----

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| x      |  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------|
|   |                                                                                           |
|   |      For the quarterly period ended June 30, 2011                     |
|   | or                                                                                             |
|   |                                                                                           |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934      |
|   |                                                                                           |
|   |      For the transition period from _____ to _____                    |

| Delaware                                                      |   | 13-4005439                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |

| 100 South Bedford Road, Suite 2 R, Mount Kisco, NY | 10549      |
|----------------------------------------------------|------------|
| (Address of principal executive offices)           | (Zip code) |

| (914) 242-5700                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

| Large accelerated filer                                            | o | Accelerated filer         | o |
|--------------------------------------------------------------------|---|---------------------------|---|
| Non-accelerated filer(Do not check if a smaller reporting company) | o | Smaller reporting company | x |

----

----

----

|          | Part I.  Financial Information                                                                  | Page No. |
|---------------|-----------------------------------------------------------------------------------------------------------|----------|
| Item 1.  | Financial Statements                                                                                      |     |
|          |                                                                                                      |     |
|          | Condensed  Consolidated Statements of Operations -                                              |     |
|          | Three Months and Six Months Ended June 30, 2011 and 2010 (Unaudited)                                 | 1        |
|          |                                                                                                      |     |
|          | Condensed  Consolidated Statements of Comprehensive Loss -                                      |     |
|          | Three Months and Six Months Ended June 30, 2011 and 2010 (Unaudited)                                      | 2        |
|          |                                                                                                      |     |
|          | Condensed  Consolidated Balance Sheets -                                                        |     |
|          | June 30, 2011 (Unaudited) and December 31, 2010                                                           | 3        |
|          |                                                                                                      |     |
|          | Condensed  Consolidated Statements of Cash Flows -                                                   |     |
|          | Six Months Ended June 30, 2011 and 2010 (Unaudited)                                                       | 4        |
|          |                                                                                                      |     |
|          | Condensed  Consolidated Statement of Changes in Stockholders’ Equity -                    |     |
|          | Six Months Ended June 30, 2011 (Unaudited)                                                                | 5        |
|          |                                                                                                      |     |
|          | Notes to Condensed Consolidated Financial Statements -Six Months Ended June 30, 2011 and 2010 (Unaudited) | 6        |
|          |                                                                                                      |     |
| Item 2.  | Management’s Discussion and Analysis of Financial                                              |     |
|          | Condition and Results of Operations                                                                       | 15       |
|          |                                                                                                      |     |
| Item 3.  | Quantitative and Qualitative Disclosures about Market Risk                                                | 19       |
|          |                                                                                                      |     |
| Item 4.  | Controls and Procedures                                                                                   | 19       |
|          |
|          | Part II. Other Information                                                                           |     |
|          |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                               | 20       |
|          |                                                                                                      |     |
| Item 6.  | Exhibits                                                                                                  | 21       |
|          |                                                                                                      |
| SIGNATURES    | 22                                                                                                        |

----

PART I.  FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                              |   | Three months endedJune 30, |   |    | Six months endedJune 30, |    |
|-------------------------------------------------------------------|--------|----------------------------|--------|---------|--------------------------|---------|
|                                                              |   | 2011                       |   |    | 2010                     |    |   | 2011 |   |   | 2010 |   |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |
| General and administrative expenses                          |   |  $                    | (439   | )       |                     |  $ | (1,123 | ) |   |  $ | (930 | ) |   |  $ | (2,557 | ) |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
|       Operating  loss     |   |                       | (439   | )       |                     |    | (1,123 | ) |   |   | (930 | ) |   |   | (2,557 | ) |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Investment and other income                                       |   |                       | 1      |    |                     |    | 11 |   |   |   | 17 |   |   |   | 20 |   |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before income tax expense    |   |                       | (438   | )       |                     |    | (1,112 | ) |   |   | (913 | ) |   |   | (2,537 | ) |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Income tax (expense) benefit                                      |   |                       | (198   | )  |                     |    | 182 |   |   |   | (200 | ) |   |   | 887 |   |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                   |   |                       | (636   | )       |                     |    | (930 | ) |   |   | (1,113 | ) |   |   | (1,650 | ) |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations                   |   |                       | 113    |    |                     |    | (182 | ) |   |   | (38 | )  |   |   | (946 | )  |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                          |   | $                          | (523   | )       |                     | $       | (1,112 | ) |   | $ | (1,151 | ) |   | $ | (2,596 | ) |
|                                                              |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net (loss) income per share           |   |                       |   |    |                     |    |   |   |   |   |   |   |   |   |   |   |
|        Continuing operations   |   | $                          | (0.04  | )       |                     | $       | (0.05 | ) |   | $ | (0.06 | ) |   | $ | (0.10 | ) |
|        Discontinued operations |   |                       | 0.01   |    |                     |    | (0.01 | ) |   |   | (0.01 | ) |   |   | (0.05 | ) |
|        Net loss per share      |   | $                          | (0.03  | )       |                     | $       | (0.06 | ) |   | $ | (0.07 | ) |   | $ | (0.15 | ) |

----

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                                                                                                       |   | Three months ended |     |   | Six months ended |   |
|------------------------------------------------------------------------------------------------------------|--------|--------------------|----------|--------|------------------|--------|
|                                                                                                       |   | June 30,           |     |   | June 30,         |   |
|                                                                                                       |   | 2011               |     |   | 2010             |   |   | 2011 |   |   | 2010 |   |
|                                                                                                       |   |               |     |   |             |   |   |   |   |   |   |   |
| Net loss                                                                                                   |   | $                  | (523     | )      |             | $      | (1,112 | ) |   | $ | (1,151 | ) |   | $ | (2,596 | ) |
|                                                                                                       |   |               |     |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), before tax:                                                             |   |               |     |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification of loss on interest rate swap to loss fromdiscontinued operations                         |   |               |   - |   |             |   |   - |   |   |   | - |   |   |   | 803 |   |
| Comprehensive loss before tax                                                                              |   |               | (523     | )      |             |   | (1,112 | ) |   |   | (1,151 | ) |   |   | (1,793 | ) |
|                                                                                                       |   |               |     |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification of deferred tax benefit related to interestrate swap to loss from discontinued operations |   |               |   - |   |             |   |   - |   |   |   | - |   |   |   | (321 | ) |
|                                                                                                       |   |               |     |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                                                         |   | $                  | (523     | )      |             | $      | (1,112 | ) |   | $ | (1,151 | ) |   | $ | (2,114 | ) |

----

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                             |   | June 30,    |   |   | December 31, |    |
|--------------------------------------------------|--------|-------------|--------|--------|--------------|---------|
|                                             |   | 2011        |   |   | 2010         |    |
|                                             |   | (unaudited) |   |   |         |    |
| Assets                                           |   |        |   |   |         |    |
| Current assets                                   |   |        |   |   |         |    |
| Cash and cash equivalents                        |   | $           | 27,526 |   |         | $       | 28,074 |   |
| Refundable and prepaid income tax                |   |        | 564    |   |         |    | 755 |   |
| Prepaid expenses and other current assets        |   |        | 78     |   |         |    | 377 |   |
| Total current assets                             |   |        | 28,168 |   |         |    | 29,206 |   |
| Property and equipment, net                      |   |        | 3      |   |         |    | 6 |   |
| Investment in undeveloped land                   |   |        | 355    |   |         |    | 355 |   |
| Other assets                                     |   |        | 275    |   |         |    | 375 |   |
| Total assets                                     |   | $           | 28,801 |   |         | $       | 29,942 |   |
|                                             |   |        |   |   |         |    |   |   |
| Liabilities and stockholders’ equity       |   |        |   |   |         |    |   |   |
| Current liabilities                              |   |        |   |   |         |    |   |   |
|                                             |   |        |   |   |         |    |   |   |
| Income taxes payable                             |   |  $     | 300    |   |         |  $ | 434 |   |
| Accounts payable and accrued expenses            |   |        | 349    |   |         |    | 255 |   |
| Total current liabilities                        |   |        | 649    |   |         |    | 689 |   |
|                                             |   |        |   |   |         |    |   |   |
| Contingencies (Note 10)                          |   |        |   |   |         |    |   |   |
|                                             |   |        |   |   |         |    |   |   |
| Stockholders’ equity                       |   |        |   |   |         |    |   |   |
| Common stock                                     |   |        | 181    |   |         |    | 181 |   |
| Additional paid-in capital                       |   |        | 29,877 |   |         |    | 29,827 |   |
| Retained earnings (deficit)                      |   |        | (547   | )      |         |    | 604 |   |
| Treasury stock, at cost                          |   |        | (1,359 | )      |         |    | (1,359 | ) |
| Total stockholders’ equity                 |   |        | 28,152 |   |         |    | 29,253 |   |
| Total liabilities and stockholders’ equity |   | $           | 28,801 |   |         | $       | 29,942 |   |

----

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                                                                                           |   | Six Months Ended |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                                                                                           |   | June 30,         |   |
|                                                                                                                                                                                           |   | 2011             |   |   | 2010 |   |
| Cash flows from operations:                                                                                                                                                                    |   |             |   |   |   |   |
| Net loss                                                                                                                                                                                       |   | $                | (1,151 | ) |   | $ | (2,596 | ) |
| Adjustments to reconcile net loss to                                                                                                                                                           |   |             |   |   |   |   |   |   |
| net cash used in operating activities:                                                                                                                                                         |   |             |   |   |   |   |   |   |
| Depreciation and amortization                                                                                                                                                                  |   |             | 3      |   |   |   | 7 |   |
| Loss on interest rate swap                                                                                                                                                                     |   |             | -      |   |   |   | 803 |   |
| Expenses paid in common stock                                                                                                                                                                  |   |             | 6      |   |   |   | 12 |   |
| Deferred income taxes                                                                                                                                                                          |   |             | -      |   |   |   | 346 |   |
| Stock based compensation expense                                                                                                                                                               |   |             | 44     |   |   |   | 178 |   |
| Gain on sale of Five Star                                                                                                                                                                      |   |             | -      |   |   |   | (2,405 | ) |
| Changes in other operating items, net of effect of sale of Five Star:                                                                                                                          |   |             |   |   |   |   |   |   |
| Refundable and prepaid income tax                                                                                                                                                              |   |             | 191    |   |   |   | (887 | ) |
| Income taxes payable                                                                                                                                                                           |   |             | (134   | ) |   |   | (530 | ) |
| Prepaid expenses and other current assets                                                                                                                                                      |   |             | (1     | )  |   |   | 2 |   |
| Accounts payable and accrued expenses                                                                                                                                                          |   |             | 94     |   |   |   | (887 | ) |
| Net cash used in operations                                                                                                                                                                    |   |             | (948   | ) |   |   | (5,957 | ) |
|                                                                                                                                                                                           |   |             |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                          |   |             |   |   |   |   |   |   |
| Cash held in escrow                                                                                                                                                                            |   |             | 400    |   |   |   | (300 | ) |
| Net proceeds from sale of Five Star, net of $1 cash of discontinued operations                                                                                                                 |   |             |   |   |   |   | 26,463 | (a) |
| Net cash provided by investing activities                                                                                                                                                      |   |             | 400    |   |   |   | 26,163 |   |
|                                                                                                                                                                                           |   |             |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                                                          |   |             |   |   |   |   |   |   |
| Proceeds from short-term borrowings                                                                                                                                                            |   |             | -      |   |   |   | 285 |   |
| Repayment of short-term borrowings                                                                                                                                                             |   |             | -      |   |   |   | (14,804 | ) |
| Net cash used in financing activities                                                                                                                                                          |   |             | -      |   |   |   | (14,519 | ) |
|                                                                                                                                                                                           |   |             |   |   |   |   |   |   |
| Net  (decrease) increase in cash and cash equivalents                                                                                                                                |   |             | (548   | )  |   |   | 5,687 |   |
| Cash and cash equivalents at beginning of period                                                                                                                                               |   |             | 28,074 |   |   |   | 23,068 | (b) |
| Cash and cash equivalents at end of period                                                                                                                                                     |   | $                | 27,526 |   |   | $ | 28,755 |   |
| (a) Includes $14,804 used to repay short-term borrowings simultaneously with closing of sale and $1,344 withheld by the buyer to pay severance and bank fees and $300 cash held in escrow |   |
| (b) Includes $62 included in assets held for sale                                                                                                                                              |   |
|                                                                                                                                                                                           |   |             |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                                                                                                             |   |             |   |   |   |   |   |   |
| Cash paid during the period for:                                                                                                                                                          |   |             |   |   |   |   |   |   |
| Interest                                                                                                                                                                                       |   |             | -      |   |   |   | 789 |   |
| Income taxes                                                                                                                                                                                   |   |             | -      |   |   |   | 91 |   |

----

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

|                                  |   | CommonStock |       |   | Additionalpaid-in |   |    | Retainedearnings |   |   | Treasurystock, at |   |   | TotalStock-holders’ |    |
|---------------------------------------|--------|-------------|------------|--------|-------------------|--------|---------|------------------|--------|--------|-------------------|--------|--------|---------------------------|---------|
|                                  |   | Shares      |       |   | Amount            |   |    | capital          |   |   | (deficit)         |   |   | cost                      |    |   | equity |   |
| Balance at December 31, 2010          |   |        | 18,140,660 |   |              | $      | 181     |             |   | $      | 29,827            |   |   | $                         | 604     |   |   | $ | (1,359 | ) |   | $ | 29,253 |   |
| Net loss                              |   |        | -     |   |              |   | -  |             |   |   | -            |   |   |                      | (1,151  | ) |   |   | -  |   |   |   | (1,151 | ) |
| Stock based compensation expense      |   |        | -     |   |              |   | -  |             |   |   | 44                |   |   |                      | -  |   |   |   | -  |   |   |   | 44 |   |
| Issuance of common stock to directors |   |        | 4,038      |   |              |   | -  |             |   |   | 6                 |   |   |                      | -  |   |   |   | -  |   |   |   | 6 |   |
| Other                                 |   |        | (98        | )      |              |   | -  |             |   |   | -            |   |   |                      | -  |   |   |   | -  |   |   |   | -  |   |
|  Balance at June 30, 2011        |   |        | 18,144,600 |   |              | $      | 181     |             |   | $      | 29,877            |   |   | $                         | (547    | ) |   | $ | (1,359 | ) |   | $ | 28,152 |   |

----

Notes to Condensed Consolidated Financial Statements

----

----

| Assets sold:                                                                 |   |    |   |
|------------------------------------------------------------------------------|--------|---------|--------|
| Cash and cash equivalents                                                    |   | $       | 1      |   |
| Accounts and other receivables, less allowance for doubtful accounts of $407 |   |    | 8,370  |   |
| Inventories – finished goods                                           |   |    | 19,611 |   |
| Prepaid expenses and other current assets                                    |   |    | 807    |   |
| Property, plant and equipment, net                                           |   |    | 676    |   |
| Intangible assets, net                                                       |   |    | 465    |   |
| Other assets                                                                 |   |    | 45     |   |
| Total assets sold                                                            |   |    | 29,975 |   |
|                                                                         |   |    |   |   |
| Liabilities assumed:                                                         |   |    |   |   |
| Accounts payable and accrued expenses                                        |   |    | 6,041  |   |
| Liability related to interest rate swap                                      |   |    | 803    |   |
| Total liabilities assumed                                                    |   |    | 6,844  |   |
|                                                                         |   |    |   |   |
| Net assets sold                                                              |   |    | 23,131 |   |
|                                                                         |   |    |   |   |
| Selling price, as adjusted                                                   |   |    | 26,463 |   |
| Legal fees and other transaction costs                                       |   |    | (927   | ) |
|                                                                         |   |    |   |   |
| Gain on sale of Five Star                                                    |   | $  | 2,405  |   |

----

|                                                                                                                                             |   | Three months ended |   |    | Six months ended |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|---------|------------------|--------|
|                                                                                                                                             |   | June 30,           |   |    | June 30,         |   |
|                                                                                                                                             |   | 2011               |   |    | 2010             |   |   | 2011 |   |   | 2010 |   |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |
| Five Star                                                                                                                                        |   |               |   |    |             |   |   |   |   |   |   |   |
| Sales                                                                                                                                            |   | $                  | -      |    |             | $      | - |   |   | $ | - |   |   | $ | 2,635 |   |
| Cost of sales                                                                                                                                    |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 2,294 |   |
| Gross margin                                                                                                                                     |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 341 |   |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                                                                                                     |   |               | (5)    |    |             |   | - |   |   |   | 120 |   |   |   | 423 |   |
| Severance payments                                                                                                                               |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 1,062 |   |
| Fees and expenses related to repayment of debt                                                                                                   |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 374 |   |
| Loss on interest rate swap                                                                                                                       |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 803 |   |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |   |   |   |   |
|           Operating (loss) income                                                              |   |               | 5      |    |             |   | - |   |   |   | (120 | ) |   |   | (2,321 | ) |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense (income)                                                                                                                        |   |               | (8     | )  |             |   | - |   |   |   | 18 |   |   |   | 100 |   |
| Other  (expense) income                                                                                                                |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | (53 | ) |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from operations before items shown below                                                                                           |   |               | 13     |    |             |   | - |   |   |   | (138 | ) |   |   | (2,474 | ) |
| Gain on sale of Five Star                                                                                                                        |   |               | -      |    |             |   | - |   |   |   | - |   |   |   | 2,405 |   |
| (Loss) income before income tax expense                                                                                                          |   |               | 13     |    |             |   | - |   |   |   | (138 | ) |   |   | (69 | ) |
| Income tax benefit (expense), including deferred tax expense of $346        in six months ended June 30, 2010 |   |               | 100    |    |             |   | (182 | ) |   |   | 100 |   |   |   | (877 | ) |
|                                                                                                                                             |   |               |   |    |             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from discontinued operations                                                                                                       |   | $                  | 113    |    |             | $      | (182 | ) |   | $ | (38 | ) |   | $ | (946 | ) |

----

----

|                                            |   | StockOptions |      |   | WeightedAverageExercisePrice |   |   | WeightedAverageContractualTerm |   |   | AggregateIntrinsicValue |   |
|-------------------------------------------------|--------|--------------|-----------|--------|------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------|--------|
|                                            |   |         |      |   |                         |   |   |                           |   |   |                    |   |
| Options outstanding at January 1, 2011          |   |         | 3,250,000 |   |                         | $      | 2.31   |                           |   |   | 6.9                     |   |   | $ | 0 | * |
| Granted                                         |   |         | 50,000    |   |                         | $      | 1.50   |                           |   |   | 10.0                    |   |   | $ | 0 | * |
| Options outstanding  at June 30, 2011 |   |         | 3,300,000 |   |                         | $      | 2.29   |                           |   |   | 6.4                     |   |   | $ | 113,000 | * |
| Options exercisable at June 30, 2011            |   |         | 2,950,000 |   |                         | $      | 2.40   |                           |   |   | 5.9                     |   |   | $ | 36,000 | * |

|   | * | The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

| Dividend yield           | 0     | %      |
|--------------------------|-------|--------|
| Expected volatility      | 46.91 | %      |
| Risk-free interest rate  | 1.72  | %      |
| Expected life (in years) | 4     |   |

----

|   |   |
|--------|--------|

| a) | On November 12, 2004, the Company entered into an agreement to borrow approximately $1,022,000 from Bedford Oak Partners, which is controlled by Harvey P. Eisen, Chairman, Chief Executive Officer and a director of the Company, and approximately $568,000 from Jerome I. Feldman, who was at the time Chairman and Chief Executive Officer of the Company, which was utilized to exercise an option held by the Company to purchase Series B Convertible Preferred shares of Valera (see Note 7).  In January 2005, the Company prepaid the loans and all accrued interest in full. As further consideration for making these loans, Bedford Oak Partners and Mr. Feldman became entitled to a portion of the consideration received by the Company on the sale of certain Valera shares.  As a result of the acquisition of Valera by Indevus, this obligation related to the sale of Indevus shares by the Company. The November 12, 2004 agreement also provides for Bedford Oak Partners and Mr. Feldman to participate in 50% of the profits earned on 19.51% of shares of Indevus common stock received by the Company upon conversion of the Contingent Rights, if any, at such time as such shares are sold by the Company. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | As a result of the consummation of the merger between Indevus and Endo in 2009, the Company has a contingent right to receive from Endo certain cash payments. The two related parties would receive the following portions of the Company’s cash payments upon the occurrence of the following events: (i) $303,000 upon FDA approval of Octreotide and (ii) $202,000 upon FDA approval of Aveed TM. The Aveed TM amount would only be payable to the Company and therefore the related parties if there were Octreotide Approval. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | In March 2010, the Company paid Bedford Oak Advisors, LLC, an entity controlled by Mr. Eisen, an aggregate of $150,000 for consulting services rendered through February 28, 2010 by two individuals (together, the “Consultants”), each of whom served as consultants to Bedford Oak Advisors, LLC.  Such consulting services included advice on investment company matters and related issues, the evaluation of potential acquisition and business development opportunities for the Company and capital raises and other financings undertaken by the Company (the “Consulting Services”). |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of March 1, 2010, the Consultants terminated their services with Bedford Oak Advisors, LLC and were retained by the Company to provide the Consulting Services to the Company on a month-to-month basis at a rate of $35,000 per month payable to one individual and $25,000 per month payable to the other individual.  The Company or either Consultant had the right to terminate the agreement at any time upon thirty days prior written notice to the other party.  The agreement with the individual at the rate of $35,000 per month was terminated by the Company as of May 15, 2010 and the agreement with the individual at the rate of $25,000 per month was terminated by the Company as of June 30, 2010. Total expenses incurred by the Company from March 1, 2010 though termination of the services provided by the Consultants are $187,000. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c) | Effective June 1, 2010, the Company relocated its headquarters to the offices of Bedford Oak Advisors, LLC in Mount Kisco, New York. The Company is subleasing a portion of the space and has access to various administrative support services on a month-to-month basis at the rate of approximately $19,700 per month. General and administrative expenses for the three and six months ended June 30, 2011 includes $59,000 and $118,000 respectively, related to the sublease arrangement. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d) | On February 24, 2011, Thomas J. Hayes was appointed Chief Operating Officer of the Company.  Mr. Hayes is also a Managing Director of Bedford Oak Advisors, LLC |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  (a) | The Company has guaranteed the lease for Five Star’s New Jersey warehouse, totaling approximately $1,825,000 per year.  On January 15, 2010, the Company completed the sale to Merit of all the issued and outstanding stock of Five Star.  Merit extended the New Jersey warehouse lease, which originally expired in September 2010 through March 2011 at which time the lease expired. Under the terms of the Five Star Stock Purchase Agreement, Merit is responsible for the first $25,000 of repairs and end of lease costs, and the Company is responsible for 75% of the remaining costs.  The Company had been in negotiations with Merit regarding an allocation of financial responsibility for repairs to the New Jersey warehouse and end of lease costs.  However, on May 17, 2011, Merit and its affiliates filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of South Carolina.  As a result of the Chapter 11 filing, and the inability of the parties to come to an agreement on financial responsibility, the landlord drew down on a $128,000 letter of credit previously provided by GP Strategies Corporation (GP Strategies).  GP Strategies had issued the letter of credit to the landlord in exchange for the landlord removing the GP Strategies guarantee for the New Jersey warehouse lease.  As a result of the spin off of the Company from GP Strategies in November 2004, the Company had indemnified GP Strategies for any costs related to their guarantee of the Five Star lease, and therefore the Company reimbursed GP Strategies $128,000.  The Company will file a claim with the bankruptcy court, but based on its initial analysis of the Chapter 11 filings believes it is unlikely that it will recover its claim.  As a result, the Company has expensed an additional $50,000 in the quarter ended June 30, 2011.  Therefore, for the quarter and six months ended June 30, 2011, Company has recorded approximately $50,000 and $135,000 respectively for its estimated share of the costs, which is included in loss from discontinued operations. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | In connection with its land investment, the Company has certain ownership interests in several dams and related reservoirs located in the State of Connecticut.  Under relevant Connecticut law, the Company is responsible for maintaining the safety of these dams.  The Company has been notified by certain landowners adjoining one of the reservoirs that the water level in the reservoir has decreased; allegedly causing harm to such landowners.  While the Company is currently investigating the cause of the decline in the water level, it does not presently know the cause of the decrease in water level.  Further, the Company cannot presently determine the extent of its legal liability, if any, with respect to the landowners.  The Company has not received any claims with respect to any of the other reservoirs.  The Company cannot reasonably estimate at this time the costs which may be incurred with respect to this matter in the future, however the Company has no reason to believe that such costs could be material.  No amounts have been provided for this matter in the accompanying financial statements. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

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|                                                                                                                                                                                          |   | Increase(decrease) |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                                                                                                          |   |               |   |   |
| Consulting services and professional fees incurred in 2010 related to the evaluation of potential acquisition andbusiness development opportunities for the Company (terminated in June 2010) |   |  $            | (223   | ) |
|                                                                                                                                                                                          |   |               |   |   |
|  Severance costs related to the Separation Agreement entered into in 2010 between the Company and JohnBelknap, a former director, officer and employee of the Company                    |   |               | (134   | ) |
|                                                                                                                                                                                          |   |               |   |   |
| Reduction in compensation expense related to option grants                                                                                                                                    |   |               | (17    | ) |
|                                                                                                                                                                                          |   |               |   |   |
| Reduced personnel costs                                                                                                                                                                       |   |               | (114   | ) |
|                                                                                                                                                                                          |   |               |   |   |
| Reduced professional fees                                                                                                                                                                     |   |               | (176   | ) |
|                                                                                                                                                                                          |   |               |   |   |
| Increased office expense                                                                                                                                                                      |   |               | 36     |   |
|                                                                                                                                                                                          |   |               |   |   |
| Other                                                                                                                                                                                         |   |               | (56    | ) |
|                                                                                                                                                                                          |   |               |   |   |
|                                                                                                                                                                                          |   | $                  | (684   | ) |

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|                                                                                                                                                                                                                                                                                         |   | Increase(decrease) |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Consulting services and professional fees incurred in 2010 related to the evaluation of potential acquisition andbusiness development opportunities for the Company (terminated in June 2010)                                                                                                |   |  $            | (430        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Discrete  bonus granted by the Board of Directors in 2010 to the Chairman, Chief Executive Officer andPresident of the Company for his specific role in the completion of the sale of both the Company’s undevelopedreal property located in Pawling, New York and Five Star |   |               |   (500 |  ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Severance costs related to the Separation Agreement entered into in 2010 between the Company and JohnBelknap, a former director, officer and employee of the Company                                                                                                                         |   |               | (125        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Reduction in compensation expense related to option grants                                                                                                                                                                                                                                   |   |               | (134        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Reduced personnel costs                                                                                                                                                                                                                                                                      |   |               | (214        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Reduced professional fees                                                                                                                                                                                                                                                                    |   |               | (188        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Increased office expense                                                                                                                                                                                                                                                                     |   |               | 81          |   |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
| Other                                                                                                                                                                                                                                                                                        |   |               | (117        | ) |
|                                                                                                                                                                                                                                                                                         |   |               |        |   |
|                                                                                                                                                                                                                                                                                         |   | $                  | (1,627      | ) |

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Item 4.    Controls and Procedures

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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

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Item 6.    Exhibits.

| Exhibit No. |   |  Description                                                                                                                                                                                                                    |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                 |
| 31.1        | *      | Certification of principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                      |
|        |   |                                                                                                                                                                                                                                 |
| 31.2        | *      | Certification of principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                      |
|        |   |                                                                                                                                                                                                                                 |
| 32.1        | *      | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company |

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SIGNATURES

|                 |   |                                                     |
|----------------------|--------|----------------------------------------------------------|
|                 |   | NATIONAL PATENT DEVELOPMENT CORPORATION                  |
|                 |   |                                                     |
|                 |   |                                                     |
| Date: August 9, 2011 |   | /s/ HARVEY P. EISEN                                      |
|                 |   | Name: Harvey P. Eisen                                    |
|                 |   | Title: Chairman of the Board and Chief Executive Officer |
|                 |   |                                                     |
|                 |   |                                                     |
|                 |   |                                                     |
| Date: August 9, 2011 |   | /s/ IRA J. SOBOTKO                                       |
|                 |   | Name: Ira J. Sobotko                                     |
|                 |   | Title: Vice President, Chief Financial Officer           |

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