##### 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, 2008
 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
 Yes þ No o
 o
  o Large Accelerated Filer
    
    o Accelerated Filer
    
    o Non-accelerated Filer
    
    þ Smaller reporting company
 Yes o No þ




---



##### 



WINSTON PHARMACEUTICALS, INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2008
  
 INDEX
 PagePART IItem 1. Description of Business
    
    
    1Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    12Item 2. Description of Properties
    
    
    12Item 3. Legal Proceedings
    
    
    12Item 4. Submission of Matters to a Vote of Security Holders
    
    
    12PART IIItem 5. Market Information for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    13Item 6. Selected Consolidated Financial Data
    
    
    13Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 8. Financial Statements and Supplementary Data
    
    
    24Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    25Item 9A(T). Controls and Procedures
    
    
    25Item 9B. Other Information
    
    
    25PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    26Item 11. Executive Compensation
    
    
    30Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    36Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    38Item 14. Principal Accounting Fees and Services
    
    
    40PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    41Index to Financial Statements
    
    
    F-1Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 Item 1. Description of Business
 Cautionary Note Regarding Forward Looking Statements
    Executive Overview
     1




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##### Table of Contents



Pain Management Market
  
    
    Decision Resources estimates that nearly $17 billion was spent in 2006 on prescription pain drugs;
    
    approximately 25 million Americans experience acute pain each year due to injury or surgery,
according to the American Pain Society, as published in 2006 by Medtech Insight (a division of
Windhover Information, Inc., that provides business information and intelligence on new trends,
technologies, and companies in the medical device, diagnostics, and biotech marketplace); and
    
    approximately 50 million Americans suffer from chronic pain, according to the American Pain Society.
  Analgesic Drugs
  Shortcomings of Current Pain Management
  
    
    Insufficient efficacy. Opioids, the current standard of care for severe pain
originating from a painful stimulus, or nociceptive 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. Opioids must be given by mouth or infusion because they
provide pain relief by acting on nerves all over the body: in the spinal cord, in the
brain and at the site of injury. As a consequence, opioids do not provide site-specific
pain relief because their action is not targeted specifically to the area of the body
that is experiencing pain. Moreover, 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.
  2




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
    
    Occurrence of side effects.NSAIDs may cause gastrointestinal ulcers, and
between 10,000 and 20,000 patients die 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.
 
    
    Slow onset of pain relief.This slow onset, as well as poor efficacy, is due to
the poor penetration of skin by the anesthetics used in these products.
 
    
    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
   LATE-STAGE PRODUCT PIPELINEU.S.Product/
    
    Dosage
    
    
    
    Development
    
    Market SizeCompound
    
    Form
    
    Product Indication(s)
    
    Status in U.S., Canada and Europe
    
    ($MM)Civamide
    
    Topical (Cream)
    
         Treatment of Osteoarthritis
    
         MAA (EU) filed 1/08
    
    
    5,000     NDS (Canada) filed 11/08     File NDA Q2 09Civamide
    
    Oral Capsule
    
         Treatment of Chronic Neuropathic Pain
    

     In
Phase I, Phase II Q3 09
    
    
    3,000Treatment of Cancer Pain
    

     In
Phase I, Phase II Q3 09
    
    
    850Treatment of Post-Surgical Pain
    
    
    
    
    3,000Civamide
    
    Patch
    
         Treatment of Neuropathic Pain
    
         Phase I Completed
    
    
    3,000     In
Phase IICivamide
    
    Nasal Solution
    
         Treatment of PHN of the Trigeminal Nerve
    

     Phase II/III
    
    
    50     Prophylaxis of Episodic Cluster Headache
    

     In
Phase III
    
    
    2,000     Treatment of Dry Eye
    
         Start Phase II Q2 09
    
    
    1,000Doxepin 
hydrochloride
    
    Nasal Solution
    
         Prophylaxis of Chronic Daily Headache
    
         Phase IIa Completed
    
    
    2,500
 Civamide
    4




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® ®
   5




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Doxepin
  Manufacturing and Raw Materials
   Sales and Marketing
  
    
    Winston intends to continue to outsource preclinical studies, clinical trials
and formulation and manufacturing activities. Winston believes outsourcing permits
significant time savings and allows for more efficient deployment of its resources.
 
    
    Winston intends to continue to license its lead products to medium to large
pharmaceutical companies with existing sales forces and marketing capabilities,
specifically outside of the United States where it currently does not have a sales and
marketing infrastructure.
 
    
    Winston will also consider building its own sales force when economics and
other factors indicate that this is a better strategy than out-licensing.
 Intellectual Property
    6




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Trademark Name/Reg. No.
    
    Owner
    
    Filed (US)
    
    RegisteredCIVANEX
2,729,437
    
    Winston Labs
    
    February 16, 1999
    
    June 24, 2003MICANOL
3,283,446
    
    Winston Labs
    
    March 27, 2003
    
    August 21, 2007WINSTON LABORATORIES, 
The Pain Company
2,856,161
    
    Winston Labs
    
    October 13, 1999
    
    June 22, 2004WINSTON LABORATORIES
    
    Winston Labs
    
    
    
    August 13, 1993Illinois State 
Trademark 73000AXSAIN
2,925,798
    
    Winston Labs
    
    November 14, 2002
    
    February 8, 2005
   7




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Competition
   Competitive Advantages SummaryWinston Product
    
    Indication
    
    Competitor Product(s)
    

Winstons Competitive AdvantagesCivamide Topical(Cream) 0.075%
    
         Osteoarthritis Pain     Rheumatoid
Arthritis Pain
    
         Oral Cox-2 Inhibitors
(e.g., Celebrex®)     Oral NSAIDs
(e.g., Mobic®,
Naprosyn®)
    
         No Cardiovascular or GI Side
Effects     No Safety Monitoring Required     Topical NSAIDs
(e.g., Volteran®)
    
         No Drug Interaction     Can Be Used Adjunctively     Long-Lasting Effect after
DiscontinuanceCivamide OralCapsule
    
         Cancer Pain     Neuropathic Pain
    
         Cymbalta®     Neurontin®
    
         Single Dose Provides ≥ 7 Days
Analgesia     Lyrica®
    
         No Addiction Potential     OpioidsCivamide Patch
    
         Neuropathic Pain
    
         Lidoderm® Patch     No FDA-approved Patch
    
         No Cardiovascular or GI Side
Effects     No Systemic Absorption     No Disposal Issues     See Also Civamide Cream Advantages     Neuropathic Pain
    
         Cymbalta®
    
         No Systemic Side Effects     Neurontin®
    
         No Drug Interactions     Lyrica®Civamide NasalSolution 0.01%
    
         Episodic Cluster
Headache
    
         No FDA-approved
medication
    
         No Systemic Side Effects     PHN Trigeminal
Nerve
    
    
    
         No Drug InteractionsDoxepin NasalSolution
    
         Chronic Daily
Headache
    
         No FDA-approved
medication
    
         No Systemic Side Effects     No Drug Interactions
  8




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Government Regulation
  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.
   9




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10




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Foreign Regulation
    Product Liability
  Executive Officers and Key Employees of the Registrant
  Human Resources
  Financial Information about Segments
   11




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General Information
 
 Item 1A. Risk Factors
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Description of Properties
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
   12




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PART II
 
 Item 5.
    
    Market Information for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Information
   High
    
    
    LowFirst Quarter
    
    
    1.50
    
    
    
    1.05Second Quarter
    
    
    1.25
    
    
    
    0.75Third Quarter
    
    
    1.09
    
    
    
    0.51Fourth Quarter
    
    
    1.00
    
    
    
    0.30
  High
    
    
    LowFirst Quarter
    
    
    3.41
    
    
    
    0.36Second Quarter
    
    
    3.71
    
    
    
    1.80Third Quarter
    
    
    3.10
    
    
    
    1.75Fourth Quarter
    
    
    3.16
    
    
    
    1.16
  Holders
  Dividends
  2008 Equity Compensation Plan Information
  Recent Sales of Unregistered Securities
  Performance Graph
  
 Item 6. Selected Consolidated Financial Data
   13




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Item 7. Managements Discussion and Analysis or Plan of Operation
    Executive Overview
  ® ® ® ® ®
    14




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®
 £
    15




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
    
    all of the issued and outstanding capital stock of Winston, consisting of
23,937,358 shares of common stock, par value $0.001 per share, 5,815,851 shares of the
Winston Series A Convertible Preferred Stock, par value $0.001 per share (Winston
Series A Preferred Stock), and 4,187,413 shares of the Winston Series B Convertible
Preferred Stock, par value $0.001 per share (Winston 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 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 preferred stock);
    
    we assumed Winstons stock option plans;
    
    Winstons outstanding 1,643,750 options to purchase 1,643,750 shares of
Winstons common stock were converted to options to purchase 29,013,848 shares of our
common stock; and
    
    outstanding warrants to purchase Winston 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.
   ®
   16




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® ®
 Critical Accounting Policies and Estimates for Continuing Operations
  Revenue Recognition
    Multiple Element Arrangements
   17




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License Arrangements.
   Research Services Arrangements
 Royalty Arrangements
   18




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Research and development expenses
   Acquired contractual rights.
 Share-Based Compensation Expense
 Share-Based Payment
    19




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Nature of Operating Expenses
   Effects of Inflation
  Results of Operations
    20




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For the year ended December 31, 2008 compared to the year ended December 31, 2007
 Year Ended December 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeREVENUESLicense Revenue
    
    $
    316,706
    
    
    $
    500,000
    
    
    $
    (183,294
    )
    
    
    -36
    %Royalty Revenue
    
    
    135,836
    
    
    
    300,000
    
    
    
    (164,164
    )
    
    
    -54
    %452,542
    
    
    
    800,000
    
    
    
    (347,458
    )
    
    
    -43
    %EXPENSESResearch and development
    
    
    3,496,150
    
    
    
    1,853,501
    
    
    
    1,642,649
    
    
    
    88
    %General and administrative
    
    
    2,182,012
    
    
    
    1,366,401
    
    
    
    815,611
    
    
    
    59
    %Depreciation and amortization
    
    
    8,651
    
    
    
    10,087
    
    
    
    (1,436
    )
    
    
    -14
    %Total Operating Expenses
    
    
    5,686,813
    
    
    
    3,229,989
    
    
    
    2,456,824
    
    
    
    76
    %Loss from Operations
    
    
    (5,234,271
    )
    
    
    (2,429,989
    )
    
    
    (2,804,282
    )
    
    
    115
    %Interest income
    
    
    90,614
    
    
    
    42,733
    
    
    
    47,881
    
    
    
    112
    %Other income
    
    
    1,911
    
    
    
    4,199
    
    
    
    (2,288
    )
    
    
    -54
    %Other income (expenses)
    
    
    92,525
    
    
    
    46,932
    
    
    
    45,593
    
    
    
    97
    %Loss before income taxes
    
    
    (5,141,746
    )
    
    
    (2,383,057
    )
    
    
    (2,758,689
    )
    
    
    115
    %Income TaxesCurrent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (5,141,746
    )
    
    $
    (2,383,057
    )
    
    $
    (2,758,689
    )
    
    
    115
    %
 Revenues
    21




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Research & Development Expenses
  Increased spending on various European and Canadian filing fees
    
    $
    232,000Decreased
spending on carcinogenicity study completed
    
    
    (185,586
    )Increased spending on Topical Cream
    
    
    428,590Increased spending on Oral Capsule
    
    
    490,591Increased spending on Patch
    
    
    172,453Increased spending on manufacturing support
    
    
    87,610Increased spending on Nasal Solution
    
    
    126,517Increased in payroll due to hiring of additional clinical staff
    
    
    290,474$
    1,642,649
 General and Administrative Expenses
  Increase in legal fees in preparation of merger
    
    $
    267,045Increase in accounting fees in preparation of merger
    
    
    244,166Increase in payroll due to hiring of additional
administrative staff
    
    
    262,892Net increase in other general and administrative expenses
    
    
    41,508$
    815,611
 Interest Income
  Net Loss
  Liquidity and Capital Resources
    22




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IncreaseDecember 31,
    
    
    (Decrease)
    
    
    December 31,2008
    
    
    During Period
    
    
    2007Cash and cash equivalents
    
    $
    5,626,913
    
    
    $
    1,145,302
    
    
    $
    4,481,611Net working capital
    
    $
    3,191,602
    
    
    $
    (617,057
    )
    
    $
    3,808,659
 Year Ended
    
    
    Change
    
    
    Year EndedDecember 31,
    
    
    Between
    
    
    December 31,2008
    
    
    Periods
    
    
    2007Net cash used in operating activities
    
    $
    (3,062,220
    )
    
    $
    (1,190,254
    )
    
    $
    (1,871,966
    )Net cash used in investing activities
    
    
    (16,334
    )
    
    
    (6,334
    )
    
    
    (10,000
    )Net cash provided by financing activities
    
    
    4,223,856
    
    
    
    (827,376
    )
    
    
    5,051,232Net increase in cash and cash equivalents
    
    $
    1,145,302
    
    
    $
    (2,023,964
    )
    
    $
    3,169,266
 Operating activities.
 Investing activities.
 ® ® ®
 Financing activities.
   23




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Contractual Obligations
  2009
    
    
    13,2242010
    
    
    2,708
   Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
   24




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Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
 Disclosure Controls and Procedures
 Managements Annual Report on Internal Control Over Financial Reporting.
 Internal Control Integrated Framework
  Internal Control Over Financial Reporting
 
 Item 9B. Other Information
   25




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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.
    
    66
    
    President and Chief Executive Officer; Director, Chairman of the Board
    
    
    2008
    
    
    
    2009Scott B. Phillips, M.D.
    
    48
    
    Senior Vice President, Scientific Affairs; Director
    
    
    2008
    
    
    
    2009David Starr
    
    39
    
    Vice President, Chief Financial Officer, Secretary
    
    
    
    
    
    
    Curtis Lockshin, Ph.D.
    
    48
    
    Director
    
    
    2006
    
    
    
    2009Robert A. Yolles
    
    68
    
    Director, Audit Committee Chair
    
    
    2008
    
    
    
    2009Glenn L. Halpryn
    
    48
    
    Director
    
    
    2006
    
    
    
    2009Neal S. Penneys, M.D., Ph.D.
    
    66
    
    Director, Audit Committee Member
    
    
    2008
    
    
    
    2009Subbarao Uppaluri, Ph.D.
    
    59
    
    Director, Audit Committee Member
    
    
    2008
    
    
    
    2009
 Executive Officers
 Joel E. Bernstein, M.D.
 Scott B. Phillips, M.D.
  26




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David Starr
 Outside Directors
 Curtis Lockshin , Ph.D.
 Robert A. Yolles, J.D
 Glenn L. Halpryn
    27




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Neal S. Penneys, M.D., Ph.D. ,
 Subbarao
Uppaluri, Ph.D..
 Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Business Conduct and Ethics
  Stockholder Communications with the Board of Directors
   28




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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;
    
    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.
   29




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Item 11. Executive Compensation
 Summary Compensation Table
  Option
    
    
    
    
    
    
    All Other
    
    
    TotalName and Principal
    
    
    
    
    
    Salary
    
    
    Awards
    
    
    Bonus
    
    
    Compensation
    
    
    CompensationPosition
    
    Year
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)
    
    
    ($)(2)
    
    
    ($)Joel E. Bernstein, M.D.
    
    
    2008
    
    
    
    242,000
    
    
    
    
    
    
    
    25,000
    
    
    
    23,570
    
    
    
    290,570President and Chief
    
    
    2007
    
    
    
    235,000
    
    
    
    38,158
    
    
    
    
    
    
    
    17,986
    
    
    
    291,144Executive Officer of the
Company and; Director
of WinstonScott B. Phillips, M.D.
    
    
    2008
    
    
    
    221,000
    
    
    
    
    
    
    
    14,500
    
    
    
    20,840
    
    
    
    256,340Senior Vice President,
    
    
    2007
    
    
    
    210,000
    
    
    
    73,695
    
    
    
    
    
    
    
    16,728
    
    
    
    300,423Scientific Affairs of the
Company and: Director
of the CompanyDavid Starr, Vice
    
    
    2008
    
    
    
    200,000
    
    
    
    
    
    
    
    14,500
    
    
    
    3,883
    
    
    
    218,383President, Chief
    
    
    2007
    (3)
    
    
    33,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,333Financial Officer,
Secretary of the
Company and; Director
of WinstonGlenn L. Halpryn (4),
    
    
    2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Former Chief Executive
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Officer of the Company;
Director of the Company
 (1)
    
    Represents the expense to Winston pursuant to FAS 123R for the respective year
for restricted stock options granted as long term incentive pursuant to 2007 Option
Plan. No options were granted to the above officers for fiscal years 2008 and 2007.(2)
    
    Dr. Bernstein, Dr. Phillips and Mr. Starr received additional compensation in
2008 and 2007, comprised of the following components: 401(k) matching contributions in
2008 of $9,665, $9,405, and $0, respectively and in 2007 in amounts of $7,050, $6,300,
and $0 , respectively; insurance premium payments in 2008 in amounts of $13,905,
$11,435, $3,883 respectively, and in 2007 in amounts of $10,936, $10,428 and $0
respectively.(3)
    
    David Starr began his employment in November, 2007.(4)
    
    Mr. Halpryn served as Chief Executive Officer and Director of the Company until
the date of the Merger, when he resigned from his executive role. He remains on the
board. Mr. Halpryn received no compensation in 2008 or 2007 in connection with his
service as an officer.  30




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End
  Number of SecuritiesUnderlying
    
    
    Option
    
    
    OptionUnexercised Options
    
    
    Exercise
    
    
    ExpirationName
    
    (#) Exercisable (1)
    
    
    Price ($)
    
    
    DateJoel E. Bernstein, M.D.
    
    
    231,670
    (2)
    
    
    0.36
    
    
    
    1/12/2009661,913
    
    
    
    0.37
    
    
    
    4/6/2010Scott B. Phillips, M.D.
    
    
    158,859
    
    
    
    0.28
    
    
    
    5/3/2009397,148
    
    
    
    0.28
    
    
    
    10/18/2009205,193
    
    
    
    0.33
    
    
    
    12/10/2012231,670
    
    
    
    0.33
    
    
    
    1/12/2014661,913
    
    
    
    0.34
    
    
    
    4/6/2015
 (1)
    
    In conjunction with the Merger, Winstons Board of Directors voted to accelerate
the vesting of all unvested stock options as of October 30, 2007.(2)
    
    On January 12, 2009, Dr. Joel E. Bernstein exercised 231,670 options. 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.
  31




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##### Table of Contents



Cause provided provided further
 Disability provided
 Scott B. Phillips, M.D.  Severance Agreements
    32




---



##### 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 or a subsidiary
thereof;(ii)
    
    intentional wrongful damage to the property of Winston or a subsidiary thereof;
 (iii)
    
    intentional wrongful disclosure of secret processes or confidential
information of Winston 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 and
such enterprises sales of any product or service competitive with any of Winstons
products or services amounted to 10% of the net sales of such enterprise and of Winston
for their respective most recently-completed fiscal years.
  33




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##### Table of Contents



Compensation of Directors
  Fees earned orPaid in Cash
    
    
    Stock Awards
    
    
    TotalName
    

($)
    
    
    ($)
    
    
    ($)Robert A. Yolles(1)
    
    
    3,125
    
    
    
    
    
    
    
    3,125Glenn L. Halpryn(2) (3)
    
    
    2,450
    
    
    
    
    
    
    
    1,200Alan Jay Weisberg(2)
    
    
    1,200
    
    
    
    
    
    
    
    1,200Noah M. Silver(2)
    
    
    1,200
    
    
    
    
    
    
    
    1,200Curtis Lockshin Ph.D.(2) (3)
    
    
    2,450
    
    
    
    
    
    
    
    1,200Neal S. Penneys, M.D., Ph.D. (3)
    
    
    1,250
    
    
    
    
    
    
    
    1,250Subbarao Uppaluri, Ph.D. (3)
    
    
    1,250
    
    
    
    
    
    
    
    1,250Jeffrey Bernstein, Ph.D. (4)
    
    
    1,875
    
    
    
    
    
    
    
    1,875
 (1)
    
    Reflects: (i) $1,875 in fees paid to Mr. Yolles service on Winstons Board of Directors for
three fiscal quarters prior to the Merger and (ii) $1,250 in fees for service on the Companys
Board of Directors for one fiscal quarter subsequent to the Merger.(2)
    
    Reflects $1,200 in fees paid to each of Messrs Halpryn, Weisberg, and Silver, and to Dr.
Lockshin, for service on the Companys Board of Directors for three fiscal quarters prior to
the Merger.(3)
    
    Reflects $1,250 in fees paid to each of Drs. Penneys, Uppaluri, and Lockshin, and to Mr.
Halpryn for service on the Companys Board of Directors for one fiscal quarter subsequent to
the Merger.(4)
    
    Reflects $1,875 in fees paid
to Dr. Jeffrey Bernstein the son of Dr. Joel Bernstein for service on Winstons Board of
Directors for three fiscal quarters prior to the Merger.   34




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##### Table of Contents



Compensation Committee Interlocks and Insider participation; Compensation Committee Report
 Regulation S-K.
  35




---



##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 2008 Equity Compensation Plan Information
 Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    
    Weighted average
    
    
    equity compensationbe issued upon exercise
    
    
    exercise price of
    
    
    plans (excludingof outstanding options,
    
    
    outstanding options,
    
    
    securities reflected inwarrants and rights
    
    
    warrants and rights
    
    
    column (a)(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security
holders
    
    
    
    
    
    
    
    
    
    
    Equity compensation
plans not approved
by security
holders
    
    
    3,626,731
    
    
    $
    0.32
    
    
    
    5,723,892
  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.
  36




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##### Table of Contents



Management and Directors:
    
    Shares Beneficially Owned
    
    
    Percentage OwnershipJoel E. Bernstein, M.D.(1)
    
    
    26,398,432
    
    
    
    29.5
    %Scott B. Phillips, M.D.(2)
    
    
    2,152,580
    
    
    
    2.4
    %David Starr
    
    
    0
    
    
    
    *Curtis Lockshin, Ph.D.
    
    
    1,250
    
    
    
    *Robert A. Yolles(3)
    
    
    368,663
    
    
    
    *Glenn L.
Halpryn(4)
    
    
    354,942
    
    
    
    *Neal Penneys, M.D., Ph.D.
    
    
    411,862
    
    
    
    *Subbarao
Uppaluri, Ph.D.(5)
    
    
    299,351
    
    
    
    *All officers and directors
As a group (8 people)
    
    
    29,987,080
    
    
    
    33.6
    %
 5% Stockholders
    
    Shares Beneficially Owned
    
    
    Percentage OwnershipFrost Gamma
Investments(6), (7)
    
    
    26,575,429
    
    
    
    29.6
    %Jeffrey
Bernstein(8)
    
    
    5,165,324
    
    
    
    5.7
    %David
Bernstein(9)
    
    
    4,982,129
    
    
    
    5.5
    %Rebecca
Zelken(10)
    
    
    4,983,129
    
    
    
    5.5
    %
 *
    
    Less than 1%.(1)
    
    Includes 661,913 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 1,654,782 shares of common stock underlying options.(3)
    
    Includes 281,313 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.(4)
    
    Includes 229,161 shares of
common stock underlying shares of Series B Convertible Preferred
Stock.(5)
    
    Includes 127,313 shares of common stock underlying Series A Convertible Preferred Stock and 89,589
shares of common stock underlying warrants to purchase shares of Series A Convertible Preferred Stock.(6)
    
    Includes 12,476,548 shares of common stock underlying shares of Series A Convertible Preferred
Stock and 8,779,797 shares of common stock underlying warrants to purchase shares of Series A Convertible
Preferred Stock and 4,583,222 shares of common stock underlying shares of Series B Convertible Preferred
Stock.(7)
    
    As the sole trustee of the Frost Gamma Investments Trust, Dr. Phillip Frost may be deemed the
beneficial owner of all shares owned by the trust by virtue of 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.(8)
    
    Includes 250 and 1,500 shares of common stock that are beneficially owned by Mr. Bernsteins wife
and children, respectively, with respect to which, Mr. Bernstein disclaims any beneficial ownership.
Jeffrey Bernstein is the son of Dr. Joel E. Bernstein.(9)
    
    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.(10)
    
    Includes 250 and 1,500 shares of common stock that are beneficially owned by Mrs. Zelkens husband
and his children, respectively, with respect to which, Mrs. Zelken disclaims any beneficial ownership.
Rebecca Zelken is the daughter of Dr. Joel E. Bernstein.  37




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Person Transactions
 Opko License
  Elorac License
 £
 Gideon Pharmaceuticals, Inc.
   38




---



##### Table of Contents



Sirius (DUSA) License
 ®
  Packers-Pine Corporation
  Consulting Agreement with Jeffrey Bernstein
  Sales of Stock of Getting Ready Corporation
   39




---



##### Table of Contents



Sales of Winston Stock for Bioglan Purchasers
  Independence of Directors
  
 Item 14. Principal Accounting Fees and Services
 Pre-Approval Policies and Procedures
  de minimis
 Audit Fees
 Form 10-Q
  40




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##### Table of Contents



Audit-Related Fees
  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 24.(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).
  41




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##### Table of Contents



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
    
    
    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).
  42




---



##### Table of Contents



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 Laboratories, Inc. 1999 Stock Option Plan (filed as Exhibit 10.10 to
the Companys Current Report on Form 8-K as filed with the SEC on October 1, 2008 and
incorporated herein by reference).10.12
    
    
    Winston Laboratories, Inc. Stock Option Plan for Non-Employee Directors (filed
as Exhibit 10.11 to the Companys Current Report on Form 8-K as filed with the SEC on
October 1, 2008 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.  43




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##### Table of Contents



SIGNATURES
  Dated: March 27, 2009
    Winston Pharmaceuticals, Inc.By:

/s/
Joel E. BernsteinJoel E. Bernstein, M.D.President and Chief Executive Officer  Dated: March 27, 2009
    
    /s/ Joel E. BernsteinJoel E. BernsteinPresident, Chief Executive Officerand Chairman of the Board(Principal Executive Officer)Dated: March 27, 2009
    
    /s/ David StarrDavid StarrVice President, Chief Financial Officer(Principal Accounting Officerand Principal Financial Officer)Dated: March 27, 2009
    
    /s/ Glenn L. HalprynGlenn L. HalprynDirectorDated: March 27, 2009
    
    /s/ Curtis LockshinCurtis LockshinDirectorDated:
March 27, 2009
    
    /s/ Neal S. PenneysNeal S. PenneysDirectorDated: March 27, 2009
    
    /s/ Scott B. PhillipsScott B. Phillips, M.D.Senior Vice President,Clinical Affairs and DirectorDated: March 27, 2009
    
    /s/ Subbarao UppaluriSubbarao UppaluriDirectorDated: March  27, 2009
    
    /s/ Robert A. YollesRobert A. YollesDirector
  44




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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, 2008 and 2007Report 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




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
  F-2




---



##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2008 AND 2007
 December 31, 2008
    
    
    December 31, 2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    5,626,913
    
    
    $
    4,481,611Accounts receivable
    
    
    17,498
    
    
    
    50,000Related party receivable
    
    
    38,142
    
    
    
    14,785Prepaid and other current assets
    
    
    68,465
    
    
    
    8,073Total current assets
    
    
    5,751,018
    
    
    
    4,554,469PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$161,907 at December 31, 2008 and $157,161 at December 31, 2007
    
    
    18,823
    
    
    
    8,966INTANGIBLE ASSETS, NET
    
    
    21,540
    
    
    
    23,714OTHER ASSETS
    
    
    
    
    
    
    4,314TOTAL ASSETS
    
    $
    5,791,381
    
    
    $
    4,591,463LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    1,052,730
    
    
    $
    491,560Accrued expenses and other current liabilities
    
    
    239,861
    
    
    $
    254,250Unearned revenue  current portion
    
    
    1,266,825
    
    
    
    Total current liabilities
    
    
    2,559,416
    
    
    
    745,810Unearned revenue  long-term portion
    
    
    316,706
    
    
    
    Total liabilities
    
    
    2,876,122
    
    
    
    745,810Commitments and ContingenciesSeries A, Convertible Preferred Stock, 12,731 shares issued and
outstanding at December 31, 2007
    
    
    
    
    
    
    4,805,352Stockholders equityPreferred Stock, $.001 par value, 250,000,000 shares authorizedSeries A, Convertible 12,730 shares issued and outstanding
at December 31, 2008
    
    
    13
    
    
    
    Series B, Convertible 9,157 and 0 shares issued and
outstanding at December 31, 2008 and December 31, 2007
    
    
    9
    
    
    
    Common stock, $.001 par value, 900,000,000 shares authorized
55,106,364 and 52,814,818 shares issued and outstanding at
December 31, 2008 and at December 31, 2007
    
    
    55,106
    
    
    
    52,814Additional paid-in capital
    
    
    49,587,913
    
    
    
    40,573,523Accumulated deficit
    
    
    (46,727,782
    )
    
    
    (41,586,036
    )Total stockholders equity (deficit)
    
    
    2,915,259
    
    
    
    (959,699
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    5,791,381
    
    
    $
    4,591,463
 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, 2008 and 2007
 2008
    
    
    2007REVENUELicense revenue
    
    
    316,706
    
    
    
    500,000Royalty revenue
    
    
    135,836
    
    
    
    300,000452,542
    
    
    
    800,000EXPENSESResearch and development
    
    
    3,496,150
    
    
    
    1,853,501General and administrative
    
    
    2,182,012
    
    
    
    1,366,401Depreciation and amortization
    
    
    8,651
    
    
    
    10,087Total operating expenses
    
    
    5,686,813
    
    
    
    3,229,989Loss from operations
    
    
    (5,234,271
    )
    
    
    (2,429,989
    )Interest income
    
    
    90,614
    
    
    
    42,733Other income
    
    
    1,911
    
    
    
    4,19992,525
    
    
    
    46,932Loss before income taxes
    
    
    (5,141,746
    )
    
    
    (2,383,057
    )Income TaxesCurrent
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (5,141,746
    )
    
    $
    (2,383,057
    )Loss per share, basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.04
    )Weighted average number of shares
outstanding basic and diluted
    
    
    53,422,158
    
    
    
    54,472,002
 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, 2008 and 2007
 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, 2007,
adjusted to reflect the effect
of the reverse merger on
September 25, 2008 and the 8
to 1 stock split on December
15, 2008
    
    
    55,126,196
    
    
    $
    55,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,985,908
    
    
    $
    (39,202,979
    )
    
    $
    838,054Issuance of common stock
    
    
    849,455
    
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,650
    
    
    
    
    
    
    
    346,500Purchase and cancellation of
common stock
    
    
    (3,518,266
    )
    
    
    (3,518
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221,482
    )
    
    
    
    
    
    
    (225,000
    )Repurchase of Bioglan Shares
in Subsidiary and Elimination
of Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173,920
    
    
    
    
    
    
    
    173,920Issuance of common stock upon
exercise of stock options
    
    
    357,433
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,023
    
    
    
    
    
    
    
    124,380Compensation with respect to
employee and non-employee
stock option grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165,504
    
    
    
    
    
    
    
    165,504Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,383,057
    )
    
    $
    (2,383,057
    )Balance at December 31, 2007
    
    
    52,814,818
    
    
    
    52,814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,573,523
    
    
    
    (41,586,036
    )
    
    $
    (959,699
    )Reclassification of Series A
Convertible Preferred Stock
(net of costs 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
    )
    
    $
    2,915,259
 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, 2008 and 2007
 2008
    
    
    2007Cash flows from operating activitiesNet loss
    
    $
    (5,141,746
    )
    
    $
    (2,383,057
    )Depreciation and amortization
    
    
    8,651
    
    
    
    10,086Stock option expense for non-employee directors and employees
    
    
    
    
    
    
    165,504Changes in:Accounts receivable
    
    
    9,145
    
    
    
    22,568Prepaid and other current assets
    
    
    (51,552
    )
    
    
    36,626Other assets
    
    
    4,314
    
    
    
    30,596Unearned revenue
    
    
    1,583,531
    
    
    
    Accounts payable
    
    
    561,170
    
    
    
    219,114Accrued expenses and other current liabilities
    
    
    (35,733
    )
    
    
    26,597Net cash used in operating activities
    
    
    (3,062,220
    )
    
    
    (1,871,966
    )Cash flows from investing activitiesPurchase of minority interest in subsidiary
    
    
    
    
    
    
    (10,000
    )Purchases of property, plant and equipment
    
    
    (14,604
    )
    
    
    Purchases of intangibles
    
    
    (1,730
    )
    
    
    Net cash used in by investing activities
    
    
    (16,334
    )
    
    
    (10,000
    )Cash flows from financing activitiesPurchase and cancellation of common stock
    
    
    
    
    
    
    (225,000
    )Issuance of common stock
    
    
    
    
    
    
    346,500Issuance of common stock upon exercise of stock options
    
    
    
    
    
    
    124,380Issuance of preferred stock, net of costs
    
    
    3,996,789
    
    
    
    4,805,352Cash received upon consummation of merger
    
    
    477,067
    
    
    
    Cost incurred in connection with merger
    
    
    (250,000
    )
    
    
    Net cash provided by financing activities
    
    
    4,223,856
    
    
    
    5,051,232NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,145,302
    
    
    
    3,169,266Cash and cash equivalents at beginning of year
    
    
    4,481,611
    
    
    
    1,312,345Cash and cash equivalents at end of year
    
    $
    5,626,913
    
    
    $
    4,481,611Supplemental disclosures of cash flow informationInterest paid
    
    $
    
    
    
    $
    Income taxes paid
    
    $
    
    
    
    $
    Supplemental disclosures of non-cash investing and financing
informationRepurchase and elimination of minority interest in subsidiary
    
    $
    
    
    
    $
    173,920Accrual 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, 2008 and 2007
 NOTE 1  COMPANY FORMATION AND BACKGROUND
   ® ® ® ® ®
   
    
    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;
  F-7




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 
    
    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.
   NOTE 2  SUMMARY OF ACCOUNTING POLICIES
 Reverse Stock Split
  Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
   F-8




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 Accounts Receivable
  Property and Equipment
  Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Fair Value of Financial Instruments
  Fair Value Measurements,
   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, 2008Quoted Prices in
    
    
    SignificantActive Markets
    
    
    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
   (EITF 00-21),
  F-10




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 Multiple Element Arrangements
 EITF 00-21,
  License Arrangements.
   Research Services Arrangements Reporting
  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
 EITF 07-3
  Acquired contractual rights
  Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation, Accounting for Stock Issued to Employees.
   F-12




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  Income Taxes
   Segment Information
  Reclassification
 Accounting for Certain Financial Instruments with Characteristics of both Liabilities
and Equity
   F-13




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 Recent Accounting Pronouncements
       F-14




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 NOTE 3  EARNINGS PER SHARE
  Fiscal 2008
    
    
    Fiscal 2007Denominator:Weighted average common shares outstanding  basic and diluted
    
    
    53,422,158
    
    
    
    54,472,002Loss per common share  basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.04
    )
  NOTE 4  TECHNOLOGY LICENSE AGREEMENTS
 ® ®
  £
  F-15




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
   NOTE 5  RELATED-PARTY TRANSACTIONS
    F-16




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  NOTE
6  INTANGIBLE ASSETS
  2008
    
    
    2007Patents and trademarks
    
    $
    42,305
    
    
    $
    40,575Less: accumulated amortization
    
    
    (20,765
    )
    
    
    (16,861
    )$
    21,540
    
    
    $
    23,714
  2009
    
    $
    3,2062010
    
    
    2,7662011
    
    
    2,6782012
    
    
    2,6782013
    
    
    2,678Thereafter
    
    
    5,134$
    21,540
   F-17




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 NOTE 7   INCOME TAXES
  2008
    
    
    2007Tax benefit at U.S. federal statutory rate
    
    $
    (1,748,000
    )
    
    $
    (810,000
    )State tax benefit, net of federal benefit
    
    
    (248,000
    )
    
    
    (115,000
    )Change in valuation allowance
    
    
    2,180,000
    
    
    
    1,020,000Permanent differences
    
    
    1,000
    
    
    
    1,000Research and development credits
    
    
    (179,000
    )
    
    
    (105,000
    )Other, net
    
    
    (6,000
    )
    
    
    9,000Income tax expense (benefit)
    
    $
    
    
    
    $
    
  2008
    
    
    2007Deferred tax assetsNet operating loss carryforward
    
    $
    16,929,000
    
    
    $
    14,701,000Research and development credits
    
    
    1,379,000
    
    
    
    1,200,000Intangible
    
    
    1,446,000
    
    
    
    1,642,000Unearned revenue
    
    
    615,000
    
    
    
    Property and equipment
    
    
    22,000
    
    
    
    22,000Accruals
    
    
    14,000
    
    
    
    3,000Other
    
    
    67,000
    
    
    
    67,000Total deferred tax assets
    
    
    20,472,000
    
    
    
    17,635,000Valuation allowance for deferred tax assets
    
    
    (20,472,000
    )
    
    
    (17,635,000
    )Deferred taxes, net
    
    $
    
    
    
    $
    
  NOTE 8   STOCK OPTION PLAN
   F-18




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
   2007Expected dividend yield
    
    
    0.00%Expected stock price volatility
    
    
    75.00%Risk-free interest rate range
    
    
    4.20%  4.71%Expected life of options (years)
    
    5.75 years
   F-19




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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, 2006
    
    
    5,599,231
    
    
    $
    0.34Granted
    
    
    66,191
    
    
    
    0.34
    
    
    $
    0.23Exercised
    
    
    (357,433
    )
    
    
    0.35Forfeitures
    
    
    (1,234,468
    )
    
    
    0.34Options at December 31, 2007
    
    
    4,073,522
    
    
    $
    0.34Granted
    
    
    
    
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    
    Forfeitures
    
    
    (446,791
    )
    
    $
    0.32Options at December 31, 2008
    
    
    3,626,731
    
    
    $
    0.34
    
    
    
    
    
    
    $
    16,186,071
    
    
    
    3.44
   NOTE 9   401(k) PLAN
   F-20




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##### Table of Contents



Winston Pharmaceuticals, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 NOTE 10  COMMITMENTS AND CONTINGENCIES
  2009
    
    
    13,2242010
    
    
    2,708
  NOTE
11  PREFERRED STOCK AND WARRANTS
    F-21




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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.