UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

               For the quarterly period ended September 30, 2004

[_]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

           For the transition period from ____________ to ____________

                        Commission file number 333-83152


                                   Inyx, Inc.
        (Exact name of small business issuer as specified in its charter)

             Nevada                                        75-2870720
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                825 Third Avenue, 40th Floor, New York, New York
                    (Address of principal executive offices)

                                 (212) 838-1111
                          (Issuer's telephone number)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Check whether the registrant  filed all documents and reports  required
to be  filed  by  Section  l2,  13 or  15(d)  of  the  Exchange  Act  after  the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of October 22, 2004: 38,012,479 shares of common stock.

Transitional Small Business Disclosure Format (Check one):  Yes [ ] No [X]

Include whether Registrant is an accelerated filer:    Yes [ ] No [X]



<PAGE>
<TABLE>
<CAPTION>

                         PART I -- FINANCIAL INFORMATION
                          Item 1. Financial Statements

                                   INYX, INC.
                           Consolidated Balance Sheets
        (Expressed in thousands of U.S. dollars except for share amounts)

                                                              September 30,     December 31,
                                                                   2004             2003
                                                               (Unaudited)
                                                              ------------------------------
<S>                                                           <C>              <C>
                                     Assets
                                     ------
Current assets:
    Cash and cash equivalents                                 $         534    $         796
    Accounts receivable, net                                          2,648            3,395
    Inventory, net                                                    1,812            1,089
    Prepaid expenses and other current assets                         5,604            1,089
                                                              ------------------------------
       Total current assets                                          10,598            6,369
                                                              ------------------------------

Property, plant and equipment, net                                    4,850            5,183
Deferred financing costs, net and other assets                        1,281              905
Deferred tax asset                                                    1,687            1,294
                                                              ------------------------------
                                                                      7,818            7,382
                                                              ------------------------------

       Total assets                                           $      18,416    $      13,751
                                                              ==============================

                      Liabilities and Stockholders' Deficit
                      -------------------------------------

Current liabilities:
    Borrowings under revolving line of credit                 $       6,827    $       3,133
    Accounts payable                                                  3,372            2,178
    Accrued expenses and other current liabilities                      640              996
    Current portion of long-term debt                                 1,959            1,483
                                                              ------------------------------
       Total current liabilities                                     12,798            7,790
                                                              ------------------------------

Long term debt, net of current portion                                7,399            7,439
                                                              ------------------------------
       Total liabilities                                             20,197           15,229
                                                              ------------------------------


Stockholders' deficit:
    Preferred stock - $0.001 par value, 10,000,000 shares
    authorized -0- shares issued and outstanding                       --               --
    Common stock - $0.001 par value, 150,000,000 shares
    authorized, 38,012,480 shares issued and outstanding at
    September 30, 2004 and 28,525,000 at December 31, 2002               38               29
    Additional paid-in capital                                       20,696           12,201
    Accumulated deficit                                             (21,897)         (13,313)
    Subscriptions receivable                                           (343)            (100)
    Accumulated other comprehensive loss -
       foreign currency translation adjustment                         (275)            (295)
                                                              ------------------------------
       Total stockholders' deficit                                   (1,781)          (1,478)
                                                              ------------------------------

       Total liabilities and stockholders' deficit            $      18,416    $      13,751
                                                              ==============================
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>

                                   INYX, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)
       (Expressed in thousands of U.S. dollars, except for share amounts)




                                                 Nine Months Ended             Three Months Ended
                                                   September 30,                   September 30,
                                               2004            2003            2004            2003
                                           ------------------------------------------------------------
<S>                                        <C>             <C>             <C>             <C>

Net revenues                               $     11,549    $     10,864    $      4,249    $      3,067
Cost of sales                                    10,392           8,799           3,572           2,597
                                           ------------------------------------------------------------
        Gross profit                              1,157           2,065             677             470

Operating expenses:
     Research and development                     1,341            --               941            --
     General and administrative expenses          6,820           7,067           2,522           2,610
     Selling expenses                               255             217              94              70
     Reorganization transaction costs              --             3,893            --              --
     Depreciation and amortization                  431             453             154              97
                                           ------------------------------------------------------------

        Total operating expenses                  8,847          11,630           3,711           2,777
                                           ------------------------------------------------------------

Loss from operations before interest             (7,690)         (9,565)         (3,034)         (2,307)

Interest expense                                  1,287             535             595             149
                                           ------------------------------------------------------------

Loss before income tax benefit                   (8,977)        (10,100)         (3,629)         (2,456)

Income tax benefit                                  393             510            --               222
                                           ------------------------------------------------------------

Net loss                                   $     (8,584)   $     (9,590)   $     (3,629)   $     (2,234)
                                           ============================================================

Loss per share of common stock
  outstanding                              $      (0.28)   $      (0.58)   $      (0.11)   $      (0.09)
                                           ============================================================

Weighted-average number of shares
  outstanding                                30,780,478      16,521,245      32,523,000      25,119,565
                                           ============================================================
</TABLE>











The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>

                                   INYX, INC.
           Consolidated Statements of Changes in Stockholders' Equity
                          and Other Comprehensive Loss
                                   (Unaudited)
                    (Expressed in thousands of U.S. dollars)
                  For the nine months ended September 30, 2004



                                                                                              Accumu-
                                                                                               lated
                                                                                               Other
                                            Common Stock         Additional       Stock       Compre-        Accumu-
                                       Number of                  Paid-in     Subscription    hensive         lated
                                        Shares       Par Value    Capital      Receivable       loss         Deficit       Total
                                      ---------------------------------------------------------------------------------------------
<S>                                   <C>           <C>          <C>           <C>           <C>           <C>           <C>
Balance at December 31, 2003              28,525    $       29   $   12,201    $     (100)   $     (295)   $  (13,313)   $   (1,478)

Issuance of Stock for options
exercised in                                 265          --            291          --            --            --             291

Issuance of stock options                   --            --            227          --            --            --             227

Subscription receivable                     --            --           --            (243)         --            --            (243)

Warrants issued for financing fees          --            --            745          --            --             745

Warrants issued for consulting fees         --            --            580          --            --            --             580

Issuance of stock for services                32          --             30          --            --            --              30

Issuance of stock net of financing
costs of $768,000                          9,191             9        6,622          --            --            --           6,632

Net loss for the period                     --            --           --            --            --          (8,584)       (8,584)

Foreign currency translation
   adjustment                               --            --           --            --              20          --              20
                                      ---------------------------------------------------------------------------------------------
Balance at June 30, 2004                  38,012    $       38   $   20,696    $     (343)   $     (275)   $  (21,897)   $   (1,781)
                                      =============================================================================================
</TABLE>









The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                    INYX, INC.
                                       Consolidated Statements of Cash Flows
                                                    (Unaudited)
                                     (Expressed in thousands of U.S. dollars)



                                                                            Nine Months Ended          Three Months Ended
                                                                              September 30,               September 30,
                                                                           2004          2003          2004          2003
                                                                        ----------    ----------    ----------    ----------
<S>                                                                     <C>           <C>           <C>           <C>
Cash flows from operating activities:
    Net loss for the period                                             $   (8,584)   $   (9,590)   $   (3,629)   $   (2,234)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
      Depreciation                                                             431           225           155            97
      Amortization of financing costs                                          319          --             119          --
      Deferred tax asset                                                      (393)         (530)         --            (231)
      Reserve for inventory obsolescence                                       116          --             333          --
      Provision for bad debt                                                    29          --             (82)         --
      Stock option compensation                                                227         1,251            66           504
      Issuance of stock for services                                            30         2,103            30          --
      Warrants issued for financing  fees                                      745           331          --
      Issuance of warrants                                                     580           507           530           202
      Issuance of shares for exercise of stock options                         290          --            --            --
      Issuance of stock in recapitalization expenses                          --           2,758          --            --
      Subscription receivable                                                 (243)         --              50          --
    Changes in assets and liabilities:
      (Increase) decrease in accounts receivables                              718        (2,547)       (1,091)          580
      Increase in inventory                                                   (839)       (1,082)       (1,045)         (237)
      (Increase) decrease in prepaid and other current assets               (4,563)         (910)       (1,835)          164
      Decrease in bank overdraft                                              --            --             (51)         --
      Increase (decrease) in accounts payable and accrued liabilities          837         3,177          (563)          940
      Increase in deferred revenue                                               2          --             278          --
      Increase in other assets                                                --            --            --            --
      Increase in deferred financing costs                                    (648)         --            (153)         --
                                                                        ----------    ----------    ----------    ----------
            Net cash used in operating activities                          (10,946)       (4,638)       (6,557)         (215)
                                                                        ----------    ----------    ----------    ----------

Cash flows from investing activities:
    Assets transferred at book value through reorganization process           --          (5,133)         --            --
    Purchase of fixed assets                                                   (97)         --             (13)           (2)
                                                                        ----------    ----------    ----------    ----------
            Net cash  used in investing activities                             (97)       (5,133)          (13)           (2)
                                                                        ----------    ----------    ----------    ----------

Cash flows from financing activities:
    Advances by stockholder                                                   --             450          --             400
    Borrowings under revolving line of credit                                3,694         1,915           331          (379)
    Proceeds from issuance of long term debt                                   500         7,606          --              50
    Repayment of long term debt                                               --            (695)         --            (367)
    Proceeds from issuance of promissory demand note                           700            50           700          --
    Repayment of promissory notes                                             (650)         --            (650)         --
    Procceds from issuance of stock net of issue costs of $768,000           6,632           388         6,632           388
    Repayment of capital lease obligation                                     (115)         --             (39)         --
                                                                        ----------    ----------    ----------    ----------
            Net cash provided by financing activities                       10,761         9,714         6,974            92
                                                                        ----------    ----------    ----------    ----------
Effect of foreign exchange rate changes
    on cash and cash equivalents                                                20          (107)           94           (45)
                                                                        ----------    ----------    ----------    ----------

Change in cash and cash equivalents                                           (262)         (164)          498          (170)
Cash at beginning of period                                                    796            25            36            31
                                                                        ----------    ----------    ----------    ----------
Cash and cash equivalents at end of period                              $      534    $     (139)   $      534    $     (139)
                                                                        ==========    ==========    ==========    ==========
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       5
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollar amounts in tables are expressed in thousands)

NOTE 1:  BUSINESS DESCRIPTION AND PRESENTATION
------   -------------------------------------


         Inyx,  Inc.   ("Inyx"  or  the  "Company")   through  its  wholly-owned
subsidiaries,  Inyx  Pharma  Limited  and  Inyx  Canada  Inc.,  is  a  specialty
pharmaceutical  company which focuses on the  development and  manufacturing  of
prescription and over-the-counter  ("OTC") aerosol  pharmaceutical  products and
drug  delivery   technologies   for  the  treatment  of  respiratory,   allergy,
dermatological and topical conditions.  Inyx's client base primarily consists of
large  ethical  pharmaceutical  corporations,   branded  generic  pharmaceutical
distributors, and biotechnology companies.

         Inyx was incorporated on March 28, 2000, in the State of Nevada,  under
the name Doblique,  Inc.  ("Doblique").  As Doblique, the Company was engaged in
the business of breeding and racing  thoroughbred  horses at various major horse
racing venues throughout the United States. On March 6, 2003, management decided
to discontinue the Company's  thoroughbred horse operation by selling the assets
of that  operation  to a third  party.  The  assets  owned  by the  Company  and
operations conducted by the Company during that period were nominal.  Concurrent
with the  discontinuance of its horse racing  operations,  Doblique  concluded a
reverse  acquisition  of  Inyx  Pharma  Limited  ("Inyx  Pharma"),   an  aerosol
pharmaceutical  manufacturing company incorporated under the laws of England and
Wales, and changed its name to Inyx, Inc. ("Inyx").

         The  acquisition  of Inyx Pharma was  consummated on April 28, 2003, by
exchanging 16 million shares of the Inyx's  restricted  common stock for 100% of
the outstanding  common stock of Inyx Pharma.  As a result of the exchange,  the
stockholders of Inyx Pharma became the controlling  stockholders of Inyx, in the
aggregate,  holding  approximately 64% of the Company's  outstanding shares. The
transaction was accounted for as a recapitalization of Inyx. As a result of this
transaction  the  financial  statements  presented  for the period  prior to the
reverse merger  transaction with Inyx Pharma on April 28, 2003 are those of Inyx
Pharma and its predecessor Miza Pharmaceuticals (UK) Ltd. ("Miza UK").

         Prior to its  acquisition by the Company on March 7, 2003,  Inyx Pharma
had  effected a  transaction  under  which the  majority  of the  pharmaceutical
business  assets of Miza UK were  transferred  out of  Administration  (a United
Kingdom form of Chapter 11 bankruptcy  protection  and  reorganization)  to Inyx
Pharma.  Prior to this  transaction  Inyx  Pharma  was a  non-operating  private
corporation  with nominal net assets.  This  transaction  was accounted for as a
reorganization of entities under common control.

         As the  Biopharma  Division  was  part of  Miza UK but not  transferred
through the reorganization  process by Inyx Pharma on March 7, 2003, its results
of operation are eliminated for comparative  purposes in the pro forma financial
results.  The results of operations  have been  presented in this manner to show
the Miza UK  operation  with and  without  the  Biopharma  Division  in order to
compare its results of operations, as the predecessor company, to Inyx.

         Inyx currently manages and operates its business as one operating
segment.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------   ------------------------------------------

a)       Unaudited Consolidated Interim Financial Statements

         The accompanying consolidated financial statements include the accounts
of Inyx and its wholly owned  subsidiaries:  Inyx Pharma  Limited,  an operating
company  formed  under the laws of  England  and Wales;  Inyx  Canada,  Inc.,  a
federally  incorporated Canadian  corporation;  and Inyx Realty, Inc., a Florida
corporation  through its  disposition  on April 14, 2004 to a related  party for
nominal consideration.

         All  inter-company  accounts and  transactions  have been eliminated in
consolidation.

         The accompanying  consolidated financial statements for the nine months
and three months ended  September  30, 2004 and 2003 are  unaudited  but, in the
opinion of management,  include all necessary adjustments (consisting of normal,
recurring nature) for a fair presentation of the financial position,  results of
operations and cash flow for the interim periods presented.  Interim results are
not necessarily indicative of results for a full year. Therefore, the results of
operations  for the nine months  ended  September  30, 2004 are not  necessarily
indicative of operating results to be expected for a full year.


                                       6
<PAGE>

b)       Use of Estimates

         The consolidated  financial  statements are prepared in conformity with
accounting  principles  generally accepted in the United States of America.  The
preparation of consolidated  financial statements,  in conformity with generally
accepted  accounting  principles,  requires  management  to make  estimates  and
assumptions.  Those  estimates and  assumptions  affect the reported  amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported amounts of revenues and expenses.  Actual results could differ from
those estimates.

         Estimates and assumptions are periodically  reviewed and the effects of
any material revisions are reflected in the consolidated financial statements in
the period that they are determined to be necessary.

c)       Accounts Receivable

         Accounts  receivable  are  stated at net  realizable  value,  net of an
allowance for doubtful accounts.  Periodically,  management reviews all accounts
receivable and based on an assessment of whether they are collectible, estimates
the  portion,  if any, of the  balance  that will not be  collected  in order to
establish an allowance for doubtful  accounts.  Such  allowance was based on the
specific  identification  of accounts deemed  uncollectible  as of September 30,
2004.  The  provision  for the  allowance  for doubtful  accounts is included in
General and Administrative expenses, in the accompanying  consolidated statement
of operations.

d)       Inventory

         Inventory  is  valued  using  the  first-in  and  first-out  method  of
accounting and is stated at the lower of cost or net realizable value.

e)       Property, Plant and Equipment

         Property,  plant and  equipment is stated at cost,  net of  accumulated
depreciation and  amortization,  which is provided for by charges to income over
the  estimated  useful life of the assets  using the straight  line method.  The
useful life of assets ranges from 3-10 years for  equipment,  and up to 25 years
for buildings.  Leasehold improvements and capital leases are amortized over the
life of the related lease.

         Expenditures  that extend the useful life of the respective  assets are
capitalized   and  depreciated   over  the  lives  of  the  respective   assets.
Maintenance, repairs and other expenses that do not extend their useful life are
expensed as incurred.

f)       Deferred Financing Costs

         Costs directly  associated with obtaining financing are capitalized and
amortized on a  straight-line  basis over the  estimated  life of the  financing
arrangement.

g)       Impairment of Long Lived Assets

         The  Company  reviews  the  carrying  value of its long  lived  assets,
whenever  events  or  changes  in  circumstances  indicate  that the  historical
cost-carrying  value of an asset  may no  longer  be  appropriate.  The  Company
assesses  recoverability  of the carrying  value of the assets by estimating the
future net cash flows  expected to result from the  assets,  including  eventual
disposition.  If the future net cash flows are less than the  carrying  value of
the assets, an impairment loss is recorded,  equal to the difference between the
asset's  carrying  value  and  its  fair  value.  In  performing  such  reviews,
management takes into  consideration  the current operating levels including any
idle capacity,  alternative uses for production utilizing current equipment, and
growth trends and industry projections.

h)       Financial Instruments

         Financial  instruments consist of cash, accounts  receivable,  accounts
payable, accrued liabilities,  borrowings under the revolving line of credit and
loans payable.  Non-derivative  financial instruments include letters of credit,


                                       7
<PAGE>

commitments  to extend credit and  guarantees of debt.  There were no derivative
financial  instruments  at  September  30, 2004.  The  carrying  values of these
financial  instruments  approximate  their fair market value as of September 30,
2004.

i)       Revenue Recognition

         The  Company  recognizes  revenue  when (1)  persuasive  evidence of an
arrangement  exists;  (2) product  delivery has  occurred or services  have been
rendered;  (3) the fee is  fixed  or  determinable;  and (4)  collectability  is
reasonably  assured.  Revenues are recognized FOB shipping point,  when products
are shipped,  which is when legal title and risk of loss is  transferred  to the
Company's customers, and is recorded at the net invoiced value of goods supplied
to customers  after  deduction of sales discounts and sales and value added tax,
where applicable. In situations where the Company receives payment in advance of
the performance of research and development services,  such amounts are deferred
and recognized as revenue as the related  services are  performed.  For the nine
month period ended  September 30, 2004 and for the year ended  December 31, 2003
deferred revenues amounting to approximately $353,000 and $351,000 respectively,
are included in Accrued Expenses and Other Liabilities.

         Non-refundable  fees are  recognized  as  revenue  over the term of the
arrangement,  based on the percentage of costs incurred to date, estimated costs
to  complete  and total  expected  contract  revenue.  Product  returns  are not
accepted.

         Shipping  costs are paid by the Company's  customers.  Any shipping and
handling  costs  incurred by the company are  included in costs of goods sold in
the accompanying consolidated statements of operations.

j)       Loss per Share

         The Company follows the guidelines of Statement of Financial Accounting
Standards  No. 128,  Earnings Per Share (SFAS 128) in  calculating  its loss per
share.  Loss per share ("LPS") is computed using the weighted  average number of
common shares outstanding during the period. The Company has reported a net loss
for the nine and three months ended  September  30, 2004 and 2003.  As a result,
23,481,687 (2003-  6,420,000)  shares of common stock,  which may be issued upon
exercise of stock options and warrants respectively, have been excluded from the
calculation,  for both the nine and three month periods ended September 30, 2004
and 2003, because their inclusion would be anti-dilutive.

k) Stock Based Compensation

         On May 1, 2003,  the Company  adopted a Stock Option Plan that provides
for the granting of incentive  stock options and non qualified stock options for
the benefit of employees, officers,  consultants,  directors and persons who the
Company believes may have made a valuable contribution to the Company. The total
number of shares that may be issued  under the plan  amounts to  5,000,000.  The
exercise  price per share must be at least equal to the fair market price at the
time of grant. There were 292,500 stock option granted, no options exercised and
227,000 options cancelled during the nine months ended September 30, 2004. As of
September 30, 2004, there were 4,450,000 stock options outstanding at a weighted
average  exercise price of $1.11 per share. As of September 30, 2004, the number
of exercisable options is 3,415,000.

         The Company  applies the fair value  method of  Statement  of Financial
Accounting Standards No. 123, Accounting for Stock Based Compensation ( SFAS No.
123) in  accounting  for its stock  option  plan.  The fair value of each option
granted is estimated on the date of grant using the Black-Scholes option pricing
model.  The fair value of all  options  granted  has been  charged to  salaries,
wages, and benefits in accordance with SFAS No. 123.

l)       Concentration of Credit Risk

         The Company obtains detailed credit evaluations of customers  generally
without  requiring  collateral,  and  establishes  credit  limits  as  required.
Exposure to losses on receivables is  principally  dependent on each  customer's
financial  condition.  The Company  monitors its exposure for credit risk losses
and maintains an allowance for  anticipated  losses.  For the three months ended
September 30, 2004 and 2003,  the Company's  top three  customers  accounted for
approximately  52% and 42% of net  revenues,  respectively.  For the nine months
ended September 30, 2004 and 2003, the Company's top three  customers  accounted
for approximately 47% and 42% of net revenues, respectively. For the nine months
ended September 30, 2004 and 2003, the Company's top three  customers  accounted
for 24% and  48% of net  receivables,  respectively.  The  loss of any of  these
customers may have a material adverse effect on the operations of the Company.


                                       8
<PAGE>
<TABLE>
<CAPTION>

m)       Income Taxes

         The Company has adopted Statement of Financial Accounting Standards No.
109,  Accounting for Income Taxes (SFAS No. 109). This standard requires the use
of an asset and  liability  approach for financial  accounting  and reporting on
income taxes.  If it is more likely than not that some portion of a deferred tax
asset will not be realized, a valuation allowance is recognized.

n)       Translation of Foreign Currency

         The functional  currency of the Company's United Kingdom  subsidiary is
the Great Britain  Pound.  The Company's  financial  statements  are reported in
United  States  Dollars (the "Dollar" ) and are  translated  in accordance  with
Statement of Financial Accounting Standards No. 52, Foreign Currency Translation
(SFAS No. 52), which requires that foreign  currency  assets and  liabilities be
translated using the exchange rates in effect at the balance sheet date. Results
of operations are translated using the average exchange rates prevailing  during
the period.  For purposes of SFAS No. 52, the Company considers the Dollar to be
the reporting  currency.  The effects of  unrealized  exchange  fluctuations  on
translating foreign currency assets and liabilities into Dollars are accumulated
as a cumulative translation adjustment which is included as a separate component
in  stockholders'  deficit.  Realized  gains and losses  from  foreign  currency
transactions are included in the results of operation for the period.

o)       Reclassifications

         Certain  amounts  from  prior  consolidated  financial  statements  and
related  notes  have  been   reclassified  to  conform  to  the  current  period
presentation.



NOTE 3:  ACCOUNTS RECEIVABLE, NET
------   ------------------------

         Accounts receivable consists of the following:

                                       September 30, 2004     December 31, 2003
                                       ------------------    ------------------
Trade receivables                      $            2,810    $            3,586
Less allowance for doubtful accounts                 (162)                 (191)
                                       ------------------    ------------------
                                       $            2,648    $            3,395
                                       ==================    ==================

         There  were no  write-offs  during  the nine  and  three  months  ended
September 30, 2004.



NOTE 4:  INVENTORY, NET
------   --------------

         Inventory is comprised of the following:

                                       September 30, 2004     December 31, 2003
                                       ------------------    ------------------
                                                             $              172
Finished goods                         $               15
Work in process                                       126                   266
Raw materials                                       1,837                 1,015
                                       ------------------    ------------------
                                                    2,135                 1,296
Less provision for obsolescence                      (323)                 (207)
                                       ------------------    ------------------
                                       $            1,812    $            1,089
                                       ==================    ==================


NOTE 5:  PREPAID EXPENSES AND OTHER CURRENT ASSETS
------   -----------------------------------------

         Prepaid expenses and other current assets consist of the following:

                                                          September 30, 2004    December 31, 2003
                                                          ------------------   ------------------
<S>                                                       <C>                  <C>
Prepaid refundable deposit for equipment (a)              $            1,205   $             --
Prepaid refundable deposit for business development (b)                1,096                 --
Deferred acquisition costs                                             1,285                 --
Prepaid vendor invoices                                                  777                  347
Deferred Development costs                                               200                 --
Prepaid refundable deposit for acquisition candidate                     320                   71




                                       9
<PAGE>

Deferred legal and consulting fees                                       569                  152
Prepaid rent                                                            --                     71
Prepaid property tax                                                    --                     55
Prepaid insurance                                                         10                  128
Sales tax receivable, net                                                 88                  132
Other prepaid expenses                                                    54                  133
                                                          ------------------   ------------------
                                                          $            5,604   $            1,089
                                                          ==================   ==================
</TABLE>


         (a)  The  Company's   subsidiaries  are  expected  to  begin  providing
manufacturing  technology  transition consulting services to the country of Cuba
on  behalf  of the  United  Nations  Development  Program  ("UNDP").  Consulting
services to be provided include the  installation of  manufacturing  facilities,
equipment,  and systems to  manufacture  CFC-free or  hydrofluoroalkane  ("HFA")
aerosol  based  respiratory  inhalers  for the  treatment  of asthma and chronic
obstructive  respiratory  disease  conditions.  As the parent  company is a U.S.
corporation and because  certain  involved  members of the Company's  management
team are U.S. residents,  to perform on the contract, the Company's subsidiaries
require United States government  business  authorizations and export permits to
do business in that  developing  nation.  Due to political  events or changes to
U.S.  government  laws,  the U.S.  government  may not  continue  to provide the
Company's  subsidiaries  with the  necessary  permits  and  authorizations  they
require to provide consulting services in that developing  country.  The failure
to receive or sustain such authorizations or permits may have a material adverse
affect on any costs, expenses, or prepaid fees and deposits that the Company and
its  subsidiaries may have incurred or will incur in relation to this consulting
contract,  or the subsidiaries'  abilities to continue to provide their services
to that developing country.  Additionally,  although the Company's  subsidiaries
will be paid  directly by the UNDP through a series of progress  payments,  they
are  subject  to risks of doing  business  in a  developing  country,  including
dealing with import or export licensing requirements;  difficulties in enforcing
aspects of the Company's subsidiaries' contracts with the UNDP and that country;
difficulties  in  protecting   intellectual  property;   unexpected  changes  in
regulatory requirements; legal uncertainty regarding liability, tax, tariffs and
other trade  barriers;  foreign  exchange  controls  and other  currency  risks;
inflation;  challenges  to  credit  and  collections;  expropriation;  and local
government instability, war, riots, insurrections and other political events.

         (b) The Company has commenced the  development  of its own  proprietary
pharmaceutical   products   for   respiratory,   dermatological,   topical   and
cardiovascular drug delivery applications.  The Company has not yet obtained the
required regulatory approvals to market such products

         (c) The  Company  has been  involved  in a  transaction  to  acquire  a
pharmaceutical  manufacturing operation,  which it announced on October 7, 2004.
Costs  incurred in relation to this  transaction  include  consulting  fees, due
diligence  costs and  manufacturing  equipment  deposits.  These costs have been
capitalized in anticipation of the completion of this transaction.



NOTE 6:  PROPERTY, PLANT AND EQUIPMENT, NET
------   -----------------------------------

         Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>

                                                   September 30, 2004    December 31, 2003
                                                   ------------------    ------------------
<S>                                                <C>                   <C>
Land                                               $              546    $              546
Buildings                                                       1,059                 1,059
Machinery, equipment and office furniture                       3,541                 3,524
Computer hardware & software                                       99                    19
                                                   ------------------    ------------------
                                                                5,245                 5,148
Less accumulated depreciation                                    (724)                 (340)
                                                   ------------------    ------------------
                                                                4,521                 4,808

Computer hardware & software under capital lease                  382                   382
Less accumulated amortization                                     (53)                   (7)
                                                   ------------------    ------------------
                                                                  329                   375
                                                   ------------------    ------------------
                                                   $            4,850    $            5,183
                                                   ==================    ==================
</TABLE>


                                       10
<PAGE>
<TABLE>
<CAPTION>

         For the nine and  three  months  ended  September  30,  2004 and  2003,
depreciation  of  property,  plant  and  equipment  was  approximately  $385,000
(2003-$453,000)  and  $136,000  (2003-$97,00)  respectively.   Amortization  for
equipment under capital leases was  approximately  $46,000 (2003-$0) and $18,000
(2003-$0)  for the nine and  three  months  ended  September  30,  2004 and 2003
respectively.

NOTE 7:  DEFERRED FINANCING COSTS, NET AND OTHER ASSETS
------   ----------------------------------------------

         Deferred  financing  costs,  net and  other  assets  are  comprised  of
deposits on office space of $28,000 and deferred  financing  costs of $1,236,000
associated with the Company's issuance of the revolving facility and convertible
debt securities and other assets  approximating  $17,000. For the nine and three
months ended September 30, 2004 and 2003, the amortization of deferred financing
costs approximated $319,000 (2003-$0) and $119,000 (2003-$0).

NOTE 8:  BORROWINGS UNDER REVOLVING LINE OF CREDIT
------   -----------------------------------------

         The  Company  has a  $6.5  million  revolving  line  of  credit  with a
financial institution,  which is renewable in December 2006. Advances under this
facility,   amounting  to   approximately   $6.8  million,   which  includes  an
over-advance   of   approximately   $300,000,   at  September   30,  2004,   are
collateralized by accounts  receivables based on an agreed formula and all other
assets of the  Company.  The Company has the option of paying  interest on these
borrowings in cash or by issuing common stock.  Interest on these  borrowings is
payable  monthly  at  prime  plus 3%  with a  minimum  of 7% on the  outstanding
balance.


NOTE 9:  LONG TERM DEBT, NET OF CURRENT PORTION
------   --------------------------------------

         Long-term debt, net of current portion consists of the following:

                                                                              September 30, 2004    December 31, 2003
                                                                              ------------------   ------------------
<C>                                                                           <C>                  <C>
7% convertible term note due to Laurus Funds, collateralized                  $            5,000   $            4,500
   by accounts receivable and other assets of the Company (a)
Uncollateralized 6% convertible promissory note due to customer,(b)                        4,013                4,013
Uncollateralized  7% to 18% demand notes due to a  stockholder  and an
   executive of the Company, principal and interest due on demand
                                                                                             150                  100
Capital lease obligations, due to financial institutions, collateralized by
   software and equipment, due in monthly installments of $14,000 including
   interest of 10% to 27%, through
   2006 (c)                                                                                  195                  309
                                                                              ------------------   ------------------
                                                                                           9,358                8,922
Less current portion                                                                       1,959                1,483
                                                                              ------------------   ------------------
Debt, net of current portion                                                  $            7,399   $            7,439
                                                                              ==================   ==================
</TABLE>


(a)      The principal is due in monthly installments of approximately  $141,000
         starting in April 2004 through  November 2006, while interest on unpaid
         balances is payable monthly. The Company has the option to issue common
         stock in lieu of debt service payments at the then-market  price of the
         stock.  In  addition,  at the  option  of the  holder,  the debt may be
         converted  into common stock at a fixed  conversion  price of $0.80 per
         share based on an agreed upon  conversion  formula.  In April 2004, the
         Company  received  a thirty  day  waiver  from the  holder on the first
         principal  payment due which was subsequently  further extended through
         the date of this filing. In addition the Company received a deferral on
         certain interest  payments which have been  subsequently paid to Laurus
         Funds. As  consideration  for the deferrals,  the Company issued a five
         year Common Stock Purchase Warrants to Laurus Funds to purchase 694,000
         shares of common stock at an exercise price of $0.81 per share.

         The principal  amount of this  collateralized  7% convertible term note
         was increased by another $500,000 on May 27, 2004. As consideration for
         the  increase  the  Company  issued a five year Common  Stock  Purchase
         Warrant to Laurus  Funds to purchase  82,500  shares of common stock at
         exercise prices ranging from $1.00 to $1.40 per share. The principal is
         due in monthly  installments  of  approximately  $17,000  commencing in
         November 2004 through November 2006.



                                       11
<PAGE>

         Pursuant to the  Registration  Rights  Agreement with Laurus Funds, the
         Company  could be  liable  for  certain  penalties  as  results  of not
         registering the securities within a specified time frame.  However,  to
         date the  Company  has not  received  any  demands  for  payment of any
         penalties.

(b)      Principal  is due in Great  Britain  Pounds,  on March 6,  2007,  while
         interest is payable  annually  commencing on March 7, 2004.  The holder
         has the option to convert  this note and any  accrued  interest  into 4
         million  shares of the Company's  common stock at any time before March
         6, 2007. Additionally, the holder has the first right of refusal, for a
         period  of four  years on any  additional  debt  financing  that may be
         required by the Company.  In March of 2004, the Company received,  from
         the holder, a waiver of the first annual interest payment  amounting to
         approximately  $240,000 in consideration of future product  development
         services.

(c)      The Company  leases  computers and furniture  under capital leases that
         expire at various dates through 2006.  The  recognition of these assets
         and liabilities in the accompanying financial statements did not result
         in cash payments by the Company. Interest rate ranging from 10% to 28%.

         As at September 30, 2004 the principal installments payable on the debt
are as follows:

2005                                                               $       1,959
2006                                                                       1,982
2007                                                                       5,417
                                                                   -------------
Total                                                                     $9,358
                                                                   =============


NOTE 10: SUBSEQUENT EVENTS
-------  -----------------

         On October 4, 2004, the Company granted 75,000 stock purchase  warrants
to a  consultant  in  connection  with two  private  placements  the Company had
completed from August 3, 2004 through  September 3, 2004.  These 5-year warrants
allow the consultant to purchase the Company's common stock at $1.08 per share.

         On  October  7,  2004,  the  Company  announced  that it had  signed an
agreement in principle with a  multinational  pharmaceutical  company to acquire
the assets and certain business of that company's subsidiary in Puerto Rico. The
agreement in principle calls for execution of a definitive agreement by December
15, 2004 and closing of the  acquisition  by March 31, 2005.  The  operation the
Company is planning to acquire is located in Manati, Puerto Rico and consists of
a 139,000 square foot regulatory-compliant pharmaceuticals aerosol manufacturing
and testing plant.

         On  November  8, 2004,  the Company  announced  that it had  expanded a
product  development  agreement with one of its clients.  Under the terms of the
agreement,  the  Company's  United  Kingdom  subsidiary,  Inyx  Pharma  will  be
assisting the client in the  development  and supply of  additional  topical and
foam aerosol products for dermatological applications.

NOTE 11: STOCKHOLDERS' DEFICIT
-------  ---------------------

         The stockholders'  deficit information  presented in these consolidated
financial  statements  reflects  the  recognition  of the effect of the  reverse
acquisition transaction with Inyx Pharma (See Note 1).

         In January  2004,  pursuant  to an  exercise  of 265,000  options,  the
Company issued 200,000 shares of common stock at approximately  $1.10 per share,
and 65,000 shares of common stock at approximately $1.20 per share.

         During the nine month period  ended  September  30,  2004,  the Company
recorded  approximately  $227,000  respectively,  of additional  paid-in capital
resulting  from stock  options  which vested  during the period.  This amount is
included in general and administrative expenses in the consolidated statement of
operations.

         During the nine month period  ended  September  30,  2004,  the Company
recorded   approximately  $567,000  of  warrants  granted  to  Laurus  Funds  as
consideration  for its  collateralized  7%  convertible  term  note and  certain





                                       12
<PAGE>
<TABLE>
<CAPTION>

amendments to the loan agreement thereafter.  In addition during the period, the
Company recoded  approximately  $178,000 of additional paid-in capital resulting
from the issuance of 700,000 stock purchase warrants as additional consideration
for  promissory  notes  issued  to two of its  executives  and  one  independent
director.  These  amounts are included in interest  expense in the  consolidated
statement of operations

         During the nine month period  ended  September  30,  2004,  the Company
recorded approximately $580,000 of additional paid-in capital resulting from the
issuance of stock purchase  warrants.  Which included (i) 100,000 stock purchase
warrants  granted to a resigning  director as an exchange  for  cancellation  of
350,000 stock  options.  These Common Stock  Purchase  Warrants have an exercise
price of $1.20 per share.  (ii) 1,500,000  warrants granted to an entity related
to Company's  Chairman,  and his spouse.  These five-year  warrants were granted
pursuant to various business  development  services  provided to the Company and
allow the holder to  purchase  our  common  stock at a price of $0.90 per share.
These  amounts  are  included  in general  and  administrative  expenses  in the
consolidated statement of operations

         On July 1, 2004, the Company issued 31,579  restricted shares of common
stock for  services  under a  strategic  collaboration  agreement  amounting  to
approximately $30,000. This amount is included in the general and administrative
expenses in the consolidated statement of operations.

         On August 3, 2004 through  September 3, 2004 the Company  completed two
private  placements and issued an aggregate of 9,190,901  shares of common stock
at exercise prices ranging from $1.00 to $1.11 per share. The private  placement
resulted in proceeds of approximately $6.6 million net of offering related costs
amounting to approximately $768,000. All of the investors were granted five-year
non-detachable  warrants to purchase up to an additional 9,190,901 shares of our
common  stock in aggregate  at exercise  prices  ranging from $1.00 to $1.11 per
share.  During the term of such  warrants,  the exercise price shall be adjusted
based on an agreed upon formula.  The warrants also contain  certain  redemption
and anti-dilution provisions.

NOTE 12: ACCUMULATED COMPREHENSIVE LOSS
-------  ------------------------------

         The  accumulated  comprehensive  loss  reflected  in  the  Consolidated
Statements of Operations  represents  accumulated  foreign currency  translation
adjustments  associated  with the  conversion  of the Company's  United  Kingdom
subsidiary's  accounts to US dollars.  These amounts are not adjusted for income
taxes as they relate to an indefinite investment in a foreign subsidiary.



NOTE 13: SUPPLEMENTAL CASH FLOW INFORMATION
-------  ----------------------------------
                                                                   September 30, 2004    December 31, 2003
                                                                   ------------------   ------------------
<S>                                                                <C>                  <C>
Supplemental Disclosure of Cash Flow Information:
     Cash paid during the period for interest                      $              341   $              216
                                                                   ==================   ==================
Supplemental Disclosure of Non-Cash Financing Activities:
     Conversion of shareholder debt into 100,000 shares of stock                 --                    100
                                                                   ==================   ==================
     Shares issued for services                                                    30                  799
                                                                   ==================   ==================
     Shares issued for finders fees                                              --                  1,302
                                                                   ==================   ==================
     Warrants issued for financing fees and services                              592                2,411
                                                                   ==================   ==================
Supplemental Disclosure of Non-Cash Investing Activities:
     Capital leases                                                              --                    309
                                                                   ==================   ==================
</TABLE>







                                       13
<PAGE>

                    PRO FORMA FINANCIAL STATEMENT INFORMATION

         The following condensed pro forma consolidated statements of operations
are based on the assumption  that the  acquisition of Inyx Pharma Limited ("Inyx
Pharma") took place as of January 1, 2003,  and includes the  operations of Miza
Pharmaceuticals (UK) Limited ("Miza UK"), the predecessor company to Inyx Pharma
for the period from  January 1, 2002  through  March 6, 2003.  As the  Biopharma
Division  was part of Miza UK but not  transferred  through  the  reorganization
process by Inyx Pharma on March 7, 2003, its results of operation are eliminated
for comparative purposes in the pro forma financial results.


                                   INYX, INC.
      Unaudited Pro Forma Condensed Consolidating Statements of Operations
               For the Nine Month Period Ended September 30, 2003

                                 (In Thousands)

Net revenues                                                       $     10,530
Cost of sales                                                             8,406
                                                                   ------------
       Gross profit                                                       2,124

Expenses:
    General and administrative expenses                                   5,282
    Selling expenses                                                        217
    Depreciation and amortization                                           573
    Management fees                                                        --
                                                                   ------------
          Total operating expenses                                        6,072
                                                                   ------------
Loss from operations before other expenses                               (3,948)

Other expense:
    Reorganization and administration                                        55
    Acquisition costs                                                     3,893
    Shares issued for consulting fees                                      --
    Investor relations                                                     --
    Consulting fees                                                        --
    Warrants issued for services                                            507
    Interest expense                                                        733
                                                                   ------------
                                                                          5,188
Loss before income tax benefit                                           (9,136)

Income tax benefit                                                          510
                                                                   ------------
Net loss                                                           $     (8,626)
                                                                   ============



                                       14
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operations


         The financial  information set forth in the following discussion should
be read in  conjunction  with,  and  qualified in its entirety by the  Company's
consolidated  financial statements and related notes appearing elsewhere in this
report.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Forward-Looking Statements

         Statements  that are not  historical  facts included in this report are
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995 that involve risks and  uncertainties  that could
cause actual results to differ from projected  results.  Such statements address
activities, events or developments that the Company expects, believes, projects,
intends or  anticipates  will or may  occur,  including  such  matters as future
capital, business strategies,  expansion and growth of the Company's operations,
cash flow,  marketing of products and services,  and development of new products
and  services.  Factors  that could cause  actual  results to differ  materially
("Cautionary  Disclosures")  are described  throughout  this report.  Cautionary
Disclosures include, among others: general economic conditions,  the markets for
and market price of the Company's  products and services,  the Company's ability
to find,  acquire,  market,  develop and produce new products and services,  the
strength and  financial  resources of the Company's  competitors,  the Company's
ability to find and retain skilled personnel, labor relations,  availability and
cost of material and equipment, the results of financing efforts, and regulatory
developments  and compliance.  All written and oral  forward-looking  statements
attributable  to the Company are  expressly  qualified in their  entirety by the
Cautionary Disclosures. The Company disclaims any obligation to update or revise
any  forward-looking  statement  to reflect  events or  circumstances  occurring
hereafter or to reflect the occurrence of anticipated or unanticipated events.

General

         Inyx, Inc. ("Inyx",  "we", "us",  "our", or the "Company")  through its
wholly-owned subsidiaries,  Inyx Pharma Limited ("Inyx Pharma") and Inyx Canada,
Inc.  ("Inyx  Canada"),  is a  specialty  pharmaceutical  company.  We focus our
expertise   on   the   development   and   manufacture   of   prescription   and
over-the-counter  ("OTC")  aerosol  pharmaceutical  products  and drug  delivery
technologies  for  the  treatment  of  respiratory,   allergy,   cardiovascular,
dermatological  and topical  conditions.  Our client base primarily  consists of
ethical pharmaceutical corporations, branded generic pharmaceutical distributors
and  biotechnology  companies.  Although  we perform  some  sales and  marketing
functions, we have limited product distribution capabilities and so we depend on
our customers'  distribution  channels or strategic  partners to market and sell
the pharmaceutical products we develop and manufacture for them.

         We  intend  to  expand  our  product   development  and   manufacturing
activities into our own lines of prescription and OTC  pharmaceutical  products,
but as of September 30, 2004, we had not yet  commercialized or marketed our own
products or drug delivery applications.  Additionally, a material element of our
growth  strategy  is to expand  our  existing  business  through  the  strategic
acquisition of pharmaceutical  products and drug delivery  technologies that are
complementary to our expertise in the aerosol pharmaceutical sector.

         Our Company was incorporated  under the laws of Nevada in March 2000 as
Doblique,  Inc. ("Doblique").  In July 2002, we became a publicly-traded company
when  we  completed  a  registration  statement  for the  sale by our  principal
stockholder of 2,450,000 shares of common stock.  Since July 2002, we have filed
annual,  quarterly  and  periodic  reports  with  the  Securities  and  Exchange
Commission pursuant to Section 15(d) of the Securities Exchange Act of 1934.

         Prior to March  2003,  we were in the  business  of owning  and  racing
thoroughbred  horses at various major horse racing tracks  throughout the United
States.  In March  2003,  the assets of this  operation  were sold for cash to a
third party,  and the Company  discontinued  the business of breeding and racing
thoroughbred  race horses.  On March 26, 2003, we announced that our controlling
stockholder  had accepted an  unsolicited  offer to sell a controlling  block of
2,250,000  shares of our common  stock,  representing  approximately  45% of the
Company's  then  issued  and  outstanding  shares,  to Medira  Investments,  LLC
("Medira"),  which later conveyed such shares to its sole member,  Ms.  Viktoria
Benkovitch, our Chairman's (Dr. Jack Kachkar) spouse.

         At  that  time,  we  also  announced  that we  would  pursue  strategic
investment  opportunities  in a number of  sectors  within  the  pharmaceutical,
biotechnology and medical devices industries.


                                       15
<PAGE>

The Inyx Pharma Transaction

         Concurrent with the  discontinuance  of our  thoroughbred  horse racing
operations,  we concluded a reverse  acquisition  of Inyx Pharma  Limited ("Inyx
Pharma"),  an  aerosol  manufacturing  company  incorporated  under  the laws of
England and Wales and changed our name to Inyx, Inc.

         The  acquisition  of Inyx Pharma was  consummated on April 28, 2003, by
exchanging 16 million of our common shares for all of the outstanding and issued
shares of Inyx Pharma. At the time of the exchange, Inyx Pharma was also related
to our company as the controlling  stockholder of Inyx Pharma was the JEM family
trust, a discretionary family trust for the benefit of our Chairman,  his spouse
and two children.

         As a result of the exchange, the stockholders of Inyx Pharma became our
controlling  stockholders,  in the aggregate  holding  approximately  64% of our
outstanding  stock,  and we  became a  publicly  held  business  focused  on the
development,  commercialization  and  manufacturing  of  aerosol  drug  delivery
pharmaceutical products.

         The Inyx  Pharma  transaction  was  accounted  for as a reverse  merger
resulting in a recapitalization  of Inyx as we were a public entity with nominal
assets and operations  prior to our share exchange with Inyx Pharma.  Therefore,
the financial  statements presented for the period prior to the transaction with
Inyx Pharma are those of Inyx Pharma and its predecessor,  Miza  Pharmaceuticals
(UK) Ltd. ("Miza UK").

         Prior to our reverse  merger with Inyx Pharma,  on March 7, 2003,  Inyx
Pharma had effected a transaction under which the majority of the pharmaceutical
business  assets of Miza UK were  transferred  out of  Administration  (a United
Kingdom form of U.S.  Chapter 11 bankruptcy  protection and  reorganization)  to
Inyx Pharma.  This transaction was accounted for as a reorganization of entities
under common control,  as the controlling  stockholders of Inyx Pharma were also
the  controlling  stockholders  of Miza  UK at the  time of the  March  7,  2003
transaction.  The assets  transferred to Inyx Pharma were therefore  recorded at
book value.  Transaction  costs incurred in the Miza UK transaction,  consisting
primarily of legal costs, consulting and finders' fees were expensed on the date
of the transaction.

Recent Developments

         Since our reverse  acquisition  of Inyx Pharma,  we have been  actively
marketing  to our  customer  base and  expect  that the  manufacturing  capacity
utilization  at our Inyx  Pharma  operation  will  continue  to  increase as new
customer contracts and purchase orders commence.

         We now operate in one business segment,  the contract  manufacturing of
pharmaceutical products. Although we have started developing our own proprietary
pharmaceutical  products, we have not yet commenced the marketing or sale of any
such  products.  As  a  result,  our  product  development  activities  and  our
manufacturing  consulting  services are primarily  supporting our  manufacturing
operations for the benefit of our customers.  Segment  reporting on our business
will begin to occur as we move into the additional business activities described
herein.

         We believe that once we have developed and marketed our own proprietary
pharmaceutical  product  lines,  consisting  of both drug  delivery  devices and
pharmaceutical   products   that   are   complementary   to  our   manufacturing
technologies, we can improve our revenue and profitability opportunities as such
products may offer greater  profit  margins than those  provided by our contract
manufacturing services.

         We are currently  focusing our own research and development  activities
on inhalation-therapy  drug delivery devices and inhalation methods, and generic
prescription   and   over-the-counter   aerosol   pharmaceutical   products  for
respiratory,  dermatological,  topical and  cardiovascular  applications.  These
include generic  pharmaceutical  products and innovative  drug delivery  systems
that allow line extensions of established  products,  or those delivery  systems
that overcome  present product and propellant  incompatibility  and consumer use
issues in the pharmaceutical aerosol sector.

         For example, on July 22, 2004, we announced that we had signed a letter
of intent with Phares  Technology BV ("Phares") to acquire from them a patented,
novel  platform   technology   that  will  enable  us  to  effectively   develop
inhalation-therapy  drugs,  including  combination  drugs,  delivered in aerosol
formats.  Then, on September  21, 2004,  we announced  that we had completed the
acquisition  of the Phares  technology.  The Phares  technology  is based on the
utilization of a  lipid-binding  matrix for delivering  incompatible or unstable
drug  substances and we plan to initially use this technology to develop our own
proprietary metered dose inhalers ("MDIs") for the treatment of asthma and other
respiratory diseases.


                                       16
<PAGE>

         While we do not currently  derive any revenues from the sale of our own
products,  it  is  anticipated  that  our  first  two  proprietary  products,  a
wound-care spray and an oral inhalation product,  should be ready for commercial
marketing by 2005. We plan to distribute our  proprietary  products  through our
own  customers'   distribution  channels  or  in  collaboration  with  strategic
marketing partners.

         During the fourth quarter of 2004 and beyond, we will continue to focus
on strengthening and growing our pharmaceutical aerosol contract development and
manufacturing  operations,  where we believe that, in addition to the conversion
of CFC  inhalers to non-ozone  depleting  HFA  products,  a second major area of
potential  growth  is a  result  of our  proprietary  hydrocarbon  aerosol  foam
expertise.

         Although we continue to add new manufacturing  and product  development
customers,  it has taken time to start-up a number of new client projects due to
their own required  regulatory or business  approvals,  lead times  required for
critical raw materials and components in the pharmaceutical  aerosol sector, and
as a result of the production commissioning and validation processes involved in
the pharmaceutical  manufacturing  industry.  Such delays have been particularly
relevant in the transition of a  chlorofluorocarbon  ("CFC") aerosol respiratory
MDI to a CFC-free or hydrofluoralkane  ("HFA") MDI for one of our major clients.
This client,  a large  international  generic drug  marketing  and  distribution
company, has not yet received the necessary regulatory approvals to market their
CFC-free  MDI for the  treatment  of asthma  which has led to a decrease  in our
revenues and profitability  opportunities during 2004. This client believes that
they can complete the transition to a CFC-free MDI by mid-2005.

         Subject to receiving  all necessary  U.S.  government  regulatory  body
approvals,  we hope that at the beginning 2005 we can also commence to implement
our  manufacturing  consulting  agreement  under the United Nations  Development
Programme  - Montreal  Protocol.  We also  continue  to  explore  pharmaceutical
business   acquisitions   or  the   acquisition  of   pharmaceutical   products,
intellectual properties or drug delivery devices.

CRITICAL ACCOUNTING POLICIES

         Our  accounting  policies  are  disclosed in Note 2 to the Notes to the
Consolidated  Financial  Statements  in our Annual Report on Form 10-KSB for the
year ended December 31, 2003. We consider the following policies to be important
to our financial statements.

Revenue Recognition

         The  Company  recognizes  revenue  when (1)  persuasive  evidence of an
arrangement exists; (2) product delivery has occurred or services rendered;  (3)
the fee is fixed or  determinable;  and (4)  collection is  reasonably  assured.
Revenues are recognized FOB (Freight-on-Board) shipping point, when products are
shipped,  which  is when  legal  title  and risk of loss is  transferred  to the
Company's customers, and is recorded at the net invoiced value of goods supplied
to customers  after  deduction of sales discounts and sales and value added tax,
where applicable. In situations where the Company receives payment in advance of
the performance of research and development services,  such amounts are deferred
and recognized as revenue as the related services are performed.

         Non-refundable  fees are  recognized  as  revenue  over the term of the
arrangement,  based on the percentage of costs incurred to date, estimated costs
to  complete  and total  expected  contract  revenue.  Product  returns  are not
accepted.

         Shipping  costs are paid for by the Company's  customers.  Any shipping
and handling  costs  incurred by the company are included in costs of goods sold
in the accompanying consolidated statements of operations.

Translation of Foreign Currency

         The functional  currency of our Company's  United  Kingdom  subsidiary,
Inyx Pharma, is the Great Britain Pound. Our Company's financial  statements are
reported  in  United  States  Dollars  and are  translated  in  accordance  with
Statement of Financial  Accounting Standards No. 52, which requires that foreign
currency assets and liabilities be translated using the exchange rates in effect
at the balance  sheet  date.  Results of  operations  are  translated  using the
average  exchange rates prevailing  during the period.  For purposes of SFAS No.
52, we  consider  the  dollar  to be the  reporting  currency.  The  effects  of
unrealized  exchange  fluctuations  on translating  foreign  currency assets and
liabilities into Dollars are accumulated as a cumulative  translation adjustment
in  stockholders'  deficit.  Realized  gains and losses  from  foreign  currency
transactions   are  included  in  the  results  of  operation  for  the  period.
Fluctuations arising from inter-company  transactions are of long term in nature
and are accumulated as cumulative translation adjustments.


                                       17
<PAGE>

         As of  September  30, 2004,  we had not  utilized any  currency-hedging
programs.  However,  as we intend to  continue  to  utilize  US-based  financing
sources,  and as the  significant  majority of our revenues are in Great Britain
Pounds,  we have  established  a commercial  banking  relationship  with a major
US-based financial  institution that will also provide us with  currency-hedging
advisory services including our participation in currency-forward  contracts for
the purpose of mitigating foreign exchange losses. We believe that we will be in
a position to  commence  utilizing  such  currency-hedging  services  during the
second half of 2005.

RESULTS OF OPERATIONS

Three Months and Nine Months Ended September 30, 2004 and 2003

         The  accompanying   consolidated  financial  information  includes  the
accounts of Inyx and its wholly-owned  subsidiaries,  Inyx Pharma,  incorporated
under  the laws of  England  and  Wales;  Inyx  Canada,  formed  as a  federally
incorporated  Canadian  corporation;  and Inyx Realty,  Inc. ("Inyx Realty"),  a
Florida  corporation  through  April 14, 2004.  All  inter-company  accounts and
transactions have been eliminated in consolidation.

         On April 14, 2004, Inyx Realty,  which we established  solely to sign a
corporate  office lease in Miami Florida,  was acquired by First Jemini Trust, a
discretionary  family trust in which our  Chairman/CEO  is a  beneficiary.  As a
result,  as of April 14,  2004,  Inyx Realty was no longer a  subsidiary  of our
Company and all of Inyx's  obligations  relating to Inyx  Realty,  primarily  an
office lease in Miami, have been terminated.

         As a result  of the  accounting  of the Inyx  Pharma  transaction  as a
reverse merger resulting in a recapitalization of Inyx, the historical financial
statements of Inyx Pharma and its predecessor,  Miza UK, are presented herein as
our own historical statements.  Therefore our actual comparative results for the
year ended December 31, 2003 and respective  nine-month  period ended  September
30, 2003 include  approximately  two months of  operations  for Miza UK while in
Administration (January 1, 2003 to March 6, 2003) prior to those business assets
being transferred to Inyx Pharma.

         The Miza UK assets  transferred  to Inyx  Pharma  included  an  aerosol
pharmaceutical  manufacturing  site  (the  Miza  UK  Aerosols  Division)  and  a
pharmaceutical product development operation (the Miza UK Development Division).
Miza UK's  operation  had also  included  another  pharmaceutical  manufacturing
operation (the Miza UK Biopharma  Division).  This asset was not  transferred to
Inyx  Pharma   through  the   reorganization   process  and  remained  with  the
Administrator.  For the three months and nine months ended  September  30, 2003,
respectively,  Miza UK's  Biopharma  Division had net revenues of  approximately
$334,000  and  costs  of  revenue  of  $393,000,  resulting  in a gross  loss of
approximately  $59,000.  Other than selling  expenses of $33,000,  the Biopharma
division  had  no  other  costs  associated  with  it as  all  such  costs  were
centralized by the Administrator.

         As noted  above,  we have  accounted  for the Inyx  Pharma  and Miza UK
transaction  as a  reorganization  of  entities  under  common  control  and our
subsequent  transaction  with Inyx  Pharma as a reverse  merger  resulting  in a
recapitalization  of our  Company.  For the year ended  December  31,  2003,  we
incurred  approximately  $3.9 million in reorganization  costs and expenses as a
result of these transactions.





                                       18
<PAGE>

NET REVENUES

         Net  revenues  for the  three  months  ended  September  30,  2004 were
approximately  $4.2 million,  as compared to  approximately  $3.1 million in net
revenues for the three months ended  September 30, 2003. Net revenues  increased
by approximately  1.1 million or approximately 39% between the comparative three
month  periods,  primarily  due to an  increase  in the  sale  and  delivery  of
customers' products and the initiation of the product commercialization phase of
two major client contracts. These include the manufacture and sale of nasal pump
sprays  for  the  Merck  Generics  group  of  companies  ("Merck  Generics"),the
commercialization  of an  HFA  MDI  for  AstraZeneca  AB  ("AstraZeneca")  and a
dermatological  product for Stiefel  Laboratories,  Inc.  ("Stiefel'),  with the
AstraZeneca and Stiefel products planned for commercial launch in 2005 and 2007,
respectively.

         Total net revenues for the nine months  ended  September  30, 2004 were
approximately  $11.5 million as compared to approximately $10.9 million in total
net  revenues  for the nine  months  ended  September  30,  2003.  Net  revenues
increased by approximately  $600,000 or approximately 6% between the comparative
nine  month  periods,  primarily  due  to an  increase  in  business  activities
including the commencement of the commercialization phase of the AstraZeneca and
Stiefel  contracts noted above.  The increase in total net revenues  between the
comparative  nine-month  periods  would have been  greater had it not been for a
number of delays  beyond our control,  including  customer  required  regulatory
and/or business  approvals,  in the commencement of several multi-year  contract
development and manufacturing contracts.

         Manufacturing revenues were also delayed because vendor production lead
times and  quality  issues  caused  delays in the  receipt of  critical  product
components  (including  specific types of cans,  valves and actuators) that were
required  for nasal pump and  nitrogen-propelled  aerosol  products  planned for
production and delivery  during the period.  We are working with our vendors and
expect to resolve these issues during the fourth  quarter of 2004 so that we may
begin the manufacturing and delivery of delayed purchase orders.

         We also continue to experience a delay in the  commencement  of a major
commercial  manufacturing  contract  with one of our major  clients.  Due to the
client's own product  formulation and processing  timelines and further required
clinical  studies,  whereby  this  client  has not yet  received  the  necessary
regulatory approvals for commercial marketing of the product, and hence allow us
to commence commercial  manufacturing of this contract. At this time, the client
believes  that it can secure the  required  regulatory  approvals  in the coming
months to enable us to proceed with the contract in 2005.

         For the nine months ended  September 30, 2004, our top three  customers
accounted for approximately $5.4 million in net revenues or approximately 47% of
total net revenues of approximately $11.5 million.  During the nine months ended
September 30, 2004, our top three customers were Merck Generics,  accounting for
approximately  $2.7  million in net revenues or  approximately  23% of total net
revenues  for  the  period;  SSL  International  Plc  ("SSL"),   accounting  for
approximately  $1.4  million in net revenues or  approximately  12% of total net
revenues;  and Genpharm Inc.  ("Genpharm"),  accounting for  approximately  $1.3
million in net revenues or approximately 12% of total net revenues.

         In  comparison,  for the nine months ended  September 30, 2003, our top
three customers accounted for approximately $4.6 million or approximately 42% of
our total net revenues of  approximately  $10.9  million.  These  customers were
Merck  Generics,  accounting for  approximately  $2.3 million in net revenues or
approximately  21% of total net revenues  for the  reporting  period;  Genpharm,
accounting for  approximately  $1.4 million in net revenues or approximately 13%
of total net revenues;  and SSL,  accounting for  approximately  $870,000 in net
revenues or approximately 8% of total net revenues.

         The loss of any one of our top three  customers  would  have a material
adverse affect on our Company's revenues and profitability  opportunities in the
near term.  However,  we have recently received major multi-year  contracts from
new clients,  including from  AstraZeneca and Stiefel,  and we are continuing to
cultivate  new business  from other new clients that we expect to  consummate in
the coming  months,  which would both  increase our revenue base and broaden our
customer base,  thereby reducing our dependence on any one client.  In addition,
we also believe that by developing our own proprietary  products, we can further
increase our revenue base on a higher profit margin basis,  and by utilizing our
existing or potential  customers'  distribution  channels to distribute  our own
proprietary  products,  we can broaden and strengthen our relationship with such
clients.

         Our  revenues  are now derived from  pharmaceutical  manufacturing  and
associated  product  formulation and  development  services,  including  product
stability,  commercial  scale-up,  and validation and regulatory support for our
clients'  products.  As noted above,  these contract revenues are very dependant


                                       19
<PAGE>

upon our clients'  maintaining or obtaining the necessary  regulatory  approvals
and  product  specifications  for the  commercialization  of their  products  in
designated  markets,  and our  vendors/suppliers  being  able to provide us with
required raw materials and components to manufacture our clients'  products on a
timely basis and in line with our customers' requirements and demands.

         Our contract manufacturing  revenues and, therefore,  our manufacturing
capacity  utilization  must  continue  to  increase  in order  for us to  become
profitable,  especially as we have not yet  commercialized  our own  proprietary
pharmaceutical  products, which we believe will significantly add to our revenue
base and profitability opportunities in the future.

         With this in view, we expect that our significant  proven  expertise in
converting  from  CFC to  CFC-free  aerosol  pharmaceuticals,  particularly  the
production of HFA  non-ozone-depleting  aerosol pharmaceutical  products such as
respiratory metered dose inhalers (MDIs), should generate increasing business as
the Montreal Protocol banning  ozone-depleting CFC pharmaceuticals  continues to
be  implemented  by countries  around the world.  We are  currently  assisting a
number of our clients with the transition to non-CFC based respiratory  inhalers
and, as noted earlier, have commenced developing and manufacturing such inhalers
at our Inyx Pharma production  facility.  Despite the delays we have experienced
as a result of our  customers'  obtaining  the required  regulatory  or business
approvals to commence  such HFA projects  with us, we expect  revenue  levels to
continue to increase in this area as more and more pharmaceutical  companies are
required to convert their respiratory MDIs to CFC-free products.

         Additionally, we believe that based on our proprietary expertise in the
development and manufacturing of hydrocarbon aerosol pharmaceutical products for
dermatological and topical applications,  we will see significant revenue growth
in this sector as the use of non-CFC foam based products continues to grow. This
is being driven by the trend to convert  conventional cream or lotion treatments
into aerosol foam or mousse  formulations,  which better penetrate the skin and,
in turn, provide faster medication as well as do not leave any greasy residue on
skin or clothing as compared to traditional ointments.

         As  we   continue  to  evolve   into  a  fully   integrated   specialty
pharmaceutical  company, we believe that our revenues can grow not only from our
contract  manufacturing and development services,  but also from the sale of our
own proprietary  pharmaceutical  products,  which may also  potentially  provide
royalty and licensing fees from potential product distributors or licensees.  We
expect that our first two proprietary  products,  a wound-care spray and an oral
inhalation product should be ready for commercial marketing, during 2005.

COST OF SALES

         Cost of sales  for the  three  months  ended  September  30,  2004 were
approximately  $3.6  million or  approximately  84% as a  percentage  of our net
revenues,  as  compared  to cost of  sales  of  approximately  $2.6  million  or
approximately 85% as a percentage of our net revenues for the three months ended
September 30, 2003.

         Total cost of sales for the nine months ended  September  30, 2004 were
approximately  $10.4 million or  approximately  90% as a percentage of total net
revenues,  as  compared  to cost of  sales  of  approximately  $8.8  million  or
approximately  81% as a  percentage  of total net  revenues  for the nine months
ended September 30, 2003.

         The increase of the cost of sales for the nine months  ended  September
30, 2004, as compared to the costs of sales for the nine months ended  September
30,  2003,  is  primarily  a result of the noted  delay in the  commencement  or
completion of a number of manufacturing contracts and purchase orders during the
second  quarter of 2004.  These  delays  resulted in a  significant  decrease in
manufacturing  capacity  utilization  during the period,  thereby reducing fixed
overhead cost  absorption  (such as labor and plant  maintenance,  operating and
quality  support  costs)  at  our  Inyx  Pharma  manufacturing  and  development
facilities and therefore,  concomitantly increasing our overall production costs
as a percentage of revenues for the nine months ended September 30, 2004.

         Our costs of sales are associated  with  manufacturing  and development
revenues,  and include  materials,  labor,  factory overheads and other internal
costs such as purchasing  and customer  service costs,  and quality  control and
quality assurance regulatory support.

         We expect our cost of sales as a  percentage  of revenues to be reduced
from present  levels as more  manufacturing  contracts  and purchase  orders are
initiated,  especially in the HFA and hydrocarbon  manufacturing  areas where we
have  signed  and now  commenced  a number of new  customer  contracts,  thereby
increasing the utilization of our manufacturing capacity from present levels. We
are currently  operating our manufacturing  facilities at an average utilization
rate of 20-25% but have targeted at least a 40-45%  utilization rate in 2005. We
are also  working  with a  multinational  pharmaceutical  company to establish a
purchasing  consortium and leverage their  purchasing  power in order to improve
vendor pricing and lead times.


                                       20
<PAGE>

         Along with the  reduction  of  unabsorbed  overhead  due to  increasing
manufacturing  utilization,  we believe that these initiatives should materially
reduce our cost of sales on a per unit basis,  thereby  improving  our operating
margins and, in turn, overall profitability.

GROSS PROFIT

         For the three months ended September 30, 2004, we had a gross profit of
approximately  $700,000 or  approximately  16% as percentage of net revenues for
the three month period, as compared to a gross profit of approximately  $500,000
or approximately  15% as a percentage of net revenues for the three months ended
September 30, 2003. The gross profit  increased  between the  comparative  three
month periods by approximately  $200,000 or approximately  44%, primarily due to
the noted  increase in the sale and delivery of customers'  products and product
commercialization   services,   which  increased  our   manufacturing   capacity
utilization and thereby contributed to a decrease in unabsorbed overhead.

         Total gross  profit for the nine months  ended  September  30, 2004 was
approximately  $1.2  million  or  approximately  10% as a  percentage  of  total
revenues for the period,  as compared to a total gross  profit of  approximately
$2.1 million or approximately 19% as a percentage of total revenues for the nine
months ended  September  30,  2003.  The  reduction in gross profit  between the
comparative  year-to-date periods, in both the amount of the gross profit and as
a percentage of revenues, is a result of the noted delays in the commencement or
completion of a number of manufacturing contracts and purchase orders during the
second  quarter of 2004.  These  delays  resulted in a  significant  decrease in
manufacturing  capacity  utilization  during the period,  thereby reducing fixed
overhead cost  absorption  (such as labor and plant  maintenance,  operating and
quality  support costs) at our  manufacturing  and  development  facilities and,
therefore, reducing our gross profit on a year-to-date basis.

         We are  anticipating  improved  gross profits as we continue to work to
increase  the  utilization  of our  manufacturing  capacity  through  additional
product  production  contracts and purchase orders. As a result of lower factory
overhead  absorption,  the gross profit  related to our  contract  manufacturing
services  has been less than  what  would be  expected  if we were  running  our
manufacturing  facilities at higher operating levels. We expect the gross profit
to  significantly  improve as we continue to commence a number of new multi-year
manufacturing contracts during the next twelve months.

         We also  believe  that  our  gross  profits  will be  improved  as more
development  support  service  contracts,  associated  with these  manufacturing
projects, are initiated. Our product research and development contract services,
historically,  have had higher gross  margins  than our  contract  manufacturing
services  because we only have to account for our own labor  support costs while
charging out such  professional  services we provide to our  customers at agreed
higher rates.

         We  expect  that our  manufacturing  consulting  services,  planned  to
commence in 2005,  should also offer greater  profit margins than those provided
by contract manufacturing services. We also expect that our gross profit margins
and our gross profit as a percentage  of our revenues  will improve once we have
commercialized our Company's planned proprietary products such as topical, oral,
nasal and pulmonary pharmaceuticals,  which traditionally provide greater profit
margins at the distribution level than that of manufacturing services.

OPERATING EXPENSES

         For the three months ended  September  30,  2004,  operating  expenses,
consisting  of product  research and  development,  general and  administrative,
selling,  and depreciation and amortization  expenses  amounted to approximately
$3.7  million  or  approximately  87%  as  a  percentage  of  net  revenues.  In
comparison,  operating  expenses for the three months ended  September  30, 2003
amounted to approximately  $2.8 million or approximately  91% as a percentage of
net revenues.

         Although  our  operating  expenses  as a  percentage  of  net  revenues
decreased  between the comparative  three month periods as a result of increased
sales,  the total  amount  of  operating  expenses  increased  by  approximately
$940,000 or approximately 34% for the three months ended September 30, 2004 as a
result of the research and  development  costs we have now commenced to incur in
developing our own proprietary pharmaceutical products.

         For the nine months  ended  September  30,  2004,  operating  expenses,
consisting  of product  research and  development,  general and  administrative,
selling,  and depreciation and amortization  expenses  amounted to approximately


                                       21
<PAGE>

$8.8  million  or  approximately  77%  as  a  percentage  of  net  revenues.  In
comparison,  operating  expenses  for the nine months ended  September  30, 2003
amounted to approximately $11.6 million or approximately 107% as a percentage of
net  revenues,   and  include   approximately  $3.9  million  in  reorganization
transaction  costs  associated  with our reverse merger with Inyx Pharma and its
prior reorganization with Miza UK.

         Such  reorganization  transaction costs accounted for approximately 33%
of our  operating  expenses  for the nine months  ended  September  30, 2003 and
included approximately $1.9 million of legal, accounting, consulting, and travel
costs  associated with the Inyx Pharma/Miza UK  reorganization  transaction plus
approximately $2.0 million legal, accounting,  consulting, travel, due diligence
costs and finders fees associated with our share exchange  transaction with Inyx
Pharma.

         Although our operating  expenses decreased between the comparative nine
month periods as a result of not having similar reorganization transaction costs
in 2004,  we have already  incurred  approximately  $1.3 million in research and
development  costs in the nine month period ended September 30, 2004. We did not
incur such  research  and  development  costs during the nine month period ended
September 30, 2003.

Research and Development Costs

         As noted  above,  research and  development  costs for the three months
ended September 30, 2004 were approximately $940,000 or approximately 25% of our
operating  expenses and 22% as a percentage of our net revenues.  In comparison,
we did not incur such research and development  costs for the three months ended
September 30, 2003.

         Total  research  and  development  costs  for  the  nine  months  ended
September 30, 2004 were  approximately  $1.3 million or approximately 15% of our
operating  expenses and 12% as a percentage of our net revenues.  In comparison,
we did not incur such research and  development  costs for the nine months ended
September 30, 2003.

         As part of our  strategy  to  evolve  into a  specialty  pharmaceutical
company with its own proprietary products, we have started to incur research and
development  costs  as part  of our  operating  expenses.  These  costs  include
intellectual  property development costs, salaries for required technical staff,
fees to consultants  and costs  associated  with the use of external  laboratory
facilities  as may be  required.  We  believe  that  even  though  research  and
development costs may increase our operating  expenses in the short term; in the
long term,  these costs should be offset by the higher  profit  margins  derived
from the manufacturing  and sale of our own proprietary  products as compared to
the  operating  margins  of our  contract  manufacturing  services.  We  plan to
distribute our  proprietary  products  through our own  customers'  distribution
channels or in collaboration with other strategic marketing partners.

         We   are   focusing   our   research   and   development   efforts   on
inhalation-therapy  drug delivery devices and methods,  and generic prescription
and   over-the-counter   aerosol   pharmaceutical   products  for   respiratory,
dermatological  and topical,  and cardiovascular  applications.  We also believe
that  we can  enhance  our  competitive  position  through  the  acquisition  of
regulatory-approved  pharmaceutical  products  and  drug  delivery  devices  for
respiratory,  dermatological, topical and cardiovascular medication applications
or such products in  development,  including  those through the  acquisition  of
other pharmaceutical  companies.  As noted above, one such example is our recent
acquisition of a  lipid-binding  matrix for delivering  incompatible or unstable
drug  substances.  We plan to use this technology to develop our own proprietary
metered dose inhalers ("MDIs") for the treatment of asthma and other respiratory
diseases,  as  well as  across  a  broad-spectrum  of  other  inhalation-therapy
treatments including acute and chronic pain management.

         At this time,  we have not  commercialized  any of our own  proprietary
products although we do have a number of aerosol pharmaceutical products already
under  development or in late planning stages.  These consist of single molecule
and  combination HFA respiratory  inhalants,  non-CFC  propelled oral sprays for
cardiovascular  ailments,  wound irrigation and cleansing sprays utilizing novel
barrier  technologies,  and  anti-inflammatory  nasal  pumps.  Our  initial  two
proprietary  products,  a wound-care spray and an oral inhalation  product,  are
expected to be ready for commercial marketing in 2005, at which time they should
start to materially contribute to our revenues and earnings.

General and Administrative Expenses

         For  the  three  months   ended   September   30,  2004,   general  and
administrative  expenses were approximately $2.5 million or approximately 68% of
our operating  expenses and 59% as a percentage of net revenues,  as compared to
general  and   administrative   expenses  of   approximately   $2.6  million  or
approximately  94% of our  operating  expenses  and 85% as a  percentage  of net
revenues for the three months ended September 30, 2003.


                                       22
<PAGE>

         Total  general and  administrative  expenses  for the nine months ended
September 30, 2004 were  approximately  $6.8 million or approximately 77% of our
operating  expenses  and 59% as a  percentage  of net  revenues,  as compared to
general  and   administrative   expenses  of   approximately   $7.1  million  or
approximately  61% of our  operating  expenses  and 65% as a  percentage  of net
revenues for the nine months ended September 30, 2003.

         Our general and administrative expenses include salaries and associated
benefits costs, including stock option expenses, at the corporate and subsidiary
levels;  consulting fees including legal and accounting costs;  insurance costs;
and  business  and  corporate   development  costs  including  directors'  fees,
financing  and  filing  fees,  investor  relations,   travel  and  communication
expenses, and other business costs such as rent and maintenance.

         Salaries  and  associated   benefits  costs,   including  stock  option
expenses,   for  the  three  months  ended   September   30,  2004  amounted  to
approximately   $880,000  (including  stock  option  expenses  of  approximately
$130,000)  or  approximately  35% of our general  administrative  expenses,  and
approximately 24% of our total operating expenses for the respective three month
period. In comparison,  for the three months ended September 30, 2003,  salaries
and associated benefit costs amounted to approximately $555,000 or approximately
22% of our general  administrative  expenses, and approximately 20% of our total
operating  expenses for the respective  three month period.  There were no stock
option expenses during the comparative three months ended September 30, 2003. As
a result of an expanded  management  group and support staff, we incurred higher
salaries  and  associated  benefit  costs  between the  comparative  three month
periods.

         For the nine months ended  September 30, 2004,  salaries and associated
benefit  costs,  including  stock  option  expenses of  approximately  $225,000,
amounted  to  approximately  $2.6  million or  approximately  38% of our general
administrative  expenses,  and  29% of our  total  operating  expenses  for  the
respective nine month period. In comparison, for the nine months ended September
30, 2003, salaries and associated benefit costs, including stock option expenses
of  approximately   $750,000,   amounted  to   approximately   $2.1  million  or
approximately 30% of our general and administrative  expenses, and approximately
30% of our total  operating  expenses for the respective  nine month period.  As
noted above,  as we continue to grow and expand our  business,  we are expanding
our management team including our business  development  staff and are therefore
incurring higher salaries and benefits costs, including the expensing of related
stock options to such employees.

         Consulting  fees  including  legal,  accounting  and audit fees for the
three months ended  September  30, 2004  amounted to  approximately  $480,000 or
approximately 19% of our general and administrative  expenses, and approximately
13% of our total operating  expenses for the respective  three month period.  In
comparison,  for the three months ended September 30, 2003, such consulting fees
amounted  to  approximately  $136,000  or  approximately  5% of our  general and
administrative  expenses,  and approximately 5% of our total operating  expenses
for the respective  three month period.  As a result of increasing  business and
corporate  development  activities,  we have incurred  higher  consulting  costs
between the comparative three month periods.

         For the nine months ended September 30, 2004, consulting fees including
legal,  accounting  and audit fees  amounted to  approximately  $1.0  million or
approximately 15% of our general and administrative  expenses, and approximately
12% of our total  operating  expenses for the respective  nine month period.  In
comparison,  for the nine months ended  September 30, 2003 such  consulting fees
amounted  to  approximately  $710,000  or  approximately  10% of our general and
administrative  expenses,  and approximately 6% of our total operating  expenses
for the respective nine month period.  As noted above, as a result of increasing
business  and  corporate  development   activities,   we  have  incurred  higher
consulting costs between the comparative nine month periods.

         Insurance costs,  including property,  product liability and directors'
and officers' insurance,  for the three months ended September 30, 2004 amounted
to approximately  $180,000 or approximately 7% of our general and administrative
expenses,  and  approximately  5%  of  our  total  operating  expenses  for  the
respective  three  month  period.  In  comparison,  for the three  months  ended
September  30,  2003,  insurance  costs  amounted to  approximately  $195,000 or
approximately 7% of our general and administrative  expenses,  and approximately
7% of our total operating  expenses for the respective three month period.  As a
result of decreased  premiums for our  directors' and officers'  insurance,  our
insurance costs have decreased between the comparative three month periods.

         For the nine months ended September 30, 2004, insurance costs including
property,  product liability and directors' and officers'  insurance amounted to
approximately  $590,000 or  approximately  9% of our general and  administrative
expenses,  and  approximately  7%  of  our  total  operating  expenses  for  the
respective nine month period. In comparison, for the nine months ended September
30, 2003, insurance costs amounted to approximately $480,000 or approximately 7%
of our general and  administrative  expenses,  and approximately 4% of our total
operating  expenses for the  respective  nine month  period.  As a result of our
increased business activities and general market conditions, our insurance costs
have increased between the comparative nine month periods.


                                       23
<PAGE>

         Other  general  and  administrative   expenses,   including   corporate
development and investor relations costs,  directors fees,  filing,  maintenance
and financing  costs,  travel and  communications  expenses,  and other business
overhead costs including rent, currency exchange losses, and bad debt provisions
for the three months ended  September  30, 2004 amounted to  approximately  $1.0
million or approximately  40% of our general and  administrative  expenses,  and
approximately 27% of our total operating expenses for the respective three month
period.  In  comparison,  for the three months ended  September  30, 2003,  such
general and  administrative  expenses amounted to approximately  $1.7 million or
approximately 65% of our general and administrative  expenses, and approximately
61% of our total operating  expenses for the respective three month period.  The
primary  result of the  decrease  in such  general and  administrative  expenses
between the comparative  periods is a result of the elimination of approximately
$1.0  million in  corporate  development  and  investor  relations  expenses  we
incurred during the respective three month period in 2003.

         For the nine  months  ended  September  30,  2004,  other  general  and
administrative  costs including  corporate  development  and investor  relations
costs,  directors  fees,  filing,  maintenance and financing  costs,  travel and
communications  expenses,  and other  business  overhead costs  including  rent,
currency exchange losses, and bad debt amounted to approximately $2.6 million or
approximately 38% of our general and administrative  expenses, and approximately
29% of our total  operating  expenses for the respective  nine month period.  In
comparison, for the nine months ended September 30, 2003, such other general and
administrative costs amounted to approximately $3.8 million or approximately 54%
of our general and administrative  expenses,  and approximately 33% of our total
operating  expenses for the respective nine month period.  The primary result of
the decrease in such general and administrative expenses between the comparative
periods is a result of the noted elimination of corporate and investor relations
expenses  and a decrease  in the amount of  warrants  we issued  during the nine
month period ended September 30, 2004.

         Although our general and administrative expenses as a percentage of our
revenues have decreased between the comparative  periods, we continue to sustain
high general and administrative  costs as we continue to implement our corporate
development  and  growth  strategy.  These  include  higher  infrastructure  and
administrative  costs, an expanded management team and new corporate development
costs.  We believe that as we grow our  business and begin to introduce  our own
proprietary products,  which we believe will have higher profit margins than the
contract  development and manufacturing  fees that we presently receive from our
customers, we can offset these incremental administrative costs on a longer term
basis.

Selling Expenses

         Selling  expenses,  consisting  primarily of salaries,  commissions and
marketing costs  associated with the commercial,  and sales and marketing arm of
our business,  amounted to approximately  $95,000 or  approximately  2.5% of our
total operating  expenses and  approximately  2% as a percentage of net revenues
for the three months ended September 30, 2004. In comparison,  selling  expenses
for the three months ended September 30, 2003 amounted to approximately  $70,000
or approximately  2.5% of our total operating expenses and approximately 2% as a
percentage of net revenues.

         Total  selling  expenses for the nine months ended  September  30, 2004
were approximately  $255,000 or approximately 3% of our total operating expenses
and  approximately  2% as a percentage of net  revenues,  as compared to selling
expenses of  approximately  $220,000 or  approximately 2% of our total operating
expenses  and  approximately  2% as a  percentage  of net  revenues for the nine
months ended September 30, 2003.

         Our selling  expenses,  both as a percentage  of our overall  operating
expenses and as a percentage of our net revenues have remained fairly consistent
between the  comparative  periods.  Selling  expenses  for the nine months ended
September 30, 2004 have increased  slightly as compared to the nine months ended
September 30, 2003 as we hired a new sales and marketing  executive,  Mr. Ulrich
Bartke during the second quarter of 2004.

         Initially,  Mr.  Bartke,  our first senior  executive in this area,  is
focusing on building Inyx's contract  manufacturing  revenues and increasing the
utilization  of production  capacity,  with the objective to increase  sales and
profitability.   As  noted  above,  our  manufacturing   capacity  is  presently
significantly  underutilized;  we  are  presently  operating  our  manufacturing
facilities at an average utilization rate of 20-25%, which increases our cost of
goods on a per unit  basis as a result of the lower  fixed  overhead  absorption
rate. We are targeting a 40-45% average capacity utilization rate in 2005, based
on new  production  business  commencing as a result of our increased  sales and
marketing efforts.

         As we continue  to ramp-up  our  business  development  and  commercial
activities,  we expect our  selling  expenses  to  increase  concomitantly  with


                                       24
<PAGE>

expected  revenue  expansion,  and as we continue  to  intensify  our  marketing
activities to both existing and potential customers.  To help grow our revenues,
Mr. Bartke will also be aiming to cultivate  strategic  marketing  relationships
with key clients to handle the distribution of Inyx's own proprietary  products,
which  we are now  developing  and  plan to start to  introduce  into  U.S.  and
European markets in 2005.

         Once we commence the marketing of our own proprietary  products, we may
also need to build or  contract  our own sales  force.  We believe  that we will
incur substantial  additional  selling expenses once we undertake these types of
commercial  activities.  Initially,  however, until we can adequately afford the
cost of  building  or  contracting  our own sales  force,  we will depend on our
customers'  distribution  channels or strategic  partners to market and sell the
pharmaceutical products that we are presently developing or planning to develop.
In the long run, we could  decide to still  utilize the sales force of strategic
industry  partners  for the  marketing  of a  majority  of our  own  proprietary
products.

Depreciation and Amortization Expenses

         Depreciation  and  amortization  expenses  for the three  months  ended
September 30, 2004 amounted to approximately $155,000 or approximately 4% of our
total operating  expenses and  approximately 4% as a percentage of net revenues,
as compared to depreciation and amortization expenses of approximately  $100,000
or approximately  3.5% of our total operating expenses and approximately 3% as a
percentage of net revenues for the three months ended September 30, 2003.

         Total depreciation and amortization  expenses for the nine months ended
September 30, 2004 were approximately  $430,000 or approximately 5% of our total
operating  expenses and  approximately  4% as a percentage of net  revenues,  as
compared to depreciation and amortization expenses of approximately  $455,000 or
approximately  4% of our total operating  expenses and  approximately  4% of net
revenues for the nine months ended September 30, 2003.

         Our depreciation and amortization  expenses are attributable  solely to
the depreciation of our fixed assets. The value of our property and equipment is
stated at cost. Depreciation is computed using the straight-line method based on
the  estimated  useful  lives of the  assets,  which  range  from 25  years  for
buildings and 3-10 years for equipment.

OPERATING LOSS BEFORE INTEREST EXPENSES

         For the three months ended September 30, 2004, our loss from operations
before interest expenses amounted to approximately $3.0 million as compared to a
loss from operations before interest expenses of approximately  $2.3 million for
the three  months ended  September  30, 2003.  The loss from  operations  before
interest  expenses  increased by approximately  $700,000 between the comparative
periods primarily as a result of research and development costs of approximately
$940,000 that we incurred  during the three months ended  September 30, 2004. In
comparison,  we did not incur such research and development  costs for the three
months ended September 30, 2003.

         The addition of these  research  and  development  costs was  partially
offset by a higher  gross  profit of  approximately  $200,000  during  the three
months ended September 30, 2004. This was as a result of an increase in the sale
and delivery of customers' products and product commercialization services which
increased our manufacturing  capacity  utilization and thereby  contributed to a
decrease in  unabsorbed  overhead  during  these three months as compared to the
three months ended September 30, 2003.

         For the nine months ended September 30, 2004,  total  operating  losses
from operations before interest expenses amounted to approximately $7.7 million.
In comparison,  total operating losses from operations  before interest expenses
amounted to  approximately  $9.6 million for the nine months ended September 30,
2003.

         Excluding  reorganization  transaction costs amounting to approximately
$3.9 million  incurred  during 2003 as a result of Inyx Pharma's  reorganization
with Miza UK and our subsequent  reverse merger with Inyx Pharma,  our operating
losses  before  interest  expenses for the nine months ended  September 30, 2003
would have amounted to approximately $5.7 million.  On that basis, the resultant
increase  in  our  operating   losses  before  interest   expenses  between  the
comparative nine month periods is attributable to approximately  $1.3 million of
research  and  development  costs that we have  incurred  during the nine months
ended  September 30, 2004,  and a lower gross profit margin due to delays in the
commencement  and/or  completion  of a number  of  manufacturing  contracts  and
purchase  orders during the second quarter of 2004. Such delays have resulted in
a decrease  in the  utilization  of our  manufacturing  capacity  and  therefore
reduced the  absorption  of fixed  overhead  costs,  thereby  reducing our gross
profit.


                                       25
<PAGE>

         During the three months ended  September  30,  2004,  we commenced  the
product  commercialization phase of two major client contracts. We plan to start
manufacturing   these   clients'   products  in  2005  and  beyond   which  will
significantly improve the utilization of our manufacturing capacity.

         We believe  that as we  continue  to  improve  the  utilization  of our
manufacturing capacity through the commencement of these newly signed multi-year
contracts and other  purchase  orders from existing and new  customers,  we will
continue to reduce our operating losses,  including  offsetting our research and
development costs and general and  administrative  expenses and start to produce
operating and net earnings.

         We also expect that the increased  business  derived from our expertise
in  non-CFC  aerosol  pharmaceuticals  including  HFA  and  hydrocarbon  aerosol
products, and the marketing of our own proprietary pharmaceutical products, once
developed and commercialized,  will also significantly improve our gross margins
and increase our profitability and earnings. Although we do not currently derive
any  revenues  from the sale of our own  products,  it is  anticipated  that our
initial two proprietary products should be ready for commercial marketing by the
first half and second half, respectively, of 2005.

INTEREST EXPENSES

         For the three  months  ended  September  30,  2004,  interest  expenses
amounted  to  approximately  $595,000  and  included  approximately  $340,000 in
interest  payments  and  associated  issued  warrant  costs in  relation  to our
convertible   loans  due  to  Laurus  Master  Fund,   Ltd.   ("Laurus   Funds"),
approximately  $70,000 in interest  payable under a convertible  promissory note
payable  to  Stiefel,  and  approximately  $185,000  in  interest  payments  and
associated  issued warrant costs as a result of short term loans obtained by the
Company during the three month period.  In comparison for the three months ended
September 30, 2003,  interest  expenses  amounted to approximately  $150,000 and
were related to a term loan and a revolving  credit facility  associated with an
Inyx Pharma lender.  Interest expenses have increased by approximately  $450,000
between  the  comparative  three  month  periods  as a result of our  increasing
business  operations and working capital  requirements  after our reverse merger
with Inyx Pharma.

         For the  nine  months  ended  September  30,  2004,  interest  expenses
amounted to approximately  $1.3 million and included  approximately  $885,000 in
interest  payments and associated  warrant costs in relation to our  convertible
loans due to Laurus Funds,  approximately  $180,000 in interest  payable under a
convertible  promissory note payable to Stiefel,  and approximately  $225,000 in
interest  payments and associated issued warrant costs as a result of short term
loans  obtained by the Company  during the nine month period.  In comparison for
the nine  months  ended  September  30,  2003,  interest  expenses  amounted  to
approximately  $535,000  and were  related  to term loans and  revolving  credit
facilities  associated with Inyx Pharma and Miza UK lenders.  Interest  expenses
have increased by  approximately  $750,000  between the  comparative  nine month
periods as a result of our increasing  business  operations and working  capital
requirements after our reverse merger with Inyx Pharma.

         We believe that as we continue to improve our revenue and profitability
opportunities,  we will be in a position to commence  reducing  our  outstanding
debt thereby reducing the associated interest payments.

INCOME TAX BENEFIT

         For the three months and nine months ended  September 30, 2004, the tax
benefit  net  of  valuation   allowance  is  approximately  zero  and  $395,000,
respectively.  In  comparison,  for the  three  months  and  nine  months  ended
September 30, 2003, the tax benefit net of valuation  allowance is approximately
$220,000 and $510,000 respectively.

         As  of  September  30,  2004,   our  deferred  tax  asset  amounted  to
approximately $1.7 million.

         We have not made any  provisions  for United States  federal or foreign
taxes that may result  from  future  remittances  of  undistributed  earnings of
foreign  subsidiaries,  because  it is  expected  that  such  earnings  will  be
permanently reinvested in our foreign operations.

NET LOSS

         For the three months ended September 30, 2004, our net loss amounted to
approximately  $3.6  million,  as compared to a net loss of  approximately  $2.2
million for the three months ended September 30, 2003. The net loss increased by


                                       26
<PAGE>

approximately $1.4 million as a result of approximately $940,000 of research and
development costs plus  approximately  $450,000 of additional  interest expenses
during the three months ended  September  30, 2004.  In  comparison,  during the
three months ended September 30, 2003, we did not incur research and development
costs and our interest  expenses were lower as a result of lower working capital
requirements.

         For the nine months ended  September 30, 2004, our net losses  amounted
to approximately  $8.7 million,  as compared to net losses of approximately $9.6
million for the nine months ended September 30, 2003.  Excluding  reorganization
transaction  costs amounting to approximately  $3.9 million incurred during 2003
as a result of Inyx  Pharma's  reorganization  with  Miza UK and our  subsequent
reverse  merger  with Inyx  Pharma,  our net  losses for the nine  months  ended
September 30, 2003 would have amounted to approximately $5.7 million.

         On  that  basis,   the   resultant   increase  in  our  net  losses  of
approximately  $2.9  million  between the  comparative  nine month  periods is a
result of a lower gross profit margin of approximately $900,000 due to delays in
the commencement  and/or  completion of a number of manufacturing  contracts and
purchase orders during the second quarter of 2004, approximately $1.3 million of
new research and development  costs,  and  approximately  $700,000 of additional
interest  expenses and associated  warrant costs incurred during the nine months
ended September 30, 2004.

         We believe that we will become  profitable  once we have  increased the
utilization of our  manufacturing  capacity  through the  commencement  of newly
signed  multi-year  contracts  and other  purchase  orders from existing and new
customers during 2005. We also expect to improve our profitability opportunities
through the addition of our own proprietary  pharmaceutical product lines, which
should  offer   greater   profit   margins  than  those   provided  by  contract
manufacturing  services.  Although we do not currently  derive any revenues from
the sale of our own products,  it is anticipated  that our first two proprietary
products should be ready for commercial  marketing  during 2005. We believe that
this  evolving  business  initiative  will  allow us to earn  greater  revenues,
improve  our gross  margins  and  offset a number of our  expenditures,  thereby
significantly improving our profitability potential.

         For the remainder of 2004,  we will continue to focus on  strengthening
and growing our pharmaceutical  aerosol contract manufacturing business in order
to reach profitability. Additionally, we plan to continue the development of our
own  proprietary  pharmaceutical  products to be marketed  and sold  through our
customers'  distribution  channels  or  with  strategic  partners.   Proprietary
products under  development  include  generic  versions of non-CFC or HFA single
molecule and combination drug respiratory  inhalants,  including those utilizing
the recently  acquired  Phares  technology,  non-CFC  propelled  oral sprays for
cardiovascular  ailments,  wound  irrigation  and cleansing  sprays that utilize
novel barrier technologies, and anti-inflammatory nasal pumps.

LIQUIDITY AND CAPITAL RESOURCES

General

         We are financing our operations  primarily  through credit  facilities,
revenues  from  multi-year   contract   manufacturing  and  product  development
contracts and purchase orders, sale of equity securities,  credit facilities and
capital lease financing.

         As of September 30, 2004, our current  assets,  including cash and cash
equivalents, accounts receivable, inventory and other current assets amounted to
approximately $10.6 million. Current liabilities amounted to approximately $12.8
million and include  approximately  $4.0 in accounts  payable and other  current
liabilities,   $6.8  million  due  under  a  revolving   line  of  credit,   and
approximately  $2.0  million  for the  current  portion  of our  long-term  debt
obligations. The Company has the option of repaying the principal or interest on
its borrowings in cash or by issuing common stock.

         As an emerging specialty  pharmaceutical  company, we are involved in a
number of business  development  projects,  including  research and  development
activities,  that require the use of capital  resources over extended periods of
time. From time to time,  these  activities may also include the use of external
resources  that require  prepayment or cash  deposits for supplies,  products or
services that we require. As we intensify the development of our own proprietary
products, our capital requirements may increase accordingly.  The profit margins
on our  proprietary  products and consulting  services are expected to be higher
than  our  contract  manufacturing  services,  although  the  time  line for the
commencement  of  revenues  and  earnings  from these  newly  evolving  business
activities  may be longer than that of our  established  contract  manufacturing
operations.

         We  also  continue  to  incur   operating   losses  since  our  reverse
acquisition  of Inyx  Pharma on April 28,  2003.  For the three and nine  months
ended September 30, 2004, such losses amounted to approximately $3.7 million and
approximately $8.7 million, respectively. These losses are primarily as a result


                                       27
<PAGE>

of low gross profit  margins due to the  underutilization  of our  manufacturing
capacity,  research and development  costs as we continue the development of our
own proprietary pharmaceutical products,  interest expenses and financing costs,
and a number of business and corporate development costs including added payroll
expenses,  and external consulting costs and fees associated with our efforts to
grow our Company and evolve into an integrated pharmaceutical company.

         In 2005, we believe that we can achieve  profitability by continuing to
intensify  our sales and  marketing  efforts to increase  the number of customer
purchase  orders and contracts for our contract  development  and  manufacturing
services.  As noted above,  we also believe that we can establish new sources of
revenue by providing pharmaceutical  consulting services to the industry, and by
marketing our own proprietary  pharmaceutical  products. Based on pharmaceutical
industry profit margins for proprietary  products, we expect that the successful
development and  manufacturing  of our own proprietary  products will provide us
with  greater   operating  margins  and  improve  our  performance  and  overall
profitability opportunities.

         Until that time, we will  continue to depend on our credit  facilities,
and  placements  of equity and debt  securities,  to assist us with our  working
capital  requirements  and to continue  implementing  our  business  development
strategies,  capital  expenditure plans, and proprietary product development and
commercialization initiatives.

Capital Resources

         On July 30, 2004, we agreed to a deferral,  from Laurus  Funds,  on the
first seven months of principal  payments due under the Laurus Note  (originally
$4.5 million and then amended to $5.0 million on May 27,  2004).  Such  payments
are now due upon maturity of the Laurus Note in November, 2006. As consideration
for this  principal  payment  deferral,  on August 30, 2004, we issued to Laurus
Funds  five-year  warrants to purchase  694,000 shares of our common stock at an
exercise price of $0.81 per share.

         During  the  three  months  ended   September  30,  2004,  we  received
approximately  $695,000  in  combined  net  proceeds  in the form of  short-term
stockholder  loans provided by our Chairman,  a senior  executive of the Company
and an outside  director.  These  stockholder loans are due upon demand and bear
interest at seven percent annually. As additional consideration for these loans,
we granted these  individuals  five-year  warrants,  to purchase an aggregate of
700,000 shares of our common stock at an exercise price of $0.80 per share.  Net
proceeds from these loans were used for working capital purposes.

         From August 3, 2004 through September 3, 2004, we completed two private
placements in which we sold an aggregate of 9,190,901 shares of our common stock
to institutional and other accredited investors, resulting in approximately $6.8
million in net proceeds to the Company. In the aggregate,  we also granted these
investors,  five year  non-detachable  warrants to purchase up to an  additional
9,190,901  shares of our common stock at exercise  prices  ranging from $1.00 to
$1.11 per share.

         We  believe  that the  funding  provided  by these  two  recent  equity
placements  has  provided  us with the  necessary  capital  to fund our  present
operations,  including raw material and component purchases,  immediate research
and development and business  development  activities,  and capital expenditures
and  debt  servicing  requirements.  Over  the  longer  term,  we  will  require
additional  funding in the amount of  approximately  $6.0 million  annually over
three years,  to complete the development  and  commercialization  of additional
planned proprietary products. We will also require an additional $3.6 million in
funding  over three  years for  capital  expenditures  in order to  improve  our
pharmaceutical  manufacturing technologies,  production capabilities,  and plant
quality and safety  systems so that we are able to pursue  expanding  commercial
and  product   manufacturing   opportunities   with   existing   and   potential
multinational pharmaceutical and biotechnology clients.

         Additionally,  we believe that we can enhance our competitive  position
through the acquisition of regulatory-approved  pharmaceutical products and drug
delivery devices for respiratory, cardiovascular, and dermatological and topical
applications  or such  products  in  development,  including  those  through the
acquisition of other pharmaceutical  companies,  which we are actively pursuing.
In the event we make a significant  acquisition or change our capital  structure
in the  future,  we may be  required  to  raise  additional  capital  through  a
combination  of additional  borrowings  and the issuance of additional  debt and
equity securities to fund such activities.

         We are also actively pursuing acquisitions that may require substantial
capital resources. In the event that we make a significant future acquisition or
change our capital structure,  we may also be required to raise additional funds
through  additional  borrowings  or the  issuance of  additional  debt or equity


                                       28
<PAGE>

securities.  To that extent,  we have recently  announced  that we had signed an
agreement  in  principle  with  Aventis  Pharmaceuticals,  Inc.,  a wholly owned
subsidiary  of the  sanofi-aventis  Group,  to acquire  the  assets and  certain
business of Aventis  Pharmaceuticals  Puerto Rico. To complete this transaction,
we may be required to obtain such additional financing.

Analysis of Cash Flows

         The net cash used in operating activities for the three and nine months
ended  September  30, 2004  amounted  to  approximately  $6.6  million and $10.9
million, respectively.

         For the three months ended September 30, 2004, the net cash used in the
operations  was primarily the result of an  approximately  $3.6 million net loss
from  continuing  operations  of the  business.  This was  adjusted  by non-cash
charges,  including  depreciation  and the  amortization  of financing  costs of
approximately  $275,000,  stock option  compensation  for vested options and the
issuance  of stock  for  services  approximating  $100,000,  warrants  issued to
consultants  and for financing fees of  approximately  $860,000,  a subscription
receivable of approximately $50,000, and a reserve for inventory obsolescence of
approximately $335,000. These non-cash charges were offset by an increase in the
provision for bad debts amounting to approximately $80,000. For the three months
ended  September  30, 2004,  working  capital  changes  reducing  cash flow from
operations  were  primarily  due  to  an  increase  in  accounts  receivable  of
approximately  $1.1  million,  and increase in inventory of  approximately  $1.0
million,  an increase in prepaid  deposits and other current assets amounting to
approximately  $1.8 million.  Other working capital  changes  reducing cash flow
from  operations  included  a decrease  in  accounts  payable  of  approximately
$565,000, a decrease of a bank overdraft amounting to approximately  $50,000 and
a decrease in deferred  financing costs and revenues of approximately  $430,000.
All such working  capital changes were due to improved  business  operations and
activities as a result of increasing sales and the equity  financings  completed
during the three months ended September 30, 2004.

         For the nine months  ended  September  30,  2004,  the net cash used in
operations  was primarily the result of an  approximately  $8.7 million net loss
from  continuing  operations  of the  business.  This was  adjusted  by non-cash
charges,  including  depreciation  and the  amortization  of financing  costs of
approximately  $750,000,  stock  option  compensation  for vested  options,  the
issuance of stock for  services  and the  issuance of shares for the exercise of
stock options  approximating  $550,000,  warrants  issued to consultants and for
financing  fees  of  approximately   $1.3  million,   a  reserve  for  inventory
obsolescence of approximately  $115,000,  and a provision for bad debt amounting
to  approximately  $30,000.  These non-cash charges were offset by a decrease in
the reserve for inventory obsolescence amounting to approximately $395,000 and a
decrease in a subscription  receivable of approximately  $245,000.  For the nine
months ended September 30, 2004, working capital changes reducing cash flow from
operations  were  primarily  due to an increase in  inventory  of  approximately
$840,000,  an increase in prepaid deposits and other current assets amounting to
approximately  $4.6  million,  and a decrease  in  deferred  financing  costs of
approximately  $650,000.  Working  capital  changes  increasing  cash  flow from
operations included a decrease in accounts receivable amounting to approximately
$720,000 and an increase in accounts payable of approximately $840,000. All such
working capital changes were due to improved business  operations and activities
as a result of increasing sales and completed equity financings completed during
the three months ended September 30, 2004.

         The net cash used in investing activities for the three and nine months
ended  September  30, 2004  amounted  to  approximately  $13,000  and  $100,000,
respectively.  These investing  activities  related to the acquisition of office
equipment and computers.

         The net cash provided by financing activities, for the three months and
nine months ended September 30, 2004 amounted to approximately  $7.0 million and
$10.8 million, respectively.

         For  the  three  months   ended   September   30,  2004,   we  borrowed
approximately   $1.0  million  in  the  form  of  short-term  loans  and  repaid
approximately  $700,000 in capital lease and loan  repayments.  We also received
approximately  $6.6  million in net  proceeds  through  the  issuance  of equity
securities during the three month period.

         For the nine months ended September 30, 2004, we borrowed approximately
$4.9  million  under  a  revolving  line of  credit  and  the  issuance  of both
short-term  and  long-term  debt.  This was  partially  offset by  approximately
$765,000 in capital lease and loan  repayments.  We also received  approximately
$6.6 million in net proceeds  through the issuance of equity  securities  in the
form of two private placements from August 3, 2004 through September 3, 2004.

         For the three months and nine months  ended  September  30,  2004,  our
existing  credit  facilities and capital  resources were  sufficient to fund the
cash  required  to operate  our  business.  However,  on both a  short-term  and


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<PAGE>

long-term  basis,  we may be  required  to  continually  raise  capital  through
additional borrowings or the issuance of additional debt or equity securities in
order to  implement  our  business  growth  strategies,  which may also  include
significant  business  or  corporate  acquisitions  or  changes  to our  capital
structure.

Subsequent Events

         On October 1, 2004, we terminated our collaboration agreement with Utek
Corporation ("Utek").  Under the terms of that agreement,  we had issued a total
of 31,579 restricted shares of our common stock to Utek.

         On October 4, 2004, we granted  75,000 stock  purchase  warrants to the
Company's solicitors, Gusrae Kaplan & Bruno, PLLC ("Gusrae"), in connection with
two private placements we had completed from August 3, 2004 through September 3,
2004.  These 5-year  warrants allow Gusrae to purchase our common stock at $1.08
per share.

         On October 7, 2004,  we  announced  that we had signed an  agreement in
principle with Aventis  Pharmaceuticals,  Inc., a wholly owned subsidiary of the
sanofi-aventis  Group,  to acquire  the assets and  certain  business of Aventis
Pharmaceuticals Puerto Rico. The agreement in principle calls for execution of a
definitive  agreement  by December  15, 2004 and closing of the  acquisition  by
March 31, 2005. The sanofi-aventis  operation that we are planning to acquire is
located  in  Manati,   Puerto  Rico  and  consists  of  a  139,000  square  foot
regulatory-compliant pharmaceuticals aerosol manufacturing and testing plant. We
believe that this facility is complementary to our existing product  development
and  manufacturing  facilities in the United  Kingdom,  and will provide us with
enhanced  capabilities to manufacture  pharmaceutical  products  currently being
distributed in the U.S. market.

         On November 8, 2004,  we  announced  that we had  expanded  our product
development relationship with Stiefel Laboratories,  Inc. ("Stiefel"). Under the
terms of this agreement,  our United Kingdom  subsidiary,  Inyx Pharma is, on an
exclusive basis, assisting Stiefel in the development and supply of both topical
and foam aerosol products for dermatological applications.  The expansion of the
agreement   includes  assisting  Stiefel  with  the  development  of  additional
dermatological  products intended for global markets,  including a novel product
currently in phase II trials.

Item 3.  Controls and Procedures

a)       Within the 90-day  period prior to the date of this report,  we carried
         out an evaluation,  under the supervision and with the participation of
         our  management,  including  the  Chief  Executive  Officer  and  Chief
         Financial Officer,  of the effectiveness of the design and operation of
         our disclosure  controls and procedures  pursuant to Rule 13a-14 of the
         Securities  Exchange Act of 1934 (the "Exchange Act").  Based upon that
         evaluation,  the Chief Executive  officer and Chief  Financial  Officer
         concluded that our disclosure  controls and procedures are effective in
         timely  alerting them to material  information  relating to the Company
         required to be included in our Exchange Act filings.  The two Executive
         Officers  responsible for the financial reporting and disclosure are in
         direct control of the books and records of the Company and are involved
         first-hand in the decision making process for material transactions.

b)       There have been no significant  changes in our internal  controls or in
         other  factors,  which could  significantly  affect  internal  controls
         subsequent to the date we carried out our evaluation.


PART II -- OTHER INFORMATION

Item 2.  Unregistered sales of equity securities

         The following  securities were issued in the third quarter  pursuant to
exemptions from  registration  provided by Section 4(2) of the Securities Act of
1933 and Regulation D promulgated  thereunder and not otherwise reported on Form
8-K.

         On July 2, 2004, the Company  granted a total of 1,500,000  warrants to
First Jemini Trust, a discretionary family trust in which the Company's Chairman
and his spouse are  non-voting  beneficiaries.  These  five-year  warrants  were
granted  pursuant  to various  business  development  services  provided  to the
Company and allow the holder to purchase the  Company's  common stock at a price
of $0.90 per share.

         In July, 2004, the Company granted five-year  warrants,  to purchase an
aggregate of 700,000  shares of its common  stock at an exercise  price of $0.80


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<PAGE>

per share as additional  consideration for short term loans. Dr. Kachkar and Mr.
J.  Douglas  Brown,  an  outside  Director,   each  provided  the  Company  with
stockholder loans amounting to $300,000.  Another executive,  Mr. Jay Green, our
Executive Vice President of Corporate  Development,  also provided the Company a
stockholder loan in the amount of $100,000.

         On  July  1,  2004,  the  Company  entered  into a  strategic  alliance
agreement with Utek Corporation ("Utek").  Under the agreement, the Company will
be collaborating with Utek in the identification, acquisition and development of
intellectual property that it may require to implement its business initiatives.
Pursuant  to this  agreement,  in  September  2004,  the Company  issued  31,579
restricted shares of our common stock to Utek.

         The agreement was cancelled in October 2004.

Item 6.  Exhibits

         10.23.10          Stock  Purchase  Warrant  for  75,000  shares  of the
                           Company's  common  stock with  Gusrae  Kaplan & Bruno
                           PLLC dated October 4, 2004

         31.1              Certification  by CEO pursuant to 18 USC Section 1350
                           as adopted by Section 302 of the  Sarbanes-Oxley  Act
                           of 2002.

          31.2             Certification  by CFO pursuant to 18 USC Section 1350
                           as adopted by Section 302 of the  Sarbanes-Oxley  Act
                           of 2002.

          32.1             Certification  by CEO pursuant to 18 USC Section 1350
                           as adopted by Section 906 of the  Sarbanes-Oxley  Act
                           of 2002.

          32.2             Certification  by CFO pursuant to 18 USC Section 1350
                           as adopted by Section 906 of the  Sarbanes-Oxley  Act
                           of 2002.



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

         Date:    November 22, 2004

                                                     INYX, INC.


                                                     By: /s/ Rima Goldshmidt
                                                        ------------------------
                                                        Rima Goldshmidt,
                                                        Vice President Finance




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