SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                 FORM 10-KSB
(Mark One)

X	 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	  EXCHANGE ACT OF 1934
	  For the fiscal year ended July 31, 1999

  	OR

  	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
	  For the transition period from                    to

                      Commission file No. 000-23399

                     FLEMINGTON PHARMACEUTICAL CORPORATION
           (Exact name of registrant as specified in its charter)

            Delaware                                  22-2407152
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)

 43 Emery Avenue, Flemington, New Jersey                 08822
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code: (908) 782-3431

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

Securities registered pursuant to Section 12(g) of the Act:
  Common Stock, par value $.001 per share
  Redeemable Class A Common Stock Purchase Warrants expiring November 18, 2002.

  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 preceding 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

  Check if there is no disclosure of delinquent filings pursuant to Item 405
of Regulation S-K contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X].

  State the issuer's revenues for its most recent fiscal year: $499,000.

  The aggregate market value of the voting and non-voting common equity of
the registrant held by non-affiliates of the registrant at October 25, 1999
was approximately $3,790,385 based upon the closing sale price of $1.6875 for
the Registrant's Common Stock, $.001 par value, as reported by the National
Association of Securities Dealers OTC Bulletin Board on October 25, 1999.

  As of October 25, 1999 the Registrant had 3,877,300 shares of Common Stock,
$.001 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Certain information contained in the Proxy Statement for the Annual Meeting
of Stockholders of the Registrant to be held November 23, 1999 is
incorporated by reference into Part III hereof.

                 FLEMINGTON PHARMACEUTICAL CORPORATION

                    Annual Report on Form 10-KSB
             For the Fiscal Year Ended July 31, 1999

                        TABLE OF CONTENTS



                                                                    Page

                             PART  I

Item 1.  Business                                                      4
Item 2.  Properties                                                   27
Item 3.  Legal Proceedings                                            27
Item 4.  Submission of Matters to a Vote of Security Holders          28
Item 4A. Non-director Executive Officers                              28

                             PART  II

Item 5.  Market for the Registrant's Common Stock and Related Security
          Holder Matters                                              29
Item 6.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                   30
Item 7.  Financial Statements                                         33
Item 8.  Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure                                    33

                             PART  III

Item 9.  Directors and Executive Officers of the Registrant           33
Item 10. Executive Compensation                                       33
Item 11. Security Ownership of Certain Beneficial Owners and
          Management                                                  34
Item 12. Certain Relationships and Related Transactions               34


                             PART  IV

Item 13. Exhibit List and Reports on Form 8-K                         34

                      FINANCIAL  STATEMENTS

         Report of Independent Auditors                              F-1
         Balance Sheet                                               F-2
         Statements of Operations                                    F-3
         Statements of Changes in Stockholders' Equity               F-4
         Statements of Cash Flows                                    F-5
         Notes to Financial Statements                               F-6

                             PART I

ITEM 1.	BUSINESS.

General

	Flemington Pharmaceutical Corporation, a Delaware corporation (the
"Company" or the "Registrant"), is engaged in consulting activities and the
development of novel application drug delivery systems for presently marketed
prescription and over-the-counter ("OTC") drugs.  The Company's (both
patented and patent-pending) delivery systems are lingual sprays and soft
gelatin bite capsules, enabling drug absorption through the oral mucosa and
more rapid absorption into the bloodstream than presently available oral
delivery systems.  The Company's proprietary oral dosage delivery systems
enhance and greatly accelerate the onset of the therapeutic benefits which
the drugs are intended to produce.  The Company refers to its delivery systems
as Immediate-Immediate Release (I2RTM) because its delivery systems are designed
to provide therapeutic benefits within minutes of administration.  The Company's
development efforts for its novel drug delivery systems are concentrated on
drugs which are already available and proven in the marketplace.  In addition
to increasing bioavailability by avoiding metabolism by the liver before
entry into the bloodstream, the Company believes that its proprietary delivery
systems offer the following significant advantages:  (i) improved drug safety
profile by reducing the required dosage, including possible reduction of side-
effects; (ii) improved dosage reliability; (iii) allowing medication to be
taken without water; and (iv) improved patient convenience and compliance.

      In light of the material expense and delays associated with independently
developing and obtaining approval of pharmaceutical products, the Company will
continue to seek to develop such products through collaborative arrangements
with major pharmaceutical companies, which will fund that development.  The
Company is presently a party to one such development agreement with a
pharmaceutical company.  Due to the Company's small revenue base, low level
of working capital and inability to increase the number of development
agreements with pharmaceutical companies, the Company has been unable to
aggressively pursue its product development strategy.  The Company will
require significant additional financing and/or a strategic alliance with
a well funded development partner to undertake its business plan.  See
"Management Discussion and Analysis."

     Since its inception in 1982, the Company has been a consultant to the
pharmaceutical industry, focusing on product development activities of
various European pharmaceutical companies, and since 1992 has used its
consulting revenues to fund its own product development activities.
The Company's recent focus on developing its own products evolved
naturally out of its consulting experience for other pharmaceutical
companies.  Substantially all of the Company's revenues have been
derived from its consulting activities.  In 1998, the Company changed
the name under which it performs its consulting activities from
Pharmaconsult to FPC Consulting.  The Company's principal business
address is 43 Emery Avenue, Flemington, New Jersey, 08822, and its
telephone number is (908) 782-3431.

Forward Looking Statements

     When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 regarding events, conditions and financial
trends that may affect the Company's future plans of operations, business
strategy, operating results and financial position.  Current stockholders and
prospective investors are cautioned that any forward-looking statements are
not guarantees of future performance and are subject to risks and uncertainties
and that actual results may differ materially from those included within the
forward-looking statements as a result of various factors.  Such factors are
described under the headings "Business-Certain Considerations", "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and Notes thereto.

Recent Developments

Contemplated Transaction with SMC

     During the third quarter of fiscal 1998, the Company was engaged in
discussions with Strategic Medical Communications, Inc., a New Jersey company,
regarding a possible business combination. By mid-October, as the discussions
between the companies became more detailed, it became apparent to the
representatives of both companies that there were basic differences in
strategic outlook between the two companies and it was decided by mutual
agreement to terminate those discussions.

Contemplated Transaction with Ash Corp.

     In December 1998 the Company initiated discussions with Ash Corp. ("Ash"),
of Gulfport, Mississippi, regarding a possible business combination. Ash is
a contract manufacturer of pharmaceutical products. The Company believed such
a combination would permit the Company to internalize many activities which
it contracted out, and to acquire an excellent manufacturing facility and a
skilled workforce, as well as the opportunity to expand Ash's business. A
Letter of Intent which set forth the general terms of the proposed
transaction was signed by the two companies on February 18, 1999.  After the
parties engaged in due diligence and during the negotiation of a Definitive
Agreement, it was mutually agreed by the parties to cease negotiations and to
terminate the Letter of Intent in March 1999.

Completion of Estradiol Pilot Study

     In mid-1999, as part of its joint development agreement with Nace
Resources, (see Development Agreements, below), the Company completed its
open label clinical pilot study of its Estradiol lingual spray product. In
the opinion of the Company, the results of the study were favorable. The
Company believes that the product would be appropriate for premenstrual
migraine, for treatment of hot flashes in post- and perimenopausal women
and as a long-term, low-dose, low side-effect treatment of post-menopausal
symptoms. The Company is presently engaged in discussions with potential
partners which would fund the further development of the product and the
necessary regulatory filings.

Loan to Chief Executive Officer

     In April 1998, the Company made a $60,000 loan to its president and CEO
in exchange for a 7% demand promissory note (the "Executive Note").  Accrued
interest (which totaled $4,200 for fiscal 1999) is to be paid quarterly.  As
of September 1, 1999, all interest payments on the Executive Note were current.

Termination of Agreement with Novartis

     The Company and Novartis, ("Novartis") were parties to a letter agreement
for the development of an oral spray version of Clemastine, an antihistamine
product, pursuant to which the Company conducted a pilot bioavailability study
of the spray version product. In October 1998, Novartis gave the Company
notice that it did not intend to pursue the development arrangement with the
Company.  The Company has made no decision regarding future activities with
respect to this product. However, a pre-IND meeting has been scheduled with
FDA for early November.

Sale of Goldmark Biologicals

      On March 1, 1999, 1999, the Company sold its Goldmark Biologicals unit
to Ted Pella, Inc. for the sum of $25,000, to be paid in three installments
of $8,333, with interest on any outstanding balance at the rate of 71/2% per
annum. On April 20, 1999 the first installment of $8,333 was paid in a timely
manner. The remaining installments are due on April 20, 2000 and 2001.

Development Agreements

     In November 1996, the Company entered into an Agreement with Altana Inc.
("Altana"), a U.S. subsidiary of Altana GmbH, under which the Company agreed
to prepare for Altana an Abbreviated New Drug Application ("ANDA") for the
Company's patent-pending lingual spray for treatment of angina.  Under the
terms of the Agreement, Altana will, upon approval of the product by the FDA,
market the product in the U.S., and source all of its related product require-
ments from the Company.  The Company was paid a consulting fee for preparation
of the ANDA. In March 1998, the FDA refused to accept the ANDA for filing.
Subsequently, the Company and Altana met with representatives of FDA and
agreed upon a plan for the Company to file an NDA under Section 505(1)(b)(2)
of the Act, together with two agreed-upon small clinical trials. Altana has
agreed to fund those trials and to pay the Company a consulting fee in
connection with its preparation of the NDA and its oversight of the trials.

      In February 1998, the Company entered into two joint development
agreements with CLL Pharmaceuticals, of Nice, France ("CLL") and Nace Resources,
Inc. (now Nace Pharma) of Highland Park, Illinois ("Nace") for the development
of various products using the Company's delivery technologies.  Under the
terms of such agreements, the Company, CLL and Nace, respectively, will
conduct a series of pilot studies (at the parties' joint expense) to validate
the efficacy of the various products being tested.  If the Company and its
partners are satisfied with the results of a particular pilot study, the
parties will seek a license to fund further trials to support applications
with the FDA and foreign regulatory agencies.  Under such agreements, the
Company will conduct the clinical trials and file all approval applications,
and the Company and its partners will share equally in the expenses and profits
(if any) arising from such arrangements. The first products identified for
development studies are progesterone and estradiol for CLL and Nace,
respectively.  During 1999 the estradiol clinical study was completed to the
satisfaction of the Company and Nace. Laboratory development of the clinical
supplies for the progesterone product has been completed and it is anticipated
that the pilot clinical study will begin before year-end 1999.

     In August 1998, the Company entered into a development agreement with
Intracellular Health, Inc. of Cranford, New Jersey ("ICH") for the development
and marketing of a soft gelatin capsule neutraceutical product containing a
mixture of dietary supplements primarily intended for the nutritional
management of both the prevention and treatment of complications of diabetes.
The Company and ICH each has a separate patent application pending for the
product on which the agreement is based.  ICH has completed a clinical trial
to assess the efficacy of this product. The results of that trial are currently
under review by ICH. If the results of such study are satisfactory, the Company
and ICH will seek a partner to fund the marketing and distribution of the
product, which would be manufactured by the Company.

1999 Annual Meeting of Stockholders

     The Company will hold the 1999 Annual Meeting of Stockholders ("Annual
Meeting") on Tuesday, November 23, l999 for the following purposes: (i)  to
elect four (4) Directors to the Board of Directors to serve until the 2000
Annual Meeting of Shareholders or until their successors have been duly elected
or appointed and qualified; (ii) to ratify the appointment of Wiss & Company,
LLP as the Company's independent certified public accountants for the fiscal
year ending July 31, 2000; and (iii) to consider and take action upon such
other business as may properly come before the Annual Meeting.  The Board of
Directors fixed the close of business on October 12, 1999, as the record date
for determining the shareholders entitled to notice of, and to vote at, the
Annual Meeting.

Business Strategy

     The Company's strategy is to concentrate its product development
activities primarily on those pharmaceuticals for which there already are
significant prescription and OTC sales, where the use of the Company's
innovative delivery systems will greatly enhance speed of onset of therapeutic
effect, reduce side effects through a reduction of the amount of active drug
substance required to produce a given therapeutic effect, and improve patient
convenience or compliance.

     In light of the material expense and delays associated with independently
developing and obtaining approval of pharmaceutical products, the Company will
continue to seek to develop such products through collaborative arrangements
with major pharmaceutical companies, which will fund that development.  The
Company is presently a party to such a development agreement with Altana.
The Company's lack of working capital has impaired its ability to pursue its
strategy.  See "Management Discussion and Analysis."


Patented and Patent Pending Delivery Systems

	The Company has patent applications pending for two oral dosage delivery
systems, the Lingual (Oral) Spray and the Soft Gelatin Bite Capsule, for which
FDA approval is not a prerequisite for patent approval.  The expected year of
marketability will vary depending upon the specific drug product with which
the delivery system will be utilized.  Each individual use of the delivery
system will require registration and/or approval with the FDA prior to
marketability, and the amount of regulatory oversight required by the FDA
will also depend on the specific type of drug product for which the delivery
system is implemented.  The following are descriptions of the two oral dosage
delivery systems for which patent applications are either granted or pending.


	Lingual (Oral) Spray.  The Company's aerosol and pump spray formulations
release the drug in the form of a fine mist into the mouth for immediate
absorption into the bloodstream via the mucosal membranes.  The Company
believes that this delivery system offers certain advantages, including
improving the safety profile of certain drugs by lowering the required dosage,
improving dose reliability, and allowing medication to be taken without water.
Drug absorption through the mucosal membranes of the mouth is rapid and
minimizes the first-pass metabolism effect (i.e., total or partial
inactivation of a drug as it passes through the gastrointestinal tract and
liver).

	Soft Gelatin Bite Capsule.  The Company's soft gelatin bite capsule
formulation consists of a seamless gelatin shell surrounding a core substance
(usually a liquid solution).  When crushed or chewed, the soft gelatin bite
capsule releases medication into the mouth, thereby allowing absorption through
the oral mucosa.  The portion of the dose that is eventually swallowed is
introduced to the stomach in a solution ready for immediate absorption, thereby
maximizing absorption from the gastrointestinal tract into the bloodstream.
The result is rapid onset of the desired therapeutic effect.

Proposed Products

	The Company's proposed products described below are subjected to
laboratory testing and stability studies and tested for therapeutic comparison
to the originators' products by qualified laboratories and clinics.  To the
extent that two drug products with the same active ingredients are substantially
identical in terms of their rate and extent of absorption in the human body
(bioavailability), they are considered bioequivalent.  If the accumulated data
demonstrates bioequivalency, submission is then made to the FDA (through the
filing of an ANDA) for its review and approval to manufacture and market.
If the accumulated data demonstrates that there are differences in the two
drugs' rate and extent of absorption into the human body, or if it is intended
to make additional or different claims regarding therapeutic effect for the
newly developed product, submission is made to the FDA via a NDA for its
review and approval under Section 505(1)(b)(2) or Section 505(b)(2) of the
FDC Act.  An NDA submitted under these sections of the FDC Act are generally
less complex than an ordinary NDA and are usually acted upon by FDA in a
shorter period of time.  It is the Company's expectation that the majority
of its products in development will require the filing of these shorter
versions of an NDA because the products are known chemical entities, but the
Company or its licensees will be making new claims as to therapeutic effects
or lessened side effects, or both.

       The Company estimates that development of new formulations of
pharmaceutical products, including formulation, testing and obtaining FDA
approval, generally takes three to five years for the ANDA process.  Development
of products requiring additional clinical studies under Section 505(b)(2)
NDAs, may take four to seven years.  There can be no assurance that the
Company's determinations will prove to be accurate or that pre-marketing
approval relating to its proposed products will be obtained on a timely
basis, or at all.  See "Government Regulation."

	The Company's initial proposed products fall into the following
therapeutic classes:

* Estradiol Lingual Spray

     Several new "non-estrogen" products have recently been introduced to
treat osteoporosis without the associated side effects of estrogens.  Due to
the non-estrogen nature of these products, the Company believes that patients
often experience "hot-flashes" and find it difficult to maintain the required
dosage regimen.  The lingual spray is intended to relieve the "hot-flashes"
within minutes, which, the Company believes, will allow such patients to
maintain the required dosage regimen more easily.  The Company  has completed
preformulation development of this product, and has manufactured and packaged
supplies for stability and clinical studies.  The pilot clinical study was
completed in mid-1999 and the Company considers the results of that study to
be favorable.

* Progesterone Lingual Spray

     This product is being developed as part of the agreement with CLL and is
intended to treat the symptoms of progesterone deficiency.  The formulation
work is completed, which was carried out by the Company and CLL, and stability
and clinical supplies were manufactured in early 1999. The pilot clinical
study is planned for early 2000.  If the results of this pilot clinical study
support the concept of fast relief of the symptoms associated with progesterone
deficiency CLL and the Company will seek development partners to finance the
further work associate with filing an NDA and bringing this product to market.

* Sleep Inducers (Diphenhydramine and Doxylamine Succinate)

     The Company is developing its formulations for diphenhydramine and
doxylamine succinate, sleep-inducing agents.  The Company has conducted
initial open label pilot clinical studies, and has approached several
pharmaceutical companies with a proposed product.  The earliest time that the
Company could reasonably expect to have a commercially salable product in this
category is early 2003.

* Cardiovascular (Nitroglycerin)

     The Company's Nitroglycerin product has been formulated and stability
testing has been completed. A United States patent was issued in 1999. This
product is subject to a license agreement with Altana.  See " -- Recent
Developments."  A pre-IND meeting has been held with the FDA and a program
for clinical trials has been tentatively agreed upon with the FDA.

Marketing and Distribution

     The Company intends, generally, to license products developed with its
technology to drug companies already selling such drug substances under their
own brand names, or to market its products to pharmaceutical wholesalers, drug
distributors, drugstore chains, hospitals, United States governmental agencies,
health maintenance organizations and other drug companies.  It is anticipated
that promotion of the Company's proposed products will be characterized by
an emphasis on their distinguishing characteristics, such as dosage form and
packaging, as well as possible therapeutic advantages of such products.  The
Company will seek to position its proposed products as alternatives or as
line extensions to brand-name products.  The Company believes that to the
extent that the Company's formulated products are patent-protected, such
formulations may offer brand-name manufacturers the opportunity to expand
their product lines. Alternatively, products which are not patented may be
offered to brand-name manufacturers as substitute products after patent
protection on existing products expire.

      Inasmuch as the Company does not have the financial or other resources
to undertake extensive marketing activities, the Company generally
intends to seek to enter into marketing arrangements, including possible
joint ventures or license or distribution arrangements, with third parties.
The Company believes that such third-party arrangements will permit the Company
to maximize the promotion and distribution of its products while minimizing
the Company's direct marketing and distribution costs.  Other than the Company's
aforementioned agreements for the Company's proposed lingual spray products
for angina, the Company has not entered into any agreements or arrangements
with respect to the marketing of its proposed products and there can be no
assurance that it will do so in the future.  There can be no assurance that
the Company's proposed products can be successfully marketed.

      Strategies relating to marketing of the Company's other proposed
formulated products have not yet been determined; these will be formulated
in advance of anticipated completion of development activities relating to the
particular formulated product. The Company has no experience in marketing or
distribution of its proposed proprietary products, and the Company's ability
to fund such marketing activities will require the Company to raise additional
funds and/or consummate a strategic alliance or combination with a well-funded
business partner.

Manufacturing

     The Company has entered into agreements with  various European
pharmaceutical manufacturers, regarding the manufacture of certain of the
Company's products in spray and gelatin bite capsule dosage forms.  The Company
will purchase all of its clinical and commercial requirements for its proposed
products from such manufacturers, at a price to be negotiated by the parties.

     It is anticipated that the Company will arrange with third-party suppliers
for supplies of active and inactive pharmaceutical ingredients and packaging
materials used in the manufacture of the Company's proposed products.  It is
the Company's present intent to seek to enter into similar manufacturing
arrangements for other products to be developed by it in the future.

     The manufacture of the Company's pharmaceutical products will be subject
to current Good Manufacturing Processes ("cGMP") prescribed by the FDA, and
pre-approval inspections by the FDA and foreign authorities prior to the
commercial manufacture of any such products.  See "Government Regulation"
and "Raw Materials and Suppliers."

     In addition, the raw materials necessary for the manufacture of the
Company's products will, in all likelihood, be purchased by the Company from
suppliers in the United States, Europe and Japan and delivered to its
manufacturers' facilities by such suppliers.  Accordingly, the Company and
its manufacturers may be subject to various import duties applicable to both
finished products and raw materials and may be affected by various other
import and export restrictions as well as other developments impacting upon
international trade.  These international trade factors will, under certain
circumstances, have an impact both on the manufacturing cost (which will, in
turn, have an impact on the cost to the Company of the manufactured product)
and the wholesale and retail prices of the products to be manufactured abroad.
To the extent that transactions relating to the foreign manufacture of the
Company's proposed products and purchase of raw materials involve currencies
other than United States dollars (e.g., Swiss francs and German marks), the
operating results of the Company will be affected by fluctuations in foreign
currency exchange rates.

Raw Materials and Suppliers

     The Company believes that the active ingredients used in the manufacture
of its proposed pharmaceutical products are presently available from numerous
suppliers located in the United States, Europe and Japan.  Generally, certain
raw materials, including inactive ingredients, are available from a limited
number of suppliers and certain packaging materials intended for use in
connection with the Company's lingual spray products may be only available
from sole source suppliers.  Although the Company believes that it will not
encounter difficulties in obtaining the inactive ingredients or packaging
materials necessary for the manufacture of its products, there can be no
assurance that the Company or its manufacturers will be able to enter into
satisfactory agreements or arrangements for the purchase of commercial
quantities of such materials.  The failure to enter into agreements or
otherwise arrange for adequate or timely supplies of principal raw materials
and the possible inability to secure alternative sources of raw material
supplies could have a material adverse effect on the ability to manufacture
formulated products.

     Development and regulatory approval of the Company's pharmaceutical
products are dependent upon the Company's ability to procure active ingredients
and certain packaging materials from FDA-approved sources.  Since the FDA
approval process requires manufacturers to specify their proposed suppliers
of active ingredients and certain packaging materials in their applications,
FDA approval of a supplemental application to use a new supplier would be
required if active ingredients or such packaging materials were no longer
available from the specified supplier, which could result in manufacturing
delays.  Accordingly, the Company will seek to locate alternative FDA approved
suppliers.

Research and Development

     During fiscal 1999, 1998 and 1997, respectively, the Company spent
$268,000, $290,000, and $171,000 on product research and development.  Such
figures include salary and associated payroll expenses.  In future periods,
assuming the Company raises additional funds and/or consummates a strategic
alliance or combination with a well-funded business partner, the Company
intends to continue to spend significant, and greatly increasing amounts, to
develop its products.

Government Regulation

     The development, manufacture and commercialization of pharmaceutical
products are generally subject to extensive regulation by various federal and
state governmental entities.  The FDA, which is the principal United States
regulatory authority, has the power to seize adulterated or misbranded products
and unapproved new drugs, to request their recall from the market, to enjoin
further manufacture or sale, to publicize certain facts concerning a product
and to initiate criminal proceedings.  As a result of federal statutes and
FDA regulations, pursuant to which new pharmaceuticals are required to
undergo extensive and rigorous testing, obtaining pre-market regulatory
approval requires extensive time and expenditures.

      Under the FDC Act, a new drug may not be commercialized or otherwise
distributed in the United States without the prior approval of the FDA.  The
FDA approval process relating to a new drug differs, depending on the nature
of the particular drug for which approval is sought.  With respect to any drug
product with active ingredients not previously approved by the FDA, a
prospective drug manufacturer is required to submit a NDA, including complete r
eports of pre-clinical, clinical and laboratory studies to prove such product's
safety and efficacy.  The NDA process generally requires, before the
submission of the NDA, submission of an IND pursuant to which permission is
sought to begin preliminary clinical testing of the new drug.  An NDA based
on published safety and efficacy studies conducted by others may also be
required to be submitted for a drug product with a previously approved active
ingredient, if the method of delivery, strength or dosage is changed.
Alternatively, a drug having the same active ingredients as a drug previously
approved by the FDA may be eligible to be submitted under an ANDA, which is
significantly less stringent than the NDA approval process.

      While the ANDA process requires a manufacturer to establish
bioequivalence to the previously approved drug, it permits the manufacturer
to rely on the safety and efficacy studies contained in the NDA for the
previously approved drug.

      The NDA approval process generally requires between four to seven years
from NDA submission to pre-marketing approval, although in the case of an NDA
submitted pursuant to Section 505(1)(b)(2) of the Act this time frame may be
significantly shorter.  By contrast, the ANDA process permits an expedited FDA
review pursuant to which pre-marketing regulatory approval can generally be
obtained in three to five years.  The ANDA process is available for drugs with
the same active ingredients, dosage form, strength and method of delivery as
a product which has previously received FDA approval pursuant to the NDA
process.  Manufacturing information, including a review of chemical and
physical data, stability data, facilities and processes, must also be
evaluated by FDA before approval.

     The Company believes that products developed in lingual spray and soft
gelatin bite capsule delivery systems (dosage forms) usually will require
submission of an NDA.

     The Company estimates that the development of new formulations of
pharmaceutical products, including formulation, testing and obtaining FDA
approval, generally takes three to five years for the ANDA process and four
to seven years for the NDA process, although NDAs submitted under Section
505(1)(b)(2) or Section 505(b)(2) are generally less complex than an ordinary
NDA and are usually acted upon by the FDA in a shorter period of time.  There
can be no assurance that the Company's determinations will prove to be accurate
or that pre-marketing approval relating to its proposed products will be
obtained on a timely basis, or at all.  The FDA application procedure has
become more rigorous and costly and the FDA currently performs pre-approval
and periodic inspections of each finished dosage form and each active
ingredient.

      The manufacture of the Company's pharmaceutical products will be subject
to cGMP prescribed by the FDA, pre-approval inspection by the FDA and foreign
authorities prior to the commercial manufacture of such products and periodic
cGMP compliance inspection by the FDA.  The Company's European manufacturers
will be required to be in compliance with cGMP with respect to the manufacture
of the Company's products.  There can be no assurance that the Company's
manufacturers will be deemed to be in compliance with cGMP with respect to
any particular product.  To the extent that the Company's manufacturers are
deemed not to be in compliance with cGMP, there can be no assurance that the
Company will be able to enter into other suitable manufacturing arrangements
with third parties which are in compliance with cGMP.

Competition

     The markets which the Company intends to enter are characterized by
intense competition.  The Company will be competing against established
pharmaceutical companies which currently market products which are equivalent
or functionally similar to those the Company intends to market.  Prices of
drug products are significantly affected by competitive factors and tend to
decline as competition increases.  In addition, numerous companies are
developing or may, in the future, engage in the development of products
competitive with the Company's proposed products.  The Company expects that
technological developments will occur at a rapid rate and that competition is
likely to intensify as enhanced delivery system technologies gain greater
acceptance.  Additionally, the markets for formulated products which the
Company has targeted for development are intensely competitive, involving
numerous competitors and products.  The Company will seek to enhance its
competitive position by focusing its efforts on its novel dosage forms.

Patents and Protection of Proprietary Information

     The Company has applied for United States and foreign patent protection
for the delivery systems which are the primary focus of its development
activities as well as the delayed contact allergy topical formulations.  Two
United States patents have been issued and other applications are pending.
There can be no assurance, however, that any additional patent applications
will be granted, or, if granted, will provide any adequate protection to the
Company. The Company also intends to rely on whatever protection the law affords
to trade secrets, including unpatented know-how.  Other companies, however,
may independently develop equivalent or superior technologies or processes
and may obtain patent or similar rights with respect thereto.

     Although the Company believes that its technology has been developed
independently and does not infringe on the patents of others, there can be
no assurance that the technology does not and will not infringe on the patents
of others.  In the event of infringement, the Company or its European
manufacturers could, under certain circumstances, be required to modify the
infringing process or obtain a license. There can be no assurance that the
Company or its European manufacturers would be able to do either of those
things in a timely manner or at all, and failure to do so could have a
material adverse effect on the Company and its business.  In addition, there
can be no assurance that the Company will have the financial or other resources
necessary to enforce or defend a patent infringement or proprietary rights
violation action.  If any of the products developed by the Company infringe
upon the patent or proprietary rights of others, the Company could, under
certain circumstances, be enjoined or become liable for damages, which would
have a material adverse effect on the Company.

     The Company also relies on confidentiality and nondisclosure arrangements
with its licensees and potential development candidates.  There can be no
assurance that other companies will not acquire information which the Company
considers to be proprietary.  Moreover, there can be no assurance that other
companies will not independently develop know-how comparable to or superior
to that of the Company.

  Buccal Nonpolar Spray or Capsule.  On April 12, 1996 the Company filed an
application with the United States Patent and Trademark Office ("PTO") for
protection of this subject matter.  On September 1, 1998 the PTO allowed the
claims directed to sprays, but rejected the claims directed to the capsules.
In October 1998 the Company dropped the capsule claims from this application,
to pursue allowance and issuance of a patent directed to the spray claims.
On October 21, 1999 the PTO issued a patent to the Company on the spray
claims.  The Company is considering either abandoning or re-filing the claims
directed to the capsule in a continuing application.  In October 1998, the
Company filed a patent application in Canada for the buccal nonpolar spray
claims.

     On February 21, 1997, the Company filed an application under the Patent
Cooperation Treaty ("PCT") for the above-subject matter.  The International
Preliminary Examination Authority has issued an opinion in which the PCT
examiner determined that the subject matter of the invention while novel, is
not inventive for obviousness.  This opinion, with which the Company disagrees,
is not dispositive, however, it may be highly persuasive in subsequent
proceedings in the European and individual national patent offices should
the Company decide to proceed in these jurisdictions.  The Company's right to
pursue this claim with the PCT expired on October 12, 1998.  The Company has
made individual filings for patent protection in Canada and Europe and recently
received an office action from the European Patent Office.  In light of this
recent action, the Company is not confident that this patent application will
ultimately be granted.

  Buccal Polar Spray or Capsule.  On April 12, 1996, the Company filed an
application in the PTO directed to the buccal polar spray or capsule.  The
PTO initially allowed the claims to the above subject matter.  In view of
references found in the counterpart PCT application (see below) which the
Company, by law, was obliged to report to the PTO, the PTO withdrew the Notice
of Allowance and subsequently rejected all claims in the application.  At this
time, the Company has refiled in Europe and Canada.  On February 21, 1997 the
Company filed a PCT application directed to the foregoing subject matter.
The situation with respect to this subject matter is the same as that of the
counterpart PCT application directed to buccal nonpolar spray or capsule
discussed above. The Company has made individual filings for patent protection
in Canada and Europe.

  Buccal Nonpolar Spray for Nitroglycerin.  On April 12, 1996, the Company
filed an application in the PTO directed to the above subject matter.  On
August 5, 1998 the PTO allowed claims to the above subject matter, and a patent
was issued in February 1999.  On February 21, 1997 the Company filed a PCT
application directed to the above subject matter.  The situation with respect
to this application is the same as that for the PCT application directed to
buccal nonpolar sprays and capsules. European counterpart applications have
been filed.

General Comment with Respect to the Foregoing PCT Applications.  The Company
is interested in obtaining patent protection in Europe and Canada.  It is to
be expected that the same examiner who examined these applications as a PCT
examiner will be the examiner who will handle these applications in the
European "National" Phase.  Hence, the Company anticipates that in the case
of the European applications, it may be necessary to appeal to the Board of
Appeals in Munich.  At the present time, it is not possible to accurately
predict the expenses involved in pursuing the foregoing applications.  However,
expenses may exceed $100,000 (in the aggregate for all three applications)
before a final disposition is obtained.  The Company expects this process to
take between two and four years.

  Buccal/Polar/Nonpolar Sprays or Capsule (Different Medicaments as Above).
An application was filed with the PCT on October 1, 1997 designating a large
number of possible countries including the United States.  This application
differs from the first two applications above in that it utilizes different
ingredients.  The search phase has been initiated and a partial search report
has been received.  An action from the PCT has been issued and the Company is
in the process of responding to it.

  Antihistamine Syrup and Ointment.  On November 10, 1997 the Company filed
an application with the U.S. PTO for protection of its antihistamine syrup
and ointments.  A technology to be utilized in the company's proposed poison
ivy product.  In October 1998, the PTO rejected the application for this
product, and the Company is currently evaluating whether to further pursue
this claim. A response has been filed to the patent examiner's comments, and
the Company is awaiting a reply.


Product Liability

       The Company may be exposed to potential product liability claims by
consumers. The Company does not presently maintain product liability insurance
coverage.  Although the Company will seek to obtain product liability insurance
prior to the commercialization of any products, there can be no assurance that
the Company will obtain such insurance or, if obtained, that any such insurance
will be sufficient to cover all possible liabilities.  In the event of a
successful suit against the Company, insufficiency of insurance coverage could
have a material adverse effect on the Company.  In addition, certain food and
drug retailers require minimum product liability insurance coverage as a
condition precedent to purchasing or accepting products for retail distribution.
Failure to satisfy such insurance requirements could impede the ability of the
Company or its distributors to achieve broad retail distribution of its proposed
products, which would have a material adverse effect upon the business and
financial condition of the Company.

Customer Dependence

       Since inception, substantially all of the Company's revenues have been
derived from consulting activities primarily in connection with product
development for various pharmaceutical companies.  Among other things, the
Company works with its European clients to obtain regulatory approvals for new
drug formulations in the United States.  For the year ended July 31, 1999,
consulting activities relating to the Company's three (3) largest clients
accounted for approximately 19%, 14% and 10% respectively, of the Company's
revenue. For the year ended July 31, 1998, consulting activities relating to
the Company's three largest clients accounted for approximately 25%, 21% and
21% respectively, of the Company's revenue. For the year ended July 31, 1997
consulting activities relating to the Company's two largest clients accounted
for approximately 24% and 23% respectively, of the Company's revenue.

Employees

      The Company currently has six (6) full-time employees, five (5) of whom
are executive officers of the Company, and one (1) of whom is engaged in
administrative functions. The success of the Company will be dependent in
part, upon its ability to hire and retain additional qualified sales and
distribution personnel, however, there can be no assurance that the Company
will be able to hire or retain such necessary personnel.

Certain Considerations

      This Form 10-KSB, other documents of the Company and statements made
by members of management of the Company, in each case, may contain forward-
looking statements which involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in such forward-
looking statements.  Factors that might cause such a difference include the
following:

	Accumulated Deficit and Operating Losses; Anticipated Continuing Losses;
Limited Working Capital.  The Company had an accumulated deficit at July 31,
1999 of approximately $3,235,000.  The Company incurred operating losses in
four of the last six fiscal years ended July 31 including a net loss of
approximately $1,367,000 for the year ended July 31, 1999.  Because the
Company increased its product development activities, the Company anticipates
that it will incur substantial operating expenses in connection with continued
development, testing and approval of its proposed products, and expects these
expenses will result in continuing and, perhaps, significant operating losses
until such time, if ever, that the Company is able to achieve adequate product
sales levels.

	Dependence on Principal Clients.  To date, substantially all of the
Company's revenues have been derived from consulting services rendered to a
limited number of clients, the loss of certain of which would have an adverse
effect on the Company.  For the year ended July 31, 1999, consulting activities
relating to the Company's three (3) largest clients, with which the Company
has written agreements, accounted for approximately 19%, 14% and 10%,
respectively, of the Company's revenues.  There can be no assurance that the
Company's clients will continue to seek consulting services from the Company
or that the Company will continue to provide consulting services to the
industry. See "-- - Customer Dependence."

	Evolving Nature of Business; Entry into Product-Based Business.
Although the Company has received revenue from its own product development
activities, these revenues are insignificant as compared to the Company's
revenues from product development consultation work done for its clients.
The nature of the Company's revenue received from its own product development
consists of payments by pharmaceutical companies for research and
bioavailability studies, pilot clinical trials, and similar milestone-related
payments.  Subject to additional funding, the Company expects to continue its
consulting activities despite increasing its product development activities.
The future growth and profitability of the Company will be dependent upon the
Company's ability to successfully raise additional funds to complete the
development of, obtain regulatory approvals for, and license out or market,
its own proposed products.  Accordingly, the Company's prospects must be
considered in light of the risks, expenses and  difficulties frequently
encountered in connection with the establishment of a new business in a
highly competitive industry, characterized by frequent new product
introductions. The Company anticipates that it will incur substantial
operating expenses in connection with the development, testing and approval
of its proposed products and expects these expenses to result in continuing
and, perhaps, significant operating losses until such time, if ever, that the
Company is able to achieve adequate levels of sales or license revenues. There
can be no assurance that the Company will be able to raise additional
financing, increase revenues significantly, or achieve profitable operations.


      Significant Capital Requirements for Product Development and
Commercialization. The Company has a significant capital requirement necessary
to fund planned expenditures in connection with the research, development,
testing and approval of its proposed products.  The Company anticipates, based
on its current proposed plans and assumptions relating to its operations
(including the timetable of, and costs associated with, new product develop-
ment), that the proceeds of the November 1997 public offering ("Public
Offering") and projected cash flow from operations will be sufficient to
satisfy its contemplated cash requirements for approximately 6 months from
the date hereof.  Due to the Company's small revenue base, low level of
working capital and inability to increase the number of development agreements
with pharmaceutical companies, the Company has been unable to pursue its
product development strategy.  The Company will require significant additional
financing and/or a strategic alliance with a well-funded development partnerto
undertake its business plan.  The Company has no current arrangements with
respect to, or sources of, additional financing, and there can be no assurance
that additional financing will be available to the Company on acceptable terms,
if at all.  Pursuant to the Underwriting Agreement, until November 2000
(thirty-six months from the closing of the Public Offering), the Company may
not offer, sell, issue or transfer its capital stock without the prior written
consent of the Representative.  There exist certain exceptions to this
prohibition.  The Company reserves the right to challenge certain contractual
obligations with the Representative due to the Representative's current status.
In view of the Company's very limited resources, its anticipated expenses and
the competitive environment in which the Company operates, any inability to
obtain additional financing could severely limit the Company's ability to
complete development and commercialization of its proposed products.See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS."

      No Commercially Available Products. The Company's principal efforts are
the development of, and obtaining regulatory approvals for, its proposed
products.  The Company anticipates that marketing activities for its
proprietary products, whether by the Company or one or more licensees will
not begin until 2001 at the earliest.  Accordingly, it is not anticipated
that the Company will generate any revenues from royalties or sales of
proprietary products until regulatory approvals are obtained and marketing
activities begin.  There can be no assurance that any of the Company's proposed
proprietary products will prove to be commercially viable, or if viable, that
they will reach the marketplace on the timetables desired by the Company.
The failure or the delay of these products to achieve commercial viability
would have a material adverse effect on the Company.  See  "- - Proposed
Products" and " - Government Regulation."

      Product Development and Acceptance Risks.  The development of the
Company's proposed products has not been completed and the Company will be
required to devote considerable effort and expenditures to complete such
development.  In addition to obtaining adequate financing, satisfactory
completion of development, testing, government approval and sufficient
production levels of such products must be obtained before the proposed
products will become available for commercial sale.  The Company does not
anticipate generating material revenue from product sales until perhaps 2001
or thereafter.  Other potential products remain in the conceptual or very
early development stage and remain subject to all the risks inherent in the
development of pharmaceutical products, including unanticipated development
problems, and possible lack of funds to undertake or continue development.
These factors could result in abandonment or substantial change in the develop-
ment of a specific formulated product.  There can be no assurance that any of
the Company's proposed products will be successfully developed, be developed
on a timely basis or be commercially accepted once developed.  The inability
to successfully complete development, or a determination by the Company, for
financial or other reasons, not to undertake to complete development of any
product, particularly in instances in which the Company has made significant
capital expenditures, could have a material adverse effect on the Company.
See "- - Proposed Products."

      Lack of Direct Consumer Marketing Experience; Dependence on Joint
Marketing Arrangements.  The Company has no experience in marketing or
distribution at the consumer level of its proposed proprietary products.
Moreover, the Company does not have the financial or other resources to
undertake extensive marketing and advertising activities.  Accordingly, the
Company intends generally to rely on marketing arrangements, including
possible joint ventures or license or distribution arrangements with third
parties.  The Company has not entered into any significant agreements or
arrangements with respect to the marketing of its proposed products, and
there can be no assurance that it will do so in the future or that any such
products can be successfully marketed. The Company's strategy to rely on third
party marketing arrangements could adversely affect its profit margins. See
" - Marketing and Distribution."

      Dependence on Contract Manufacturing.  The Company has agreements with
respect to the manufacture of its initially proposed products with its European
contract manufacturers.  Under these agreements the Company is responsible to
obtain required regulatory approvals, begin commercialization within three
months after FDA marketing approval, pay royalties under certain circumstances,
and satisfy certain minimum purchase requirements.  Additionally, these
agreements provide for negotiation and annual re-negotiation of terms
relating to per item cost. There can be no assurance that such terms can be
negotiated on terms satisfactory to the Company or that failure to negotiate
such terms will not result in the termination of any such agreement. The
failure of the Company to satisfy its obligations under any of these agreements
could result in modification or termination of such agreement. There can be
no assurance that the Company will have the ability to satisfy all of its
obligations under these agreements, and failure to do so could require the
Company to obtain alternative manufacturing arrangements, which could have an
material adverse effect on the Company.  The Company's dependence upon third
parties for the manufacture of its products could have an adverse effect on
the Company's profit margins and its ability to deliver its products on a
timely and competitive basis.

      Compliance with Good Manufacturing Practices.  The Company currently
intends to rely on third-party arrangements for the manufacture of its proposed
products.  The manufacture of the Company's pharmaceutical products will be
subject to current Good Manufacturing Practices ("cGMP") prescribed by the FDA,
pre-approval inspections by the FDA or foreign authorities, or both, before
commercial manufacture of any such products and periodic cGMP compliance
inspections thereafter by the FDA. There can be no assurance that the Company's
European manufacturers will be able to comply with cGMP or satisfy pre- or
post-approval inspections in connection with the manufacture of the Company's
proposed products. Failure or delay by any such manufacturer to comply with
cGMP or satisfy pre- or post-approval inspections would have a material
adverse effect on the Company.  See "-- Manufacturing."

      Foreign Manufacturing and Related Risks.  The Company anticipates that
its initially proposed products will be manufactured by its European
manufacturers at facilities in Germany, France and Switzerland.  The Company
intends to import completed manufactured products into the United States.
In addition, the raw materials necessary for the manufacture of the Company's
products will, in all likelihood, be purchased by the Company from suppliers
in the United States or Europe and delivered to its manufacturers' facilities
by such suppliers.  Accordingly, the Company and its manufacturers may be
subject to various import duties applicable to both finished products and
raw materials and may be affected by various other import and export
restrictions as well as other developments impacting upon international trade.
These international trade factors will, under certain circumstances, have an
impact both on the manufacturing cost (which will, in turn, have an impact on
the cost to the Company of the manufactured product) and the wholesale and
retail prices of the products to be manufactured abroad.  To the extent that
transactions relating to the foreign manufacture of the Company's proposed
products and purchase of raw materials involve currencies other than United
States dollars, the operating results of the Company will be affected by
fluctuations in foreign currency exchange rates. See "- - Manufacturing."

      Supplier Dependence.  The Company believes that the active ingredients
used in the manufacture of its proposed pharmaceutical products are presently
available from numerous suppliers located in the United States, Europe and
Japan.  The Company believes that certain raw materials, including inactive
ingredients, are available from a limited number of suppliers and that certain
packaging materials intended for use in connection with its spray products
currently are available only from sole source suppliers.  Although the Company
does not believe it will encounter difficulties in obtaining the inactive
ingredients or packaging materials necessary for the manufacture of its
products, there can be no assurance that the Company will be able to enter
into satisfactory agreements or arrangements for the purchase of commercial
quantities of such materials.  The Company has written supply agreements with
Dynamit Nobel for certain raw materials and with Rapid Spray GmbH & Co. KG
("Rapid Spray") for the nitroglycerin lingual spray product. With respect
to other suppliers, the Company operates primarily on a purchase order basis
beyond which there is no contract memorializing the Company's purchasing
arrangements.  The failure to enter into agreements or otherwise arrange for
adequate or timely supplies of principal raw materials and the possible
inability to secure alternative sources of raw material supplies could have a
material adverse effect on the Company's ability to arrange for the
manufacture of formulated products. In addition, development and regulatory
approval of the Company's products are dependent upon the Company's ability
to procure active ingredients and certain packaging materials from FDA-approved
sources. Since the FDA approval process requires manufacturers to specify
their proposed suppliers of active ingredients and certain packaging materials
in their applications, FDA approval of a supplemental application to use a new
supplier would be required if active ingredients or such packaging materials
were no longer available from the originally specified supplier, which could
result in manufacturing delays. See "- - Raw Materials and Suppliers."

      Competition.  The markets which the Company intends to enter are
characterized by intense competition.  The Company or its licensees may be
competing against established pharmaceutical companies which currently market
products which are equivalent or functionally similar to those the Company
intends to market.  Prices of drug products are significantly affected by
competitive factors and tend to decline as competition increases.  In addition,
numerous companies are developing or may, in the future, engage in the
development of products competitive with the Company's proposed products.
The Company expects that technological developments will occur at a rapid
rate and that competition is likely to intensify as enhanced dosage from
technologies gain greater acceptance. Additionally, the markets for formulated
products which the Company has targeted for development are intensely
competitive, involving numerous competitors and products.  Most of the Company's
prospective competitors possess substantially greater financial, technical
and other resources than the Company.  Moreover, many of these companies
possess greater marketing capabilities than the Company, including the
resources necessary to enable them to implement extensive advertising campaigns.
There can be no assurance that the Company will have the ability to compete
successfully.  See "- - Competition."

      Absence of Product Liability Insurance Coverage.  The Company may be
exposed to potential product liability claims by consumers.  The Company
presently maintains no product liability insurance coverage.  Although the
Company will seek to obtain product liability insurance before the
commercialization of any proprietary products, there can be no assurance
that the Company will be able to obtain such insurance or, if obtained, that
any such insurance will be sufficient to cover all possible liabilities to
which the Company may be exposed.  In the event of a successful suit against
the Company, insufficiency of insurance coverage could have a material adverse
effect on the Company.  In addition, certain food and drug retailers require
minimum product liability insurance coverage as a condition precedent to
purchasing or accepting products for retail distribution.  Failure to satisfy
such insurance requirements could impede the ability of the Company or its
distributors to achieve broad retail distribution of its proposed products,
which could have a material adverse effect on the Company.  None of the
Company's European manufacturers have made any representations as to the
safety or efficacy of the products covered by their agreements or as to any
products which may be marketed or used under rights granted under any such
agreements, other than compliance with cGMP and product specifications.
See "- - Product Liability."

      Extensive Government Regulation. The development, manufacture and
commercialization of pharmaceutical products is generally subject to extensive
regulation by various federal and state governmental entities.  The FDA, which
is the principal United States regulatory authority, has the power to seize
adulterated or misbranded products and unapproved new drugs, to request their
recall from the market, to enjoin further manufacture or sale, to publicize
certain facts concerning a product and to initiate criminal proceedings.  As
a result of federal statutes and FDA regulations, pursuant to which new
pharmaceuticals are required to undergo extensive and rigorous testing,
obtaining pre-market regulatory approval requires extensive time and
expenditures.  Under the Federal Food, Drug and Cosmetic Act (the "FDC Act"),
a new drug may not be commercialized or otherwise distributed in the United
States without the prior approval of the FDA.  The FDA approval processes
relating to new drugs differ, depending on the nature of the particular drugfor
which approval is sought.  With respect to any drug product with active
ingredients not previously approved by the FDA, a prospective drug manufacturer
is required to submit a new drug application ("NDA"), including complete
reports of pre-clinical, clinical and laboratory studies to prove such
product's safety and efficacy. The NDA process generally requires, before
the submission of the NDA, submission of an IND pursuant to which permission
is sought to begin preliminary clinical testing of the new drug.  An NDA,
based on published safety and efficacy studies conducted by others, may also
be required to be submitted for a drug product with a previously approved
active ingredient if the method of delivery, strength or dosage form is
changed. Alternatively, a drug having the same active ingredient as a drug
previously approved by the FDA may be eligible to be submitted under an ANDA,
which is significantly less stringent than the NDA approval process.  While
the ANDA process requires a manufacturer to establish bioequivalence to the
previously approved drug, it permits the manufacturer to rely on the safety
and efficacy studies contained in the DNA for the previously approved drug.
The Company believes that some of its drug products developed in capsule form
will be substantially similar to products which have previously obtained FDA
approval and, accordingly, that approvals for such products can be obtained
by submitting an ANDA.  The Company, however, may be required, before
submitting an ANDA, to submit a suitability petition, the purpose of which
is to permit the FDA to evaluate whether a change in strength, dosage form
or method of delivery is significant enough to require clinical trials and,
therefore, an NDA filing.  There can be no assurance that the FDA will not
require the Company to conduct clinical trials for such products and otherwise
comply with the NDA approval process. The Company believes that products
developed in spray dosage form will require submission of an NDA. The Company
estimates that the development of new formulations of pharmaceutical products,
including formulation, testing and obtaining FDA approval, generally takes
three to five years for the ANDA process and four to seven years for the NDA
process. There can be no assurance that the Company's determinations will
prove to be accurate or that pre-marketing approval relating to its proposed
products will be obtained on a timely basis, or at all. The failure by the
Company to obtain necessary regulatory approvals, whether on a timely basis,
or at all, would have a material adverse effect on the Company.

     Patents and Protection of Proprietary Information. The Company holds a
United States patent covering its formulation for Nifedipine gelatin capsules,
which the Company believes is not material to its operations.  The Company has
received two United States patents for its proposed lingual sprays and soft
gelatin drug delivery processes and is pursuing foreign patent protection for
such products. To the extent possible, the Company intends to seek formulation
patent protection or other proprietary rights for those products utilizing the
Company's oral dosage formulations.  There can be no assurance, however, that
patents relating to such formulated products or processes will in fact be
granted or, if granted, will provide any proprietary rights adequately
protecting the Company.  Other companies may independently develop equivalent
or superior technologies or processes and may obtain patent or similar rights
with respect thereto. Although the Company believes that its technology has
been independently developed and does not infringe on the patents of others,
there can be no assurance that the technology does not and will not infringe
on the patents of others.  If a process covered by a United States patent is
utilized in the manufacture of a product in a foreign country, the further
manufacture, use or sale of such products in the United States may constitute
an infringement of the United States patent.  In the event of infringement,
the Company or its European manufacturers could, under certain circumstances,
be required to modify the infringing process or obtain a license.  There can
be no assurance that the Company or the European manufacturers will be able
to do so in a timely manner or upon acceptable terms and conditions or at all.
The failure to do any of the foregoing could have a material adverse effect
on the Company.  In addition, there can be no assurance that the Company will
have the financial or other resources necessary to enforce or defend a patent
infringement or proprietary rights violation action.  If any of the products
developed by the Company infringes upon the patent or proprietary rights of
others, the Company could, under certain circumstances, be enjoined or become
liable for damages, which would have a material adverse effect on the Company.
See "- - Patents and Protection of Proprietary Information."


      Dependence on Existing Management.  The success of the Company is
substantially dependent on the efforts and abilities of its founder,
President and Chief Executive Officer, Harry A. Dugger, III, Ph.D., the
Company's Chairman, John J. Moroney, Vice Presidents Kenneth E. Cleaver, Ph.D.
and Donald P. Cox, Ph.D., and the Company's Chief Financial Officer, Donald
Deitman.  Mr. Moroney is not required to devote full time to the Company.
Decisions concerning the Company's business and its management are and will
continue to be made or significantly influenced by these individuals.  The
Company has entered into employment agreements with Mr. Moroney and Drs.
Dugger, Cox and Cleaver.  See "MANAGEMENT - Employment Agreements."  The
loss or interruption of their continued services would have a materially
adverse effect on the Company's business operations and prospects. See "-
Marketing and Distribution" and "DIRECTORS AND OFFICERS."

     Control by Current Stockholders, Officers and Directors.  Management and
affiliates of the Company currently beneficially own (including shares they
have the right to acquire) approximately 59.3% of the outstanding Common Stock.
These persons are and will continue to be able to exercise control over the
election of the Company's directors and the appointment of officers, increase
the authorized capital, dissolve, merge or engage the Company in other
fundamental corporate transactions.  Certain change in control provisions
found in the employment agreements of Dr. Dugger and Mr. Moroney may have the
effect of discouraging, delaying or preventing a change in control of the
Company.

      Dividend Policy.  The Company has never declared or paid a dividend on
its Common Stock, and management expects that a substantial portion of the
Company's future earnings will be retained for expansion or development of
the Company's business.  The decision to pay dividends, if any, in the future
is within the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other
relevant factors such as contractual obligations.  Management, therefore,
does not contemplate that the Company will pay dividends on the Common Stock
in the foreseeable future.

     Limited Public Market.  There has been a very limited public market for
the Units, the Common Stock and Warrants.  Although the Units, Common Stock
and Warrants have been approved for inclusion on the OTC Bulletin Board, the
securities have been thinly traded, and there can be no assurance that a more
fluid trading market for the securities will develop or that, if developed,
it will be sustained.  The OTC Bulletin Board is an unorganized, inter-dealer,
over-the-counter market which provides significantly less liquidity than the
Nasdaq Stock market, and quotes for stocks included on the OTC Bulletin Board
are not listed in the financial sections of newspapers as are those for the
Nasdaq Stock Market.  Therefore, prices for securities traded solely on the
OTC Bulletin Board may be difficult to obtain and purchasers of the Units may
be unable to resell the securities offered hereby at or near their original
offering price or at any price.  See "Possible Adverse Effect of "Penny Stock"
Rules in Liquidity for the Company's Securities."

      Outstanding Options and Warrants.  The Company has reserved up to
3,216,000 shares of its Common Stock for issuance upon exercise of stock
options and warrants.  Of the reserved shares, a total of 1,500,000 shares
have been reserved and evenly divided among each of the Company's 1992, 1997
and 1998 Stock Option Plans, of which options to purchase an aggregate of
500,000, 500,000 and 160,000 shares have been issued under the respective Plans.
Another 800,000 shares are reserved for issuance and available for the options
granted pursuant to the terms of the employment agreements of Mr. Moroney, and
Drs. Dugger, Cox and Cleaver.  Further, shares of Common Stock are reserved
for issuance to cover warrants to purchase an aggregate of 100,000 shares of
Common Stock issued to Creative Technologies, Inc. in December 1996.  In
connection with the Public Offering, the Company issued 680,000 Class A common
stock purchase warrants (the "Class A Warrants"). Also in connection with the
Public Offering, the Company issued to the Underwriters an option to purchase
68,000 Units exercisable at $9.74 (165% of the respective public offering price
of the Units) which expire in November, 2001 (the "Underwriters' Options").

        The Company agreed with the Underwriters, under certain circumstances,
to register the Shares and the Warrants subject to the Underwriters' Options
for distribution to the public.  Exercise of these registration rights could
involve a substantial expense to the Company and could prove a hindrance to
future financings.  Exercise of the Underwriters' Options, the Class A
Warrants, the outstanding warrants and stock options, and those which may be
granted under the Stock Option Plans (collectively, the "Convertible
Securities"), will reduce the percentage of Common Stock held by the public
stockholders.  Further, the terms on which the Company could obtain
additional capital during the life of the Convertible Securities may be
adversely affected, and it should be expected that the holders of the
Convertible Securities would exercise them at a time when the Company would
be able to obtain equity capital on terms more favorable than those provided
for by such Convertible Securities.

	Potential Adverse Effect of Redemption of Warrants.  The Warrants may be
redeemed by the Company commencing May 1999 (eighteen months from the date of
the Public Offering), or earlier with the consent of the Representative, at a
redemption price of $.10 per Warrant upon not less then thirty days prior
written notice provided the last sale price of the Common Stock on the NASD
OTC Bulletin Board, Nasdaq (or another national securities exchange) for
twenty consecutive trading days ending within three days of the notice of
redemption, equals or exceeds 200% of the current Warrant exercise price,
subject to adjustment.  Redemption of the Warrants could force the holders
thereof to exercise the Warrants and pay the exercise price at a time when
it may be disadvantageous for the holders to do so, to sell the Warrants at
the then current market price when they might otherwise wish to hold the
Warrants, or to accept the redemption price, which is likely to be
substantially less than the market value of the  Warrants at the time of
redemption.

	Possible Resales Under Rule 144.  Of the 3,877,300 shares of Common
Stock held by the Company's present stockholders, 3,197,300 shares of Common
Stock have not been registered under the Securities Act of 1933, as amended
(the "Act"). Under certain circumstances, the unregistered shares may be
available for public sale by means of ordinary brokerage transactions in the
open market pursuant to Rule 144, promulgated under the Act, subject to
certain limitations.  In general, under Rule 144, a person (or persons whose
shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of
securities which does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume of the class
during the four calendar weeks prior to such sale.  Rule 144 also permits,
under certain circumstances, the sale of securities, without any limitation,
by a person who is not an affiliate of the Company and who has satisfied a
two-year holding period. Of the unregistered shares, (i) 2,597,300 shares
have been held by present stockholders for more than two years, of which
133,200 shares have entered the public market pursuant to Rule 144; and (ii)
600,000 shares have been held by present stockholders for more than one year
but less than two years.

	The Company has reserved up to 3,216,000 shares of its Common Stock for
issuance upon exercise of various stock options and warrants, of which
1,600,000 shares were registered under a Registration Statement on Form S-8
under the Act.  Although certain of the Company's principal stockholders, as
well as all of its officers and directors have executed lock-up agreements
in which they agreed not to publicly offer, sell or otherwise dispose of
directly or indirectly, any of the Company's securities owned by them, until
November 2000 without the prior written consent of the Representative, any
substantial sale of Common Stock pursuant to Rule 144 may have an adverse
effect on the market price of the Shares or the component securities.
Notwithstanding the foregoing, the Company reserves the right to contest the
validity of any release of a lock-up agreement by the Representative.

     Possible Adverse Effect of "Penny Stock" Rules on Liquidity for the
Company's Securities.  Commission regulations define a "penny stock" to be
any equity security that is not traded on a national securities exchange or
Nasdaq and that has a market price (as therein defined) of less than $5.00
per share, subject to certain exceptions.  For any transaction involving a
penny stock, unless exempt, the rules require delivery prior to any
transaction in a penny stock, of a disclosure schedule prepared by the
Commission relating to the penny stock market.  Disclosure is also required
to be made about commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.

      The Company currently has an exemption from the penny stock rules.  If
the Company no longer holds such an exemption and the Company's Common
Stock continues to trade on the OTC Bulletin Board at less than $5.00 per
share, the Company's securities may become subject to Rule 15g-9 under the
Exchange Act that imposes additional sales practice requirements on broker-
dealers who sell such securities to persons other than established customers
and accredited investors (generally, such investors have assets in excess of
$1,000,000 or an individual annual income exceeding $200,000, or, together
with the investor's spouse, a joint income of $300,000).  For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt,
the rules require, among other things, the delivery, prior to the
transaction, of a risk disclosure document mandated by the Commission
relating to the penny stock market and the risks associated therewith.  The
broker-dealer must also disclose the commission payable to both the broker-
dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-
dealer must disclose this fact and the broker-dealer's presumed control over
the market.  Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.  Consequently, such rule may adversely affect
the ability of broker-dealers to sell the Company's securities and may
adversely affect the ability of purchasers in this offering to sell in the
secondary market any of the securities acquired hereby.
        There can be no assurance that the Company's securities will continue to
qualify for exemption from these restrictions.  Even though the Company's
securities are currently exempt from such restrictions, it would remain
subject to Section 15(b)(6) of the Exchange Act, which gives the Commission
the authority to prohibit any person that is engaged in unlawful conduct
while participating in a distribution of a penny stock from associating with
a broker-dealer or participating in a distribution of a penny stock, if the
Commission finds that such a restriction would be in the public interest.  If
the Company's securities were subject to rules on penny stocks, the market
liquidity for the Company's securities could be severely adversely affected.
In such event, the regulations on penny stocks could limit the ability of
broker-dealers to sell the Company's securities and thus the ability of
purchasers of the Company's securities to sell their securities in the
secondary market.

        Future Unspecified Acquisitions.  Although there are no such
transactions contemplated at this time, the Company may, in the future,
expand its business, in part, through the acquisition of compatible products
or businesses.  In attempting to locate and consummate such acquisitions, the
Company may compete with other prospective purchasers of the acquisition
candidate, some of which may have greater resources than the Company.  There
can be no assurance that suitable acquisition candidates could be identified
and acquired on terms favorable to the Company, or that the acquired product
lines or operations could be profitably operated or integrated into the
Company's operations.  In addition, any internally generated growth
experienced by the Company could place significant demands on the Company's
management, thereby restricting or limiting its available time and
opportunity to identify and evaluate potential acquisition candidates.  The
target entity of any such acquisition will not be subject to shareholder
review and the Company's decision to pursue such transactions is not subject
to shareholder approval.

	Limitation on Directors' Liabilities under Delaware Law.  Pursuant to
the Company's Certificate of Incorporation and under Delaware law, directors
of the Company are not liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty, except for liability in connection with
a breach of duty of loyalty, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for dividend
payments or stock repurchases illegal under Delaware law or any transaction
in which a director has derived an improper personal benefit.

        Indemnification of Directors under Delaware Law.  Pursuant to both the
Company's Certificate of Incorporation and Delaware law, the Company's
officers and directors are indemnified by the Company for monetary damages
for breach of fiduciary duty, except for liability which arises in connection
with (i) a breach of duty or loyalty, (ii) acts or omissions not made in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for dividend payments or stock repurchases illegal under Delaware law,
or (iv) any transaction in which the officer or director derived an improper
personal benefit.  The Company's Certificate of Incorporation does not have
any effect on the availability of equitable remedies (such as an injunction
or rescissions) for breach of fiduciary duty.  However, as a practical
matter, equitable remedies may not be available in particular circumstances.
The Company maintains director and officer liability coverage.

	Authorization and Discretionary Issuance of Preferred Stock.  The
Company's Certificate of Incorporation authorizes the issuance of "blank
check" preferred stock with such designations, rights and preferences as may
be determined from time to time by the Board of Directors.  Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividends, liquidation, conversion, voting or other
rights which could adversely affect the relative voting power or other rights
of the holders of the Company's Common Stock.  In the event of issuance, the
preferred stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company,
which could have the effect of discouraging bids for the Company and thereby
prevent stockholders from receiving the maximum value for their shares.
Although the Company has no present intention to issue any shares of its
preferred stock, there can be no assurance that the Company will not do so
in the future.  In the event the Company relocates under the Laws of the State
of Delaware (as it proposes to do upon approval of the Company's
shareholders) the rights, preferences and designations of the preferred
stock will be substantially identical to those of the present.

       Pursuant to the terms of the Underwriting Agreement, the Company may
not, except with respect to certain qualifying acquisitions, issue capital
stock until November 2000 without prior written consent of the Representative.
Notwithstanding the foregoing, the Company reserves the right to contest its
obligations under agreements with the Representative due to the Representative's
current status.

ITEM 2.	PROPERTIES

       The Company's executive offices are located at 43 Emery Avenue,
Flemington, New Jersey.  The facility, constituting approximately 2,500
square feet is occupied under two separate month to month tenancies.  Should
these tenancies be terminated for any reason, there is ample comparable space
available in the area for the Company to occupy.  Since the manufacture of
the Company's products are conducted by outside vendors, the Company does not
own or lease any production or manufacturing facilities.  The Company believes
the current Flemington facilities will adequately serve its needs for the
foreseeable future.

ITEM 3.	LEGAL PROCEEDINGS

Shareholder Lawsuit

      On December 23, 1998, one of the Company's shareholders filed a lawsuit
commenced in Federal District Court, District of New Jersey, styled as a class
action on behalf of all purchasers of the Company's securities from November
19, 1997 (the date of the Company's initial public offering) to December 29,
1999, against the Company and its officers alleging violations of the federal
securities laws arising out of alleged omissions in the Company's initial
public offering Prospectus.

The complaint alleges violations of Sections 11, 12 and 15 of the Securities
Act of 1933 against the Company, two of its officers, Mr. Dugger and Mr.
Moroney (with the Company, the "Flemington Defendants"), Monroe Parker
Securities and two of its principals, Alan Lipsky and Bryan Herman
(collectively, the "Monroe Parker Defendants").  The complaint also alleges
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
against the Monroe Parker Defendants.  All allegations in the complaint arise
out of the initial public offering of the Company's securities pursuant to a
Registration Statement dated November 19, 1997.  The complaint alleges that
the Flemington Defendants committed securities laws violations by omitting
material facts from the Prospectus; specifically that:  (1) the cessation of
market-making activities by Monroe Parker would result in an immediate
substantial drop in the market price of the Company's securities; (2) Monroe
Parker would be unable to maintain market maker activities for the Company's
securities because Monroe Parker had been violating the securities laws and
therefore the NASD or law enforcement officials were likely to take action to
put Monroe Parker out of business; (3) Monroe Parker had been violating the
federal securities laws by controlling the market for securities for which it
was a market maker, running up the price of securities through various illegal
tactics, and after amassing illegal profits, allowing the market price to
collapse by declining to purchase the securities except at an extremely low
price; and (4) defendants Lipsky and Herman had been principals of Biltmore
Securities until they started Monroe Parker.  The complaint further alleges
a violation of Section 12(2) of the Securities Act by alleging that the
Flemington Defendants were "sellers" of the Company's securities purchased by
the plaintiff.

By Notice of Motion dated March 25, 1999, the Company, Mr. Dugger and Mr.
Moroney moved the Court to dismiss the complaint in its entirety against
these defendants pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure, arguing that the complaint failed to state a claim for relief
under federal law.

In a Memorandum and Order filed on October 12, 1999, the Court granted the
motion made by the Flemington Defendants in part and denied it in part.  The
Court ruled that the only potential material omission in the Prospectus was
that the Prospectus may have failed to disclose that the Monroe Parker
Defendants had been violating the federal securities laws by controlling the
markets for securities for which it was a market maker and after amassing
illegal profits, allowing the market prices to collapse.  The Court dismissed
the allegations relating to the other alleged omissions, ruling they were not
material as a matter of law.  The Court further ruled that the plaintiff
would be allowed an opportunity to state a claim under Section 12(2) of the
Securities Act.

In connection with this lawsuit, the Company has incurred professional fees
of approximately $60,000 through July 31, 1999.  Since the Company has a
$100,000 insurance deductible, it has accrued $40,000 at July 31, 1999 in
anticipation of additional costs that will not be covered by insurance.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders, though the solicitation
of proxies or otherwise.

ITEM 4A.NON-DIRECTOR EXECUTIVE OFFICERS

	The non-director executive officers of the Company and their positions
with the Company are as follows:

Donald Deitman, Chief Financial Officer.  Mr. Deitman joined the Company in
1998.  From 1988 until joining the Company, Mr. Deitman was employed as a
business consultant implementing multi-module MRP II software systems.  From
1982 to 1988, Mr. Deitman was corporate controller for FCS Industries, Inc.
of Flemington, New Jersey.  From 1975 to 1982, he was manager of materials
and systems for the Walworth Company operations located in Linden and Elizabeth,
NJ and from 1966 to 1975, he was employed by Ortho Pharmaceuticals, Inc. and
Ortho Diagnostics, Inc.  Mr. Deitman received a BS in Accounting from Rutgers
University in 1972.

Kenneth E. Cleaver, Ph.D., Vice President, Regulatory Affairs.  Dr. Cleaver
joined the Company in 1998.  From 1992 until joining the Company, Dr. Cleaver
founded and served as the President of Medical Development Quality Associates
of Flemington, New Jersey, a consulting firm which assisted various members of
the pharmaceutical industry in the development, marketing and maintenance of
medical products.  From 1984 to 1992, Dr. Cleaver held various positions in
which he consulted in the areas of clinical research, quality assurance and
regulatory affairs.  From 1976 to 1984, he was employed by Janssen
Pharmaceutical, Inc. of Piscataway, New Jersey.  Dr. Cleaver received a BS
in Chemistry from Albright College in 1968, and an MA in Organic Chemistry
and a Ph.D. in Pharmaceutics from Temple University in 1975 and 1984,
respectively.

Donald P. Cox, Ph. D., Vice President, Product Development.  Dr. Cox joined
the Company in 1998.  In 1989, Dr. Cox founded D.P. Cox Associates, a
biotechnology consulting firm, and Goldmark Biologicals, a distributor of
colloidal gold reagents.  From 1979 to 1989, Dr. Cox was a Director of
Technical Services/Operations with Janssen Pharmaceutical, Inc. of Piscataway,
New Jersey.  Dr. Cox received a BS in Biology from Eureka College in 1964,
an MS and Ph.D. in Bacteriology from the University of Wisconsin in 1967 and
1970, respectively, an MBA from Temple University in 1989, and conducted a
Postdoctoral Fellowship at Cornell University from 1970 to 1973.


                              PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED SECURITYHOLDER MATTERS

		(a)	Market Information.  Since the November 1997 closing
                of the Public Offering, the Company's Common Stock has traded
                in the over-the-counter market on the National Association of
                Securities Dealers, Inc. OTC Bulletin Board System ("OTCBB")
                under the symbol "FLEM".  The following table sets forth the
                range of high and low closing bid quotations of the Common
                Stock as reported by the OTCBB for each fiscal quarter for the
                past two fiscal years or such shorter period that there has been
                a public trading market.  High and low bid quotations represent
                prices between dealers without adjustment for retail mark-ups,
                mark-downs or commissions and may not necessarily represent
                actual transactions.


                                                                Bid  Prices
                                                              High        Low
FISCAL  1997


Second Quarter  (November 26, 1997 through January 31, 1998)  7.75       1.00
Third Quarter (February 1, 1998 through April 30, 1998)       1.938       .875
Fourth Quarter (May 1, 1998 through July 31, 1998)            1.938      1.313

FISCAL 1998

First Quarter (August 1, 1998 through October 31, 1988)       3.375      1.375
Second Quarter (November 1, 1998 through January 31, 1999)    2.125      1.125
Third Quarter (February 1, 1999 through April 30, 1999)       2.125      1.125
Fourth Quarter (May 1, 1999 through July 31, 1999)            1.438      1.063

FISCAL  1999

First Quarter (August 1, 1999 through October 25, 1999)       1.687      0.875

    The closing bid price of the Company's Common Stock as reported by the
OTCBB was $1.6875 on October 25, 1998.

		(b)	Holders.  As of October 25, 1998 there were
                approximately 66 record holders of the Company's Common Stock.

		(c)	Dividends.  The Company has never declared or paid a
                dividend on its Common Stock, and management expects that all or
                a substantial portion of the Company's future earnings will be
                retained for expansion or development of the Company's business.
                The decision to pay dividends, if any, in the future is within
                the discretion of the Board of Directors and will depend upon
                the Company's earnings, capital requirements, financial
                condition and other relevant factors such as contractual
                obligations.  Management does not anticipate that the Company
                will pay dividends on the Common Stock in the foreseeable
                future.  Moreover, there can be no assurance that dividends can
                or will ever be paid.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

General

	Since its inception, substantially all of the Company's revenues have
been derived from consulting activities, primarily in connection with product
development for various pharmaceutical companies. The Company has had a
history of recurring losses from operations, giving rise to an accumulated
deficit at July 31, 1999 of approximately $3,235,000.  Although substantially
all of the Company's revenues to date have been derived from its consulting
business, the future growth and profitability of the Company will be principally
dependent upon its ability to successfully develop its products and to enter
into license agreements with drug companies who will market and distribute
the final products.  The Company's revenues from consulting declined during
the two years ended July 31, 1999 and may continue to decline in the future
as the Company shifts its emphasis away from product development consulting
for its clients and towards development of its own products.

	The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.  The Company
incurred losses during the fiscal years ended July 31, 1999 (fiscal 1999) and
1998 (fiscal 1998) and had an accumulated deficit at July 31, 1999 of
approximately $3,235,000.

	The Company's continued existence is dependent upon its ability to
achieve profitable operations or obtain additional financing.  The Company is
currently seeking a collaborative arrangement with pharmaceutical companies
for a joint development of delivery systems and the successful marketing of
these delivery systems.  In order to pursue this strategy, the Company will
be required to obtain financing and/or consummate a strategic alliance with
a well-funded business partner in the near future.  In view of the Company's
very limited resources, its anticipated expenses and the competitive
environment in which the Company operates, there can be no assurance that the
Company's operations will be sustained for the duration of its next fiscal
year.

Results of Operations

Fiscal Year 1999 Compared to Fiscal Year 1998

	Revenues, including interest income, for fiscal 1999 decreased
approximately $294,000 or 34% to $577,000 (Includes $78,000 interest income)
from $871,000 (Includes $97,000 interest income) for fiscal 1998.  The revenue
decrease in fiscal 1999 was primarily attributable to a significant reduction
in the size and number of client clinical studies during the year.

	Total costs and expenses for fiscal 1999 increased approximately
$365,000 or 23% to approximately $1,944,000 from $1,579,000 for fiscal 1998.
This increase includes an approximate $316,000 increase in payroll costs and
an approximate $239,000 increase in legal & professional fees.  In addition,
the Company had an approximate $40,000 increase in insurance costs offset with
an approximate $240,000 decrease in the costs of clinical studies.

Fiscal Year 1998 Compared to Fiscal Year 1997

       	Revenues for fiscal 1998 decreased approximately $62,000 or 7% to
$871,000 from $933,000 for the fiscal year ended July 31, 1997 ("fiscal 1997").
The revenue decrease in fiscal 1998 was primarily attributable to the
completion of clinical studies in progress from July 31, 1997 and no new
studies beginning during fiscal 1998.
        Total costs and expenses for fiscal 1998 increased approximately
$235,000 or 17% to approximately $1,579,000 from $1,344,000 for fiscal 1997.
This increase includes an approximate $119,000 increase in product development
costs and an approximate $119,000 increase in consulting fees and commissions.
The consulting fees and commissions related to client studies, business
development and financial public relations.  In addition, the Company had an
approximate $160,000 increase in salaries offset with an approximate $200,000
decrease in operating expenses primarily related to costs of clinical studies.

Liquidity and Capital Resources

        	From its inception, the Company's principal sources of capital have
been provided by consulting revenues, private placements and a public
offering of its securities, as well as loans and capital contributions from
the Company's principal stockholders.  At July 31, 1999 the Company had
working capital of approximately $918,000 as compared to working capital of
$2,221,000 at July 31, 1998 representing a net decrease in working capital of
approximately $1,303,000.  In November 1997, the Company successfully closed
an offering of its securities ("Public Offering").  The Public Offering
provided for the sale of 675,000 units, each unit consisting of one share of
common stock, par value $.01 per share and one redeemable Class A common stock
purchase warrant with an exercise price of $5.80 per share, subject to
adjustment.  As part of the Public Offering, the underwriter exercised part of
its over allotment option to purchase an additional 5,000 units.  As a result
of the Public Offering, the Company received proceeds, net of offering costs
and underwriting discounts, of approximately $3,013,000.

      	Net cash used in operating activities was approximately $1,271,000 for
fiscal 1999 compared to net cash used in operating activities of approximately
$1,073,000 for fiscal 1998.  Net cash used in operating activities for fiscal
1999 was primarily attributable to the net loss of $1,367,000.  For fiscal
1999, $6,000 was used for investing activities.  Therefore, notwithstanding a
$1,367,000 net loss and $708,000 net loss for fiscal 1999 and 1998,
respectively, total cash flow for fiscal 1999 increased approximately $90,000
as compared to a $2,632,000 increase for fiscal 1998.  The Company, upon the
completion of the Public Offering in November 1997, incurred salary obligations
of $200,000 and $150,000 per annum to its two executive officers.

     	The Company believes that its current cash levels together with revenues
from operations, will be sufficient to satisfy its cash requirements for the
next six (6) months and has substantial doubt about its ability to continue
operations beyond such period without obtaining additional financing and/or
consummating a strategic alliance with a well-funded  business partner.  No
assurance can be given that future unforeseen events will not adversely
affect the Company's ability to continue operations or to successfully obtain
additional financing, which may not be available on terms acceptable to the
Company, if at all.




Inflation

      	The Company does not believe that inflation has had a material effect
on its results of operations during the past three fiscal years. There can be
no assurance that the Company's business will not be affected by inflation in
the future.

Year 2000 Issue ("Y2K")

       	Many existing computer programs use only two digits to identify a year
in the date field.  These programs were designed and developed without
considering the impact of the upcoming change in the century.  If not
corrected many computer applications could fail or create erroneous results
by or at the Year 2000.  The Year 2000 issue affects virtually all companies
and organizations.  Although the Company feels that the Year 2000 issue will
not have a significant impact on its internal operations, there can be no
assurance that the Company's suppliers, creditors, customers and financial
service organizations may not be adversely affected by the Year 2000 issue
and as a result, there can be no assurance as to the impact of the Year 2000
issue on the Company.  The Company has corresponded with the aforementioned
organizations to determine their Y2K readiness and compliance.  Suppliers
completed and returned surveys while financial service organizations responded
to verbal requests for readiness information.

New Accounting Pronouncements

        	See Note 1 to the Financial Statements for a discussion of New
Accounting Pronouncements affecting the Company.

ITEM 7.	FINANCIAL STATEMENTS

     	The response to this item is included as a separate section of this
report commencing on page F-1.

ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

	Not Applicable.

                               PART III

ITEM 9.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        	See the information under the caption "Election of Directors"
contained in the Proxy Statement for the Annual Meeting of Stockholders of
the Registrant to be held on November 23, 1998, which information is
incorporated herein by reference.  See also the information with respect to
non-director executive officers of the Registrant under Item 4a of Part I
hereof, which information is incorporated herein by reference.


ITEM 10.	EXECUTIVE COMPENSATION

        	See the information under the caption "Executive Compensation"
contained in the Proxy Statement for the Annual Meeting of Stockholders of
the Registrant to be held on November 23, 1999, which information is
incorporated herein by reference.

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        See the information under the caption "Security Ownership of
Management and Certain Beneficial Owners" contained in the Proxy Statement
for the Annual Meeting of Stockholders of the Registrant to be held on
November 23, 1999, which information is incorporated herein by reference.

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the information under the caption "Certain Transactions" contained in the
Proxy Statement for the Annual Meeting of Stockholders of the Registrant to
be held on November 23, 1999, which information is incorporated herein by
reference.


                                 PART IV

ITEM 13.	EXHIBITS, LIST AND REPORTS ON FORM 8-K

                List of Exhibits

		The exhibits that are filed with this report or that are
                incorporated herein by reference are set forth in the Exhibit
                Index appearing on page E-1 hereof.

	(b)	Reports on Form 8-K

		No reports on Form 8-K were filed during the last quarter of
                fiscal 1999.

                      INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders of
  Flemington Pharmaceutical Corporation


We have audited the balance sheet of Flemington Pharmaceutical Corporation as
of July 31, 1999 and the related statements of operations, changes in
stockholders' equity (deficiency) and cash flows for each of the two years in
the period then ended.  These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Flemington Pharmaceutical
Corporation at July 31, 1999, and the results of its operations and its cash
flows for each of the two years in the period then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company has had a recent history of recurring
losses from operations, giving rise to a stockholders' deficiency through
July 31, 1999 and is currently developing pharmaceutical products which will
require substantial financing to fund anticipated product development costs.
Resulting operating losses and negative cash flows from operations are likely
to occur until, if ever, profitability can be achieved through successful
marketing of newly developed products.  These factors raise substantial doubt
about the Company's ability to continue as a going concern.  Management's
plans in regard to these matters are described in Note 2.  The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.


                                                   WISS & COMPANY, LLP


Livingston, New Jersey
October 15, 1999

               FLEMINGTON PHARMACEUTICAL CORPORATION

                           BALANCE SHEET
                           JULY 31, 1999

              ASSETS

CURRENT ASSETS:

  Cash and cash equivalents                    $  864,000
  Accounts receivable - trade, less
   allowance for doubtful accounts of $15,000     122,000
  Prepaid expenses and other current assets        58,000
            Total Current Assets                ---------
                                                1,044,000

FURNITURE, FIXTURES, AND EQUIPMENT, LESS
  ACCUMULATED DEPRECIATION OF $57,000              30,000

DEMAND NOTE RECEIVABLE, SHAREHOLDER                60,000

OTHER ASSETS                                       29,000
                                                ---------
                                               $1,163,000
                                               ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable-trade                       $   48,000
  Accrued expenses and other current
   liabilities                                     78,000
                                                ---------
     Total Current Liabilities                    126,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY :
   Preferred stock, $.01 per value:
     Authorized 1,000,000 shares, none issued           -
   Common stock $.001 par value:
     Authorized - 50,000,000 shares
      Issued and outstanding - 3,877,300 shares     4,000
   Additional paid-in capital                   4,268,000
   Accumulated Deficit                         (3,235,000)
                                               ----------
          Total Stockholders' Equity            1,037,000
                                               ----------
                                               $1,163,000
                                               ==========




See accompanying notes to financial statements.


                 FLEMINGTON PHARMACEUTICAL CORPORATION

                      STATEMENTS OF OPERATIONS

                                                       Year Ended
                                                        July 31,
                                                     ---------------
                                                      1999     1998
                                                     -----     -----

REVENUES:
   Operating revenues                             $499,000    $774,000
   Interest Income                                  78,000      97,000
                                                   -------     -------
                                                   577,000     871,000
COST AND EXPENSES:
   Operating expenses                              411,000     535,000
   Product development                             268,000     290,000
   Selling, general and administrative expenses  1,260,000     747,000
   Interest expense                                  5,000       7,000
                                                 ---------   ---------
                                                 1,944,000   1,579,000
                                                 ---------   ---------
NET LOSS                                        (1,367,000)   (708,000)

PRO FORMA ADJUSTMENT:
   Officers' salary                                      -      67,000
                                                 ---------   ---------
PRO FORMA NET LOSS                              (1,367,000)  ($775,000)
                                                 =========    ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING                                     3,877,300   3,491,637
                                                 =========   =========
BASIC AND DILUTED LOSS
PER COMMON SHARE:
  Net Loss                                           ($.35)      ($.20)
                                                 =========   =========
    Pro forma net loss                               ($.35)      ($.22)
                                                 =========   =========


See accompanying notes to financial statements.

                   FLEMINGTON PHARMACEUTICAL CORPORATION

        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

                     Common Stock
                     -------------     Additional                Stockholders'
                              Par      Paid-in     Accumulated    Equity
                     Shares   Value    Capital     Deficit       (Deficiency)
                     ------   -----    -----------  ------------ -------------
BALANCE, JULY 31,
 1997              2,597,300  $26,000  $   897,000   $(1,160,000)  $  (237,000)

YEAR ENDED JULY
 31, 1998
 Issuance of
 Common Stock:
 In Connection with
 Initial Public
 Offering, net of
 offering costs      680,000   7,000     3,006,000             -     3,013,000
 Upon Conversion
 of Stockholder Note 600,000   6,000       294,000             -       300,000
  Options issued for
  services                 -       -        36,000             -        36,000
  Net Loss                 -       -             -      (708,000)     (708,000)
                   ---------  ------     ---------     ---------     ---------
BALANCE, JULY 31,
 1998              3,877,300  39,000     4,233,000    (1,868,000)    2,404,000
                   ---------  ------     ---------     ---------     --------
YEAR ENDED JULY 31,
 1999
Par Value Decrease
 from $.01 to $.001        - (35,000)       35,000             -             -
Net Loss                   -       -             -    (1,367,000)   (1,367,000)
BALANCE,  JULY 31, --------- -------     ---------    ----------    ----------
 1999              3,877,300  $4,000    $4,268,000   ($3,235,000)  $ 1,037,000
                   ========= =======     =========    ==========    ==========







See accompanying notes to financial statements.


                  FLEMINGTON PHARMACEUTICAL CORPORATION

                        STATEMENTS OF CASH FLOWS


                                                      Year Ended
                                                       July 31,
                                               -------------------------
                                                  1999         1998
CASH FLOW FROM OPERATING ACTIVITIES:           ----------   -----------

  Net  loss                                   ($1,367,000)  ($708,000)
  Adjustments to reconcile net loss to
   net cash flows from operating activities:
   Provision (credit) for losses on accounts
       receivable                                 (24,000)          -
   Options issued for services                     19,000       7,000
  Depreciation and amortization                    12,000      11,000
  Loss on sale of assets                           14,000           -
  Changes in operating assets and liabilities:
   Accounts receivable                             49,000      92,000
   Prepaid expenses and other current assets      (22,000)    (30,000)
   Costs and estimated earnings in excess of
    billings on uncompleted contracts                   -      12,000
   Other Assets                                    24,000     (47,000)
   Accounts payable - trade                       (31,000)   (137,000)
   Billings in excess of costs and
    estimated earnings on uncompleted contracts         -    (277,000)
   Accrued expenses and other current liabilities  55,000       4,000
                                               ----------  ----------
         Net cash flows from operating
         activities                            (1,271,000) (1,073,000)
                                               ----------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES -
    Purchase of property and equipment             (6,000)    (33,000)
    Demand note receivable - shareholder                -     (60,000)
                                               ----------   ---------
         Net cash flows from investing
         activities                                (6,000)    (93,000)
                                               ----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES -
    Initial public offering                             -   3,090,000
                                               ----------   ---------
      Net cash flows from financing activities          -   3,090,000
                                               ----------   ---------
NET CHANGE IN CASH                             (1,277,000)  1,924,000
CASH, AND CASH EQUIVALENTS, BEGINNING OF YEAR   2,141,000     217,000
                                               ----------   ---------
CASH, AND CASH EQUIVALENTS, END OF YEAR          $864,000  $2,141,000
                                               ==========   =========



SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest paid                               $  5,000  $    7,000
                                                 ========= ==========
     Income taxes paid                           $      -  $        -
NON CASH FINANCING ACTIVITIES:                   ========= ==========

    Conversion of Stockholder Note
     Payable into Common Stock                   $      -  $  300,000
                                                 ========= ==========

Reclassification of deferred offering costs
  into paid in capital                           $      -  $   77,000
                                                 ========= ==========
  Options issued for future services             $      -  $   29,000
                                                 ========= ==========

See accompanying notes to financial statements






                      FLEMINGTON PHARMACEUTICAL CORPORATION

                        NOTES TO FINANCIAL STATEMENTS



Note 1 -	Nature of the Business and Summary of Significant Accounting
                Policies:

Nature of the Business - Flemington Pharmaceutical Corporation (the "Company"),
which was formerly incorporated under the laws of New Jersey was reincorporated
in the State of Delaware in November 1998.  The Company is engaged in domestic
and international consulting activities and the development of novel
pharmaceutical products combining presently marketed drugs with innovative
patent-pending oral dosage delivery systems of the Company, designed to
enhance and accelerate the onset of the therapeutic benefits which the drugs
are intended to produce.  Management intends to develop the products in
collaboration with pharmaceutical companies having significant existing sales
of the pharmaceutical compounds being incorporated into the Company's dosage
delivery systems, thereby creating a more effective, and more attractive
product.

The Company has not materially commercialized any of its proposed products and,
accordingly, has not generated any material revenue from product sales.  Since
inception, substantially all of the Company's revenue has been derived from
providing consulting services to the pharmaceutical industry.  To date, the
Company's drug development activities have been largely funded through cash
flow generated by the initial public offering of its securities in November
1997 and its consulting services.

Revenues and Costs - Revenues from contract clinical research are recognized
on the percentage-of-completion method.  Completion is measured by the
relationship of total contract costs incurred to total estimated contract costs
for each study.  Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.

Contract costs normally consist of fees paid to outside clinics for studies
and an allocable portion of the  Company's operating expenses.  General and
administrative costs pertaining to contracts are charged to expense as incurred.
At July 31, 1999, the Company had no outstanding contracts in process.

Cash Equivalents - Cash equivalents include certificates of deposit and money
market instruments purchased with original maturities of three months or less.

Financial Instruments - Financial instruments include cash and cash equivalents,
accounts receivable, loans to stockholders, accounts payable, and accrued
expenses.  The amounts reported for financial instruments are considered to
be reasonable approximations of their fair values, based on market information
available to management.

Furniture, Fixtures and Equipment - Furniture, fixtures and equipment are
stated at cost.  The Company provides for depreciation using accelerated
methods, based upon estimated useful lives of 5 to 7 years for furniture,
fixtures and equipment.

Income Taxes - Deferred income taxes result primarily from net operating
losses and the differences resulting from reporting on the cash basis of
accounting for tax reporting purposes.  As a result of these temporary
differences, the Company has recorded a deferred tax asset with an offsetting
valuation allowance for the same amount.

Defined Contribution Retirement Plans - The Company had a 401(k) retirement
plan covering substantially all employees.  Company contributions are at the
discretion of the Board of Directors.  The Company made no contributions for
the year ended July 31, 1998 ("fiscal 1998") and the plan was terminated during
fiscal 1998.  In September 1998, the Company adopted a new retirement plan
providing for contributions at management's discretion.  During the year
ended July 1999, the Company made a contribution to the new retirement plan
of approximately $4,000.

Stock Compensation - Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting" for Stock-Based Compensation," requires companies to measure
employee stock compensation plans based on the fair value method of accounting.
However, the statement allows the alternative of continued use of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," with pro forma disclosure of net income and earnings per share
determined as if the fair value based method had been applied in measuring
compensation cost.  The Company has determined it will continue to apply APB
Opinion No. 25 in accounting for its stock options plans.  The Company granted
100,000 options to an officer employee during the year ended July 31, 1999
("fiscal 1999").  (See pro forma disclosure related to the issuance of employee
options in Stock Option Footnote.)  For fiscal 1998, the Company recorded a
$36,000 charge in accordance with SFAS No. 123, for options which have been
granted to one of its consultants under an agreement which was executed in
May 1997 and amended in March 1998 (See Stock Options Footnote Disclosure).
No other compensation costs have been recorded for fiscal 1999 and 1998
related to options, warrants or any other equity instrument.


Risk Concentrations:

(a) Major Customers - During fiscal 1999, the Company had revenue from one
customer located in Germany and two customers located in USA approximating
19%, 14% and 10%, respectively, of the Company's total revenue.

During fiscal 1998, the Company had  revenue from three customers located in
France, the United Arab Emirates and Germany approximating 25%, 21% and 21%,
respectively, of the Company's total revenue.

(b) Accounts Receivable - At July 31, 1999, the Company had unsecured accounts
receivable from one customer located in USA, and two customers located in
Germany,  approximating 34%, 16% and 8%, respectively, of the Company's total
accounts receivable.  At July 31, 1998, the Company had unsecured accounts
receivable from one customer located in the United Arab Emirates and two
customers located in Germany, approximating 36%, 25% and 14%, respectively,
of the Company's total accounts receivable.  The Company has long-standing
relationships with its principal customers and feels that credit risk
associated with these customers is limited.  With regard to new customers,
the Company receives customer referrals through long standing relationships.

(c)	Supplier Dependence - The Company believes that certain raw materials,
including inactive ingredients, are available only from a limited number of
suppliers internationally and that certain packaging materials intended for
use in connection with its spray products currently are available from limited
supply sources.  The Company does not believe it will encounter difficulties
in obtaining inactive ingredients or packaging materials necessary for the
manufacture of its products.  However, there can be no assurance that the
Company will be able to enter into satisfactory purchasing agreements or
arrangements, thereby, causing a potential significant adverse effect on the
Company's ability to arrange for the manufacture of formulated products.


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
disclosures 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.

Pro forma Adjustments - Officers' salaries are determined pursuant to
employment agreements which became effective in November 1997 upon the
consummation of initial public offering of the Company's securities.  As a
result, officers' salaries have varied during the periods presented.
Accordingly, the pro forma effects of such changes have been reported on the
face of the statements of operations.

Net Income or (Loss) Per Share  -  The Company calculates earnings per share
in accordance with Statement of Financial Accounting Standard (SFAS) No. 128,
"Earnings Per Share" which was issued in February 1997 and is effective for
periods ending after December 15, 1997.  SFAS No. 128 replaces the
presentation of primary and fully diluted earnings per share with basic and
diluted earnings per share.  The Company uses the weighted-average number of
common shares outstanding during each period to compute basic earnings per
common share.  Diluted earnings per share are computed using the weighted-
average number of common shares and dilutive potential common shares
outstanding.  Dilutive potential common shares are additional common shares
assumed to be exercised.

New Accounting Pronouncements - In March 1998, the Accounting Standards
Executive Committee issued Statement of Position 98-1. ("SOP 98-1"),
Accounting for the cost of Computer Software Developed or Obtained for
Internal Use.  SOP 98-1 requires all costs related to the development of
internal use software other than those incurred during the application
development stage to be expensed as incurred.  Costs incurred during the
application development stage are required to be capitalized and amortized
over the estimated useful life of the software.  SOP 98-1 is effective for
fiscal years beginning after December 15, 1998.

In addition, the Board issued SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities in June 1998 for years beginning after
June 15, 1999.  Subsequently, the Board deferred the effective date of this
pronouncement through the issuance of SFAS No. 137.

The Company does not expect that any of the previously mentioned pronouncements
will significantly impact its financial statements.

Note 2 - Management's Plans to Overcome Operating and Liquidity Difficulties

The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.  The Company
incurred losses during fiscal years 1999 and 1998 and has an accumulated
deficit at July 31, 1999 of approximately $3,235,000.

The Company's continued existence is dependent upon its ability to achieve
profitable operations or obtain additional financing.  The Company is
currently seeking collaborative arrangements with pharmaceutical companies
for the joint development of delivery systems and the successful marketing
of these delivery systems.  The Company is exploring merger opportunities or
other strategic alternatives to fund future operations.

In view of the Company's very limited resources, its anticipated expenses and
the competitive environment in which the Company operates, there can be no
assurance that its operations will be sustained for the duration of its next
fiscal year.

Note 3 - Stockholders' equity:

Initial Public Offering - In  November  1997,  the Company successfully closed
an offering  of its  securities  ["Public Offering" or "Offering"].  The
Offering provided for the sale of 675,000 units at a per unit price of $5.90,
each unit consisting of one share of common stock, par value $.01 per share
and one redeemable Class A common stock purchase warrant with an exercise
price of $5.80 per share, subject to adjustment.  As part of the Offering,
the underwriter exercised part of its over allotment option to purchase an
additional 5,000 units.  As a result of the Offering, the Company received
proceeds, net of offering costs and underwriting discounts, of approximately
$3,013,000.

Bridge Financing - In July 1997, the Company borrowed an aggregate of $300,000,
at an interest rate of 7% per annum, from two of its officer shareholders,
who financed this loan with proceeds realized upon the private sale of 600,000
shares of their common stock in the Company. The loan, which was evidenced by
certain notes and was due to mature in October 1998, was converted into an
aggregate of 600,000 shares of the Company's common stock upon the
consummation of the Public Offering in November 1997 in accordance with the
terms of the notes.

Preferred Stock -  The Company's Certificate of Incorporation authorizes the
issuance of up to 1,000,000 shares of Preferred Stock.  None of such Preferred
Stock has been designated or issued to date.  The Board is authorized to issue
shares of Preferred Stock from time to time in one or more series and to
establish and designate any such series and to fix the number of shares and
the relative conversion rights, voting, terms of redemption and liquidation.

Status of Underwriter -  Monroe Parker Securities, Inc., the
representative of several underwriters involved in underwriting the
Company's Public Offering ceased market making activities in the
Company's securities in late December 1997, and on January 5, 1998 was
the subject of a complaint issued by the NASD for alleged violations of
the NASD's rules in 1994 and 1995.  In October 1998, the New York
attorney general's office announced the indictment of Monroe Parker
Securities, Inc. and twelve (12) principals and brokers from the firm
on charges that they have defrauded investors in the sale and trading
of securities.  These alleged violations have no connection with the
Company's securities.  See Note 5 regarding shareholder lawsuit.

Note 4 -Related Party Transactions:

Legal Fees - The Company has incurred legal fees with an officer and director
of the Company.  These fees approximated $93,000 and $71,000 for the years
ended July 31, 1999 and 1998, respectively.

Stockholder's Note Receivable - In April 1998, the Company loaned $60,000 to
its President.  The note is due on demand with interest at 7% due quarterly.
Interest approximated $4,200 for the year ended July 31, 1999.

Note 5 -	Commitments and Contingencies:

Shareholder Lawsuit - One of the Company's shareholders has filed a class
action lawsuit on behalf of all purchasers of the Company's securities from
November 1997 to December 1997, against the Company and its officers alleging
violations of federal securities laws arising in its recently completed
initial public offering.

A motion was filed by the Company and its officers to dismiss the complaint
in its entirety in March 1999.  In a memorandum and order filed October 12,
1999, the court ruled to allow the plaintiff to state a claim against the
Company and its officers alleging the Company's Prospectus may have failed
to disclose that the Underwriter had been violating federal securities laws
by controlling markets for securities in which it acted as a market maker.
All other allegations were dismissed by the court.

In connection with this lawsuit, the Company has incurred professional fees
of approximately $60,000 through July 31, 1999.  Since the Company has a
$100,000 insurance deductible, it has accrued $40,000 at July 31, 1999 in
anticipation of additional professional costs.  Counsel has not formed a
professional conclusion that in the action described above an adverse outcome
is either probable or remote.  Although the Company feels that any additional
costs above and beyond the deductible amount will be covered by insurance,
there can be no guarantee that the Company will not incur additional liability
in connection with this matter.

Employment Agreements - The Company entered into separate employment agreements
with its President and Chairman of the Board of Directors for a base annual
salary of $200,000 and $150,000, respectively.  These agreements provide for
annual cost of living adjustments equal to the greater of the increase in the
Consumer Price Index or 7.5% with additional increases and bonuses as shall
be approved by the Board.  Each agreement has a base term of three years,
which became effective in November 1997 upon the completion of the public
offering.  The agreements are thereafter renewable for additional one-year
periods, unless the Company gives notice to the contrary.

Pursuant to these agreements, options were issued to these officers to
purchase a total of 600,000 shares, exercisable during the ten-year period
following consummation of the public offering at an exercise price of $1.84
per share.

In May 1998, the Company entered into 3-year employment contracts with a Vice
President for Research and Development and a Vice President for Product
Development at annual salaries of $125,000 and $100,000, respectively.  In
addition, the Company granted each officer 100,000 ten (10) year stock options
with an exercise price of $1.75 as consideration for employment contracts.
One third of the options vest in each of the years 1999, 2000 and 2001.

Consulting Agreement - In December 1996, the Company entered into agreement
with a consulting company, (the "Consultant"), for assistance in finding
suitable business opportunities.  The agreement provides for the Company to
pay a fee to the Consultant of 10% of the consideration received by the
Company from projects identified in the agreement, net of expenses. The
agreement also provides for the Company to pay a 5% fee for equity transactions
arranged by the Consultant.  In addition to the above, the Company issued a
warrant to the Consultant to purchase up to 100,000 shares of the Company's
common stock at $2.50 per share, with vesting of 20,000 shares upon completion
of each successful project.  No warrants were earned through July 31, 1999
pursuant to this agreement.

Public Relations Consultant - In May, 1997, the Company entered into an
agreement with a consultant to enhance its entree into the public market and
to secure an underwriter for the Company.  In connection with that agreement,
the Company issued an option to the public relations consultant to purchase
an aggregate of 200,000 shares of the Company's common stock (See Stock Options
Disclosure).

In March 1998, the  Company and the public relations consultant amended the
agreement to continue services through April 1999.  As a result of this
extension, the original option issued in May 1997 was surrendered and options
were issued to purchase 200,000 shares with exercise prices of $1.00 and
120,000 shares with an exercise price of $2.00, all expiring five years from
the date of grant.

Leases -  The Company rents office space on a month to month basis.  Rent
expense for the Company totaled approximately $33,000 and $27,000 for the years
ended July 31, 1999 and 1998, respectively.

Government Regulation - The development, manufacture and commercialization of
pharmaceuticals are subject to extensive regulation by various federal and
state government entities.  The Company cannot determine the impact of
government regulations on the development of its delivery systems.

Note 6 -  Income Taxes:

No provision for current and deferred income taxes is required for the years
ended July 31, 1999 and 1998.

The significant components of the Company's net deferred tax asset are
summarized as follows:

                                                            July 31
                                                       1999        1998
                                                       ----        ----
  Differences between the cash basis of accounting
   for income tax reporting and the accrual basis
   for financial reporting purposes                 $(38,000)  $ (32,000)
  Non-employee compensation pursuant to SFAS 123           -      33,000
  Net operating loss carryforwards                 1,298,000     758,000
                                                   ---------    --------
                                                   1,260,000     759,000

                Valuation allowance               (1,260,000)   (759,000)
                                                   ---------     -------
                        Net deferred tax asset    $        -    $      -
                                                   =========     =======

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.  The Company has
determined, based on the Company's prior history of recurring losses, that a
full valuation allowance is appropriate at July 31, 1999 and 1998.

At July 31, 1999, the Company has federal and state net operating loss
carryforwards for financial reporting and income tax purposes of approximately
$3,246,000 and $3,233,000, respectively, which can be used to offset current
and future taxable income through the year 2019.

Note 7 -  Stock Options:

At July 31, 1999,  the Company had three plans to allow for the issuance of
stock options and other awards, the 1992 Stock Option Plan (the "1992 Plan"),
the 1997 Stock Option Plan (the "1997 Plan") and the 1998 Stock Option Plan
(the "1998 Plan").

The 1992 Plan - In May 1992, the Company adopted the 1992 Plan under which
500,000 shares of common stock were reserved for issuance either as incentive
stock options ("ISO's") under the Internal Revenue Code or as non-qualified
options.  ISOs may be granted to employees and officers of the Company and
non-qualified may be granted to consultants, directors, employees and officers
of the Company.  Options to purchase Company's  common stock could not be
granted at a price less than the fair market value of the common stock at the
date of grant and will expire not more than ten years from the date of grant.
ISOs granted to a 10% or more stockholder could not be for less than 110% of
fair market value or for a term of more than 5 years.

Information on option activity for the 1992 Plan for fiscal 1999 and 1998 is
as follows:

                                                    July 31,
                                    -----------------------------------------
                                      1999       (c)        1998        (c)
                                    -------   --------    --------   --------
Balance - beginning of year         500,000     $1.78      482,000(b)  $1.76
  Options granted :
  To 10% or more shareholders             -         -            -         -
  To others                               -         -       20,000(a)   2.00
Options cancelled                         -         -       (2,000)     1.67
                                    ----------------------------------------
Balance - end of year               500,000      1.78      500,000      1.78
                                    ========================================
Options exercisable - end of year   500,000      1.78      500,000      1.78
                                    ========================================

(a)	The weighted average fair value of options granted during fiscal 1998
        was $.30 per option.
(b)	Includes 54,348 incentive stock and 145,652 non-qualified options,
        issued to the President of the Company and 200,000 non-qualified
        options issued to its Chairman of the Board, for a total of 400,000
        options.
(c)	Represents weighted average exercise price.

1997 Plan - In January 1997, the Company's Board of Directors adopted the
1997 Plan, providing for the issuance of options to employees, officers and
under certain circumstances, directors of and consultants to the Company.
Options granted under the plan may be either incentive stock options as
defined in the Internal Revenue Code or non-qualified stock options.  The
total number of shares of common stock reserved for issuance under the plan
is 500,000 shares.


Information on option activity of the 1997 Plan for fiscal 1999 and 1998 is
as follows:


                                                      July 31,
                                          ----------------------------------
                                          1999       (e)     1998      (e)
                                          -----     -----    -----     -----
Balance - beginning of year               500,000   1.22    200,000    $5.80
  Options granted :
   To 10% or more shareholders (b)              -      -    100,000     1.10
   To others                                    -      -    400,000 (c) 1.25
Options cancelled                               -      -   (200,000)(a) 5.80
                                          -----------------------------------
Balance - end of year                     500,000   1.22    500,000 (d)$1.22
                                          ==================================
Options exercisable - end of year         500,000   1.22    500,000    $1.22
                                          ==================================

(a) Represents options issued to a consultant in May 1997, which were canceled
    during fiscal 1998 (See Public Relations Consulting Agreement).
(b) Represents 50,000 ISOs each issued to the President of the Company and to
    its Chairman of the Board for total options to purchase 100,000 shares.
(c) Represents 25,000 non-qualified stock options (NQSO) each issued to four
    directors of the  Company and 300,000 NQSOs to a consultant  (See Public
    Relations Consulting Agreement) for a total of 400,000 NQSOs.
(d) The weighted average fair value of options granted during fiscal 1998 was
    $.67 per option.
(e) Represents weighted average exercise price.


1998 Plan - In June 1998, the Company's Board of Directors adopted the 1998
Plan, providing for the issuance of options to employees, officers and under
certain circumstances, directors of and consultants to the Company.  Options
granted under the plan may be either incentive stock options as defined in the
Internal Revenue Code or non-qualified stock options.  The total number of
shares of common stock reserved for issuance under the plan is 500,000 shares.

Information on option activity of the 1998 Plan for fiscal 1999 and 1998 is
as follows:


                                                    July 31,
                                        ---------------------------------
                                        1999     (c)        1998     (c)
                                        -----   ------     ------   -----
Balance - beginning of year                -        -           -       -

  Options granted :
   To 10% or more shareholders             -        -           -       -
   To others                           100,000(a) 1.75          -       -
  Options cancelled                          -      -           -       -
                                       ----------------------------------
Balance - end of year                  100,000    1.75          -       -
                                       ==================================
Options exercisable - end of year      100,000    1.75(b)       -       -
                                       ==================================
(a)	Represents 100,000 ISOs issued to an employee officer in Fiscal 1999
        at an exercise price of $1.75 per share.
(b)	The weighted average fair value of options granted during fiscal 1999
        was $1.38 per option.
(c)	Represents weighted average exercise price.


The Company uses the intrinsic value method of accounting to measure
compensation expense.  If the fair value method had been used to measure
compensation expense, net loss would have increased by approximately
$250,000 or $.06 per share to $1,617,000 or $.41 per share for fiscal 1999
and approximately $630,000 or $.18 per share to $1,338,000 or $.38 per share
for fiscal 1998.

The fair value of options granted in fiscal 1998 and 1999 were estimated at
the date of grant using a Black-Scholes option model with the following
weighted-average assumptions, respectively: risk-free interest rates of 5.0%,
yield of 0.0%, volatility factors of the expected market price of the Company's
Common Stock of 10% to 128% and a weighted-average expected life of the
options of five (5) to ten (10) years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable.  In addition, option valuation models require input of
highly subjective assumptions including the expected stock price volatility.
When the Company shares were not traded publicly, the employee stock options
had characteristics significantly different from those of publicly traded
options.  Because changes in the subjective input assumptions can materially
affect fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single estimate of the fair value of its
employee stock options.

Other Non-plan Options and Warrants - At July 31, 1999 there were outstanding
the following classes and numbers of instruments exercisable for Common Stock:

A.	680,000 Class A Warrants, issued in connection with the Public
Offering, exercisable until November 2002, to purchase a like number of
shares of Common Stock at an exercise price of $5.80 per share.

B.	68,000 units, issued to the Underwriter in connection with the Public
Offering, exercisable until November 2002, to purchase 68,000 units, each
consisting of one share of Common Stock and one Class A Warrant at an
exercise price of $9.74 per unit.  Each Class A Warrant included in the
units is exercisable on the same terms as is described above in paragraph A.

C.	800,000 stock options, not issued under any of the plans, as follows
(See also Note 4 -Commitments and Contingencies):

* (300,000 options each issued to the Company's President and Chairman of the
Board of Directors, for a total of 600,000, having an exercise price of
$1.84 per share, issued in connection with their respective employment
agreements in June 1997, exercisable until November 2007.

* (100,000 options each issued to the Company's Vice President for Research
and Development and Vice President for Product Development in May 1998, for
a total of 200,000, in connection with their respective employment agreements,
having an exercise price of $1.75 per share, exercisable until May 2008.

D.	100,000 warrants issued to a consulting company as disclosed under
the "Consulting Agreements" section of "Commitments and Contingencies".




                                  SIGNATURES

	Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         FLEMINGTON PHARMACEUTICAL
                                         CORPORATION


Date:  October  28, 1999          By: /s/ Harry A. Dugger, III
                                          Harry A. Dugger, III, President

	Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report is signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

      Signatures                 Title                      Date
---------------------------      -------------------------- ----------------
/s/ Harry A. Dugger, III         President and Chief        October 29, 1999
Harry A. Dugger, III             Executive Officer
                                 (Principal Executive Officer)


/s/ Donald Deitman               Chief Financial Officer    October 29, 1999
Donald Deitman                   (Principal Financial Officer)


/s/ John J. Moroney              Chairman of the Board and  October 29, 1999
John J. Moroney                  Director


/s/ Robert F. Schaul             Secretary and Director     October 29, 1999
Robert F. Schaul


/s/ Jack J. Kornreich            Director                   October 29, 1999
Jack J. Kornreich


                         Incorporated Documents
                          SEC Exhibit Reference



2.1   Agreement of Merger dated as of October 29, 1998
       As filed with the Registrant's Preliminary
       Proxy Statement on October 20, 1998, File No. 000-23399

3.1   Certificate of Incorporation of the Registrant, as amended
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

3.2   Bylaws of the Registrant, as amended
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

4.1   Form of Warrant Agreement
       As filed with the Registrant's Form SB-2, on October 31, 1997, File
       No. 333-33201

4.3   Form of Class A Warrant Certificate
       As filed with the Registrant's Form SB-2, on October 31, 1997, File
       No. 333-33201

4.4   Form of Underwriters' Option Agreement
       As filed with the Registrant's Form SB-2, on October 31, 1997, File
       No. 333-33201

10.1  Employment Agreement with Harry A. Dugger, III, Ph.D.
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.2  Employment Agreement with John J. Moroney
       As filed with the Registrant's Form SB-2, on October 3, 1997, File
       No. 333-33201

10.3  Agreement dated December 7, 1996 between the Registrant and Altana,
      Inc.
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.4  Registrant's 1992 Stock Option Plan
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.5  Form of Option Agreement under the 1992 Stock Option Plan
       As filed with the Registrant's Form SB-2, on October 3, 1997, File
       No. 333-33201

10.6  Registrant's 1997 Stock Option Plan
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.7  Form of Option Agreement under the 1997 Stock Option Plan
       As filed with the Registrant's Form SB-2, on October 3, 1997, File
       No. 333-33201

10.8  Agreement with Rapid Spray (Clemastine) dated June 2, 1992
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.9  Agreement with Rapid Spray (Nitroglycerin) dated June 2, 1992
       As filed with the Registrant's Form SB-2, on August 8, 1997, File
       No. 333-33201

10.10 Agreement with Creative Technologies, Inc. dated December 26, 1996
       As filed with the Registrant's Form SB-2, on October 3, 1997, File
       No. 333-33201

10.11 Registrant's 1998 Stock Option Plan
       As filed with the Registrant's Preliminary  Proxy Statement on
       October 20, 1998, File No. 000-23399

10.12 Employment Agreement with Donald P. Cox, Ph.D.
       As filed with the Registrant's Form 10-KSB on October 28, 1999, File
       No. 000-23399

10.13 Employment Agreement with Kenneth Cleaver, Ph.D.
       As filed with the Registrant's Form 10-KSB on October 28, 1999, File
       No. 000-23399

10.14 Amendment to Consulting Agreement with Saggi Capital Corp. dated
      March 25, 1998
       As filed with the Registrant's Form 10-KSB on October 28, 1999, File
       No. 000-23399


       Filed herewith

11.1 Computation of earnings per share

27.1 Financial Data Schedule for fiscal year ended July 31, 1999



                                 EXH 11.1

                  FLEMINGTON PHARMACEUTICAL CORPORATION

                      EARNINGS PER SHARE COMPUTATION



                                                      YEAR ENDED
                                                     JULY 31, 1999
                                                    ---------------
                                                          BASIC
                                                     -------------
Weighted average shares outstanding                      3,877,300
Dilutive effect of stock performance plans (1)                   -
                                                     -------------
   Total                                                 3,877,300
Net loss                                                (1,367,000)
                                                     -------------
Earnings (loss) per share                                     (.35)
                                                     -------------


                                                      YEAR ENDED
                                                     JULY 31, 1998
                                                    ---------------
                                                          BASIC
                                                     -------------
Weighted average shares outstanding                      3,491,637
Dilutive effect of stock performance plans (1)                   -
                                                     -------------
   Total                                                 3,491,637
Net loss                                                  (708,000)
                                                     -------------
Earnings (loss) per share                                     (.20)
                                                     -------------



(1) Since the company has reported a loss for each period, no
    potential shares from stock performance plans have been presented,
    as their effect would be anti-dilutive