UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549


FORM 10-Q

[X] Quarterly Report Under Section 13 or
15(d) of the Securities Exchange Act of 1934. For the quarterly period ended: December 31, 2008

OR

[_] Transition Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934. 
For the transition period from: ________  to _________

Commission File Number: 000-030813

AlphaRx, Inc.(Name of Small Business Issuer in its Charter)

|Delaware                        | 98-0416123                              
|------------------------------- | ----------------------------------------
|(State or other jurisdiction of | (I.R.S.
    Employer Identification No.)
|incorporation or organization)  |                                         
|                                |                                         

168 Konrad Crescent, Suite 200 
Markham, Ontario, Canada L3R 9T9
(Address of principal executive offices)

Registrant's telephone number, including area
code: (905) 479-3245

Securities registered pursuant to Section 12(b)
of the Act: None

Securities registered pursuant to Section 12(g)
of the Act: Common Stock, $.0001 par value(Title of Class)

Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.     Yes [X]        
No [ ]

The number of outstanding shares of registrant's
Common Stock on February 12, 2009 was 92,371,192.

Transitional Small Business Disclosure Format.    
Yes [ ]         No [X]

---

ALPHARX, INC.FORM
10-QDECEMBER31, 2008TABLE OF CONTENTS

|                                                                                                                                                           |      
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | -----
|Unaudited Interim
    Consolidated Balance Sheets as ofDecember 31 2008 andSeptember 30, 2008                                                              | 3    
|                                                                                                                                                           |      
|Unaudited Interim Consolidated Statements of Operations and Comprehensive
    Lossfor
      the three months ended December 31, 2008 and December 31, 2007 | 4    
|                                                                                                                                                           |      
|Unaudited
    Interim Consolidated Statements of Changes in Shareholders' Deficitas
      of December 31, 2008 and September 30, 2008                      | 5    
|                                                                                                                                                           |      
|Unaudited Interim Consolidated Statements of Cash Flow for
      the three months ended
      December 31, 2008 and December 31, 2007                      | 6    
|                                                                                                                                                           |      
|Condensed
      Notes to Unaudited Interim Consolidated Financial Statements                                                                               | 7-11 
|                                                                                                                                                           |      
|Managements
      Discussion and Analysis of Financial Condition and Plan of Operation                                                                    | 12-17
|                                                                                                                                                           |      
|Other Information                                                                                                                                          | 18   

2

---

ALPHARx, INC.INTERIM CONSOLIDATED BALANCE
SHEETSAS AT DECEMBER 31, 2008 AND SEPTEMBER 30, 2008(UNAUDITED)(All amounts in US Dollars)

|                                                         |   | December 31, |   |   | September 30, |  
|-------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                         |   | 2008         |   |   | 2008          |  
|CURRENT ASSETS                                           |   |              |   |   |               |  
|                                                         |   |              |   |   |               |  
|Cash and Cash Equivalents                                | $ | 21,384       |   | $ | 24,623        |  
|Trade Accounts Receivable, net                           |   | 74,388       |   |   | 6,076         |  
|Other Accounts Receivable                                |   | 2,770        |   |   | 2,353         |  
|Other Assets                                             |   | 14,350       |   |   | -             |  
|TOTAL CURRENT ASSETS                                     |   | 112,892      |   |   | 33,052        |  
|                                                         |   |              |   |   |               |  
|PROPERTY, PLANT and EQUIPMENT, net                       |   | 129,289      |   |   | 149,498       |  
|                                                         |   |              |   |   |               |  
|TOTAL ASSETS                                             |   | 242,181      |   |   | 182,550       |  
|                                                         |   |              |   |   |               |  
|CURRENT LIABILITIES                                      |   |              |   |   |               |  
|Accounts Payable and Accrued Liabilities                 |   | 329,367      |   |   | 316,306       |  
|Notes Payable (note 4)                                   |   | 420,399      |   |   | 403,665       |  
|Deferred Revenue                                         |   | 33,333       |   |   | -             |  
|TOTAL CURRENT LIABILITIES                                |   | 783,099      |   |   | 719,971       |  
|                                                         |   |              |   |   |               |  
|                                                         |   |              |   |   |               |  
|SHAREHOLDERS EQUITY/(DEFICIT)                           |   |              |   |   |               |  
|Common Stock: $ 0.0001 par value,                        |   |              |   |   |               |  
|Authorized: 250,000,000 shares; Issued and outstanding   |   |              |   |   |               |  
|December 31, 2008- 92,371,192 (September
      30, 2008- |   | 9,238        |   |   | 9,238         |  
|92,371,192) (Notes 6-8)                                  |   |              |   |   |               |  
|Additional paid-in capital                               |   | 16,978,351   |   |   | 16,978,351    |  
|Deficit                                                  |   | (17,640,969  | ) |   | (17,619,930   | )
|Accumulated Other
      Comprehensive Income/(loss)      |   | 9,757        |   |   | (6,704        | )
|TOTAL ALPHARX, INC. SHAREHOLDERS DEFICIT                |   | (643,623     | ) |   | (639,045      | )
|Non-controlling Interest (Note
      5)                  |   | 102,705      |   |   | 101,624       |  
|TOTAL DEFICIT                                            |   | (540,918     | ) |   | (537,421      | )
|                                                         |   |              |   |   |               |  
|TOTAL LIABILITIES AND DEFICIT                            | $ | 242,181      |   | $ | 182,550       |  

|Signed: Michael Lee | Signed: Dr. Ford Moore
|------------------- | ----------------------
|Director            | Director              

See condensed notes to unaudited consolidated financial
statements

3

---

ALPHARx, INC.INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED DECEMBER 31,
2008 AND 2007 (UNAUDITED) (All amounts in US Dollars)

|December 31,                                                     |   | 2008       |   |   | 2007       |  
|---------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                 |   |            |   |   |            |  
|Consulting Revenue                                               | $ | 86,100     |   |   | -          |  
|License Fees and Royalties                                       |   | 17,474     |   |   | 17,132     |  
|TOTAL REVENUES                                                   |   | 103,574    |   |   | 17,132     |  
|                                                                 |   |            |   |   |            |  
|General and Administrative Expenses                              |   | 53,243     |   |   | 359,822    |  
|Research and Development Expenses                                |   | 42,959     |   |   | 215,032    |  
|Depreciation                                                     |   | 17,176     |   |   | 23,855     |  
|LOSS FROM OPERATIONS                                             |   | (9,804     | ) |   | (581,577   | )
|                                                                 |   |            |   |   |            |  
|OTHER EXPENSES                                                   |   |            |   |   |            |  
|                                                                 |   |            |   |   |            |  
|Interest Expense, net                                            |   | (10,154    | ) |   | (9,629     | )
|                                                                 |   |            |   |   |            |  
|LOSS BEFORE INCOME TAXES                                         |   | (19,958    | ) |   | (591,206   | )
|                                                                 |   |            |   |   |            |  
|Income Tax                                                       |   | -          |   |   | -          |  
|                                                                 |   |            |   |   |            |  
|LOSS FROM OPERATIONS, net of tax                                 |   | (19,958    | ) |   | (591,206   | )
|                                                                 |   |            |   |   |            |  
|Gain from Operations of Discontinued
      Component (note 4)    |   | -          |   |   | 1,808      |  
|                                                                 |   |            |   |   |            |  
|NET LOSS                                                         |   | (19,958    | ) |   | (589,398   | )
|                                                                 |   |            |   |   |            |  
|Net income (loss) attributable to
      non-controlling interest |   | (1,081     | ) |   | 4,209      |  
|                                                                 |   |            |   |   |            |  
|NET LOSS ATTRIBUTABLE TO ALPHARX, INC.                           |   | (21,039    | ) |   | (585,189   | )
|                                                                 |   |            |   |   |            |  
|Cumulative Translation Adjustment                                |   | 16,461     |   |   | (128       | )
|                                                                 |   |            |   |   |            |  
|COMPREHENSIVE LOSS                                               | $ | (4,578     | ) | $ | (585,317   | )
|                                                                 |   |            |   |   |            |  
|Net Loss per Share attributable to AlphaRx, Inc. Common          |   |            |   |   |            |  
|Shareholders, basic and diluted                                  | $ | (0.00      | ) | $ | (0.01      | )
|                                                                 |   |            |   |   |            |  
|Weighted Average Number of Common Shares
      Outstanding       |   | 92,371,192 |   |   | 83,876,537 |  

See condensed notes to interim consolidated financial
statements

4

---

ALPHARx, INC.INTERIM CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS DEFICIT FOR THE PERIOD ENDED DECEMBER 31, 2008
(UNAUDITED) (All amounts in US Dollars)

|                                       |  | Common Stock |  |   |        |  |   | AlphaRx, Inc. Shareholders |  |   |             |   |   |             |   |   |              |  
|-------------------------------------- |  | ------------ |  | - | ------ |  | - | -------------------------- |  | - | ----------- | - | - | ----------- | - | - | ------------ | -
|                                       |  |              |  |   |        |  |   |                            |  |   |             |   |   |             |   |   |              |  
|                                       |  |              |  |   |        |  |   |                            |  |   | Accumulated |   |   |             |   |   | Total        |  
|                                       |  |              |  |   |        |  |   | Additional                 |  |   | Other Com-  |   |   | Retained    |   |   | AlphaRx Inc. |  
|                                       |  | Number of    |  |   |        |  |   | Paid in                    |  |   | prehensive  |   |   | Earnings    |   |   | Shareholders |  
|                                       |  | Shares       |  |   | Amount |  |   | Capital                    |  |   | Income      |   |   | (Deficit)   |   |   | Deficit      |  
|Balance as of September
      30, 2007 |  | 81,203,964   |  | $ | 8,122  |  | $ | 15,824,162                 |  | $ | (6,609      | ) | $ | (16,284,473 | ) | $ | (458,798     | )
|Warrants Amortization                  |  |              |  |   |        |  |   | 131,832                    |  |   |             |   |   |             |   |   | 131,832      |  
|Warrants exercised                     |  | 2,737,228    |  |   | 273    |  |   | 273,450                    |  |   |             |   |   |             |   |   | 273,723      |  
|Stock Options exercised                |  | 3,430,000    |  |   | 343    |  |   | 274,407                    |  |   |             |   |   |             |   |   | 274,750      |  
|Private Placement                      |  | 5,000,000    |  |   | 500    |  |   | 474,500                    |  |   |             |   |   |             |   |   | 475,000      |  
|Foreign currency translation           |  |              |  |   |        |  |   |                            |  |   | (95         | ) |   |             |   |   | (95          | )
|Non- controlling interest              |  |              |  |   |        |  |   |                            |  |   |             |   |   |             |   |   |              |  
|Net Loss 2008                          |  |              |  |   |        |  |   |                            |  |   |             |   |   | (1,335,457  | ) |   | (1,335,457   | )
|Balance as of September
      30, 2008 |  | 92,371,192   |  | $ | 9,238  |  | $ | 16,978,351                 |  |   | (6,704      | ) |   | (17,619,930 | ) |   | (639,045     | )
|Foreign Currency Translation           |  |              |  |   |        |  |   |                            |  |   | 16,461      |   |   |             |   |   | 16,461       |  
|Non- controlling interest              |  |              |  |   |        |  |   |                            |  |   |             |   |   |             |   |   |              |  
|Net Loss for the Period                |  |              |  |   |        |  |   |                            |  |   |             |   |   | (21,039     | ) |   | (21,039      | )
|Balance as of December
      31, 2008  |  | 92,371,192   |  | $ | 9,238  |  | $ | 16,978,351                 |  | $ | 9,757       |   |   | (17,640,969 | ) | $ | (643,623     | )

See condensed notes to interim consolidated financial
statements

5

---

ALPHARx, INC.INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007
(UNAUDITED)(All amounts in US Dollars)

|Three months ended December 31,                                       |   | 2008    |   |   | 2007     |  
|--------------------------------------------------------------------- | - | ------- | - | - | -------- | -
|                                                                      |   |         |   |   |          |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                  |   |         |   |   |          |  
|Net Loss                                                              | $ | (21,039 | ) | $ | (585,189 | )
|Adjustments to reconcile net
      loss to net cash used in operating |   |         |   |   |          |  
|activities:                                                           |   |         |   |   |          |  
|Depreciation and amortization                                         |   | 17,176  |   |   | 23,855   |  
|Warrant amortization                                                  |   | -       |   |   | 149,559  |  
|Changes in assets and
      liabilities:                              |   |         |   |   |          |  
|Decrease
      (Increase) in accounts receivable                      |   | (68,729 | ) |   | 2,821    |  
|Decrease (Increase) in other assets                                   |   | (14,350 | ) |   | 3,756    |  
|(Decrease)
      Increase in accounts payable and accrued liabilities |   | 13,061  |   |   | (233,902 | )
|Accrued interest on notes payable                                     |   | 8,559   |   |   | (12,538  | )
|Increase in
      deferred revenue                                    |   | 33,333  |   |   | -        |  
|Non-controlling interest                                              |   | 1,081   |   |   | (4,209   | )
|Discontinued
      operations (Note 3)                                |   | -       |   |   | (13,249  | )
|                                                                      |   |         |   |   |          |  
|NET CASH USED IN OPERATING ACTIVITIES                                 |   | (30,908 | ) |   | (669,096 | )
|                                                                      |   |         |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                  |   |         |   |   |          |  
|                                                                      |   |         |   |   |          |  
|Purchase of
      Machinery & Equipment, net of disposals             |   | -       |   |   | -        |  
|                                                                      |   |         |   |   |          |  
|NET CASH PROVIDED BY INVESTING ACTIVITIES                             |   | -       |   |   | -        |  
|                                                                      |   |         |   |   |          |  
|                                                                      |   |         |   |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                  |   |         |   |   |          |  
|                                                                      |   |         |   |   |          |  
|Issuance of Common Stock                                              |   | -       |   |   | 935,973  |  
|Issuance
      (repayment) of Notes Payable, net                      |   | 42,019  |   |   | (221,228 | )
|                                                                      |   |         |   |   |          |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                             |   | 42,019  |   |   | 714,745  |  
|                                                                      |   |         |   |   |          |  
|Effect of exchange rate changes on cash and cash
      equivalents    |   | (14,350 | ) |   | (292     | )
|NET INCREASE (DECREASE) IN CASH                                       |   | (3,239  | ) |   | 45,357   |  
|                                                                      |   |         |   |   |          |  
|CASH, and cash equivalents, beginning of
      period                 |   | 24,623  |   |   | 128,328  |  
|                                                                      |   |         |   |   |          |  
|CASH, and cash equivalents, end of period                             | $ | 21,384  |   | $ | 173,685  |  
|                                                                      |   |         |   |   |          |  
|                                                                      |   |         |   |   |          |  
|                                                                      |   |         |   |   |          |  
|Taxes Paid                                                            | $ | 0       |   | $ | 0        |  
|Interest Paid                                                         | $ | 0       |   | $ | 19,234   |  

See condensed notes to interim consolidated financial
statements

6

---

ALPHARX INC.CONDENSED NOTES TO INTERIM
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2008(UNAUDITED)

NOTE 1. NOTES TO INTERIM CONSOLIDATED FINANCIAL
STATEMENTS

The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of all recurring accruals) considered
necessary for fair presentation have been included. Operating results for the
interim periods are not necessarily indicative of the results that may be
expected for the year ended September 30, 2008. Interim financial statements
should be read in conjunction with the Companys annual audited financial
statements.

NOTE 2. NATURE OF BUSINESS AND GOING CONCERN

ALPHARX, INC. (the Company) was incorporated under the laws of
the State of Delaware on August 7, 1997. The company is an emerging
pharmaceutical company specializing in the formulation of human therapeutic
products using proprietary drug delivery technologies.

Effective June 30, 2006 AlphaRx International Holdings Limited.
(AIH) acquired 100% of AlphaRx Life Sciences Ltd. (ALS) for a nominal amount
and the assumption of approximately $63,000 of related party liabilities. ALS is
involved in obtaining necessary regulatory approvals for the manufacture and
distribution of the Companys products in the Asian market.

Effective June 22, 2006, New Super Limited, an independent Hong
Kong based corporation, subscribed for 1,500 shares or 15% of common stock of
AlphaRx International Holdings Limited. (AIH), previously a wholly-owned
subsidiary of the Company.

The Company holds an indirect 42.5% interest in AlphaAP Inc.
(AAP), a joint venture established between the Company (via its AIH
subsidiary) and Basin Industrial Limited (an independent third party). As the
Company contributes no funds, and does not provide management or direction to
the joint venture, the Companys interest in the joint venture is not
consolidated into the financial statements. AIH receives a 5% royalty on all
revenues generated by AAP. This joint venture is currently inactive.

The consolidated financial statements reflect the activities of
the Company, 100% of AlphaRx Canada Limited and 85% of AlphaRx International
Holdings Limited and AlphaRx Life Sciences Ltd. (AIHs wholly owned subsidiary).
All material inter-company accounts and transactions have been eliminated.

The accompanying interim consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
Accordingly, they do not include any adjustments relating to the realization of
the carrying value of assets or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern. Continuance of the Company as a going concern is dependent on its
future profitability and on the on-going support of its shareholders, affiliates
and creditors. Factors relating to going concern issues include working capital
deficiencies, operating losses, shareholders deficits, and continued reliance
on external funding sources. Continuance of the Company as a going concern is
dependent on its future profitability and on the on-going support of its
shareholders, affiliates and creditors. In order to mitigate the going concern
issues, the Company is constantly pursuing new business arrangements and
striving to achieve profitability, and seeking capital funding on an ongoing
basis via the issuance of Promissory Notes, and private placements. The Company
has contracted with two parties during the three months ended December 31, 2008
for research and development consulting services that could also result in future license fees and royalties. There is no
assurance that such license fees or royalties will materialize.

7

---

NOTE 3. DISCONTINUED OPERATIONS

Interim statements of income and loss related to Flexogan
sales, which were discontinued, were as follows:

|Income Statements for three months ended December
      31, |   | 2008 |  |   | 2007  | 
|----------------------------------------------------------- | - | ---- |  | - | ----- | 
|Sales                                                       | $ | -    |  | $ | 1,808 | 
|Gain from discontinued operations                           | $ | -    |  | $ | 1,808 | 

There were no assets or liabilities remaining related to the
discontinued operations as of December 31, 2008 and September 30, 2008.

NOTE 4. NOTES PAYABLE

The Company issued approximately $42,000 in promissory notes
during the three months ended December 31, 2008. (During the three months ended
December 31, 2007 the Company issued $154,000 in promissory notes, before a
discount of $83,596). These notes bear interest at 12% per annum and are
repayable on the first anniversary date of issuance. Prepayment of these notes
prior to the first anniversary date is permitted.

Prior to December 31, 2007 all third party promissory notes
were repaid including interest from funds obtained via the issuance of Common
Stock. In conjunction with these promissory notes, the Company issued warrants
(See also Note 8  Warrants). This in turn required a discount to be established
in the amount of $83,596. This discount was expensed during the three months
ended December 31, 2007 in conjunction with the repayment of all promissory
notes.

See also note 9  Related Party Transactions.

NOTE 5. NON-CONTROLLING INTEREST

Effective June 22, 2006, AlphaRx International Holdings Ltd.
(AIH) issued 1,500 shares of its common stock to New Super Limited (NSL) at
a price of approximately $HK 6,667 per share or $HK 10 million in cash. (USD
$1,288,826). There are 10,000 common shares outstanding of which 8,500 or 85%
belong to the Company. With the consolidation of only 85% of AIH, a
non-controlling interest was established, representing net amounts owing to the
non-controlling shareholder. The capital infusion into AIH is accounted for as
additional paid in capital on the interim consolidated financial statements of
the Company.

NOTE 6. COMMON STOCK

The Company is authorized to issue 250,000,000 shares of common
stock. As of December 31, 2008, there are 92,371,192 shares of Common Stock
issued and outstanding with a stated par value of $0.0001 per share. (December
31, 2007  91,496,192)

The Company did not issue any shares of Common Stock during the
three months ended December 31, 2008. During the three months ended December 31,
2007 the Company issued the following restricted shares of Common Stock:

5,000,000 units, each unit consisting
of one share of Common Stock and a warrant to purchase one share of Common Stock
at $0.10, expiring December 31, 2009;

Officers, directors and consultants
exercised options to purchase 3,430,000 shares of Common Stock at an average
exercise price of $0.08 per share;

Michael Lee (CEO) exercised warrants to
purchase 1,862,228 shares of Common Stock at an exercise price of $0.10 per
share.

8

---

NOTE 7. STOCK OPTION PLANS

The Company now has only one Stock Option Plan (the 2008
Plan) under which officers, key employees, certain independent contractors, and
independent directors may be granted options to purchase shares of the Companys
authorized but unissued Common Stock. All outstanding options currently expire
no later than June 30, 2012. Proceeds received by the Company from exercises of
stock options are credited to Common Stock and additional paid-in capital.

At the Companys Annual General Meeting held November 26, 2008
a majority of stockholders approved amendments to the existing Stock Option
Plans including, among others: (i) combining the 2004 and 2006 Plans into the
2008 Stock Option Plan for ease of administration; (ii) providing a cap for
the number of options to be issued at 22,000,000; (iii) providing guidelines for
exercise prices such that the exercise price of any newly granted option is
never less than the market value or in the case of a 10%+ holder, never less
than 110% of the market value on the date of grant; (iv) providing for a maximum
term of 5 years for any option granted; (v) provide for a vesting schedule
whereby vesting must occur over at least 18 months with no more than
1/6th of the options granted vesting in any 3 month period; (vi)
providing for the maximum number of options to be granted to any one individual
in any 12 month period to be no more than 5% of the issued and outstanding
common stock, and (vii) providing for a maximum number of options to be granted
to any Investor Relations party to be no more than 2% of the issued and
outstanding common stock.

As a result of the new terms governing the Companys Stock
Option Plan, the maximum number of options that can still be issued totals
4,310,000, regardless of whether existing options are exercised or cancelled.

During the three months ended December 31, 2008 no options were
granted and no options were exercised.

Additional details of the 2004 and 2006 Plans, as at December
31, 2008, which were combined into the one remaining 2008 Plan, are as follows
(the 2000 and 2003 Plans no longer exist in any form):

2008 Stock Option Plan
    Number Granted/ (Exercised,
      Expired 
    or Cancelled)
    Issue Date
    Exercise Price $
    Share Price on Date of
      Grant $
    Expiry Date
    Remaining Contractual Life
      (Years)Inception
    0Granted
    12,720,000
    15/11/2004
    0.15
    0.11
    6/30/2012
    3.50Cancelled
    (6,000,000)
    12/28/2007
    -
    -
    -
    -Granted
    500,000
    15/11/2004
    0.40
       0.50
    0.11
    6/30/2012
    3.50Cancelled
    (40,000)
    12/28/2007
    -
    -
    -
    -Expired
    (460,000)
    2/10/2008
    -
    -
    -
    -Granted
    7,000,000
    10/1/2005
    0.16
    0.14
    6/30/2012
    3.50Granted
    390,000
    8/2/2005
    0.15
    0.14
    6/30/2012
    3.50Cancelled
    (40,000)
    12/28/2007
    -
    -
    -
    -Granted
    100,000
    5/25/2005
    0.13
    0.13
    6/30/2012
    3.50Granted
    3,290,000
    10/17/2005
    0.075
    0.08
    6/30/2012
    3.50Cancelled
    (560,000)
    12/28/2007
    -
    -
    -
    -Granted
    90,000
    1/3/2007
    0.10
    0.10
    1/3/2012
    3.01Exercised
    (2,730,000)
    12/27/2007
    0.075
    -
    -
    -Remaining
    14,260,000
    As at December 31, 2008Weighted Average Exercise Price
      and Contractual Life of Options Remaining
    $0.15
    
    
    3.48


9

---

During the three months ended December 31, 2007 options to
purchase 3,430,000 were exercised. Immediately thereafter the Company cancelled
options to purchase 7,660,000 shares of Common Stock under the various Option
Plans with the agreement of the option holders or in accordance with the Plans
terms and conditions. Accordingly the 2000 Plan and the 2003 Plan no longer
exist in any form. Also, the expiry period of options under the 2004 and 2006
Plans was accelerated, with the agreement of the option holders, such that all
existing and future options will expire in less than five years.

Additional information with respect to the various Plans stock
option during the three months ended December 31, 2007 was as follows:

|Options outstanding September 30, 2007:                | 25,810,000 
|------------------------------------------------------ | -----------
|Options exercised under the
      2004 and 2006 Plans: | (2,730,000)
|Options exercised under the 2000 and 2003
      Plans: | (700,000)  
|Options cancelled under the
      2000 and 2003 Plans: | (1,020,000)
|Options cancelled under the 2004 and 2006
      Plans: | (6,640,000)
|                                                       |            
|Options remaining December 31, 2007:                   | 14,720,000 

The Company has adopted the fair value accounting for employee
stock options as per SFAS 123(R) using the modified retrospective application
method, effective April 1, 2005. The Company did not record any stock based
compensation expense during the three months ended December 31, 2008 and 2007.
The Black-Scholes option-pricing model is used to calculate this expense. There
are no further stock based compensation expenses to be recorded based on options
granted to date and their existing terms and conditions. Multiplying the options
by their exercise price and dividing the total obtained by the total outstanding
options calculated the weighted average exercise price.

NOTE 8. WARRANTS

The Company did not issue any warrants, nor were any warrants
exercised during the three month period ended December 31, 2008. The Company has
the following warrants outstanding to purchase shares of Common Stock at
December 31, 2008:

Outstanding as at 
      September 30,
      2008
      
      Weighted Average 
      Exercise Price
      
      
      Weighted Average 
      Contractual Life7,260,000
      
      $0.10
      
      
      1.02Activity during the three months ended December 31,
        2008(1,050,000)
      Expired December 31, 2008Outstanding as at December 31, 20086,210,000
      
      $0.10
      
      
      0.90Below are details of the outstanding warrants as at
        December 31, 2008Issue Date
      Exercise Price $
      Share Price on Grant Date $
      Expiry Date
      Remaining Contractual Life (Years)
      Reason for Issuance 625,000
      3/31/2007
      0.10
      0.10
      3/31/2009
      0.25
      Issuance of Promissory Notes585,000
      9/30/2007
      0.10
      0.08
      9/30/2009
      0.75
      Issuance of Promissory Notes5,000,000
      12/31/2007
      0.10
      0.26
      12/31/2009
      1.00
      Private Placement of Units completed
      on Nov 14, 2007 and consisting of one share of common stock and one
      warrant.


10

---

The weighted average exercise price was calculated by
multiplying the warrants by their exercise price and dividing the total obtained
by the total outstanding warrants. The weighted average contractual life was
calculated by multiplying the warrants by their remaining contractual life and
dividing the total obtained by the total outstanding warrants. There were
12,370,000 warrants issued and outstanding as at December 31, 2007. The
following table details warrant activity during the three months ended December
31, 2007:

|Outstanding as of September 30,
      2007                | Weighted Average
      Exercise Price                                             | Weighted Average
      Contractual Life
|--------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------
|14,336,663                                                | $0.22                                                                             | 0.53
      Years                       
|Activity during the three months ended December 31, 2007:
|(5,204,160)                                               | Expired October 13, 2007                                                          |                                        
|5,000,000                                                 | Granted November 14, 2007 as part of a Private Placement of
      5,000,000 units
|770,000                                                   | Granted during Q1, 2008 based on issuance of Promissory Notes                    
|(670,275)                                                 | Expired December 19, 2007                                                        
|(1,862,228)                                               | Exercised December 27, 2007 @ $0.10 per share                                    
|Outstanding as of December 31,
      2007                 | Weighted Average
      Exercise Price                                             | Weighted Average
      Contractual Life
|12,370,000                                                | $0.10                                                                             | 1.24
      Years                       

NOTE 9: RELATED PARTY TRANSACTIONS

The Company sources some of its funding in the form of
promissory notes from directors. The directors loaned the Company approximately
$154,000 during the three months ended December 31, 2007. These loans attracted
interest at 12% per annum and were unsecured.

Edward Lee, brother of Michael Lee (President & CEO of the
Company) and managing director of AlphaRx Life Sciences Ltd. an 85% owned
subsidiary of the Company, received a commission of $25,000 in conjunction with
the sourcing of funds related to the $500,000 issuance of Common Stock during
the three months ended December 31, 2007. The net proceeds to the Company were
$475,000.

NOTE 10: RECLASSIFICATIONS

Certain amounts have been reclassified to conform to current
period presentation. Specifically the Company has adopted SFAS 160 
Non-controlling Interests in Consolidated Financial Statements. The objective of
this Statement is to improve the relevance, comparability, and transparency of
the financial information that a Company provides.

11

---

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATION

The following discussion and analysis should be read in
conjunction with the Financial Statements, including the condensed Notes
thereto, appearing in this Form 10-Q. For additional information and complete
financial statement note disclosure as of September 30, 2008, reference should
be made to the annual Form 10-K filed during December 2008. Except for the
historical information contained herein the foregoing discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those projected in the forward-looking
statements discussed herein.

General

AlphaRx is a drug delivery company specializing in the
development of innovative human therapeutic products for the pharmaceutical and
consumer health care market. Our core competence is in the development of novel
drug formulations for therapeutic molecules or compounds that have exhibited
poor gastro intestinal absorption due to poor solubility or have yet be
administerable to the human body with an acceptable delivery method. Our drug
delivery system is versatile and offers significant flexibility in the
development of suitable dosage formulations (i.e. oral, topical or parenteral)
to meet the requirements of specific drug molecules. We are no longer pursuing
direct marketing and sales of our market ready products, nor do we intend to
pursue direct marketing and commercialization of any newly developed products.
The absence of marketing expertise, and significant ongoing funding required to
introduce and promote a product successfully into the market are the principal
factors limiting our ability to directly market our proprietary products. We are
and will continue to seek out established collaborative partners, distributors
and licensees to commercialize and market our products in exchange for milestone
payments and royalties.

The costs incurred for individual research and development
initiatives to date cannot be readily determined because (i) there is no clear
distinction between initiatives in order to be able to differentiate between
them; (ii) all initiatives have a common goal and that is to adopt our
Bioadhesive Colloidal Dispersion drug delivery system to the specific drug in
order to improve that drugs effectiveness; and (iii) we do not maintain a time
control system to separately classify research and development activities
between similar initiatives.

The nature, timing and estimated costs to complete a research
and development initiative and anticipated completion dates cannot be estimated
because: (i) the nature of research is experimental and we could encounter
unforeseen situations which could significantly delay project completion or
require us to abandon the project; (ii) timing to complete a research initiative
depends, to a certain extent, on financial resources and we cannot predict with
any degree of certainty that financial resources will be available when needed
to complete any specific initiative; (iii) we cannot significantly influence our
partners and licensees as to timing and completion of collaborative efforts, and
(iii) cost estimates cannot be predicted with any acceptable degree of accuracy
due to unforeseen issues arising during the clinical stages or the approval
stages of any specific initiative.

If we cannot complete our research and development initiatives
on a timely basis consequences to our operations could be significant to the
point where the initiative would be delayed or even abandoned. We could also
face the risk of competitors developing the same or similar products and being
first to market. Finally, our failure to develop products on a timely basis
could substantially impair our ability to generate revenues and materially harm
our financial position.

We cannot predict the timing of material net cash inflows from
significant initiatives due to a number of factors including (i) availability of
financial resources required to market a new product via a partner, (ii) our
lack of experience in bringing a new product to market successfully and gaining
market share; (iii) competitors products and the nature and timing of their
marketing initiatives.

12

---

We intend to continue investing in the further development of
our drug delivery technologies and to actively seek collaborators and licensees
to accelerate the development and commercialization of products incorporating
our drug delivery systems. Depending upon a variety of factors, including
collaborative arrangements, available personnel and financial resources, we will
conduct or fund clinical trials on such products and will undertake the
associated regulatory activities.

Recent Developments

We entered into a feasibility and option agreement with Gaia
Biopharma Limited, a privately held, early stage biopharmaceutical company,
during October 2008. Under the agreement we will use our proprietary nano drug
delivery platforms to formulate two injectable products. Should development and
commercialization of these product candidates proceed beyond the formulation
stage, we could earn development and sales milestones as well as royalties based
on net sales.

We entered into a co-development agreement with a global
specialty pharmaceutical company during October 2008 whereby we have been tasked
to develop a novel drug formulation using our proprietary drug delivery
technology. The company will have an exclusive option period to complete a
commercialization agreement with us within six months of completion of the
formulation. The extent and duration of consulting services for the initial
phase have been finalized and work is underway on the formulation. It is too
early to determine whether the formulations will be commercially feasible. There
is no assurance that any further consulting services or any other form of
revenues will materialize with this company.

One of our most promising drug candidates is Zysolin that uses
an inhalable version of the drug Tobramycin (an antibiotic used to treat
Gram-negative bacteria) to treat Gram-negative pneumonia. We have completed
animal testing on Zysolin and are in the process of preparing protocols for
Phase I/II human trials. We have completed safety and efficacy testing on
Streptomycin (a drug used to treat tuberculosis) and are seeking collaborative
partner(s) to initiate human trials on this product candidate. We continue to
test formulations and conduct research on Vansolin (MRSA- pneumonia) and
Streptomycin (tuberculosis). The delivery route for all of the above product
candidates is Intravenous (I.V.) or Intratracheal (I.T.).

Our objectives for the remainder of this fiscal year include:

- Deliver co-development services and initiate follow on formulations for
  our two customers;
- Pursue other co-development agreements, license and royalty arrangements;
- Seek and obtain capital funding to continue with our research initiatives
  including:
- Completion of pre-clinical studies of Zysolin and preparation of protocol
  for Phase I/II human trials;
- Initiation of Phase I human trials for Zysolin.

During March 2008 Cypress Bioscience, Inc. (Cypress)
completed the acquisition of our partner Proprius Pharmaceuticals Inc.
(Propius). Proprius has development and commercialization rights for Indaflex
 our topical cream for the treatment of osteoarthritis of the knee. Additional
funding is now available through Cypress in order to further Phase II and III
human trials for Indaflex and continue the FDA application process. Under the
terms of our agreement, Proprius will undertake completion of clinical trials
for Indaflex and will have exclusive global rights (except for Asia and Mexico)
to sell and or sublicense Indaflex and any successor NSAID products developed by
us. Should clinical trials for Indaflex be successful and sales commence, we
will receive clinical trial completion milestone payments and sales milestone
payments including a milestone payment of $3 million for the successful
completion of the Phase II trials. In addition to the milestone payments, we
will receive royalty payments on sales of Indaflex by Proprius, its affiliates
and its sublicensees. There are no assurances or guarantees that Proprius and or
Cypress will continue with human trials of Indaflex.

13

---

Our 85% owned subsidiary AlphaRx International Holdings Ltd.
(AIH), through its wholly-owned subsidiary AlphaRx Life Sciences Ltd. is
seeking commercial arrangements and is responsible for the commercialization of
Indaflex in China.

We suspended application to have the Company listed on the
Toronto Stock Exchange  Venture Market during October 2008 due to market
conditions and our stock price among other factors. Should market conditions
improve in the future we may consider re-applying for a Canadian stock market
listing. There is no assurance that we will re-apply for this or any other
listing.

Overview of Results of Operations

The following tables summarize the results of operations for
the eight quarters ended December 31, 2008:

|Three              | Dec 31   | Sep 30   | June 30   | Mar 31    | Dec 31    | Sep 30    | Jun 30    | Mar 31   
|------------------ | -------- | -------- | --------- | --------- | --------- | --------- | --------- | ---------
|Months             | 2008     | 2008     | 2008      | 2008      | 2007      | 2007      | 2007      | 2007     
|Ended              | $        | $        | $         | $         | $         | $         | $         | $        
|Net Sales          | 103,574  | 16,326   | 46,798    | 17,243    | 17,132    | 95,891    | 35,856    | 27,365   
|Net Loss           | (21,039) | (59,252) | (293,761) | (397,255) | (585,189) | (227,583) | (462,236) | (469,640)
|Net Loss per Share | (0.00)   | (0.01)   | (0.01)    | (0.01)    | (0.01)    | (0.01)    | (0.01)    | (0.01)   

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER
31, 2008, AS COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2007

The Company incurred a net loss of $21,039 for the three month
period ended December 31, 2008 as compared to a net loss of $585,189 incurred
for the same period a year ago, a decrease of $564,150 or about 96%. The Company
signed two co-development agreements in the three months ended December 31, 2008
and generated $86,100 in consulting revenues for the period with no comparable
revenue during the same period a year ago. Operations in research and
development and general and administrative expenses have also been
cost-restructured based on the absence of capital funding available in the
current environment.

Revenues

Total revenues for the three-month period ended December 31,
2008 were $103,574 as compared to $17,132 generated for the same period a year
ago, an increase of $86,442 or about 505%. Royalty revenues were comparable year
over year at $17,474 for the three months ended December 31, 2008 as compared to
$17,132 for the same period a year ago. The Company generated consulting
revenues in the amount of $86,100 for the three months ended December 31, 2008
with no comparable revenues for the same period a year ago. Consulting revenues
relate to the formulation of compounds for a larger pharmaceutical concern,
which if pursued to commercialization, could result in license fees and
royalties. There is no assurance, however, that any such license fee or royalty
revenues will materialize.

General and Administrative Expenses

General and Administrative expenses consist primarily of
personnel costs related to general management functions, finance, office
overheads, as well as insurance costs and professional fees related to legal,
audit and tax matters.

General and Administrative expenses were $53,243 for the three
month period ended December 31, 2008 as compared to $359,822 incurred for the
same period a year ago, a decrease of $306,579 or about 85%. We incurred
$149,559 in warrant amortization during the three months ended December 31, 2007
with no comparable expense in the current period. We also incurred
$137,700 in investor relations and application fees for a Canadian stock
exchange listing during the three months ended December 31, 2007 as compared to
$9,023 in the current period (for investor relations only), a decrease of
$128,677 or about 93%. With the improvement of the US Dollar compared to the
Canadian dollar during the quarter, we realized a foreign exchange gain of
$37,510 during the three months ended December 31, 2008 as compared to a foreign
exchange loss of $9,926 incurred in the same period a year ago, an improvement
of $47,436.

14

---

Savings during the three months ended December 31, 2007
included the writing off of reserves for sale returns - $6,556 and the
forgiveness of certain legal fees totalling $20,677 for a total general and
administrative expense reduction of $27,233. There were no comparable write offs
or forgiveness of legal or other expenses during the three months ended December
31, 2008.

Research and Development Expenses

Research and development expenses include costs for scientific
personnel, supplies, equipment, and outsourced clinical and other research
activities.

Research and development expenses for the three months ended
December 31, 2008 were $42,959 as compared to $215,032 incurred for the same
period a year ago, a decrease of $172,073 or about 80%. We currently have 3 full
time staff as compared to 4 full time staff during the same period a year ago.
Also, research staff costs were reduced during the three months ended December
31, 2008 as compared to the same period a year ago. Staff costs totalled $33,760
for the three months ended December 31, 2008 as compared to $120,398 incurred
for the same period a year ago, a reduction of $86,638 or about 72%. We are
realigning our costs to be more in line with revenue expectations until capital
markets improve or additional funding is sourced. Research efforts will again
increase in the future depending on the timing and availability of additional
funds.

Depreciation

Depreciation totalled $17,176 for the three months ended
December 31, 2008 as compared to $23,855 incurred during the same period a year
ago, a decrease of $6,679 or about 29%. Our capital asset purchases were
minimized during the last two fiscal years totalling less than $17,000. Certain
assets are now fully depreciated resulting in decreasing depreciation expense.
Should any assets become permanently impaired they are written off to income as
determined.

Loss from Operations

Loss from operations were $9,804 for the three months ended
December 31, 2008 as compared to a loss of $581,577 incurred for the same period
a year ago, a decrease of $571,773 or 98%.

Interest Expense

Interest expense for the three months ended December 31, 2008
was $10,154 as compared to interest expense of $9,629 generated during the same
period a year ago. There were similar levels of promissory notes outstanding
during the two periods.

Gain from operations of Discontinued Component

We ceased entirely our sales of Flexogan during fiscal 2008 and
hence no such sales were generated during the three months ended December 31,
2008 as compared to $1,808 in sales for the same period a year ago.

Net Income (loss) attributable to Non-Controlling Interest

We reflected a non-controlling interest loss of $1,081 for the
three months ended December 31, 2008 as compared to an income of $4,209 for the
same period a year ago, a decrease of $5,290. Non-Controlling interest represents our minority shareholders proportionate
interest in our 85% owned subsidiary  AIH. The non-controlling interest
resulted in the investment in our subsidiary AlphaRx International Holdings Ltd.
by an independent third party  New Super Ltd. during June 2006.

15

---

Net Loss Attributable to AlphaRx, Inc.

As a result of the above revenues and expenses, we incurred a
net loss of $21,039 for the three months ended December 31, 2008 as compared to
a net loss of $585,189 incurred in the same period a year ago.

Cumulative Translation Adjustment

This adjustment results from unrealized foreign exchange gain
and losses stemming from translation of our foreign subsidiaries into U.S.
Dollars. We incurred a translation adjustment gain of $16,461 for the three
months ended December 31, 2008 as compared to a translation loss of $128 for the
same period a year ago. The gain stems primarily from the strengthening of the
US dollar versus the Canadian dollar during the period.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2008 the Company had working capital
deficiency of $(670,207) as compared to a working capital deficiency of
$(686,919) as at September 30, 2008. The Company has also increased its
shareholders deficiency of $(643,623) as at December 31, 2008 as compared to a
shareholders deficiency of $(639,045) as at September 30, 2008. We did not
issue any stock during the three months ended December 31, 2008.

We issued 10,292,228 shares of Common Stock during the three
months ended December 31, 2007. We used the resulting funds to repay all
outstanding promissory notes and to improve our cash position and hence our
working capital deficiency which led to an improved deficiency position as
compared to the three months ended December 31, 2008.

We have a licensing arrangement with Andromaco, which provides
us with a small royalty stream. We entered into two co-development agreements
during the three months ended December 31, 2008 and we continue to seek out new
arrangements. We also have licensing arrangements with Proprius Pharmaceuticals
Inc. and a joint venture agreement with AlphaAP Inc., which may provide us with
milestone payments and/or royalty streams in the future. There is no assurance
that such payments or royalty streams will materialize.

Since inception, we have financed operations principally from
the sale of Common Stock and issuance of promissory notes and expect to continue
this practice to fund our ongoing activities.

We currently do not have sufficient resources to complete the
commercialization of any of our proposed products or to carry out our entire
business strategy. Therefore, we will likely need to raise substantial
additional capital to fund our operations in the future. We cannot be certain
that any financing will be available when needed on acceptable terms or at all.
Any additional equity financings will be dilutive to our existing shareholders,
and debt financing, if available, may require additional stock to be issued
and/or involve restrictive covenants on our business.

We expect to continue to spend capital on:

|1. | research and development programs;                                                                  
|-- | ----------------------------------------------------------------------------------------------------
|2. | preclinical studies and clinical trials;                                                            
|3. | regulatory processes; and                                                                           
|4. | third party licensees and distribution partners to
      manufacture and market our products for us.

The amount of capital we may need will depend on many factors,
including:

16

---

|1. | the progress, timing and scope of our research and
      development programs;                                  
|-- | ----------------------------------------------------------------------------------------------------------------
|2. | the progress, timing and scope of our preclinical studies
      and clinical trials;                            
|3. | the time and cost necessary to obtain regulatory
      approvals;                                               
|4. | the time and cost necessary to establish or to retain
      sales and marketing partners to market our products;
|5. | the time and cost necessary to respond to technological
      and market developments; and                      
|6. | new collaborative, licensing and other commercial
      relationships that we may establish.                    

The inability to raise capital would have a material adverse
effect on the Company. We currently have no capital commitments other than the
payment of rent on our facilities lease, one leased auto and for certain
research equipment.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain of the information contained in this document
constitutes forward-looking statements, including but not limited to those
with respect to the future revenues, our development strategy, involve known and
unknown risks, uncertainties, and other factors which may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the risks and
uncertainties associated with a drug delivery company which has not successfully
commercialized our first product, including a history of net losses, unproven
technology, lack of manufacturing experience, current and potential competitors
with significant technical and marketing resources, need for future capital and
dependence on collaborative partners and on key personnel. Additionally, we are
subject to the risks and uncertainties associated with all drug delivery
companies, including compliance with government regulations and the possibility
of patent infringement litigation, as well as those factors disclosed in our
documents filed from time to time with the United States Securities and Exchange
Commission.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

The Company's management, with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer and Principal Accounting Officer, has evaluated the effectiveness of the
Company's disclosure controls and procedures as of December 31, 2008. The
Company's Chief Executive Officer and Chief Financial Officer and Principal
Accounting Officer concluded that the Company's disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
the Company is required to disclose in the reports it files under the Securities
Exchange Act of 1934, within the time periods specified in the SEC's rules and
forms.

17

---

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

There are currently no legal proceedings against the Company or
any of its subsidiaries.

ITEM 2 - CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES

We did not issue nor purchase any equity securities during the
three months ended December 31, 2008.

Warrants to purchase 1,050,000 shares of Common Stock expired
on December 31, 2008. There were 92,371,192 shares of Common Stock issued and
outstanding as of December 31, 2008 and there would be 112,841,192 shares of
Common Stock issued and outstanding if all warrants and options were exercised
as of December 31, 2008.

During the three months ended December 31, 2007 we issued the
following securities and made amendments to our stock options and warrants as
follows:

We issued 5,000,000 shares of Common Stock plus 5,000,000
warrants to purchase shares of Common Stock on November 14, 2007 in a private
placement for net proceeds of $475,000. We issued 3,430,000 shares of Common
Stock as a result of option exercises on December 27, 2007. Total proceeds were
$274,750. Finally we issued 1,862,228 shares of Common Stock as a result of
warrant exercises on December 27, 2007. Total proceeds were $186,223. All of the
above securities are restricted in accordance with Rule 144.

We cancelled options to purchase 7,660,000 shares of Common
Stock in accordance with the Stock Option Plan terms and conditions and with the
agreement of existing option holders during the three months ended December 31,
2007. No new options were issued.

During the three months ended December 31, 2007 warrants to
purchase 5,874,435 shares of Common Stock expired. We also issued 5,770,000 new
warrants in conjunction with the private placement of 5,000,000 shares of Common
Stock and in conjunction with the issuance of $154,000 in promissory notes.

As a result of the above transactions there were 91,496,192
shares of Common Stock issued and outstanding, as of December 31, 2007 and there
would be 123,496,192 shares of Common Stock issued and outstanding if all
warrants and options were exercised as of December 31, 2007.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

N/A

ITEM 4 - OTHER INFORMATION

None.

ITEM 5 - EXHIBITS AND REPORTS ON FORM 8-K

(i)            
EXHIBITS.

18

---

|31.1 | Certification of C.E.O. Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.                   
|---- | -----------------------------------------------------------------------------------------------------------
|31.2 | Certification of C.F.O. Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.                   
|32.1 | Certification of Michael Lee pursuant to Section 1350 of
      Chapter 63 of Title 18 United States Code.  
|32.2 | Certification of Marcel Urbanc pursuant to Section 1350
      of Chapter 63 of Title 18 United States Code.

(ii) REPORTS ON FORM 8-K

Not applicable

SIGNATURES:

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

DATED: February 13, 2009

ALPHARx, INC. By: /s/ Michael M. Lee
Michael M. Lee, Chief Executive OfficerDirectors: By: /s/
Michael M. LeeMichael M. Lee, DirectorBy: /s/ David MilroyDavid Milroy, DirectorBy: /s/ Ford MooreFord Moore, Director




---