##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-51314
 Winston Pharmaceuticals, Inc.
  Delaware
    
    30-0132755(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)100 North Fairway Drive, Suite 134 Vernon Hills, IL
    
    60061(Address of principal executive offices)
    
    (Zip Code)
 (847) 362-8200
 Securities registered under Section 12(b) of the Exchange Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $.001 par value per share
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  o Large Accelerated Filer
    
    o Accelerated Filer
    
    o Non-accelerated Filer
    
    þ Smaller reporting company
 Yes o No þ




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##### 



WINSTON PHARMACEUTICALS, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009
 INDEX
 PagePART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    16Item 1B. Unresolved Staff Comments
    
    
    16Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    16Item 4.
Removed and Reserved
    
    
    16PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    17Item 6. Selected Financial Data
    
    
    18Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 8. Financial Statements and Supplementary Data
    
    
    28Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    28Item 9A(T). Controls and Procedures
    
    
    28Item 9B. Other Information
    
    
    29PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    30Item 11. Executive Compensation
    
    
    33Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    37Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    40Item 14. Principal Accounting Fees and Services
    
    
    42PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    43Index to Financial Statements
    
    
    F-1Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 Item 1. Business
 Cautionary Note Regarding Forward Looking Statements
    Going Concern Audit Opinion
  Executive Overview
     1




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Pain Management Market
     Several trends are also expected to drive growth and create opportunities for new
products for pain management:
 Aging of the population
  Greater recognition of the importance of pain diagnosis and treatment
  Significant unmet medical needs in pain management
   2




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Shortcomings of Current Pain Management
  
    
    Insufficient efficacy. Opioids, the current standard of care for severe pain,
reduce pain less than 50 percent in a majority of situations. Neuropathic pain
is difficult to treat with existing analgesics because of the differing types of
nerves and organs involved in, and types of injuries causing, this kind of pain.
Neuropathic pain does not respond to treatment with NSAIDs and responds poorly
to treatment with opioids at doses that do not impair the ability of patients to
live reasonably active lifestyles.
 
    
    Lack of site specificity. Most analgesics, including opioids and NSAIDs, are
given orally or by intravenous infusion and thereby subject the patient to high
circulating concentrations of drug, even though most types of pain are
experienced in discrete parts of the body. Circulating drugs cause side effects
at parts of the body unrelated to the perception of pain. Although there are
currently means of delivering site-specific analgesia, such as by injection of
short-acting anesthetics into joints such as the ankle or knee, these techniques
are reserved to provide relatively short-term anesthesia prior to surgery and
are not appropriate for long-term pain relief.
 
    
    Occurrence of side effects.NSAIDs can cause gastrointestinal ulcers, with
between 10,000 and 20,000 patients dying each year from gastrointestinal
bleeding believed to be related to the use of NSAIDs. Use of opioids is
associated with nausea and vomiting in many patients. High-dose opioids cause
sedation and may also cause respiratory depression, or a decrease in the ability
to breathe spontaneously. Opioids used chronically can cause severe constipation
that leads many patients to stop using them, and opioids may sometimes cause
severe itching. Drugs used to treat neuropathic pain frequently cause sedation
and problems with coordination.
 
    
    Need for frequent dosing.Drugs used to treat neuropathic pain require
frequent dosing that makes their use inconvenient, often leading to reduced
patient compliance.
 
    
    Potential to cause physical dependence.Opioids, when used chronically, can
cause physical dependence. Fear of physical dependence often influences
clinicians to prescribe less than adequate doses of opioid analgesics. Similar
fears lead many patients to refuse opioid analgesics.
   3




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Winston Product Pipeline
    MARKETINGRIGHTS INPRODUCT/
    
    
    
    PRODUCT
    
    DEVELOPMENT
    
    NORTHCOMPOUND
    
    DOSAGE FORM
    
    INDICATION(S)
    
    STATUS IN U.S.
    
    AMERICACivamide
    
    Patch
    
    Postherpetic Neuralgia
    
    Phase III
    
    WinstonCivamide
    
    Nasal Spray
    
    Episodic Cluster Headache
PHN of Trigeminal Nerve
    
    Phase IIIPhase II
    
    WinstonWinstonDoxepin
    
    Nasal Spray
    
    Chronic Daily Headache
    
    Phase II
    
    WinstonCivamide
    
    Cream
    
    Osteoarthritis
    
    Phase III CompletedNDA 2010
    
    WinstonSanofi Aventis(Canada)OTHER PRODUCTSCivamide
    
    Capsule
    
    Crohns Disease
    
    Phase II
    
    WinstonCivamide
    
    Nasal Spray
    
    Keratoconjunctivitis Sicca
    
    Phase II
    
    Winston
  4




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Civamide
  
    
 
  5




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Civamide Patch
  ® ® ® ®
 
  6




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Civamide Patch Phase II
 Study WL-1001-04-03
 
 ® ®
 Civamide Nasal Spray
   7




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8




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Civamide Cream
 ®
  Table 1: TWA and Day 84 P-Values for Co-Primary Efficacy Variables in Favor of
CIVANEX Over Control Study WL-1001-05-01 (ITT Population)
 Primary Efficacy Variable
    
    TWA
    
    
    Day 84WOMAC® Pain Subscale
    
    
    0.0089
    
    
    
    0.0126WOMAC® Physical Function Subscale
    
    
    <0.0001
    
    
    
    0.0005Subject Global Evaluation
    
    
    0.0080
    
    
    
    0.0485
 *
    
    For the WOMAC® Pain and WOMAC® Physical Function Subscales,
these p-values correspond to treatment differences for Baseline scores >10 and,
>39, respectively, as a result of investigating the significant Baseline-by-Treatment
interaction. For SGE these p-values correspond to treatment differences for Baseline
scores ≤1(TWA) and 0 (Day 84).  Doxepin
 Doxepin Nasal Spray
    9




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Other Products
 Civamide Capsule
  
   10




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Civamide Nasal Spray
 ®
 Manufacturing and Raw Materials
   Commercialization Strategy
       11




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Trademark Name/Reg. No.
    
    Owner
    
    Filed (US)
    
    RegisteredCIVANEX2,729,437
    
    Winston Labs
    
    February 16, 1999
    
    June 24, 2003MICANOL3,283,446
    
    Winston Labs
    
    March 27, 2003
    
    August 21, 2007WINSTON LABORATORIES,The Pain Company2,856,161
    
    Winston Labs
    
    October 13, 1999
    
    June 22, 2004WINSTON LABORATORIESIllinois StateTrademark 73000
    
    Winston Labs
    
    
    
    August 13, 1993AXSAIN2,925,798
    
    Winston Labs
    
    November 14, 2002
    
    February 8, 2005ANTHRODERM
    
    Winston Labs
    
    February 1, 2010RHEUMODERM
    
    Winston Labs
    
    February 1, 2010CIVADERM
    
    Winston Labs
    
    February 1, 2010NEURODERM
    
    Winston Labs
    
    February 1, 2010DOLORAC
    
    Winston Labs
    
    November 10, 2009
  Competition
     12




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Competitive Advantages SummaryOur Product
    
    Indication
    
    Competitor Product(s)
    
    Our Competitive AdvantagesCivamide Patch
    
    Postherpetic Neuralgia
    
    Lyrica®
Neurontin®
Opiates 
Lidoderm® Patch
    
    No Systemic Side Effects or Drug Interactions 
Can be Used Adjunctively 
No Disposal Issues (as with
Lidoderm) 
Can be Bathed or Showered with (in Contrast to Lidoderm)Civamide NasalSpray
    
    Episodic Cluster
Headache
    
    None
    
    No Approved CompetitorTrigeminal PHN
    
    None
    
    No Systemic Side Effects or Drug InteractionsCivamideCapsule
    
    Crohns Disease
    
    Aminosalicylates (e.g. sulfasalazine, mesalamine); Oral corticosteroids; Biologic Therapies (e.g. adalimumab (Humira®),
infliximab (Remicade®))
    
    Targeted Unique Action No Systemic Side Effects or Drug InteractionsCivamideCream
    
    Osteoarthritis
    
    Oral NSAIDs (e.g. Mobic®, Naprosyn®) and COX2 Inhibitors (e.g. Celebrex®)
Topical NSAIDs (e.g. Volteran®)
    
    No Approved Competitor No Systemic Side Effects or Drug InteractionsDoxepin NasalSpray
    
    Chronic Daily 
Headache
    
    None
    
    No Approved Competitor No Systemic Side Effects or Drug Interactions
  Government Regulation
   13




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United States Government Regulation
    
    
    completion of preclinical laboratory tests, animal studies and formulation studies under the FDAs
good laboratory practices regulations;
    
    submission to the FDA of an Investigational New Drug, or IND, application for human clinical
testing, which must become effective before human clinical trials may begin;
    
    performance of adequate and well-controlled clinical trials to establish the safety and efficacy of
the product for each proposed indication;
    
    submission to the FDA of an NDA;
    
    satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which
the product is produced to assess compliance with current good manufacturing practice, or cGMP; and
    
    FDA review and approval of the NDA before any commercial marketing, sale or shipment of the product.
       14




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Foreign Regulation
     15




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Product Liability
  Executive Officers and Key Employees of the Registrant
  Human Resources
  Financial Information about Segments
  
 Item 1A. Risk Factors
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
   Item 4.
(Removed and Reserved)
  16




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PART II
 
 Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information
  For the Year Ended December 31, 2009:
 High
    
    
    LowFirst Quarter
    
    
    3.40
    
    
    
    0.25Second Quarter
    
    
    2.80
    
    
    
    0.25Third Quarter
    
    
    2.25
    
    
    
    0.45Fourth Quarter
    
    
    1.65
    
    
    
    0.28
 For the Year Ended December 31, 2008:
 High
    
    
    LowFirst Quarter
    
    
    1.50
    
    
    
    1.05Second Quarter
    
    
    1.25
    
    
    
    0.75Third Quarter
    
    
    1.09
    
    
    
    0.51Fourth Quarter
    
    
    1.00
    
    
    
    0.30
 Holders
  Dividends
  2009 Equity Compensation Plan Information
  Recent Sales of Unregistered Securities
   17




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Performance Graph
  
 Item 6. Selected Financial Data
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    Executive Overview
  ® ® ® ® ®
  18




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®
 £
     19




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
    
    all of the issued and outstanding capital stock of Winston Labs,
consisting of 23,937,358 shares of common stock, par value $0.001 per
share, 5,815,851 shares of the Winston Labs Series A Convertible
Preferred Stock, par value $0.001 per share (Winston Labs Series A
Preferred Stock), and 4,187,413 shares of the Winston Labs Series B
Convertible Preferred Stock, par value $0.001 per share (Winston Labs
Series B Preferred Stock), was exchanged for 422,518,545 shares of
our common stock, par value $0.001 per share (at an exchange ratio of
17.65101 shares of our common stock per share of Winston Labs common
stock), 101,849 shares of our Series A Preferred Stock and 73,332
shares of our Series B Preferred Stock (at an exchange ratio of
..01751238 shares of our preferred stock per share of Winston Labs
preferred stock);
    
    we assumed Winston Labss stock option plans;
    
    Winston Labss outstanding 1,643,750 options to purchase 1,643,750
shares of Winston Labss common stock were converted to options to
purchase 29,013,848 shares of our common stock; and
    
    outstanding warrants to purchase Winston Labs Series A Preferred Stock
were assumed by us and converted into the right to acquire, expiring
November 13, 2012, upon the exercise of such warrants, an aggregate of
71,672 shares of our Series A Preferred Stock at a price per share of
$49.09.
   ®
     20




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® ®
  21




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Critical Accounting Policies and Estimates
  Revenue Recognition
   Revenue Recognition
 Multiple Element Arrangements
   License Arrangements.
  22




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Research Services Arrangements
 Royalty Arrangements
  Research and development expenses
 Research and Development,
  Acquired contractual rights.
 Share-Based Compensation Expense
 Stock Compensation
  23




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Nature of Operating Expenses
   Effects of Inflation
  Results of Operations
    24




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For the year ended December 31, 2009 compared to the year ended December 31, 2008
 Year Ended December 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeREVENUESLicense Revenue
    
    $
    1,266,825
    
    
    $
    316,706
    
    
    $
    950,119
    
    
    
    300
    %Royalty Revenue
    
    
    127,762
    
    
    
    135,836
    
    
    
    (8,074
    )
    
    
    (6
    )%1,394,587
    
    
    
    452,542
    
    
    
    942,045
    
    
    
    208
    %EXPENSESResearch and development
    
    
    2,062,933
    
    
    
    3,496,150
    
    
    
    (1,433,217
    )
    
    
    (41
    )%General and administrative
    
    
    2,063,879
    
    
    
    2,182,012
    
    
    
    (118,133
    )
    
    
    (5
    )%Depreciation and amortization
    
    
    9,007
    
    
    
    8,651
    
    
    
    356
    
    
    
    4
    %Total Operating Expenses
    
    
    4,135,819
    
    
    
    5,686,813
    
    
    
    (1,550,994
    )
    
    
    (27
    )%Loss from Operations
    
    
    (2,741,232
    )
    
    
    (5,234,271
    )
    
    
    2,493,039
    
    
    
    (48
    )%Interest income
    
    
    10,487
    
    
    
    90,614
    
    
    
    (80,127
    )
    
    
    (88
    )%Other income
    
    
    75,429
    
    
    
    1,911
    
    
    
    73,518
    
    
    
    3,847
    %Other income (expenses)
    
    
    85,916
    
    
    
    92,525
    
    
    
    (6,609
    )
    
    
    (7
    )%Loss before income taxes
    
    
    (2,655,316
    )
    
    
    (5,141,746
    )
    
    
    2,486,430
    
    
    
    (48
    )%Income TaxesCurrent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (2,655,316
    )
    
    $
    (5,141,746
    )
    
    $
    2,486,430
    
    
    
    (48
    )%
 Revenues
   Research & Development Expenses
   25




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General and Administrative Expenses
  Interest Income
  Net Loss
  Liquidity and Capital Resources
     IncreaseDecember 31,
    
    
    (Decrease)
    
    
    December 31,2009
    
    
    During Period
    
    
    2008Cash and cash equivalents
    
    $
    1,562,848
    
    
    $
    (4,064,065
    )
    
    $
    5,626,913Net working capital
    
    $
    457,356
    
    
    $
    (2,734,246
    )
    
    $
    3,191,602
 Year Ended
    
    
    Change
    
    
    Year EndedDecember 31,
    
    
    Between
    
    
    December 31,2009
    
    
    Periods
    
    
    2008Net cash used in operating activities
    
    $
    (4,198,636
    )
    
    $
    (1,136,416
    )
    
    $
    (3,062,220
    )Net cash provided by (used in) investing activities
    
    
    141
    
    
    
    16,475
    
    
    
    (16,334
    )Net cash provided by financing activities
    
    
    134,430
    
    
    
    (4,089,426
    )
    
    
    4,223,856Net increase (decrease) in cash and cash equivalents
    
    $
    (4,064,065
    )
    
    $
    (5,209,367
    )
    
    $
    1,145,302
  26




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Operating activities.
 Investing activities.
 ® ® ®
 Financing activities.
      27




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Contractual Obligations
 Contractual Obligations
    
    Total
    
    
    Less than 1 yearOperating Lease Obligations
    
    $
    3,000
    
    
    $
    3,000
   Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
  
 Item 9A(T). Controls and Procedures
 Disclosure Controls and Procedures
  28




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Managements Annual Report on Internal Control Over Financial Reporting.
 Internal
Control Integrated Framework
  Internal Control Over Financial Reporting
 
 Item 9B. Other Information
   29




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Management
   Name
    
    Age
    
    Position
    
    First Elected
    
    
    Term ExpiresJoel E. Bernstein, M.D.
    
    67
    
    President and Chief Executive Officer; Director
    
    
    2008
    
    
    
    2010Scott B. Phillips, M.D.
    
    49
    
    Senior Vice President, Scientific Affairs; Director
    
    
    2008
    
    
    
    2010David Starr
    
    40
    
    Vice President, Chief Financial Officer, Secretary
    
    
    
    
    
    
    Robert A. Yolles
    
    69
    
    Director, Audit Committee Chair,  Chairman of the Board
    
    
    2008
    
    
    
    2010Glenn L. Halpryn
    
    49
    
    Director
    
    
    2008
    
    
    
    2010Curtis Lockshin, Ph.D.
    
    49
    
    Director
    
    
    2006
    
    
    
    2010Neal S. Penneys, M.D., Ph.D.
    
    68
    
    Director, Audit Committee Member
    
    
    2008
    
    
    
    2010Subbarao Uppaluri, Ph.D.
    
    60
    
    Director, Audit Committee Member
    
    
    2008
    
    
    
    2010
 Executive Officers
 Joel E. Bernstein, M.D.,
 Scott B. Phillips, M.D.,
  30




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David Starr
 Outside Directors
 Robert A. Yolles, J.D
 Glenn L Halpryn
 Curtis Lockshin , Ph.D.
 Neal S. Penneys, M.D., Ph.D.
 Subbarao Uppaluri, Ph.D.,
  31




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Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Business Conduct and Ethics
  Stockholder Communications with the Board of Directors
    Audit Committee
  
    
    appointing, approving the compensation of, and assessing the independence of the Companys
independent auditors;
    
    overseeing the work of the Companys independent auditors, including through the receipt and
consideration of certain reports from the independent auditors;
  32




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
    
    reviewing and discussing with management and the independent auditors the Companys annual and
quarterly financial statements and related disclosures;
    
    coordinating the Board of Directors oversight of the Companys internal control over financial
reporting, disclosure controls and procedures and code of business conduct and ethics;
    
    establishing procedures for the receipt and retention of accounting related complaints and concerns;
    
    meeting independently with the Companys independent auditors and management; and
    
    preparing the audit committee report required by SEC rules.
  
 Item 11. Executive Compensation
 Summary Compensation Table
  Option
    
    
    All Other
    
    
    TotalName and Principal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Compensation
    
    
    CompensationPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)Joel E. Bernstein, M.D.
    
    
    2009
    
    
    
    265,307
    
    
    
    
    
    
    
    218,000
    
    
    
    23,593
    
    
    
    506,900President and Chief
    
    
    2008
    
    
    
    242,000
    
    
    
    25,000
    
    
    
    
    
    
    
    23,570
    
    
    
    290,570Executive Officer of
the Company and;
Director of the
CompanyScott B. Phillips, M.D.
    
    
    2009
    
    
    
    250,000
    
    
    
    
    
    
    
    109,000
    
    
    
    22,588
    
    
    
    381,588Senior Vice President,
    
    
    2008
    
    
    
    221,000
    
    
    
    14,500
    
    
    
    
    
    
    
    20,840
    
    
    
    256,340Scientific Affairs of
the Company and;
Director of the
CompanyDavid Starr, Vice
    
    
    2009
    
    
    
    200,000
    
    
    
    
    
    
    
    163,500
    
    
    
    11,530
    
    
    
    375,030President, Chief
    
    
    2008
    
    
    
    200,000
    
    
    
    14,500
    
    
    
    
    
    
    
    3,883
    
    
    
    218,383Financial Officer,
Secretary of the
Company and; Director
of Winston
 (1)
    
    Represents aggregate grant date fair value pursuant to ASC Topic 718 for the respective year
for restricted stock options granted as long term incentive pursuant to the Companys Omnibus
Incentive Plan. No options were granted to the above officers for fiscal year 2008.(2)
    
    Dr. Bernstein, Dr. Phillips and Mr. Starr received additional compensation in 2009 and 2008,
comprised of the following components: 401(k) matching contributions in 2009 of $10,612,
$10,000, and $0, respectively and in 2008 of $9,665, $9,405, and $0; insurance premium
payments in 2009 in amounts of $12,981, $12,588, and $11,530, respectively, and in 2008 in
amounts of $13,905, $11,435, and $3,883, respectively.  33




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Outstanding Equity Awards at Fiscal Year-End
  Number ofSecuritiesUnderlyingUnexercisedOptions
    
    
    Option
    
    
    Option(#)
    
    
    Exercise
    
    
    ExpirationName
    
    Exercisable
    
    
    Price ($)
    
    
    DateJoel E. Bernstein, M.D.
    
    
    661,913
    
    
    
    0.37
    
    
    
    4/6/2010100,000
    
    
    
    1.53
    
    
    
    4/7/2019Scott B. Phillips, M.D.
    
    
    205,193
    
    
    
    0.33
    
    
    
    12/10/2012231,670
    
    
    
    0.33
    
    
    
    1/12/2014661,913
    
    
    
    0.34
    
    
    
    4/6/201550,000
    
    
    
    1.53
    
    
    
    4/7/2019David Starr
    
    
    75,000
    
    
    
    1.53
    
    
    
    4/7/2019
 Narrative Disclosure to Summary Compensation Table; Additional Narrative Disclosure
 Employment and Consulting Agreements; Termination, Severance and Change-in-Control
Matters
  Joel E. Bernstein, M.D. Employment Agreement
    
    
    the base salary in effect on the date of termination for the twelve months following termination;
    
    life insurance benefits, to the same extent as provided to similarly
situated employees, for the twelve months following termination;
    
    medical insurance continuation coverage under COBRA up to twelve months following termination; and
    
    all benefits not fully vested will vest on the date of termination.
  34




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##### Table of Contents



Cause provided provided further
 Disability provided
 Scott B. Phillips, M.D.  Severance Agreements
     35




---



##### Table of Contents



(i)
    
    an intentional act of fraud, embezzlement or theft in connection with Dr.
Phillips duties or in the course of his employment with Winston Labs or a
subsidiary thereof;(ii)
    
    intentional wrongful damage to the property of Winston Labs or a subsidiary thereof;(iii)
    
    intentional wrongful disclosure of secret processes or confidential
information of Winston Labs or a subsidiary thereof; or(iv)
    
    intentional wrongful engagement by Dr. Phillips in the management of
any business enterprise that engages in substantial and direct
competition with Winston Labs and such enterprises sales of any product
or service competitive with any of Winston Labss products or services
amounted to 10% of the net sales of such enterprise and of Winston Labs
for their respective most recently-completed fiscal years.
 Compensation of Directors
  Feesearned orPaid in
    
    
    OptionCash
    
    
    Awards
    
    
    TotalName
    
    ($)
    
    
    ($)(1)
    
    
    ($)Robert A. Yolles
    
    
    5,000
    
    
    
    43,830
    
    
    
    48,830Glenn L. Halpryn
    
    
    5,000
    
    
    
    43,830
    
    
    
    48,830Curtis Lockshin Ph.D.
    
    
    5,000
    
    
    
    40,178
    
    
    
    45,178Neal S. Penneys, M.D., Ph.D.
    
    
    5,000
    
    
    
    40,178
    
    
    
    45,178Subbarao Uppaluri, Ph.D.
    
    
    5,000
    
    
    
    40,178
    
    
    
    45,178
 (1)
    
    Represents aggregate grant date fair value pursuant to ASC Topic 718
for the respective year for restricted stock options granted as long term incentive
pursuant to the Companys Omnibus Incentive Plan.  Compensation Committee Interlocks and Insider participation; Compensation Committee
Report
 Regulation S-K.
  36




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##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 2009 Equity Compensation Plan Information
 Number ofsecuritiesremainingavailable forfuture issuanceNumber of
    
    
    Weighted
    
    
    undersecurities to
    
    
    average
    
    
    equitybe issued
    
    
    exercise price
    
    
    compensationupon exercise
    
    
    of
    
    
    plansof outstanding
    
    
    outstanding
    
    
    (excludingoptions,
    
    
    options,
    
    
    securitieswarrants and
    
    
    warrants and
    
    
    reflected inrights
    
    
    rights
    
    
    column (a)(a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by security holders
    
    
    3,041,985
    
    
    $
    0.50
    
    
    
    6,666,070
        37




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##### Table of Contents



Voting Securities and Principal Stockholders
     
    
    persons who own beneficially more than 5% of our outstanding voting securities,
    
    our directors,
    
    named executive officers, and
    
    all of our directors and officers as a group.
  38




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##### Table of Contents



Management and Directors:
    
    Shares Beneficially Owned (14)
    
    
    Percentage OwnershipJoel E. Bernstein, M.D. (1)
    
    
    26,498,432
    
    
    
    29.63
    %Scott B. Phillips, M.D. (2)
    
    
    1,810,433
    
    
    
    2.02
    %David Starr (3)
    
    
    75,000
    
    
    
    *Curtis Lockshin, Ph.D. (4)
    
    
    28,750
    
    
    
    *Robert A. Yolles (5)
    
    
    398,665
    
    
    
    *Glenn L. Halpryn (6)
    
    
    384,781
    
    
    
    *Neal Penneys, M.D., Ph.D. (7)
    
    
    439,362
    
    
    
    *Subbarao Uppaluri, Ph.D. (8)
    
    
    326,538
    
    
    
    *All officers and directors
As a group (8 people)
    
    
    29,961,961
    
    
    
    33.51
    %
 5% Stockholders
    
    Shares Beneficially Owned
    
    
    Percentage OwnershipFrost Gamma Investments (9), (10)
    
    
    26,574,659
    
    
    
    29.72
    %Jeffrey Bernstein (11)
    
    
    5,170,824
    
    
    
    5.78
    %David Bernstein (12)
    
    
    4,982,129
    
    
    
    5.57
    %Rebecca Zelken (13)
    
    
    4,983,829
    
    
    
    5.57
    %
 *
    
    Less than 1%.(1)
    
    Includes 761,913 shares of common stock underlying options. Also includes 12,709,386 shares
of common stock that are beneficially owned by Dr. Bernsteins wife, with respect to which
Dr. Bernstein disclaims any beneficial ownership.(2)
    
    Includes 1,148,776 shares of common stock underlying options.(3)
    
    Represents 75,000 shares of common stock underlying options.(4)
    
    Includes 27,500 shares of common stock underlying options.(5)
    
    Includes 311,315 shares of common stock underlying options. Also includes 4,350 shares of common stock that
are beneficially owned by Mr. Yolless wife, with respect to which Mr. Yolles disclaims any beneficial ownership.(6)
    
    Includes 30,000 shares of common stock underlying options.(7)
    
    Includes 27,500 shares of common stock underlying options.(8)
    
    Includes 27,500 shares of common stock underlying options and 89,589 shares of common stock underlying
warrants.(9)
    
    Includes 8,779,797 shares of common stock underlying warrants.(10)
    
    As the sole trustee of the Frost Gamma Investment Trust, Dr. Phillip Frost may be deemed the beneficial owner
of all shares owned by the trust by virtue that his power to vote or direct the vote of such shares or to dispose or
direct the disposition of such shares owned by the trust.  39




---



##### Table of Contents



(11)
    
    Includes 250 and 1,500 shares of common stock that are beneficially owned by Mr. Bernsteins
wife and his children, respectively, with respect to which, Mr. Bernstein disclaims any beneficial
ownership. Jeffrey Bernstein is the son of Dr. Joel E. Bernstein.(12)
    
    Includes 250 and 500 shares of common stock that are beneficially owned by Mr. Bernsteins wife
and his child, respectively, with respect to which, Mr. Bernstein disclaims any beneficial ownership.
David Bernstein is the son of Dr. Joel E. Bernstein.(13)
    
    Includes 950 and 1,500 shares of common stock that are beneficially owned by Mrs. Zelkens
husband and her children, respectively, with respect to which, Mrs. Zelken disclaims any beneficial
ownership. Rebecca Zelken is the daughter of Dr. Joel E. Bernstein.(14)
    
    On February 12, 2010, Pharmaceutical Financial Syndicate, LLC (PFS), whose members include Dr.
Joel E. Bernstein, the President and Chief Executive Officer and Robert A. Yolles and Neal S. Penneys,
directors of the Company, executed a letter of intent (LOI) with Frost Gamma Investments Trust,
Subbarao Uppaluri, a director of the company, and certain other shareholders of the Company
(collectively, the Frost Group), to acquire 100% of the Companys capital stock (the Acquisition)
beneficially owned by all of the members of the Frost Group consisting of an aggregate of 18,399,271
outstanding shares of common stock and warrants to purchase an aggregate of 8,958,975 shares of common
stock (collectively, the Acquired Securities). As of the date of this filing, the Acquisition has
not taken place and its effect on the shares beneficially owned is not reflected in the table above. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Person Transactions
 PFS Acquisition
   Opko License
   40




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##### Table of Contents



Elorac License
 £
 Gideon Pharmaceuticals, Inc.
  Sirius (DUSA) License
 ®
  Packers-Pine Corporation
   41




---



##### Table of Contents



Consulting Agreement with Jeffrey Bernstein
  Independence of Directors
  
 Item 14. Principal Accounting Fees and Services
 Pre-Approval Policies and Procedures
  de minimis
 Audit Fees
  Audit-Related Fees
   42




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##### Table of Contents



Tax Fees
  All Other Fees
  
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
  (1)
    
    Financial Statements: For a list of financial statements
which are filed as part of this Form 10-K, See Item 8.
Financial Statements and Supplementary Data on Page 28.(2)
    
    Exhibits
 2.1
    
    
    Merger Agreement and Plan of Reorganization
dated as of November 13, 2007 by and among
Getting Ready Corporation, Winston
Laboratories, Inc. and Winston Acquisition
Corp. (filed as Exhibit 2.1 to the Companys
Current Report on Form 8-K dated November
13, 2007 and incorporated herein by
reference).2.2
    
    
    First Amendment to Merger Agreement and Plan
of Reorganization dated as of May 30, 2008
by and among Winston Laboratories, Inc., a
Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and
Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the
Companys Current Report on Form 8-K dated
May 30, 2008 and incorporated herein by
reference).2.3
    
    
    Second Amendment to Merger Agreement and
Plan of Reorganization dated as of June 23,
2008 by and among Winston Laboratories,
Inc., a Delaware corporation, Getting Ready
Corporation, a Delaware corporation, and
Winston Acquisition Corp., a Delaware
corporation (filed as Exhibit 2.1 to the
Companys Current Report on Form 8-K dated
June 23, 2008 and incorporated herein by
reference).3.1
    
    
    Certificate of Incorporation (filed as
Exhibit 3.1A to the Companys Registration
Statement on Form SB-2 dated September 15,
2004 and incorporated herein by reference).3.2
    
    
    Certificate of Amendment of Certificate of
Incorporation (filed as Exhibit 3.1B to the
Companys Registration Statement on
Form SB-2 dated September 15, 2004 and
incorporated herein by reference).3.3
    
    
    Certificate of Amendment of Certificate of
Incorporation (filed as Exhibit 1 to the
Companys Form PRE14C dated December 7, 2007
and incorporated herein by reference).3.4
    
    
    Certificate of Amendment to Certificate of
Incorporation (filed as Annex A to the
Companys DEF 14C dated September 22, 2008
and incorporated herein by reference).3.5
    
    
    Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred
Stock of Getting Ready Corporation (filed as
Exhibit 3.5 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).3.6
    
    
    Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred
Stock of Getting Ready Corporation (filed as
Exhibit 3.6 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).3.7
    
    
    Certificate of Amendment to Certificate of
Incorporation (form of amendment filed in
the Companys DEF 14C dated October 22, 2008
and incorporated herein by reference).3.8
    
    
    Certificate of Amendment to Certificate of
Incorporation (form of amendment filed in
the Companys DEF 14C dated November 25,
2008 and incorporated herein by reference).
  43




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##### Table of Contents



3.9
    
    
    By-laws (filed as Exhibit 3.7 to the
Companys Current Report on Form 8-K as
filed with the SEC on October 1, 2008 and
incorporated herein by reference).4.1
    
    
    Form of Common Stock Certificate (filed as
Exhibit 4.1 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).4.2
    
    
    Form of Warrant to Purchase Series A
Convertible Preferred Stock (filed as
Exhibit 4.2 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).4.3
    
    
    Form of Lockup Agreement (filed as
Exhibit 4.3 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).10.1
    +
    
    License Agreement dated October 30, 2008 by
and between Winston Laboratories, Inc. and
sanofi-aventis Canada Inc. (filed as
Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein
by reference).10.2
    
    
    Voting Agreement dated as of September 25,
2008 between Getting Ready Corporation and
certain stockholders of the Company (filed
as Exhibit 10.1 to the Companys Current
Report on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).10.3
    
    
    Employment Agreement dated as of
September 25, 2008 between Getting Ready
Corporation and Joel E. Bernstein, M.D
(filed as Exhibit 10.2 to the Companys
Current Report on Form 8-K as filed with the
SEC on October 1, 2008 and incorporated
herein by reference).10.4
    
    
    Secrecy, Invention and Non-Competition
Agreement dated as of October 5, 2007 by and
between Winston Laboratories, Inc. and Joel
E. Bernstein, M.D. (filed as Exhibit 10.3 to
the Companys Current Report on Form 8-K as
filed with the SEC on October 1, 2008 and
incorporated herein by reference).10.5
    
    
    Employment Letter Agreement dated October 3,
2007 between Winston Laboratories, Inc. and
David Starr (filed as Exhibit 10.4 to the
Companys Current Report on Form 8-K as
filed with the SEC on October 1, 2008 and
incorporated herein by reference).10.6
    
    
    Secrecy, Invention and Non-Competition
Agreement dated as of October 3, 2007 by and
between Winston Laboratories, Inc. and David
Starr (filed as Exhibit 10.5 to the
Companys Current Report on Form 8-K as
filed with the SEC on October 1, 2008 and
incorporated herein by reference).10.7
    
    
    Severance Agreement dated as of October 8,
2003 between Winston Laboratories, Inc. and
Scott B. Phillips, M.D. (filed as
Exhibit 10.6 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).10.8
    
    
    General Severance Letter Agreement dated
January 26, 2006 between Winston
Laboratories, Inc. and Scott B. Phillips,
M.D. (filed as Exhibit 10.7 to the Companys
Current Report on Form 8-K as filed with the
SEC on October 1, 2008 and incorporated
herein by reference).10.9
    
    
    Secrecy, Invention and Non-Competition
Agreement dated as of October 5, 2007 by and
between Winston Laboratories, Inc. and Scott
B. Phillips, M.D. (filed as Exhibit 10.8 to
the Companys Current Report on Form 8-K as
filed with the SEC on October 1, 2008 and
incorporated herein by reference).10.10
    
    
    Consultation Agreement dated September 30,
2007 between Winston Laboratories, Inc. and
Jeffrey R. Bernstein, Ph.D. (filed as
Exhibit 10.9 to the Companys Current Report
on Form 8-K as filed with the SEC on
October 1, 2008 and incorporated herein by
reference).10.11
    
    
    Winston Pharmaceuticals Inc. Omnibus
Inventive Plan (filed as Exhibit 10.1 to the
Companys Current Report on Form 8-K dated
April 17, 2009 and incorporated herein by
reference).10.12
    
    
    Form of Nonqualified Stock Option Agreement
(filed as Exhibit 10.2 to the Companys
Current Report on Form 8-K dated April 17,
2009 and incorporated herein by reference).10.13
    
    
    Form of Nonqualified Stock Option Agreement
(filed as Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2009 and
incorporated herein by reference).
  44




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##### Table of Contents



10.14
    
    
    Letter of Intent Between Pharmaceutical
Financial Syndicate, LLC, Frost Gamma
Investments Trust, Subbarao Uppaluri, Steven
D. Rubin and Jane Hsiao, Ph.D. (filed as
Exhibit 10.1 to the Companys Current Report
on Form 8-K dated February 12, 2010 and
incorporated herein by reference).21.1
    *
    
    Subsidiaries of Winston Pharmaceuticals, Inc.31.1
    *
    
    Certification of the Companys President and
Chief Executive Officer, Joel E. Bernstein,
M.D., pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of the Companys Vice
President and Chief Financial Officer, David
Starr, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    *
    
    Certification of the Companys President and
Chief Executive Officer, Joel E. Bernstein,
M.D., pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    *
    
    Certification of the Companys Vice
President and Chief Financial Officer, David
Starr, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith.+
    
    Portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act
of 1934, amended, and the omitted material has been separately filed
with the Securities and Exchange Commission.  45




---



##### Table of Contents



SIGNATURES
  Dated: March 5, 2010
    
    Winston Pharmaceuticals, Inc.(Registrant)By:
    
    /s/ Joel E. Bernstein

Joel E. Bernstein, M.D.President and Chief Executive Officer
  Dated: March 5, 2010
    
    /s/ Joel E. Bernstein

Joel E. BernsteinPresident, Chief Executive Officer(Principal Executive Officer)Dated: March 5, 2010
    
    /s/ David Starr

David StarrVice President, Chief Financial Officer(Principal Accounting Officer andPrincipal Financial Officer)Dated: March 5, 2010
    
    /s/ Robert A. Yolles

Robert A. YollesDirector, Chairman of the Board
  46




---



##### Table of Contents



Dated: March
 5, 2010
    
    /s/ Glenn L. Halpryn

Glenn L. HalprynDirectorDated: March
 5, 2010
    
    /s/ Curtis Lockshin

Curtis LockshinDirectorDated: March
 5, 2010
    
    /s/ Neal S. Penneys

Neal S. PenneysDirectorDated: March
 5, 2010
    
    /s/ Scott B. Phillips

Scott B. Phillips, M.D.Senior Vice President,Clinical Affairs and DirectorDated: March
 5, 2010
    
    /s/ Subbarao Uppaluri

Subbarao UppaluriDirector
  47




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##### Table of Contents



Index to Financial Statements
 Winston Pharmaceuticals, Inc. and Subsidiaries
 PageAudited Financial Statements as of and for the Years Ended December 31, 2009 and 2008Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets
    
    F-3Consolidated Statements of Operations
    
    F-4Consolidated Statements of Stockholders Equity
    
    F-5Consolidated Statements of Cash Flows
    
    F-6Notes to Consolidated Financial Statements
    
    F-7
  F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
       /s/ McGladrey & Pullen, LLP

Chicago, IllinoisMarch
 5, 2010
  F-2




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2009 AND 2008
 December 31,
    
    
    December 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,562,848
    
    
    $
    5,626,913Accounts receivable
    
    
    15,653
    
    
    
    17,498Related party receivable
    
    
    22,395
    
    
    
    38,142Prepaid and other current assets
    
    
    43,944
    
    
    
    68,465Total current assets
    
    
    1,644,840
    
    
    
    5,751,018EQUIPMENT, net of accumulated depreciation of $141,433 at
December 31, 2009 and $161,907 at December 31, 2008
    
    
    13,760
    
    
    
    18,823INTANGIBLE ASSETS, NET
    
    
    17,455
    
    
    
    21,540TOTAL ASSETS
    
    $
    1,676,055
    
    
    $
    5,791,381LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    724,140
    
    
    $
    1,058,980Accrued expenses and other current liabilities
    
    
    146,638
    
    
    
    233,611Unearned revenue  current portion
    
    
    316,706
    
    
    
    1,266,825Total current liabilities
    
    
    1,187,484
    
    
    
    2,559,416Unearned revenue  long-term portion
    
    
    
    
    
    
    316,706Total liabilities
    
    
    1,187,484
    
    
    
    2,876,122Commitments and ContingenciesStockholders equityPreferred Stock, $.001 par value, 250,000,000 shares authorizedSeries A, Convertible 0 and 12,730 shares issued and
outstanding at December 31, 2009 and at December 31, 2008,
respectively
    
    
    
    
    
    
    13Series B, Convertible 0 and 9,157 shares issued and
outstanding at December 31, 2009 and December 31, 2008,
respectively
    
    
    
    
    
    
    9Common stock, $.001 par value, 900,000,000 shares authorized
77,408,893 and 55,106,364 shares issued and outstanding at
December 31, 2009 and December 31, 2008, respectively
    
    
    77,409
    
    
    
    55,106Additional paid-in capital
    
    
    49,794,260
    
    
    
    49,587,913Accumulated deficit
    
    
    (49,383,098
    )
    
    
    (46,727,782
    )Total stockholders equity
    
    
    488,571
    
    
    
    2,915,259TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,676,055
    
    
    $
    5,791,381
 See accompanying notes
  F-3




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31, 2009 and 2008
 2009
    
    
    2008REVENUELicense revenue
    
    $
    1,266,825
    
    
    $
    316,706Royalty revenue
    
    
    127,762
    
    
    
    135,8361,394,587
    
    
    
    452,542EXPENSESResearch and development
    
    
    2,062,933
    
    
    
    3,496,150General and administrative
    
    
    2,063,879
    
    
    
    2,182,012Depreciation and amortization
    
    
    9,007
    
    
    
    8,651Total operating expenses
    
    
    4,135,819
    
    
    
    5,686,813Loss from operations
    
    
    (2,741,232
    )
    
    
    (5,234,271
    )Interest income
    
    
    10,487
    
    
    
    90,614Other income
    
    
    75,429
    
    
    
    1,91185,916
    
    
    
    92,525Loss before income taxes
    
    
    (2,655,316
    )
    
    
    (5,141,746
    )Income TaxesCurrent
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (2,655,316
    )
    
    $
    (5,141,746
    )Loss per share, basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.10
    )Weighted average number of shares outstanding basic and diluted
    
    
    61,258,364
    
    
    
    53,422,158
 See accompanying notes
  F-4




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Years Ended December 31, 2009 and 2008
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Preferred Stock A
    
    
    Preferred Stock B
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity (Deficit)Balance at January 1, 2008
    
    
    52,814,818
    
    
    $
    52,814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,573,523
    
    
    $
    (41,586,036
    )
    
    $
    (959,699
    )Reclassification of Series A
Convertible Preferred Stock
(net of cost of $194,648)
    
    
    
    
    
    
    
    
    
    
    12,731
    
    
    $
    13
    
    
    
    
    
    
    
    
    
    
    
    4,805,339
    
    
    
    
    
    
    
    4,805,352Issuance of Series B
Convertible Preferred Shares
(net of cost of $3,211)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,166
    
    
    $
    9
    
    
    
    3,996,780
    
    
    
    
    
    
    
    3,996,789Merger with Getting Ready
Corporation (net of cost of
$250,000)
    
    
    2,291,612
    
    
    
    2,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233,615
    
    
    
    
    
    
    
    235,907Redemption of fractional shares
    
    
    (66
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (21,344
    )
    
    
    
    
    
    
    (21,344
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,141,746
    )
    
    
    (5,141,746
    )Balance at December 31, 2008
    
    
    55,106,364
    
    
    
    55,106
    
    
    
    12,730
    
    
    
    13
    
    
    
    9,157
    
    
    
    9
    
    
    
    49,587,913
    
    
    
    (46,727,782
    )
    
    
    2,915,259Issuance of common stock upon
exercise of stock options
    
    
    415,529
    
    
    
    416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,014
    
    
    
    
    
    
    
    134,430Conversion of Series A
Convertible Preferred Shares
and Series B Convertible
Preferred Shares to common
shares
    
    
    21,887,000
    
    
    
    21,887
    
    
    
    (12,730
    )
    
    
    (13
    )
    
    
    (9,157
    )
    
    
    (9
    )
    
    
    (21,865
    )
    
    
    
    
    
    
    Compensation with respect to
employee and non-employee
stock option grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94,198
    
    
    
    
    
    
    
    94,198Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,655,316
    )
    
    
    (2,655,316
    )Balance at December 31, 2009
    
    
    77,408,893
    
    
    $
    77,409
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    49,794,260
    
    
    $
    (49,383,098
    )
    
    $
    488,571
 See accompanying notes
  F-5




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2009 and 2008
 2009
    
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (2,655,316
    )
    
    $
    (5,141,746
    )Depreciation and amortization
    
    
    9,007
    
    
    
    8,651Stock option expense for non-employee directors and employees
    
    
    94,198
    
    
    
    Changes in:Accounts receivable
    
    
    17,592
    
    
    
    9,145Prepaid and other current assets
    
    
    24,521
    
    
    
    (51,552
    )Other assets
    
    
    
    
    
    
    4,314Unearned revenue
    
    
    (1,266,825
    )
    
    
    1,583,531Accounts payable
    
    
    (334,840
    )
    
    
    554,920Accrued expenses and other current liabilities
    
    
    (86,973
    )
    
    
    (29,483
    )Net cash used in operating activities
    
    
    (4,198,636
    )
    
    
    (3,062,220
    )Cash flows from investing activitiesProceeds from sale of trademarks
    
    
    1,154
    
    
    
    Purchases of equipment
    
    
    (738
    )
    
    
    (14,604
    )Purchases of intangibles
    
    
    (275
    )
    
    
    (1,730
    )Net cash provided by (used in) investing activities
    
    
    141
    
    
    
    (16,334
    )Cash flows from financing activitiesIssuance of common stock upon exercise of stock options
    
    
    134,430
    
    
    
    Issuance of preferred stock, net of costs
    
    
    
    
    
    
    3,996,789Cash received upon consummation of merger
    
    
    
    
    
    
    477,067Cost incurred in connection with merger
    
    
    
    
    
    
    (250,000
    )Net cash provided by financing activities
    
    
    134,430
    
    
    
    4,223,856NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (4,064,065
    )
    
    
    1,145,302Cash and cash equivalents at beginning of year
    
    
    5,626,913
    
    
    
    4,481,611Cash and cash equivalents at end of year
    
    $
    1,562,848
    
    
    $
    5,626,913Supplemental disclosures of cash flow informationInterest paid
    
    $
    
    
    
    $
    Income taxes paid
    
    $
    
    
    
    $
    Supplemental disclosures of non-cash investing and financing informationAccrual for redemption of fractional shares
    
    $
    
    
    
    $
    21,344
  See accompanying notes
  F-6




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2000 and 2008
 NOTE 1  COMPANY FORMATION, BACKGROUND AND ABILITY TO CONTINUE AS A GOING CONCERN
 Organization
   ® ® ® ® ®
   
    
    all of the issued and outstanding capital stock of Winston Labs,
consisting of 23,937,358 shares of common stock, par value $0.001 per
share, 5,815,851 shares of the Winston Labs Series A Convertible
Preferred Stock, par value $0.001 per share (Series A Preferred
Stock), and 4,187,413 shares of the Winston Labs Series B Convertible
Preferred Stock, par value $0.001 per share (Series B Preferred
Stock), was exchanged for 422,518,545 shares of the GRCs common
stock, par value $0.001 per share (at an exchange ratio of 17.65101
shares of GRC common stock per share of Winston Labs common stock),
101,849 shares of the GRCs Series A and 73,332 shares of the GRCs
Series B Preferred Stock (at an exchange ratio of .01751238 shares of
GRC preferred stock per share of Winston Labs preferred stock);
    
    GRC assumed Winston Labs stock option plans;
    
    Winston Labs outstanding 1,643,750 options to purchase 1,643,750
shares of Winston Labs common stock were converted to options to
purchase 29,013,848 shares of GRCs common stock; and
    
    all outstanding warrants to purchase Winston Labs Series A Preferred
Stock were assumed by GRC and converted into the right to acquire,
expiring November 13, 2012, upon the exercise of such warrants, an
aggregate of 71,672 shares of GRCs Series A Preferred Stock at a
price per share of $49.09.
  F-7




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Generally Accepted Accounting Principle
 NOTE 2  SUMMARY OF ACCOUNTING POLICIES
 Reverse Stock Split
   F-8




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  Equipment
  Impairment of Long-Lived Assets
 Intangibles-Goodwill and Other
 Fair Value of Financial Instruments
  Fair Value Measurements and Disclosures,
  F-9




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Fair Value Measurements at December 31, 2008QuotedPrices inActive
    
    
    SignificantMarkets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssets:Mutual fund
    
    $
    1,961,059
    
    
    $
    
    
    
    $
    
    
    
    $
    1,961,059Total
    
    $
    1,961,059
    
    
    $
    
    
    
    $
    
    
    
    $
    1,961,059
  Revenue recognition
    F-10




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revenue Recognition
 Multiple Element Arrangements
   License Arrangements.
   Research Services Arrangements
  F-11




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Royalty Arrangements
  Research and Development Expenses
 Research and Development,
  Acquired contractual rights
  Stock-Based Compensation
 Stock Compensation
 Income Taxes
  Income Taxes
  F-12




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Reclassification
  Segment Information
  Subsequent Events
 Subsequent Events
 Recent Accounting Pronouncements
  Noncontrolling Interests in
Consolidated Financial Statements
     F-13




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revenue Recognition (Topic 605)-
Multiple-Deliverable Revenue Arrangements Revenue Recognition
 NOTE 3  EARNINGS PER SHARE
  Fiscal 2009
    
    
    Fiscal 2008Denominator:Weighted average common shares outstanding  basic and diluted
    
    
    61,258,364
    
    
    
    53,422,158Loss per common share  basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.10
    )
  NOTE 4  TECHNOLOGY LICENSE AGREEMENTS
 ® ®
  £
  F-14




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 5  RELATED-PARTY TRANSACTIONS
      F-15




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   NOTE 6  INTANGIBLE ASSETS
  2009
    
    
    2008Patents and trademarks
    
    $
    41,426
    
    
    $
    42,305Less: accumulated amortization
    
    
    (23,971
    )
    
    
    (20,765
    )$
    17,455
    
    
    $
    21,540
  2010
    
    $
    2,7662011
    
    
    2,6782012
    
    
    2,6782013
    
    
    2,6782014
    
    
    2,678Thereafter
    
    
    3,977$
    17,455
   F-16




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 7  INCOME TAXES
  2009
    
    
    2008Tax benefit at U.S. federal statutory rate
    
    $
    (903,000
    )
    
    $
    (1,748,000
    )State tax benefit, net of federal benefit
    
    
    (128,000
    )
    
    
    (248,000
    )Change in valuation allowance
    
    
    1,132,000
    
    
    
    2,180,000Permanent differences
    
    
    1,000
    
    
    
    1,000Research and development credits
    
    
    (104,000
    )
    
    
    (179,000
    )Other, net
    
    
    2,000
    
    
    
    (6,000
    )Income tax expense (benefit)
    
    $
    
    
    
    $
    
  2009
    
    
    2008Deferred tax assetsNet operating loss carryforward
    
    $
    18,604,000
    
    
    $
    16,929,000Research and development credits
    
    
    1,483,000
    
    
    
    1,379,000Intangible
    
    
    1,261,000
    
    
    
    1,446,000Unearned revenue
    
    
    123,000
    
    
    
    615,000Property and equipment
    
    
    23,000
    
    
    
    22,000Accruals
    
    
    6,000
    
    
    
    14,000Other
    
    
    104,000
    
    
    
    67,000Total deferred tax assets
    
    
    21,604,000
    
    
    
    20,472,000Valuation allowance for deferred tax assets
    
    
    (21,604,000
    )
    
    
    (20,472,000
    )Deferred taxes, net
    
    $
    
    
    
    $
    
   F-17




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 8  STOCK OPTION PLAN
         2009Expected dividend yield
    
    0.00%Expected stock price volatility
    
    76.57%Risk-free interest rate range
    
    1.87%  2.36%Expected life of options (years)
    
    6.5 yearsFair value of options granted
    
    $1.43  $2.14
  F-18




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   WeightedWeighted-
    
    
    Weighted-
    
    
    
    
    
    
    AverageAverage
    
    
    Average
    
    
    Aggregate
    
    
    RemainingExercise
    
    
    Grant Date
    
    
    Intrinsic
    
    
    ContractualShares
    
    
    Price
    
    
    Fair Value
    
    
    Value
    
    
    LifeOptions at December 31, 2007
    
    
    4,073,522
    
    
    $
    0.34Granted
    
    
    
    
    
    $
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    Forfeitures
    
    
    (446,791
    )
    
    $
    0.32Options at December 31, 2008
    
    
    3,626,731
    
    
    $
    0.34Granted
    
    
    409,500
    
    
    $
    1.47
    
    
    $
    1.89Exercised
    
    
    (415,529
    )
    
    $
    0.32Forfeitures
    
    
    (578,717
    )
    
    $
    0.28Options at December 31, 2009
    
    
    3,041,985
    
    
    $
    0.50
    
    
    
    
    
    
    $
    
    
    
    
    4.20
    F-19




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 9  401(k) PLAN
  NOTE 10  COMMITMENTS AND CONTINGENCIES
  NOTE 11  PREFERRED STOCK AND WARRANTS
   F-20




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description21.1*
    
    Subsidiaries of Winston Pharmaceuticals, Inc.31.1*
    
    Certification of the Companys President and Chief
Executive Officer, Joel E. Bernstein, M.D.,
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2*
    
    Certification of the Companys Vice President and
Chief Financial Officer, David Starr, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of the Companys President and Chief
Executive Officer, Joel E. Bernstein, M.D.,
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.2*
    
    Certification of the Companys Vice President and
Chief Financial Officer, David Starr, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    filed herewith.