FORM 10-Q



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



(Mark One)

xQuarterly Report Under Section 13 or 15(d)

Of the Securities Exchange Act of 1934

For Quarterly Period ended June 30, 2012.



 ̈Transition Report Under Section 13 or 15(d) of the Exchange Act.

For the transition period from ___ to ____.

Commission File Number: 000-52991



INNOVUS PHARMACEUTICAL, INC.

(Exact name of registrant as specified in
its charter)



|NEVADA                          | 87-0324697         
|------------------------------- | -------------------
|(State or other jurisdiction of | (IRS Employer      
|incorporation or organization)  | Identification No.)



80 W. Sierra Madre Blvd., #392

Sierra Madre, CA 91024

(Address of principal executive offices)



Registrant's telephone number including
area code:(626) 227-1630



Former Address, if changed since last report.



Indicateby
check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive
Data File required to be submitted and posted pursuant Rule 405 of Regulation S-T (§220.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files.

Yesx No ̈Not applicable ̈



Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or 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 ̈



Indicate by check mark whether the registrant is a large accelerated
filer, a non-accelerated filer, or a smaller reporting company.



|Large accelerated filer ̈ | Accelerated filer ̈        
|------------------------ | --------------------------
|Non-accelerated filer ̈   | Smaller reporting companyx



Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈Nox



As of August 3, 2012, Registrant had 16,333,670 shares of common
stock, par value of $.001 per share, issued and outstanding.











ITEM I - FINANCIAL STATEMENTS



The condensed financial statements included
herein have been prepared by Innovus Pharmaceuticals, Inc. (the "Company", "Registrant", “we”,
“us”, or “our”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures
are adequate to make the information presented not misleading.



In our opinion, all adjustments, consisting
of only normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 30, 2012, and
the results of our operations from January 1, 2012, through June 30, 2012 were made. The results of our operations for such interim
periods are not necessarily indicative of the results to be expected for the entire year.



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



The following information should be read with the financial
statements and notes appearing in this Form 10-Q:



We, Innovus Pharmaceuticals, Inc., as an
entity continuing the business operations of FasTrack, are a development stage company as we have limited assets, operations and
income. The merger agreement (the Agreement”), dated December 7, 2011, stipulated that Innovus and FasTrack would undergo
a combination whereby both companies would survive as legal entities, but FasTrack would become a wholly-owned subsidiary of Innovus.
Pursuant to the Agreement, Innovus changed its name from North Horizon, Inc. to Innovus Pharmaceuticals, Inc.



For the next twelve months, additional
capital will be required to maintain our corporate operations, which will include filing appropriate reports with the Securities
and Exchange Commission, and we will need to seek additional funding for product acquisition and development once we have selected
product(s) for exploitation. If we are unable to obtain significant financing, our ability to continue as a going concern is substantially
doubtful.



We are focused on the development and in-licensing/acquisition
of new and innovative pharmaceutical product opportunities that offer definable pathways to regulatory approvals, partnering and
commercialization. We have a three-pronged approach in our business strategy:



| | • | To internally develop new, 505(b)(2) topical products based on a proven drug delivery technology; and                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | To in-license/acquire late stage revenue generating pharmaceutical products; and                                                                               
| | • | To leverage near term revenue opportunities afforded by our proprietary pipeline comprised of ethical therapeutic (“Rx”) and over-the-counter (“OTC”) products.



Our business model is designed to create
multiple opportunities for success while minimizing the risks associated with reliance on any single technology platform or product
type, and to bridge the critical gap between promising new product candidates and product opportunities that are ready for commercialization.
Consistent with our long-term strategy, we will consider various corporate development transactions designed to place our product
candidates into larger organizations or with partners having existing commercialization, sales and marketing resources, and a need
for innovative products. Such transactions could involve the sale, partnering or other monetization of particular product opportunities
or businesses.



2







In parallel, as our business strategy advances
and corresponding valuations are established, we plan to pursue new product opportunities and acquisitions with strong value enhancement
potential. Our other long-term goal is to improve our balance sheet and cash flow with minimal dilution to our shareholders. 
This strategy may include debt financing and/or acquisitions of small revenue generating companies and products, which we believe
would accelerate our shareholders' return on investment and provide us with additional cash flow to fund our own product development.



We believe that inflation has not and will
not have a material effect on our operations. If we are involved in a merger or acquisition, management will evaluate the possible
effects of inflation on operations and our business.



Liquidity and Capital Resources



At June 30, 2012, the Company had $105,726
in cash as compared to $25,014 at December 31, 2011. On January 13, 2012, the Board of Directors authorized a total of $174,668
in convertible promissory notes (the "January Notes) to six individuals. One January Note for $74,668 was issued to an accredited
investor to settle liabilities assumed from North Horizon and therefore this did not result in any cash inflow for us. Five January
Notes for a total of $100,000 in a new cash infusion were issued to five individuals, three of whom are members of the Company's
Board of Directors. The January Notes bear an annual interest rate of 8% and are payable in cash at the earlier of January 13,
2013, or when the Company completes a financing of a minimum of $4 million (the "Financing"). The holders of the January
Notes have the option to convert their principal and interest accrued into the Company’s securities (“New Financing
Securities”) that will be issued to the investors in the future Financing.  In the event the Company defaults on repayment,
or if the Company fails to complete a Financing within one year of the note date, the annual interest rate would increase to 13%
and the holders of the January Notes would have the option to convert the note to the Company’s common stock at $0.05 per
share.



On June 26, 2012 the Company issued 134,000
shares of common stock to an unrelated investor at $0.75 per share for cash proceeds of $100,500. Also on June 26, 2012 the Company
and an unrelated noteholder reached a settlement on outstanding balance of $12,000, plus accrued interest of $435, of the convertible
debenture whereas the fair value of the 16,580 shares of common stock issued approximated the carrying value of the outstanding
convertible debenture at time of settlement. Accordingly, no gain or loss resulted from the settlement.



Results of Operations



For the three months ended June 30, 2012 and 2011

(The 2011 results reflect only pre-merger former FasTrack entity,
as a private company)



Revenues and Cost of Sales - for all periods
ended June 30, 2012 and 2011 the Company earned no revenues, and consequently, no cost of sales.



3







Operating Expenses - Operating expenses
for the three months ended June 30, 2012 and 2011 totaled $49,849 and $50,994, respectively, marking a $1,145 decrease. This minor
decrease was primarily the result of minor decreases in professional fees as a result of the completion of the reverse merger transaction
in December 2011 and the filing of our first Form 10K in March 2012.



Other expenses - The Company recognized
interest expense of $4,472 and $4,730 for the three months ended June 30, 2012 and 2011, respectively, resulting in a change of
$(258). This change is primarily the result of decreased level of debt during 2012 compared to 2011.



Net Loss - The Company recognized net losses
in the amount of $54,321 and $55,724, for the three month periods ended June 30, 2012 and 2011, respectively. This decreased net
loss results primarily from minor decreases in operating expenses and interest expense.



For the six months ended June 30, 2012 and 2011

(The 2011 results reflect only pre-merger former FasTrack entity,
as a private company)



Revenues and Cost of Sales - for all periods
ended June 30, 2012 and 2011 the Company earned no revenues, and consequently, no cost of sales.



Operating Expenses - Operating expenses
for the six months ended June 30, 2012 and 2011 totaled $106,126 and $71,200, respectively, marking a $34,926 increase. This increase
was primarily the result of increases in professional fees as a result of the completion of the reverse merger transaction in December
2011 and the filing of our first Form 10K in March 2012.



Other expenses - The Company recognized
interest expense of $8,455 and $9,050 for the six months ended June 30, 2012 and 2011, respectively, resulting in a change of $(595).
This change is primarily the result of decreased level of debt during 2012 compared to 2011.



Net Loss - The Company recognized net losses
in the amount of $114,581 and $80,250, for the six month periods ended June 30, 2012 and 2011, respectively. This increased net
loss results primarily from increases in operating expenses, partially offset by the decrease in interest expense.



Off-Balance Sheet Arrangements



We have no such arrangements to discuss.



Forward Looking Statements



This Report makes certain forward-looking
statements. Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 refer to the term
“forward looking statements.” Such statements may refer to such matters as anticipated financial performance, future
revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance, and similar
matters.



Such words as “may”, “will”,
“expect”, “continue”, “estimate”, “project”, and “intend” and similar
terms and expressions are intended to identify forward looking statements. These terms may relate to events, conditions, and financial
trends that may affect our future plans of operations, business strategy, operating results, and financial position. We advise
readers that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements, including
but not limited to, the following: our ability to find a suitable business venture that will benefit us, our ability to investigate
a potential business venture, and our ability to determine all information about a business venture.



4







ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS



This item is not applicable to smaller
reporting companies.



ITEM 4. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures



As of the end of the period covered by
this quarterly report, we conducted an evaluation under the supervision and direct participation of our management, including our
chief executive officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing
and evaluating disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness
of any system of disclosure procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their desired control objectives. In evaluating and implementing possible controls and procedures, management
is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our chief executive
officer, has concluded that, as of June 30, 2012, our disclosure controls and procedures were not effective.



We have one employee, and she is responsible
for all matters surrounding accounting and business transactions. Management believes that the material weakness of the lack of
segregation of responsibilities can impact our financial statements. The existence of any material weakness precludes an effective
determination.



Changes in Internal Controls over Financial Reporting



We had no significant changes in our internal
controls during the period ended June 30, 2012. Management concluded there has been no change in our internal control over financial
reporting during the quarter ended June 30, 2012. The design of any system of controls is based in part upon certain assumptions
about the likelihood of future events and there is no certainty that any design will succeed in achieving it stated goal under
all potential future considerations regardless of how remote.



PART II



ITEM 1 – LEGAL PROCEEDINGS



None.



ITEM 1A – RISK FACTORS



This item is not applicable to smaller reporting companies.



5







ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS



None.



ITEM 3 – DEFAULTS UPON SENIOR SECURITIES



None.



ITEM 4 – (REMOVED AND RESERVED)



This item is not applicable.



ITEM 5 – OTHER INFORMATION



None.



ITEM 6 – EXHIBITS AND FINANCIAL STATEMENTS



(a)(1)(2) Financial statements. See the financial statements
for the three months ended June 30, 2012 and 2011, presented in Item 6.



(a)(3) Exhibits. The following exhibits are filed as part of
this Quarter Report:



|No.  | Description                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------
|2.1  | Merger Agreement and Plan of Merger - previously filed on July 20, 2011                                                           
|3.1  | Articles of Incorporation- previously filed                                                                                       
|3.2  | Bylaws- previously filed                                                                                                          
|3.3  | Ethics Policy- previously filed                                                                                                   
|3.4  | Amendments to Articles of Incorporation – Nevada- previously filed on December 12, 2011                                           
|3.5  | Certificate of Merger – Delaware- previously filed on December 12, 2011                                                           
|3.6  | Articles of Merger – Utah- previously filed on December 12, 2011                                                                  
|10.1 | Financial Advisory and Consulting Agreement with Dawson James Securities, Inc., - previously filed on December 12, 2011           
|10.2 | Placement Agent Agreement with Dawson James Securities, Inc., dated December 16, 2011- previously filed on March 29, 2012         
|10.3 | Addendum to Placement Agent Agreement with Dawson James Securities, Inc., dated March 21, 2012- previously filed on March 29, 2012
|10.3 | Vivian Liu Employment Offer, dated March 7, 2012- previously filed on March 29, 2012                                              
|21.2 | List of subsidiaries- previously filed on December 12, 2011                                                                       
|31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act                                                                   
|31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act                                                                   
|32.1 | Certification                                                                                                                     
|32.2 | Certification                                                                                                                     



6







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: August 3, 2012



Innovus Pharmaceuticals, Inc.

|By                                    | s/Vivian Liu | 
|------------------------------------- | ------------ | 
|President and Chief Executive Officer



|By                      | s/Vivian Liu | 
|----------------------- | ------------ | 
|Chief Financial Officer



7











|INNOVUS PHARMACEUTICALS, INC.        
|-------------------------------------
|(Formerly North Horizon, Inc.)       
|(A Development Stage Company)        
|Condensed Consolidated Balance Sheets



|                                                                                                                                                      |  | June 30,    |            |   | December 31, |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | - | ------------ | -
|                                                                                                                                                      |  | 2012        |            |   | 2011         |  
|                                                                                                                                                      |  | (Unaudited) |            |   |              |  
|ASSETS                                                                                                                                                |  |             |            |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|CURRENT ASSETS                                                                                                                                        |  |             |            |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Cash                                                                                                                                                  |  | $           | 105,726    |   |              | $
|                                                                                                                                                      |  |             |            |   |              |  
|Total Current Assets                                                                                                                                  |  |             | 105,726    |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|TOTAL ASSETS                                                                                                                                          |  | $           | 105,726    |   |              | $
|                                                                                                                                                      |  |             |            |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                        |  |             |            |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|CURRENT LIABILITIES                                                                                                                                   |  |             |            |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Accounts payable                                                                                                                                      |  | $           | 525        |   |              | $
|Convertible debentures - related party                                                                                                                |  |             | 162,668    |   |              |  
|Promissory notes                                                                                                                                      |  |             | 50,000     |   |              |  
|Accrued interest payable                                                                                                                              |  |             | 8,020      |   |              |  
|Related-party payables                                                                                                                                |  |             | -          |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Total Current Liabilities                                                                                                                             |  |             | 221,213    |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Contigent liability related to common shares, subject to recsission rights, issuable to FasTrack shareholders arising from Merger (14,722,077 shares) |  |             | -          |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                        |  |             |            |   |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Common stock; 150,000,000 shares authorized, at $0.001 par value, 16,333,670 and 1,325,125 shares issued and outstanding, respectively                |  |             | 16,334     |   |              |  
|Additional paid-in capital                                                                                                                            |  |             | 2,733,183  |   |              |  
|Deficit accumulated during the development stage                                                                                                      |  |             | (2,865,004 | ) |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|Total Stockholders' Equity (Deficit)                                                                                                                  |  |             | (115,487   | ) |              |  
|                                                                                                                                                      |  |             |            |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                  |  | $           | 105,726    |   |              | $



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



F-1







|INNOVUS PHARMACEUTICALS, INC.                  
|-----------------------------------------------
|(Formerly North Horizon, Inc.)                 
|(A Development Stage Company)                  
|Condensed Consolidated Statements of Operations
|(Unaudited)                                    



|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  | From             |           
|--------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | -------- |  | - | ----------- | - |  | ---------------- | ----------
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  | October 31, 2008 |           
|                                              |  |                            |            |   |                          |   |            |          |  |   | (Inception) |  
|                                              |  | For the Three Months Ended |            |   | For the Six Months Ended |   |            | through  | 
|                                              |  | June 30,                   |            |   | June 30,                 |   |            | June 30, | 
|                                              |  | 2012                       |            |   | 2011                     |   |            | 2012     |  |   | 2011        |   |  | 2012             |           
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|REVENUES                                      |  | $                          | -          |   |                          | $ | -          |          |  | $ | -           |   |  | $                | -         
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|OPERATING EXPENSES                            |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|Research and development                      |  |                            | -          |   |                          |   | -          |          |  |   | -           |   |  |                  | -         
|Professional fees                             |  |                            | 39,435     |   |                          |   | 41,122     |          |  |   | 82,962      |   |  |                  | 50,133    
|Investment banking fees                       |  |                            | -          |   |                          |   | -          |          |  |   | -           |   |  |                  | -         
|General and administrative                    |  |                            | 10,414     |   |                          |   | 9,872      |          |  |   | 23,164      |   |  |                  | 21,067    
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|Total Operating Expenses                      |  |                            | 49,849     |   |                          |   | 50,994     |          |  |   | 106,126     |   |  |                  | 71,200    
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|LOSS FROM OPERATIONS                          |  |                            | (49,849    | ) |                          |   | (50,994    | )        |  |   | (106,126    | ) |  |                  | (71,200   
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|OTHER EXPENSES                                |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|Interest expense                              |  |                            | (4,472     | ) |                          |   | (4,730     | )        |  |   | (8,455      | ) |  |                  | (9,050    
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|Total Other Expenses                          |  |                            | (4,472     | ) |                          |   | (4,730     | )        |  |   | (8,455      | ) |  |                  | (9,050    
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|NET LOSS                                      |  | $                          | (54,321    | ) |                          | $ | (55,724    | )        |  | $ | (114,581    | ) |  | $                | (80,250   
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|BASIC LOSS AND DILUTED LOSS PER SHARE         |  | $                          | (0.00      | ) |                          | $ | (0.00      | )        |  | $ | (0.02       | ) |  | $                | (0.01     
|                                              |  |                            |            |   |                          |   |            |          |  |   |             |   |  |                  |           
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |  |                            | 13,764,648 |   |                          |   | 14,722,077 |          |  |   | 7,593,514   |   |  |                  | 14,609,764



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



F-2







|INNOVUS PHARMACEUTICALS, INC.      
|-----------------------------------
|(Formerly North Horizon, Inc.)     
|(A Development Stage Company)      
|Statements of Stockholders' Deficit



|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         | Deficit     |  |   |               |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | -------- | - | ------- | ----------- |  | - | ------------- | -
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   | Accumulated   |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         | Additional  |  |   | During the    |  
|                                                                                                                                                                                                                                                                |  | Common Stock |             |   | Paid-in  |   |         | Development |  |   | Stockholders' |  
|                                                                                                                                                                                                                                                                |  | (Shares)     |             |   | (Amount) |   |         | Capital     |  |   | Stage         |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Balance at Inception on October 31, 2008                                                                                                                                                                                                                        |  |              | -           |   |          | $ | -       |             |  | $ | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Balance on December 31, 2008                                                                                                                                                                                                                                    |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued in FasTrack asset purchase                                                                                                                                                                                                                  |  |              | 13,372,284  |   |          |   | 13,372  |             |  |   | 12,648        |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued in Sorrento business combination                                                                                                                                                                                                            |  |              | -           |   |          |   | -       |             |  |   | 11,000        |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Deemed distribution for the value of assets acquired from Apricus Bio                                                                                                                                                                                           |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Net loss for the year ended December 31, 2009                                                                                                                                                                                                                   |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Balance at December 31, 2009                                                                                                                                                                                                                                    |  |              | 13,372,284  |   |          |   | 13,372  |             |  |   | 23,648        |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued for compensation of board members                                                                                                                                                                                                           |  |              | 381,761     |   |          |   | 382     |             |  |   | 368           |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Deemed contribution for the value of assets sold to Apricus Bio                                                                                                                                                                                                 |  |              | -           |   |          |   | -       |             |  |   | 204,896       |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Net loss for the year ended December 31, 2010                                                                                                                                                                                                                   |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Balance at December 31, 2010                                                                                                                                                                                                                                    |  |              | 13,754,045  |   |          |   | 13,754  |             |  |   | 228,912       |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued for services rendered                                                                                                                                                                                                                       |  |              | 134,364     |   |          |   | 134     |             |  |   | 6,866         |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued for compensation of officer                                                                                                                                                                                                                 |  |              | 833,668     |   |          |   | 834     |             |  |   | 804           |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Forgiveness of interest by Apricus Bio                                                                                                                                                                                                                          |  |              | -           |   |          |   | -       |             |  |   | 4,021         |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Deemed contibution to capital arising from conversion of convertible promissory notes held by Apricus Bio at Merger date pursuant to terms of convertible note, resulting in the future issuance of 135,888 shares of common stock in March 2012 to Apricus Bio |  |              | -           |   |          |   | -       |             |  |   | 538,117       |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued for net assets acquired in reverse-merger                                                                                                                                                                                                   |  |              | 1,325,125   |   |          |   | 1,325   |             |  |   | (63,050       | )
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Issuance of warrants to investment banker for services                                                                                                                                                                                                          |  |              | -           |   |          |   | -       |             |  |   | 1,904,865     |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Reclassification of shares issuable to FasTrack shareholders pursuant to rescission offer                                                                                                                                                                       |  |              | (14,722,077 | ) |          |   | (14,722 | )           |  |   | (14,204       | )
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Net loss for the year ended December 31, 2011                                                                                                                                                                                                                   |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Balance at December 31, 2011                                                                                                                                                                                                                                    |  |              | 1,325,125   |   |          |   | 1,325   |             |  |   | 2,606,331     |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued on conversion of ApricusBio convertible note (see above)                                                                                                                                                                                    |  |              | 135,888     |   |          |   | 136     |             |  |   | (136          | )
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued for cash                                                                                                                                                                                                                                    |  |              | 134,000     |   |          |   | 134     |             |  |   | 100,366       |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Common stock issued in connection with settlement of $12,000 note payable                                                                                                                                                                                       |  |              | 16,580      |   |          |   | 17      |             |  |   | 12,418        |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Expiration of FasTrack rescission offer                                                                                                                                                                                                                         |  |              | 14,722,077  |   |          |   | 14,722  |             |  |   | 14,204        |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|Net loss for the six-months ended June 30, 2012                                                                                                                                                                                                                 |  |              | -           |   |          |   | -       |             |  |   | -             |  
|                                                                                                                                                                                                                                                                |  |              |             |   |          |   |         |             |  |   |               |  
|                                                                                                                                                                                                                                                                |  |              | 16,333,670  |   |          | $ | 16,334  |             |  | $ | 2,733,183     |  



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



F-3







|INNOVUS PHARMACEUTICALS, INC.                  
|-----------------------------------------------
|(Formerly North Horizon, Inc.)                 
|(A Development Stage Company)                  
|Condensed Consolidated Statements of Cash Flows
|(Unaudited)                                    



|                                                                                                           |  |                          |          |   |             |   |          | From             | 
|---------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ----------- | - | -------- | ---------------- | 
|                                                                                                           |  |                          |          |   |             |   |          | October 31, 2008 | 
|                                                                                                           |  |                          |          |   | (Inception) |  
|                                                                                                           |  | For the Six Months Ended |          |   | through     |  
|                                                                                                           |  | June 30,                 |          |   | June 30,    |  
|                                                                                                           |  | 2012                     |          |   | 2011        |   |          | 2012             | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                       |  |                          |          |   |             |   |          |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|Net loss                                                                                                   |  | $                        | (114,581 | ) |             | $ | (80,250  | )                | 
|Adjustments to reconcile net loss to net cash used by operating activities:                                |  |                          |          |   |             |   |          |                  | 
|Common stock issued for services                                                                           |  |                          | -        |   |             |   | 8,638    |                  | 
|Value of warrants granted to investment banker                                                             |  |                          | -        |   |             |   | -        |                  | 
|Non-cash interest expense (including a discount on conversion of Apricus Bio convertible notes of $48,920) |  |                          | -        |   |             |   | 4,120    |                  | 
|Promissory note issued for services rendered                                                               |  |                          | -        |   |             |   | -        |                  | 
|Research and development expense recognized upon purchase of SSAO inhibitor assets                         |  |                          | -        |   |             |   | -        |                  | 
|Expenses paid on behalf of the Company by Apricus Bio                                                      |  |                          | -        |   |             |   | -        |                  | 
|Changes in operating assets and liabilities                                                                |  |                          |          |   |             |   |          |                  | 
|Change in related-party payable                                                                            |  |                          | (12,500  | ) |             |   | (18,600  | )                | 
|Prepaid expenses                                                                                           |  |                          | -        |   |             |   | (37,640  | )                | 
|Interest payable                                                                                           |  |                          | 8,455    |   |             |   | 4,930    |                  | 
|Income taxes payable                                                                                       |  |                          | -        |   |             |   | -        |                  | 
|Accounts payable                                                                                           |  |                          | (1,162   | ) |             |   | 1,883    |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|Net Cash Used in Operating Activities                                                                      |  |                          | (119,788 | ) |             |   | (116,919 | )                | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                       |  |                          | -        |   |             |   | -        |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                       |  |                          |          |   |             |   |          |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|Proceeds from issuance of loans from officers                                                              |  |                          | -        |   |             |   | 20,003   |                  | 
|Repayment of loans from officers                                                                           |  |                          | -        |   |             |   | (20,003  | )                | 
|Proceeds from stock issued for cash                                                                        |  |                          | 100,500  |   |             |   | -        |                  | 
|Proceeds from convertible debentures                                                                       |  |                          | 100,000  |   |             |   | 250,000  |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|Net Cash Provided by Financing Activities                                                                  |  |                          | 200,500  |   |             |   | 250,000  |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|NET CHANGE IN CASH                                                                                         |  |                          | 80,712   |   |             |   | 133,081  |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH AT BEGINNING OF PERIOD                                                                                |  |                          | 25,014   |   |             |   | 1,650    |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH AT END OF PERIOD                                                                                      |  | $                        | 105,726  |   |             | $ | 134,731  |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                          |  |                          |          |   |             |   |          |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|CASH PAID FOR:                                                                                             |  |                          |          |   |             |   |          |                  | 
|                                                                                                           |  |                          |          |   |             |   |          |                  | 
|Interest                                                                                                   |  | $                        | -        |   |             | $ | -        |                  | 
|Income Taxes                                                                                               |  | $                        | -        |   |             | $ | -        |                  | 



|See Note 7 for disclosure of non-cash financing activities
|----------------------------------------------------------



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



F-4







INNOVUS PHARMACEUTICALS, INC.

(Formerly North Horizon, Inc.)

(A Development Stage Company)

Notes to the Condensed Consolidated Financial
Statements

June 30, 2012 and December 31, 2011



NOTE 1 - CONDENSED FINANCIAL STATEMENTS



In the opinion of management, the accompanying
condensed financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present
fairly the Company's financial position, results of operations and cash flows. The condensed balance sheet as of December 31, 2011
has been derived from audited financial statements as of that date. The interim results of operations are not necessarily indicative
of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial
statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed
or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (the "SEC").
The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these
condensed financial statements are read in conjunction with the financial statements and notes included in its Annual Report on
Form 10-K for the year ended December 31, 2011 filed with the SEC.



NOTE 2 - GOING CONCERN



The Company's financial statements are prepared using generally
accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization
of assets and liquidation of liabilities in the normal course of business. As a result of its losses to date, expected losses in
the future, limited capital resources and accumulated deficit, there is substantial doubt as to the Company’s ability to
continue as a going concern. The Company has not yet established a source of revenues sufficient to cover its operating costs and
allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company
obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital,
it could be forced to cease operations.



In order to continue as a going concern, the Company will need,
among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital
from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing
to finance the acquisition of product targets and the development of such targets. However management cannot provide any assurances
that the Company will be successful in accomplishing any of its plans.



The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other
sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.



In the Company’s annual report filed for the year ended
December 31, 2011, the Company’s independent registered public accounting firm has included an explanatory paragraph in their
report dated March 30, 2012, expressing substantial doubt about the Company’s ability to continue as a going concern.



NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES



Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



F-5







INNOVUS PHARMACEUTICALS, INC.

(Formerly North Horizon, Inc.)

(A Development Stage Company)

Notes to the Condensed Consolidated Financial
Statements

June 30, 2012 and December 31, 2011



NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and
their adoption has not had or is not expected to have a material impact on the Company’s financial position or statements.



NOTE 4 – RELATED PARTY TRANSACTIONS



The Company has recorded expenses paid on its behalf by shareholders
as a related party payable. At December 31, 2011, this payable totaled $87,168.  During the six months ended June 30, 2012
the Company repaid $12,500 on this amount, and converted the remaining $74,668 into a convertible debenture (see Note 5).



NOTE 5 – CONVERTIBLE DEBENTURES – RELATED PARTIES



On January 13, 2012, the Board of Directors authorized the issuance
of a total of $174,668 in promissory notes (the “January Notes”) to six individuals.  One Note for $74,668 was
issued to one accredited investor in exchange for the liabilities assumed from North Horizon, Inc.  The five remaining January
Notes for a total of $100,000 in new cash infusion were issued to five individuals, three of whom are members of the Company’s
Board of Directors.   The January Notes bear an annual interest rate of 8% and payable in cash at the earlier of January
13, 2013 or when the Company completes a financing of a minimum of $4 million (the “Financing”).   The holders
of the January Notes have the right to convert their principal and interest accrued into the Company’s securities (“New
Financing Securities”) that will be issued to the investors in the future Financing.  In the event the Company defaults
on repayment, or if the Company fails to complete a Financing within one year of the note date, the annual interest rate would
increase to 13% and the holders of the January Notes would have the right to convert at $0.05 per share. Through June 30, 2012,
$12,000 of such notes were converted into shares of common stock (see Note 6), leaving a balance of $162,668 at June 30, 2012.
Interest expense recognized for the three and six months ended June 30, 2012 was $4,472 and $8,455, respectively.



The embedded conversion feature is contingent upon the occurrence
of the future Financing. The value of the contingent conversion feature, if beneficial, will be recognized when the contingencies
are resolved.



NOTE 6 – STOCKHOLDERS’ EQUITY



Rescission Offer

On February 29, 2012, the Company made an offer
for rescission to former FasTrack shareholders of the record date for the approval of the Reverse Merger.  The Reverse
Merger had been approved by the written consent of FasTrack shareholders holding a majority of the shares outstanding.  Because
FasTrack had not solicited any proxies from its shareholders for approval of the Reverse Merger, limited or no information had
been provided to the FasTrack shareholders who had not signed the written consent.  The Company sent to the former FasTrack
shareholders the North Horizon Information Statement dated September 27, 2011 and a report on Form 8-K dated December 12, 2011,
which provided information about North Horizon and FasTrack including a description of the business, future plans, risk factors,
financial information, description of the transactions, biographical summaries of the new officer and directors, financial statements
and pro-forma financial statement for North Horizon and FasTrack as of September 30, 2011.  Former shareholders of FasTrack
had thirty days to accept or reject the rescission offer of $6 per share ($.002 after effect of conversion ratio) from the date
of receipt of the information.  The rescission offer was limited to the FasTrack shareholders who were shareholders as
of the record date of December 7, 2011.  The Rescission Offer was not accepted by any parties, and expired on April 14, 2012.
Through the date of rescission offer expiration (April 14, 2012), the Company recognized the amounts potentially refundable under
this offer as a liability. On April 14, 2012, the amount of such liability was reclassified to stockholders’ equity since
the rescission period expired.



F-6







INNOVUS PHARMACEUTICALS, INC.

(Formerly North Horizon, Inc.)

(A Development Stage Company)

Notes to the Condensed Consolidated Financial
Statements

June 30, 2012 and December 31, 2011



NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)



Contingency related to shares of common stock issued in
the reverse merger

As of the date of the merger between FasTrack and North Horizon
(the record date), the FasTrack shareholders may not have received adequate information regarding the combination and merger. The
FasTrack shareholders reside in thirteen states and commonwealths. The securities statutes of these jurisdictions have exemptions
for an exchange or for a transaction that is termed an "isolated transaction." Despite the fact, that none of FasTrack
shareholders chose to rescind the offer, as described above, the shareholders reside in different jurisdictions and the statutes
of limitations in these jurisdictions have different terms, the longest being four years . Until such statutes expire, a shareholder
may make a claim against the Company. Until such claim is made there will be no impact on the Company. At this time the Company
unable to determine if any shareholder will make a claim and if pursued what any outcome may be.



Issuances of Common Stock

On June 26, 2012 the Company issued 134,000 shares of common
stock to an unrelated investor at $0.75 per share for cash proceeds of $100,500.



On June 26, 2012 the Company and an unrelated noteholder reached
a settlement on outstanding balance of $12,000, plus accrued interest of $435, of the convertible debenture whereas the fair value
of the 16,580 shares of common stock issued approximated the carrying value of the outstanding convertible debenture at time of
settlement. Accordingly, no gain or loss resulted from the settlement. (See Note 5)



NOTE 7 – NON CASH FINANCING ACTIVITIES



Six-month period ended June 30, 2012:



| | · | $74,668 payable to a related party was converted into a convertible note, as described in Note 5.
| | - | -------------------------------------------------------------------------------------------------

| | · | The Company issued 135,888 shares of common stock related to the conversion of the Apricus Bio convertible promissory note
that was originally issued in December 2011 and deemed contributed to capital in March 2012.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A $12,000 note payable with accrued interest of $435 was converted into 16,580 shares of common stock, as described in Note
6.
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | · | Continent liability in the amount of $28,926 was reclassified to equity due to expiration of the rescission rights, none of
which were exercised
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



Six-month period ended June 30, 2011:



| | · | The Company issued of 134,364 shares of common stock to Dr. Bassam
Damaj, our largest shareholder, for a settlement of $7,000 of accounts payable balance
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



F-7