. IF WE ARE UNABLE
TO SECURE SUCH FUNDING ON ACCEPTABLE TERMS, WE WILL NEED TO CEASE OPERATIONS, SIGNIFICANTLY
REDUCE, DELAY OR CEASE ONE OR MORE OF OUR RESEARCH OR DEVELOPMENT PROGRAMS, OR SURRENDER RIGHTS TO
SOME OR ALL OF OUR TECHNOLOGIES. IF WE VIOLATE A DEBT COVENANT OR DEFAULT UNDER OUR DEBT
AGREEMENTS, WE MAY NEED TO CEASE OPERATIONS OR REDUCE , CEASE OR
DELAY ONE OR MORE OF OUR RESEARCH OR DEVELOPMENT PROGRAMS, ADJUST OUR
CURRENT BUSINESS PLAN AND MAY NOT BE ABLE TO CONTINUE AS A GOING
CONCERN.
  24




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
    
    The scope, rate of progress and cost of our clinical trials and other research and development activities;
    
    Future clinical trial results;
    
    The terms and timing of any collaborative, licensing and other arrangements that we may establish;
    
    The cost and timing of regulatory approvals and of establishing sales, marketing and distribution capabilities;
    
    The cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;
    
    The cost of obtaining and maintaining licenses to use patented technologies;
    
    The effect of competing technological and market developments; and
    
    The cost of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights and other patent-related costs, including litigation costs and
the results of such litigation.
      25




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OUR ESTIMATES OF OUR LIABILITY UNDER OUR BOSTON, MASSACHUSETTS LEASE MAY CHANGE.
  Risks Related to Commercialization
 OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY DEVELOP OUR PRODUCT CANDIDATES INTO COMMERCIAL
PRODUCTS.
  EVEN IF WE RECEIVE APPROVAL TO MARKET OUR DRUG CANDIDATES, THE MARKET MAY NOT BE RECEPTIVE TO OUR
DRUG CANDIDATES UPON THEIR COMMERCIAL INTRODUCTION, WHICH COULD PREVENT US FROM SUCCESSFULLY
COMMERCIALIZING OUR PRODUCTS AND FROM BEING PROFITABLE.
   
    
    The timing of our receipt of any marketing approvals, the terms of any approval and the
countries in which approvals are obtained;
    
    The safety, efficacy and ease of administration of our products;
    
    The competitive pricing of our products;
    
    The success of our education and marketing programs;
    
    The sales and marketing efforts of competitors; and
    
    The availability and amount of government and third-party payor reimbursement.
 26




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ACQUISITIONS PRESENT MANY RISKS, AND WE MAY NOT REALIZE THE ANTICIPATED FINANCIAL AND STRATEGIC
GOALS FOR ANY SUCH TRANSACTIONS.
  
    
    We may find that the acquired company or assets do not further our business strategy, or
that we overpaid for the company or assets, or that economic conditions change, all of which
may generate a future impairment charge;
    
    We may have difficulty integrating the operations and personnel of the acquired business,
and may have difficulty retaining the key personnel of the acquired business;
    
    We may have difficulty incorporating the acquired technologies;
    
    We may encounter technical difficulties or failures with the performance of the acquired
technologies or drug products or may experience unfavorable results in the clinical studies
related to such technologies or products;
    
    We may face product liability risks associated with the sale of the acquired companys
products;
    
    Our ongoing business and managements attention may be disrupted or diverted by
transition or integration issues and the complexity of managing diverse locations;
    
    We may have difficulty maintaining uniform standards, internal controls, procedures and policies across locations;
    
    The acquisition may result in litigation from terminated employees or third-parties; and
    
    We may experience significant problems or liabilities associated with product quality, technology and legal contingencies.
   Risks Related to Regulation
 IF OUR PRECLINICAL TESTING AND CLINICAL TRIALS ARE NOT SUCCESSFUL, WE WILL NOT OBTAIN REGULATORY
APPROVAL FOR COMMERCIAL SALE OF OUR PRODUCT CANDIDATES.
   27




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
    
    Ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;
    
    Delays in enrolling patients and volunteers into clinical trials;
    
    Lower than anticipated retention rate of patients and volunteers in clinical trials;
    
    Negative or inconclusive results of clinical trials or adverse medical events during a
clinical trial could cause a clinical trial to be repeated or a program to be terminated,
even if other studies or trials related to the program are successful;
    
    Insufficient supply or deficient quality of drug candidate materials or other materials
necessary for the conduct of our clinical trials;
    
    Serious and unexpected drug-related side-effects experienced by participants in our clinical trials; or
    
    The placement of a clinical trial on hold.
 OUR PRODUCT CANDIDATES ARE SUBJECT TO RIGOROUS REGULATORY REVIEW AND, EVEN IF APPROVED, REMAIN
SUBJECT TO EXTENSIVE REGULATION.
  28




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
    
    Regulatory approvals may impose significant limitations on the uses for which any
approved products may be marketed;
    
    Any marketed product and its manufacturer are subject to periodic reviews and audits, and
any discovery of previously unrecognized problems with a product or manufacturer could
result in suspension or limitation of approvals;
    
    Changes in existing regulatory requirements, or the enactment of additional regulations
or statutes, could prevent or affect the timing of our ability to achieve regulatory
compliance. Federal and state laws, regulations and policies may be changed with possible
retroactive effect, and how these rules actually operate can depend heavily on
administrative policies and interpretation over which we have no control, and we may possess
inadequate experience to assess their full impact upon our business; and
    
    The approval may impose significant restrictions on the indicated uses, conditions for
use, labeling, advertising, promotion, marketing and/or production of such product, and may
impose ongoing requirements for post-approval studies, including additional research and
development and clinical trials.
 OUR PRODUCTS COULD BE SUBJECT TO RESTRICTIONS OR WITHDRAWAL FROM THE MARKET AND WE MAY BE SUBJECT
TO PENALTIES IF WE FAIL TO COMPLY WITH REGULATORY REQUIREMENTS, OR IF WE EXPERIENCE UNANTICIPATED
PROBLEMS WITH OUR PRODUCTS, WHEN AND IF ANY OF THEM ARE APPROVED.
  
    
    Restrictions on such products, manufacturers or manufacturing processes;
    
    Warning letters;
    
    Withdrawal of the products from the market;
 29




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
    
    Refusal to approve pending applications or supplements to approved applications that we submit;
    
    Recall;
    
    Fines;
    
    Suspension or withdrawal of regulatory approvals;
    
    Refusal to permit the import or export of our products;
    
    Product seizure; and
    
    Injunctions or the imposition of civil or criminal penalties.
 FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WOULD PREVENT US FROM MARKETING OUR
PRODUCTS ABROAD.
  FOREIGN GOVERNMENTS TEND TO IMPOSE STRICT PRICE CONTROLS WHICH MAY ADVERSELY AFFECT OUR REVENUES,
IF ANY.
  Risks Related to our Intellectual Property
 IF WE ARE UNABLE TO SECURE ADEQUATE PATENT PROTECTION FOR OUR TECHNOLOGIES, THEN WE MAY NOT BE
ABLE TO COMPETE EFFECTIVELY AS A BIOTECHNOLOGY COMPANY.
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
    
    Our ability to protect our technologies could be delayed or negatively affected if the
United States Patent and Trademark Office, or USPTO, requires additional experimental
evidence that our technologies work;
    
    Our competitors may develop similar technologies or products, or duplicate any technology developed by us;
    
    Our competitors may develop products which are similar to ours but which do not infringe our patents or products;
    
    Our competitors may successfully challenge one or more of our patents in an interference or litigation proceeding;
    
    Our patents may infringe the patents or rights of other parties who may decide not to
grant a license to us. We may have to change our products or processes, pay licensing fees
or stop certain activities because of the patent rights of third parties which could cause
additional unexpected costs and delays;
    
    Patent law in the fields of healthcare and biotechnology is still evolving and future
changes in such laws might conflict with our existing and future patent rights, or the
rights of others;
    
    Our collaborators, employees and consultants may breach the confidentiality agreements
that we enter into to protect our trade secrets and proprietary know-how. We may not have
adequate remedies for such breach; and
    
    There may be disputes as to the ownership of technological information developed by
consultants, scientific advisors or other third parties which may not be resolved in our
favor.
 WE IN-LICENSE A SIGNIFICANT PORTION OF OUR INTELLECTUAL PROPERTY AND IF WE FAIL TO COMPLY WITH OUR
OBLIGATIONS UNDER ANY OF THE RELATED AGREEMENTS, WE COULD LOSE LICENSE RIGHTS THAT ARE NECESSARY
TO DEVELOP OUR PRODUCT CANDIDATES.
   IF WE BECOME INVOLVED IN PATENT LITIGATION OR OTHER PROCEEDINGS RELATED TO A DETERMINATION OF
RIGHTS, WE COULD INCUR SUBSTANTIAL COSTS AND EXPENSES, SUBSTANTIAL LIABILITY FOR DAMAGES OR BE
REQUIRED TO STOP OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS.
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CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT DISCLOSURE OF
TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.
  Risks Related to our Dependence on Third Parties
 IF ANY COLLABORATOR TERMINATES OR FAILS TO PERFORM ITS OR THEIR OBLIGATIONS UNDER AGREEMENTS WITH
US, THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES COULD BE DELAYED OR
TERMINATED.
   
    
    Larry I. Benowitz, Ph.D., Director, Laboratories for Neuroscience Research in
Neurosurgery, Childrens Hospital, Boston; Associate Professor of Neurosurgery, Harvard
Medical School.
    
    Joseph R. Bianchine, M.D., Ph.D., F.A.C.P., F.A.C.C.P., Scientific Advisory Board
Member, Boston Life Sciences, Inc.; former Senior Scientific Advisor, Schwarz Pharma AG.
    
    Zhigang He, Ph.D., BM, Research Associate, Department of Neurology, Childrens Hospital
Boston; Associate Professor of Neurology, Department of Neurology, Harvard Medical School.
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
    
    Robert S. Langer, Jr. Sc.D., Director, Boston Life Sciences, Inc., Institute Professor of
Chemical and Biomedical Engineering, Massachusetts Institute of Technology.
    
    Peter Meltzer, Ph.D., President, Organix, Inc., Woburn, MA.
    
    
    Childrens Hospital in Boston, Massachusetts where certain of our collaborating
scientists perform their research efforts;
    
    Harvard Medical School in Boston, Massachusetts where certain of our collaborating
scientists perform their research efforts;
    
    MDS Nordion in Vancouver, British Colombia which manufactures the SPECT ALTROPANE
molecular imaging agent;
    
    Molecular Neuroimaging, Inc. in New Haven, Connecticut which is optimizing our imaging
protocol for commercial use; and
    
    Organix in Woburn, Massachusetts which provides non-radioactive ALTROPANE for FDA
mandated studies and synthesizes our compounds for the treatment of PD and for axon
regeneration.
     IF WE ARE UNABLE TO MAINTAIN OUR KEY WORKING RELATIONSHIPS WITH OUR LICENSORS, INCLUDING BIOAXONE,
HARVARD AND ITS AFFILIATES AND CMCC, WE MAY NOT BE SUCCESSFUL SINCE SUBSTANTIALLY ALL OF OUR
CURRENT TECHNOLOGIES WERE LICENSED FROM SUCH LICENSORS.
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
    
    CETHRIN compositions and methods of use;
    
    ALTROPANE molecular imaging agent compositions and methods of use;
    
    Technetium-based molecular imaging agent compositions and methods of use;
    
    INOSINE methods of use; and
    
    DAT blocker compositions and methods of use.
   
    
    An initial licensing fee payment upon the execution of the agreement and annual license
maintenance fee;
    
    Reimbursement payments for all patent related costs incurred by the licensor, including
fees associated with the filing of continuation-in-part patent applications;
    
    Milestone payments as licensed technology progresses through each stage of development
(filing of IND, completion of one or more clinical stages and submission and approval of an
NDA); and
    
    Royalty payments on the sales of any products based on the licensed technology.
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IF WE ARE UNABLE TO ESTABLISH, MAINTAIN AND RELY ON NEW COLLABORATIVE RELATIONSHIPS, THEN WE MAY
NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES.
  
    
    We will be able to enter into such collaborations on economically feasible and otherwise
acceptable terms and conditions;
    
    Such collaborations will not require us to undertake substantial additional obligations
or require us to devote additional resources beyond those we have identified at present;
    
    Any of our collaborators will not breach or terminate their agreements with us or
otherwise fail to conduct their activities on time, thereby delaying the development or
commercialization of the technology for which the parties are collaborating; and
    
    The parties will not dispute the ownership rights to any technologies developed under
such collaborations.
 IF ONE OF OUR COLLABORATORS WERE TO CHANGE ITS STRATEGY OR THE FOCUS OF ITS DEVELOPMENT AND
COMMERCIALIZATION EFFORTS WITH RESPECT TO OUR RELATIONSHIP, THE SUCCESS OF OUR PRODUCT CANDIDATES
AND OUR OPERATIONS COULD BE ADVERSELY AFFECTED.
  
    
    The amount and timing of resources that our collaborators may devote to the product candidates;
    
    Our collaborators may experience financial difficulties;
    
    We may be required to relinquish important rights such as marketing and distribution rights;
    
    Should a collaborator fail to develop or commercialize one of our product candidates, we
may not receive any future milestone payments and will not receive any royalties for the
product candidate;
    
    Business combinations or significant changes in a collaborators business strategy may
also adversely affect a collaborators willingness or ability to complete its obligations
under any arrangement;
    
    A collaborator may not devote sufficient time and resources to any collaboration with us,
which could prevent us from realizing the potential commercial benefits of that
collaboration;
    
    A collaborator may terminate their collaborations with us, which could make it difficult
for us to attract new collaborators or adversely affect how we are perceived in the business
and financial communities; and
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
    
    A collaborator could move forward with a competing product candidate developed either
independently or in collaboration with others, including our competitors.
  Risks Related to Competition
 WE ARE ENGAGED IN HIGHLY COMPETITIVE INDUSTRIES DOMINATED BY LARGER, MORE EXPERIENCED AND BETTER
CAPITALIZED COMPANIES.
  
    
    Many of our potential competitors in the field of CNS research have significantly greater
experience than we do in completing preclinical and clinical testing of new pharmaceutical
products, the manufacturing and commercialization process, and obtaining FDA and other
regulatory approvals of products;
    
    Many of our potential competitors have products that have been approved or are in late
stages of development;
    
    Many of our potential competitors may develop products or other novel technologies that
are more effective, safer or less costly than any that we are developing;
    
    Many of our potential competitors have collaborative arrangements in our target markets
with leading companies and research institutions;
    
    The timing and scope of regulatory approvals for these products;
    
    The availability and amount of third-party reimbursement;
    
    The strength of our patent position;
    
    Many of our potential competitors are in a stronger financial position than us, and are
thus better able to finance the significant cost of developing, manufacturing and selling
new products; and
    
    Companies with established positions and prior experience in the pharmaceutical industry
may be better able to develop and market products for the treatment of those diseases for
which we are trying to develop products.
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IF WE ARE UNABLE TO COMPETE EFFECTIVELY, OUR PRODUCT CANDIDATES MAY BE RENDERED NONCOMPETITIVE OR
OBSOLETE.
  IF THIRD-PARTY PAYORS DO NOT ADEQUATELY REIMBURSE OUR CUSTOMERS FOR ANY OF OUR PRODUCTS THAT ARE
APPROVED FOR MARKETING, THEY MIGHT NOT BE ACCEPTED BY PHYSICIANS AND PATIENTS OR PURCHASED OR
USED, AND OUR REVENUES AND PROFITS WILL NOT DEVELOP OR INCREASE.
   
    
    Significant uncertainty exists as to the reimbursement status of newly approved health care products;
    
    Third-party payors are increasingly challenging the prices charged for medical products and services;
    
    Adequate insurance coverage and reimbursement may not be available to allow us to charge
prices for products which are adequate for us to realize an appropriate return on our
development costs. If adequate coverage and reimbursement are not provided for use of our
products, the market acceptance of these products will be negatively affected;
    
    Health maintenance organizations and other managed care companies may seek to negotiate
substantial volume discounts for the sale of our products to their members thereby reducing
our profit margins; and
    
    In recent years, bills proposing comprehensive health care reform have been introduced in
Congress that would potentially limit pharmaceutical prices and establish mandatory or
voluntary refunds. It is uncertain if any legislative proposals will be adopted and how
federal, state or private payors for health care goods and services will respond to any
health care reforms.
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MEDICARE PRESCRIPTION DRUG COVERAGE LEGISLATION AND FUTURE LEGISLATIVE OR REGULATORY REFORM OF THE
HEALTH CARE SYSTEM MAY AFFECT OUR ABILITY TO SELL OUR PRODUCT CANDIDATES PROFITABLY.
    WE HAVE LIMITED MANUFACTURING CAPACITY AND MARKETING INFRASTRUCTURE AND EXPECT TO BE HEAVILY
DEPENDENT UPON THIRD PARTIES TO MANUFACTURE AND MARKET APPROVED PRODUCTS.
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USE OF THIRD PARTY MANUFACTURERS MAY INCREASE THE RISK THAT WE WILL NOT HAVE ADEQUATE SUPPLIES OF
OUR PRODUCT CANDIDATES.
  
    
    Reliance on the third party for regulatory compliance and quality assurance;
    
    The possible breach of the manufacturing agreement by the third party; and
    
    The possible termination or nonrenewal of the agreement by the third party, based on its
own business priorities, at a time that is costly or inconvenient for us.
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Risks Related to Employees and Growth
 IF WE ARE UNABLE TO RETAIN OUR KEY PERSONNEL AND/OR RECRUIT ADDITIONAL KEY PERSONNEL IN THE
FUTURE, THEN WE MAY NOT BE ABLE TO OPERATE EFFECTIVELY.
   Risks Related to our Stock
 OUR STOCK PRICE MAY CONTINUE TO BE VOLATILE AND CAN BE AFFECTED BY FACTORS UNRELATED TO OUR
BUSINESS AND OPERATING PERFORMANCE.
  
    
    Announcements of technological innovations or new commercial products by our competitors or us;
    
    Announcements in the scientific and research community;
    
    Developments concerning proprietary rights, including patents;
    
    Delay or failure in initiating, conducting, completing or analyzing clinical trials or
problems relating to the design, conduct or results of these trials;
    
    Announcement of FDA approval or non-approval of our product candidates or delays in the FDA review process;
    
    Developments concerning our collaborations;
    
    Publicity regarding actual or potential medical results relating to products under development by our competitors or us;
    
    Failure of any of our product candidates to achieve commercial success;
    
    Our ability to manufacture products to commercial standards;
    
    Conditions and publicity regarding the life sciences industry generally;
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
    
    Regulatory developments in the United States and foreign countries;
    
    Changes in the structure of health care payment systems;
    
    Period-to-period fluctuations in our financial results or those of companies that are perceived to be similar to us;
    
    Departure of our key personnel;
    
    Future sales of our common stock;
    
    Investors perceptions of us, our products, the economy and general market conditions;
    
    Differences in actual financial results versus financial estimates by securities analysts and changes in those estimates; and
    
    Litigation.
 
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
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Item 6  Exhibits
 10.1+
    
    First Amendment, effective March 23, 2007, to License Agreement between the
Company and BioAxone Therapeutic Inc. dated December 28, 200610.2
    
    Third Amendment, effective April 1, 2007, to License Agreement between
President and Fellows of Harvard College and the Company effective as of
October 15, 199610.3
    
    Second Amendment, effective April 1, 2007, to License Agreement between
Organix, Inc. and the Company effective as of July 1, 200010.4
    
    Employment Agreement, dated April 16, 2007 between the Company and Frank Bobe10.5
    
    Third Amended and Restated Promissory Note (unsecured) in favor of Robert
Gipson dated March 22, 2007. Incorporated by reference to our current report
on Form 8-K filed March 28, 2007.10.6
    
    Second Amended and Restated Promissory Note (unsecured) in favor of Thomas
Gipson dated March 22, 2007. Incorporated by reference to our current report
on Form 8-K filed March 28, 2007.10.7
    
    Convertible Promissory Note Purchase Agreement (unsecured) dated March 22,
2007 among the Company and purchasers listed therein. Incorporated by
reference to our current report on Form 8-K filed March 28, 2007.31.1
    
    Certification of the Chief Executive Officer pursuant to Section 1350 of
Title 18, United States Code, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 1350 of
Title 18, United States Code, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 +
    
    Confidential treatment has been requested as to certain portions which have been filed
separately with the Securities and Exchange Commission. 43




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SIGNATURES
  BOSTON LIFE SCIENCES, INC
(Registrant)DATE: May 15, 2007
    /s/ Peter G. SavasPeter G. SavasChief Executive Officer
(Principal Executive Officer)DATE: May 15, 2007
    /s/      Kenneth L. Rice, Jr.Kenneth L. Rice, Jr.Executive Vice President Finance and Administration
And Chief Financial Officer
(Principal Financial and Accounting Officer) 44