----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Canada                                         | 000-54051                           | 14-1987900                           |
|------------------------------------------------|-------------------------------------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation) | (Commission  File Number) | (I.R.S. Employer Identification No.) |

| Large accelerated filer o |   | Accelerated filer o         |
|---------------------------|--------|-----------------------------|
| Non-accelerated filer o   |   | Smaller reporting company x |

----

----

----

NDE

| Part I  | FINANCIAL INFORMATION                                                                               |   |
|---------|-----------------------------------------------------------------------------------------------------|--------|
| Item 1  | Interim Condensed Consolidated Financial Statements (Unaudited)                                     | 3      |
|    | Interim Condensed Consolidated Balance Sheets (Unaudited)                                           |   |
|    | Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) |   |
|    | Interim Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)      |   |
|    | Interim Condensed Consolidated Statements of Cash Flows (Unaudited)                                 |   |
|    | Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)                        |   |
| Item 2  | Management’s Interim Discussion and Analysis of Financial Condition and Results of Operations | 19     |
| Item 3  | Quantitative and Qualitative Disclosures About Market Risk                                          | 24     |
| Item 4  | Controls and Procedures                                                                             | 25     |
| Part II | OTHER INFORMATION                                                                                   |   |
| Item 1  | Legal proceedings                                                                                   | 26     |
| Item 1A | Risk Factors                                                                                        | 26     |
| Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds                                         | 29     |
| Item 3  | Defaults upon Senior Securities                                                                     | 29     |
| Item 4  | Mine Safety Disclosures                                                                             | 29     |
| Item 5  | Other information                                                                                   | 30     |
| Item 6  | Exhibits                                                                                            | 31     |

----

Index

----

me

ens

|                                                                                                                                       |   | June 302012 |       |   | December 312011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|------------|--------|-----------------|--------|
| Assets                                                                                                                                     |   |        |       |   |            |   |
| Current assets                                                                                                                             |   |        |       |   |            |   |
| Cash and cash equivalents                                                                                                                  |   | $           | 622,789    |   |            | $      | 217,034 |   |
| Accounts receivable                                                                                                                        |   |        | 2,019      |   |            |   | 3,934 |   |
| Accounts receivable from related party (note 9)                                                                                            |   |        | 525,100    |   |            |   | - |   |
| Inventory (note 4)                                                                                                                         |   |        | 510,557    |   |            |   | 368,696 |   |
| Prepaid expenses and deposits                                                                                                              |   |        | 402,486    |   |            |   | 89,481 |   |
| Total current assets                                                                                                                       |   |        | 2,062,951  |   |            |   | 679,145 |   |
| Prepaid expenses relating to patents                                                                                                       |   |        | 76,301     |   |            |   | 68,507 |   |
| Deposit for equipment (note 10)                                                                                                            |   |        | 75,000     |   |            |   | - |   |
| Equipment, net (note 5)                                                                                                                    |   |        | 203,105    |   |            |   | 213,851 |   |
| Equity investment (note 6)                                                                                                                 |   |        | 226,340    |   |            |   | - |   |
| Total assets                                                                                                                               |   | $           | 2,643,697  |   |            | $      | 961,503 |   |
|                                                                                                                                       |   |        |       |   |            |   |   |   |
| Liabilities                                                                                                                                |   |        |       |   |            |   |   |   |
| Current liabilities                                                                                                                        |   |        |       |   |            |   |   |   |
| Accounts payable                                                                                                                           |   |        | 154,044    |   |            |   | - |   |
| Accrued liabilities                                                                                                                        |   |        | 86,001     |   |            |   | 266,081 |   |
| Advances (note 7(b)(xvi))                                                                                                                  |   |        | 100,000    |   |            |   | - |   |
| Employee related payables                                                                                                                  |   |        | 14,462     |   |            |   | - |   |
| Loan from related party (note 9)                                                                                                           |   |        | 71,000     |   |            |   | - |   |
| Advance from related party                                                                                                                 |   |        | -          |   |            |   | 3,914 |   |
| Customer deposits                                                                                                                          |   |        | 160,000    |   |            |   | 75,000 |   |
| Income taxes payable (note 14)                                                                                                             |   |        | 240,000    |   |            |   | - |   |
| Total liabilities                                                                                                                          |   |        | 825,507    |   |            |   | 344,995 |   |
|                                                                                                                                       |   |        |       |   |            |   |   |   |
| Stockholders’ Equity                                                                                                                 |   |        |       |   |            |   |   |   |
| Preferred stock, no-par value, unlimited, none issued and outstanding                                                                 |   |        | -          |   |            |   | - |   |
| Common stock, no-par value, unlimited authorized, 33,808,176 (December 31, 2011 – 32,617,105) shares issued and outstanding (note 7) |   |        | 7,553,410  |   |            |   | 7,077,077 |   |
| Additional paid in capital                                                                                                                 |   |        | 3,722,712  |   |            |   | 2,082,988 |   |
| Accumulated comprehensive (loss) income                                                                                                    |   |        | (2,687     | )      |            |   | 2,922 |   |
| Accumulated deficit                                                                                                                        |   |        | (9,444,198 | )      |            |   | (8,535,754 | ) |
|                                                                                                                                       |   |        |       |   |            |   |   |   |
| Nerium Biotechnology, Inc. Stockholders’ equity                                                                                      |   |        | 1,829,237  |   |            |   | 627,233 |   |
| Non-controlling interests                                                                                                                  |   |        | (11,047    | )      |            |   | (10,725 | ) |
| Total stockholders’ equity                                                                                                           |   |        | 1,818,190  |   |            |   | 616,508 |   |
| Total liabilities and equity                                                                                                               |   | $           | 2,643,697  |   |            | $      | 961,503 |   |
|                                                                                                                                       |   |        |       |   |            |   |   |   |
| Going Concern and Economic Dependence (note 2)                                                                                             |   |        |       |   |            |   |   |   |
| Commitments (note 10)                                                                                                                      |   |        |       |   |            |   |   |   |

----

Index

----

nsiv

|                                                  |   |   | Three months endedJune 30 |   |   |   | Six months endedJune 30 |   |
|-------------------------------------------------------|--------|--------|---------------------------|--------|--------|--------|-------------------------|--------|
|                                                  |   |   | 2012                      |   |   |   | 2011                    |   |   |   | 2012 |   |   |   | 2011 |   |
|                                                  |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Revenue                                               |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Sales (note 9)                                        |   | $      | 2,478,932                 |   |   | $      | 103,118                 |   |   | $ | 3,166,666 |   |   | $ | 225,660 |   |
| Other                                                 |   |   | 3,825                     |   |   |   | 1,098                   |   |   |   | 5,384 |   |   |   | 3,341 |   |
|                                                  |   |   | 2,482,757                 |   |   |   | 104,216                 |   |   |   | 3,172,050 |   |   |   | 229,001 |   |
| Cost of sales (note 10)                               |   |   | 1,457,094                 |   |   |   | 19,924                  |   |   |   | 1,926,994 |   |   |   | 58,859 |   |
| Gross profit                                          |   |   | 1,025,663                 |   |   |   | 84,292                  |   |   |   | 1,245,056 |   |   |   | 170,142 |   |
| Operating expenses                                    |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| General and administrative (note 9)                   |   |   | 331,170                   |   |   |   | 366,438                 |   |   |   | 720,638 |   |   |   | 596,111 |   |
| Research and development                              |   |   | 32,788                    |   |   |   | 226,034                 |   |   |   | 97,644 |   |   |   | 288,172 |   |
| Stock-based compensation (note 8)                     |   |   | 84,365                    |   |   |   | 504,043                 |   |   |   | 1,382,655 |   |   |   | 504,043 |   |
| Depreciation                                          |   |   | 9,851                     |   |   |   | 8,063                   |   |   |   | 19,162 |   |   |   | 18,553 |   |
| Foreign exchange (gain) loss                          |   |   | (296                      | )      |   |   | 2,023                   |   |   |   | (296 | ) |   |   | 4,762 |   |
| Total operating expenses                              |   |   | 457,878                   |   |   |   | 1,106,601               |   |   |   | 2,219,803 |   |   |   | 1,411,641 |   |
| Income (loss) from operations                         |   |   | 567,785                   |   |   |   | (1,022,309              | )      |   |   | (974,747 | ) |   |   | (1,241,499 | ) |
| Earnings from equity investment                       |   |   | 305,981                   |   |   |   | -                       |   |   |   | 305,981 |   |   |   | - |   |
|                                                  |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Net income (loss) before income taxes                 |   |   | 873,766                   |   |   |   | -                       |   |   |   | (668,766 | ) |   |   | - |   |
| Provision for income taxes (note 14)                  |   |   | 240,000                   |   |   |   | -                       |   |   |   | 240,000 |   |   |   | - |   |
|                                                  |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                      |   |   | 633,766                   |   |   |   | (1,022,309              | )      |   |   | (908,766 | ) |   |   | (1,241,499 | ) |
| Exchange difference on translating foreign operations |   |   | 3                         |   |   |   |  606               |   |   |   | (5,609 | ) |   |   | 7,289 |   |
| Comprehensive income (loss) for the period            |   |   | 633,769                   |   |   |   | (1,021,703              | )      |   |   | (914,375 | ) |   |   | (1,234,210 | ) |
| Loss attributable to non-controlling interest         |   |   | (143                      | )      |   |   | (141                    | )      |   |   | (322 | ) |   |   | (286 | ) |
| Income (loss) attributable to controlling interest    |   | $      | 633,912                   |   |   | $      | (1,021,562              | )      |   | $ | (914,053 | ) |   | $ | (1,233,924 | ) |
|                                                  |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per common share                |   | $      | 0.02                      |   |   | $      | (0.03                   | )      |   | $ | (0.03 | ) |   | $ | (0.04 | ) |
| Diluted earnings (loss) per common share              |   | $      | 0.02                      |   |   | $      | (0.03                   | )      |   | $ | (0.03 | ) |   | $ | (0.04 | ) |
|                                                  |   |   |                      |   |   |   |                    |   |   |   |   |   |   |   |   |   |
| Weighted-average common shares outstanding- basic     |   |   | 33,741,813                |   |   |   | 32,076,882              |   |   |   | 33,190,339 |   |   |   | 31,815,560 |   |
| Weighted-average common shares outstanding- diluted   |   |   | 35,492,813                |   |   |   | 32,076,882              |   |   |   | 33,190,339 |   |   |   | 31,815,560 |   |

----

Index

----

ckho

|                                                                 |   |         |       |   |            |   |      |       |   |   | Accumulated   |   |   |        |     |   |          |   |      |                |   |
|----------------------------------------------------------------------|--------|--------------|------------|--------|-----------------|--------|-----------|------------|--------|--------|---------------|--------|--------|-------------|----------|--------|---------------|--------|-----------|---------------------|--------|
|                                                                 |   |         |       |   |            |   |      | Additional |   |   | Other         |   |   | Non-        |     |   |          |   |      | Total               |   |
|                                                                 |   | Common Stock |       |   | Preferred Stock |   |      | Paid-in    |   |   | Comprehensive |   |   | Controlling |     |   | Accumulated   |   |      | Stockholders’ |   |
|                                                                 |   | Shares       |       |   | Amount          |   |      | Shares     |   |   | Amount        |   |   | Capital     |     |   | Income (Loss) |   |      | Interest            |   |   | Deficit |   |   | Equity |   |
|                                                                 |   |         |       |   |            |   |      |       |   |   |          |   |   |        |     |   |          |   |      |                |   |   |   |   |   |   |   |
| At December 31, 2010                                                 |   |         | 31,544,681 |   |            | $      | 5,814,538 |       |   |   | -             |   |   | $           | -        |   |          | $      | 1,410,215 |                |   | $ | (3,871 | ) |   | $ | (10,140 | ) |   | $ | (6,671,273 | ) |   | $ | 539,469 |   |
| Preference shares issued(note 7(b)(ii) and ( viii))                  |   |         | -          |   |            |   | -         |       |   |   | 750,000       |   |   |        | 750,000  |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 750,000 |   |
| Issued on private placements(note 7(b)(i))                           |   |         | 199,583    |   |            |   | 299,374   |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 299,374 |   |
| Preference shares converted tocommon shares (note 7(b)(iii)and (ix)) |   |         | 750,000    |   |            |   | 750,000   |       |   |   | (750,000      | )      |   |        | (750,000 | )      |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issued on private placements(note 7(b)(iv))                          |   |         | 29,867     |   |            |   | 44,800    |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 44,800 |   |
| Fair value of warrants(note  7(c))                         |   |         | -          |   |            |   | -         |       |   |   | -             |   |   |        | -        |   |          |   | 504,043   |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 504,043 |   |
| Issued on private placements(note 7 (b)(v))                          |   |         | 41,206     |   |            |   | 61,809    |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 61,809 |   |
| Cancellation of shares(note  7(b)(vi))                     |   |         | (19,269    | )      |            |   | -         |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issued on private placements(note 7 (b) (vii))                       |   |         | 68,737     |   |            |   | 103,106   |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 103,106 |   |
| Fair value of options                                                |   |         | -          |   |            |   | -         |       |   |   | -             |   |   |        | -        |   |          |   | 168,730   |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 168,730 |   |
| Issued on private placements (note 7(b) (x))                         |   |         | 2,300      |   |            |   | 3,450     |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,450 |   |
| Comprehensive loss for the year                                      |   |         | -          |   |            |   | -         |       |   |   | -             |   |   |        | -        |   |          |   | -         |                |   |   | 6,793 |   |   |   | (585 | ) |   |   | (1,864,481 | ) |   |   | (1,858,273 | ) |
|                                                                 |   |         |       |   |            |   |      |       |   |   |          |   |   |        |     |   |          |   |      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2011                                                 |   |         | 32,617,105 |   |            | $      | 7,077,077 |       |   |   | -             |   |   | $           | -        |   |          | $      | 2,082,988 |                |   | $ | 2,922 |   |   | $ | (10,725 | ) |   | $ | (8,535,754 | ) |   | $ | 616,508 |   |

----

Index

----

|                                                     |         |   |       |            |   |   |             |   |   | Accumulated   |   |   |        |   |   |          |   |   |                |   |
|----------------------------------------------------------|--------------|--------|------------|-----------------|--------|--------|------------------|--------|--------|---------------|--------|--------|-------------|--------|--------|---------------|--------|--------|---------------------|--------|
|                                                     |         |   |       |            |   |   | Additional  |   |   | Other    |   |   | Non-        |   |   |          |   |   | Total          |   |
|                                                     | Common Stock |   |       | Preferred Stock |   |   | Paid-in          |   |   | Comprehensive |   |   | Controlling |   |   | Accumulated   |   |   | Stockholders’ |   |
|                                                     | Shares       |   |       | Amount          |   |   | Shares           |   |   | Amount        |   |   | Capital     |   |   | Income (Loss) |   |   | Interest            |   |   | Deficit |   |   | Equity |   |
|                                                     |         |   |       |            |   |   |             |   |   |          |   |   |        |   |   |          |   |   |                |   |   |   |   |   |   |   |
| December 31, 2011                                        |         |   | 32,617,105 |            |   | $      | 7,077,077        |   |   |          | -      |   |        | $      | -      |          |   | $      | 2,082,988           |   |   | $ | 2,922 |   |   | $ | (10,725 | ) |   | $ | (8,535,754 | ) |   | $ | 616,508 |   |
| Issued on private placements(note 7(b)(xi))              |         |   | 120,071    |            |   |   | 120,071          |   |   |          | -      |   |        |   | -      |          |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 120,071 |   |
| Fair value of options (note 8 (i), (ii) and (iii))       |         |   | -          |            |   |   | -                |   |   |          | -      |   |        |   | -      |          |   |   | 1,382,656           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,382,656 |   |
| Exercise of options (note 7(b)(xii))                     |         |   | 870,000    |            |   |   | 87,000           |   |   |          | -      |   |        |   | -      |          |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 87,000 |   |
| Fair value of options exercised                          |         |   | -          |            |   |   | 68,262           |   |   |          | -      |   |        |   | -      |          |   |   | (68,262             | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issued on private placements(note 7(b)(xiii))            |         |   | 120,000    |            |   |   | 120,000          |   |   |          | -      |   |        |   | -      |          |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 120,000 |   |
| Issued on private placements(note 7(b)(xiv))             |         |   | 81,000     |            |   |   | 81,000           |   |   |          | -      |   |        |   | -      |          |   |   | -                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 81,000 |   |
| Shares to be issued on private placements(note 7(b)(xv)) |         |   | -          |            |   |   | -                |   |   |          | -      |   |        |   | -      |          |   |   | 325,330             |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 325,330 |   |
| Comprehensive loss for the period                        |         |   | -          |            |   |   | -                |   |   |          | -      |   |        |   | -      |          |   |   | -                   |   |   |   | (5,609 | ) |   |   | (322 | ) |   |   | (908,444 | ) |   |   | (914,375 | ) |
|                                                     |         |   |       |            |   |   |             |   |   |          |   |   |        |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At June 30, 2012                                         |         |   | 33,808,176 |            |   | $      | 7,553,410        |   |   |          | -      |   |        | $      | -      |          |   | $      | 3,722,712           |   |   | $ | (2,687 | ) |   | $ | (11,047 | ) |   | $ | (9,444,198 | ) |   | $ | (1,818,190 | ) |

----

Index

----

Ca

|                                                         |   | June 302012 |      |   | June 302011 |   |
|--------------------------------------------------------------|--------|-------------|-----------|--------|-------------|--------|
| Cash flow from operating activities                          |   |        |      |   |        |   |
| Net loss for the period                                      |   | $           | (908,766  | )      |        | $      | (1,241,499 | ) |
| Items not affecting cash:                                    |   |        |      |   |        |   |   |   |
| Depreciation                                                 |   |        | 19,162    |   |        |   | 18,553 |   |
| Depreciation included in research and development            |   |        | 7,580     |   |        |   | 7,580 |   |
| Stock-based compensation                                     |   |        | 1,382,655 |   |        |   | 504,043 |   |
| Earnings from equity investment, net                         |   |        | (226,340  | )      |        |   | - |   |
| Changes in non-cash working capital balances:                |   |        |      |   |        |   |   |   |
| Accounts receivable                                          |   |        | 1,915     |   |        |   | 1,961 |   |
| Accounts receivable from related party                       |   |        | (525,100  | )      |        |   | - |   |
| Inventory                                                    |   |        | (141,861  | )      |        |   | (8,230 | ) |
| Prepaid expenses and deposits                                |   |        | (313,005  | )      |        |   | (150,829 | ) |
| Accounts payable                                             |   |        | 154,045   |   |        |   | 183,360 |   |
| Accrued liabilities                                          |   |        | (180,080  | )      |        |   | - |   |
| Employee related payables                                    |   |        | 14,462    |   |        |   | - |   |
| Loan from related party                                      |   |        | 71,000    |   |        |   | - |   |
| Advanced from related party                                  |   |        | (3,914    | )      |        |   | - |   |
| Customer deposits                                            |   |        | 85,000    |   |        |   | - |   |
| Income taxes payable                                         |   |        | 240,000   |   |        |   | - |   |
|                                                         |   |        | (323,247  | )      |        |   | (685,061 | ) |
|                                                         |   |        |      |   |        |   |   |   |
| Cash flow from investing activities                          |   |        |      |   |        |   |   |   |
| Purchase of equipment                                        |   |        | (15,996   | )      |        |   | (6,259 | ) |
| Deposit for equipment                                        |   |        | (75,000   | )      |        |   | - |   |
| Prepaid expenses relating to patents                         |   |        | (7,794    | )      |        |   | - |   |
|                                                         |   |        | (98,790   | )      |        |   | (6,259 | ) |
| Cash flow from financing activities                          |   |        |      |   |        |   |   |   |
| Issuance of common shares                                    |   |        | 321,071   |   |        |   | 905,984 |   |
| Common shares to be issued                                   |   |        | 325,330   |   |        |   | - |   |
| Proceeds from options exercised                              |   |        | 87,000    |   |        |   | - |   |
| Advances                                                     |   |        | 100,000   |   |        |   | - |   |
|                                                         |   |        | 833,401   |   |        |   | 905,984 |   |
| Effect of exchange rate changes on cash and cash equivalents |   |        | (5,609    | )      |        |   | 282 |   |
| Increase in cash and cash equivalents                        |   |        | 405,755   |   |        |   | 214,946 |   |
| Cash and cash equivalents, beginning of the period           |   |        | 217,034   |   |        |   | 186,823 |   |
| Cash and cash equivalents, end of the period                 |   | $           | 622,789   |   |        | $      | 401,769 |   |
|                                                         |   |        |      |   |        |   |   |   |
| Included in cash and cash equivalents is:                    |   |        |      |   |        |   |   |   |
| Cash                                                         |   | $           | 327,935   |   |        | $      | 160,241 |   |
| Money market instruments                                     |   |        | 294,854   |   |        |   | 241,528 |   |
|                                                         |   | $           | 622,789   |   |        | $      | 401,769 |   |

----

Index

----

Not

| 1.  | Basis of Presentation |
|----------|-----------------------|

| 2.  | Going Concern and Economic Dependence |
|----------|---------------------------------------|

----

Index

----

| 3.  | Significant Accounting Policies |
|----------|---------------------------------|

| 4.  | Inventory |
|----------|-----------|

|                          |   | June 302012 |    |   | December 312011 |   |
|-------------------------------|--------|-------------|---------|--------|-----------------|--------|
|                          |   |        |    |   |            |   |
| Raw materials and consumables |   | $           | 425,368 |   |            | $      | 289,722 |   |
| Supplies                      |   |        | 20,702  |   |            |   | 47,873 |   |
| Medicine (finished goods)     |   |        | 64,487  |   |            |   | 31,101 |   |
|                          |   | $           | 510,557 |   |            | $      | 368,696 |   |

----

Index

----

| 5. | Equipment, net |
|----|----------------|

|                                   |   |   |    |   |                    |   |    | June 302012    |   |   | December 312011 |   |
|----------------------------------------|--------|--------|---------|--------|-------------------------|--------|---------|----------------|--------|--------|-----------------|--------|
|                                   |   | Cost   |    |   | AccumulatedDepreciation |   |    | Net Book Value |   |   | Net Book Value  |   |
|                                   |   |   |    |   |                    |   |    |           |   |   |            |   |
| Lab furniture and equipment            |   | $      | 270,366 |   |                    | $      | 164,076 |           |   | $      | 106,290         |   |   | $ | 117,275 |   |
| Clinic, office furniture and equipment |   |   | 92,924  |   |                    |   | 64,992  |           |   |   | 27,932          |   |   |   | 30,787 |   |
| Computer equipment                     |   |   | 24,979  |   |                    |   | 6,629   |           |   |   | 18,350          |   |   |   | 7,676 |   |
| Research and development               |   |   | 75,800  |   |                    |   | 25,267  |           |   |   | 50,533          |   |   |   | 58,113 |   |
|                                   |   | $      | 464,069 |   |                    | $      | 260,964 |           |   | $      | 203,105         |   |   | $ | 213,851 |   |

| 6. | Equity Investment |
|----|-------------------|

|                                                      |   | June 302012 |    |
|-----------------------------------------------------------|--------|-------------|---------|
|                                                      |   |        |    |
| Carrying value of investment at December 31, 2011         |   | $           | -       |   |
| Reversal of investment impairment to original cost        |   |        | 300     |   |
| Income from equity investment to June 30, 2012            |   |        | 305,981 |   |
| Less:  elimination of downstream sales (note 9) |   |        | (79,941 | ) |
| Carrying value of investment at June 30, 2012             |   | $           | 226,340 |   |

|                                     |   | Three months ended June 30 |       |   | Six months ending June 30 |   |
|------------------------------------------|--------|----------------------------|------------|--------|---------------------------|--------|
|                                     |   |                       | 2012       |   |                      |   | 2011 |   |   |   | 2012 |   |   |   | 2011 |   |
|                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                  |   | $                          | 14,309,151 |   |                      | $      | 23 |   |   | $ | 19,455,106 |   |   | $ | 23 |   |
| Gross profit (loss)                      |   | $                          | 4,026,286  |   |                      | $      | (44 | ) |   | $ | 5,137,189 |   |   | $ | (44 | ) |
| Income (loss) from continuing operations |   | $                          | 2,055,828  |   |                      | $      | (325,233 | ) |   | $ | 2,385,816 |   |   | $ | (325,233 | ) |
| Net income (loss)                        |   | $                          | 2,055,828  |   |                      | $      | (325,233 | ) |   | $ | 2,385,816 |   |   | $ | (325,233 | ) |

----

Index

----

| 7.  | Capital Stock |
|----------|---------------|

| (a)   Authorized                                |   |   |       |   |   |   |
|-----------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Unlimited Common stock                                    |   |   |       |   |   |   |
| Unlimited Preferred stock, non-voting, issuable in series |   |   |       |   |   |   |
| (b)   Issued                                    |   |   |       |   |   |   |
| Common stock                                              |   | Shares |       |   | Amount |   |
|                                                      |   |   |       |   |   |   |
| As at December 31, 2010                                   |   |   | 31,544,681 |   |   | $      | 5,814,538 |   |
| Private placement (i)                                     |   |   | 199,583    |   |   |   | 299,374 |   |
| Preference share conversion (iii)                         |   |   | 500,000    |   |   |   | 500,000 |   |
| Private placement (iv)                                    |   |   | 29,867     |   |   |   | 44,800 |   |
| Private placement (v)                                     |   |   | 41,206     |   |   |   | 61,809 |   |
| Cancellation of shares (vi)                               |   |   | (19,269    | )      |   |   | - |   |
| Private placement (vii)                                   |   |   | 68,737     |   |   |   | 103,106 |   |
| Preference share conversion (ix)                          |   |   | 250,000    |   |   |   | 250,000 |   |
| Private placement (x)                                     |   |   | 2,300      |   |   |   | 3,450 |   |
| As at December 31, 2011                                   |   |   | 32,617,105 |   |   |   | 7,077,077 |   |
| Private placement (xi)                                    |   |   | 120,071    |   |   |   | 120,071 |   |
| Stock option exercise (xii)                               |   |   | 870,000    |   |   |   | 87,000 |   |
| Fair value of options exercised                           |   |   | -          |   |   |   | 68,262 |   |
| Private placement (xiii)                                  |   |   | 120,000    |   |   |   | 120,000 |   |
| Private placement (xiv)                                   |   |   | 81,000     |   |   |   | 81,000 |   |
| As at June 30, 2012                                       |   |   | 33,808,176 |   |   | $      | 7,553,410 |   |
| Preferred stock                           |   |   | Shares   |   |   |   | Amount   |   |
|-------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|
| As at December 31, 2010                   |   |   | -        |   |   | $      | -        |   |
| Issuance of preference shares (ii)        |   |   | 500,000  |   |   |   | 500,000  |   |
| Conversion to common shares (iii)         |   |   | (500,000 | )      |   |   | (500,000 | )      |
| Issuance of preference shares (viii)      |   |   | 250,000  |   |   |   | 250,000  |   |
| Conversion to common shares (ix)          |   |   | (250,000 | )      |   |   | (250,000 | )      |
| As at December 31, 2011 and June 30, 2012 |   |   | -        |   |   | $      | -        |   |

----

Index

----

| 7.  | Capital Stock – continued |
|----------|---------------------------------|

| (b)  | Issued |
|-----------|--------|

|   | (i) | On March 29, 2011, the Company completed the fourth closing of its non-brokered private placement by issuing 199,583 common shares at $1.50 per share for gross proceeds of $299,374. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | On March 9, 2011, the Company completed a non-brokered private placement to issue 500,000 Series “A” Convertible Preference Shares, at a subscription price of $1.00 per share for a total of $500,000.   The Convertible Preference Shares are non-voting, non-redeemable, non-retractable and are not entitled to receive dividends.  Each Series “A” Convertible Preference Share may, at the option of the holder, be converted into one common share.  The expiry date of the conversion is December 31, 2012. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | On May 5, 2011 the 500,000 Series “A” Convertible Preference Shares were converted into 500,000 common shares. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | On May 5, 2011, the Company completed the fifth closing of its non-brokered private placement by issuing 29,867 common shares at $1.50 per share for gross proceeds of $44,800. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | On June 28, 2011, the Company completed the sixth closing of its non-brokered private placement by issuing 41,206 common shares at $1.50 per share for gross proceeds of $61,809. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | On June 28, 2011 the Company cancelled 19,269 residual shares as result of the shares in trust  being distributed to individual shareholders. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | On September 8, 2011 and September 29, 2011, the Company completed the seventh and eighth closing of its non-brokered private placement by issuing 58,737 and 10,000 common shares at $1.50 per share for gross proceeds of $103,106. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (viii) | On September 26, 2011, the Company approved a non-brokered private placement to issue 1,000,000 Series “B” Convertible Preference Shares, at a subscription price of $1.00.  The Convertible Preference Shares are non-voting, non-redeemable, non-retractable and are not entitled to receive dividends.  Each Series “B” Convertible Preference Share may, at the option of the holder, be converted into one common share.  The expiry date of the conversion is December 31, 2012. Pursuant to this private placement 250,000 preference shares were issued. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | On September 29, 2011, the 250,000 Series “B” Convertible Preference Shares were converted into 250,000 common shares. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------|

|   | (x) | On December 22, 2011, the Company completed the ninth closing of its non-brokered private placement by issuing 2,300 common shares at $1.50 per share for gross proceeds of $3,450. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xi) | In February 2012, the Company's Board of Directors approved a private placement of up to 2,000,000 common shares of the Company at a subscription price of $1.00 per common share. On March 30, 2012, the Company completed the first closing of its non-brokered private placement by issuing 120,071 common shares at $1.00 per share for gross proceeds of $120,071. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xii) | During the quarter ended March 31, 2012, 870,000 stock options were exercised at $0.10 per option for gross proceeds of $87,000.  The fair value of the options was $68,262. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xiii) | On April 25, 2012, the Company completed the second closing of its non-brokered private placement by issuing 120,000 common shares at $1.00 per share for gross proceeds of $120,000. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xiv) | On May 10, 2012, the Company completed the third closing of its non-brokered private placement by issuing 81,000 common shares at $1.00 per share for gross proceeds of $81,000. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xv) | During June 2012, the Company received gross proceeds of $325,330 for 325,330 common shares at $1.00 per share pursuant to its fourth non-brokered private placement.  These shares were issued on July 27, 2012 (note 15). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xvi) | On June 14, 2012, an investor advanced $100,000 to the Company as partial payment for shares to be issued at a future date. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------|

----

Index

----

| 7.  | Capital Stock - continued |
|----------|---------------------------|

|   | (c) | Warrants |
|--------|-----|----------|

|                   |   | June 30, 2012      |     |   | December 31, 2011 |   |
|------------------------|--------|--------------------|----------|--------|-------------------|--------|
|                   |   | Number of Warrants |     |   | ExercisePrice     |   |   | Number of Warrants |   |   | ExercisePrice |   |
| Outstanding, beginning |   |               | 500,000  |   |              | $      | 1.25 |   |   |   | 500,000 |   |   | $ | 1.25 |   |
| Expired (i)            |   |               | (500,000 | )      |              |   | 1.25 |   |   |   | (500,000 | ) |   |   | 1.25 |   |
| Issued                 |   |               | -        |   |              |   | - |   |   |   | 500,000 |   |   |   | 1.25 |   |
| Outstanding, ending    |   |               | -        |   |              | $      | - |   |   |   | 500,000 |   |   | $ | 1.25 |   |

|   | (i) | On May 5, 2012, the 500,000 warrants expired. |
|--------|-----|-----------------------------------------------|

| 8.  | Stock-Based Compensation |
|----------|--------------------------|

|                   |   | June 30, 2012 |      |   | December 31, 2011               |   |
|------------------------|--------|---------------|-----------|--------|---------------------------------|--------|
|                   |   | Stock Options |      |   | Weighted-average exercise price |   |   | Stockoptions |   |   | Weighted-average exercise price |   |
| Outstanding, beginning |   |          | 3,630,000 |   |                            | $      | 0.47 |   |   |   | 3,180,000 |   |   | $ | 0.47 |   |
| Exercised (i)          |   |          | (870,000  | )      |                            |   | (0.10 | ) |   |   |   |   |   |   |   |   |
| Granted (ii) and (iii) |   |          | 150,000   |   |                            |   | 1.50 |   |   |   | 450,000 |   |   |   | 1.50 |   |
| Expired                |   |          | -         |   |                            |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding, ending    |   |          | 2,910,000 |   |                            | $      | 0.79 |   |   |   | 3,630,000 |   |   | $ | 0.47 |   |

----

Index

----

| 8.  | Stock-Based Compensation- continued |
|----------|-------------------------------------|

| Options Outstanding |   |   | Options Exercisable |      |
|---------------------|--------|--------|---------------------|-----------|
| Exercise Prices     |   |   | Outstanding         |      |   | Weighted‐AverageExercise Price |   |   | Weighted‐AverageRemaining Contractual Life |   |   | Exercisable |   |   | Weighted‐Average ExercisePrice |   |
|                |   |   | #                   |      |   | Years |   |   |   |   |   |  # |   |   |   |   |
|                |   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CDN$0.10            |   |   |                | 750,000   |   |   | CDN $0.10 |   |   |   | 2.55 |   |   |   | 750,000 |   |   | CDN$0.10 |   |
| CDN$0.50            |   |   |                | 800,000   |   |   | CDN $0.50 |   |   |   | 0.02 |   |   |   | 800,000 |   |   | CDN$0.50 |   |
| CDN$1.22            |   |   |                | 310,000   |   |   | CDN $1.22 |   |   |   | 1.04 |   |   |   | 310,000 |   |   | CDN$1.22 |   |
| $1.22               |   |   |                | 450,000   |   |   | $1.22 |   |   |   | 3.16 |   |   |   | 450,000 |   |   | $1.22 |   |
| $1.50               |   |   |                | 600,000   |   |   | $1.50 |   |   |   | 4.04 |   |   |   | 262,500 |   |   | $1.50 |   |
|                |   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                |   |   |                | 2,910,000 |   |   | $0.79 |   |   |   | 2.10 |   |   |   | 2,572,500 |   |   | $0.70 |   |

|   | (i) | 1,950,000 stock options with an exercise price of CDN$0.10 were granted to various directors, employees and consultants on January 17, 2007, which vested immediately and expire January 17, 2012.  The fair value was determined to be $153,000 at $0.08 per option, using the Black-Scholes model for pricing options. This amount was recorded as stock-based compensation expense and an increase to accumulated paid in capital.  The following assumptions were used: risk free interest rate of return of 4.3%, expected stock volatility of 105%, dividend yield of 0% and expected life of 5 years.  In January 2012, 870,000 of these options were exercised for $87,000.  The fair value of these options was $68,262.  On January 17, 2012 the remaining un-exercised options were amended to expire January 17, 2015.  The fair value of the amended options is $1,084,252 at $1.45 per option, using the Black-Scholes model for pricing options.  The following assumptions were used: risk free interest rate of return of 1.06%, expected stock volatility of 148%, dividend yield of 0% and expected life of 3 years.  This amount was recorded as stock-based compensation expense and an increase to accumulated paid in capital. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 450,000 stock options were granted to certain employees on June 27, 2011 with an exercise price of $1.50, which vest 25% on June 27, 2012; 25% on June 27, 2013; 25% on June 27, 2014 and 25% on June 27, 2015 and expire June 27, 2016.  The fair value was determined to be $647,925 at $1.44 per option, using the Black-Scholes model for pricing options.  $84,365 and $168,730 was recorded as an increase to stock-based compensation expense and an increase to accumulated paid in capital for the three-month and six-month period ended June 30, 2012 respectively. The following assumptions were used:  risk free interest rate of return of 2.79%; expected volatility of 181%; dividend yield of 0% and expected life of 5 years. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | 150,000 stock options were granted to a consultant on February 14, 2012 with an exercise price of $1.50, which vest immediately and expire on August 29, 2016.  The fair value was determined to be $129,674 at $0.86 per option, using the Black-Scholes model for pricing options.  The following assumptions were used:  risk free interest rate of return of 1.44%; expected volatility of 148%; dividend yield of 0% and expected life of 5 years. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

| 9.  | Related Party Transactions and Balances |
|----------|-----------------------------------------|

| 10.  | Commitments |
|-----------|-------------|

| 2012       |   | $      | 187,584   |   |
|------------|--------|--------|-----------|--------|
| 2013       |   |   | 376,532   |   |
| 2014       |   |   | 378,417   |   |
| 2015       |   |   | 350,530   |   |
| 2016       |   |   | 330,000   |   |
| Thereafter |   |   | 1,815,000 |   |
|       |   | $      | 3,438,063 |   |

|   | (a) | The Company has entered into two separate agreements with one individual. The first agreement, a production and purchasing agreement effective June 2004, entitles the individual to receive $3.25 per vial of Anvirzel sold to third parties in exchange for the use of facilities and production supervision. The second agreement, a consulting agreement effective January 2007, entitles the individual to receive an additional $3.25 per vial of Anvirzel sold to third parties in exchange for consulting services in relation to the production of Anvirzel.  Both agreements remain in effect for as long as Anvirzel is produced in Honduras. The commissions paid are not significant and are included in cost of sales. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Prior to 2004, the Company entered into a consulting agreement which entitles the consultant to receive $1.00 per vial of Anvirzel sold to third parties in Central America and $2.00 per vial for patients coming from countries other than Central America, to a maximum of $20,000 per month, expiring in 2018.  The commissions paid are not significant and are included in cost of sales. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | During 2011, the Company entered into a consulting agreement which entitles the consultant to receive a 5% commission, based on a per unit price charged on each product produced for commercial sale to the end consumer, that was formulated by the consultant.  The agreement expires in 2031.  The commission incurred is $29,896 and $40,664 for the three-month and six-month period ended June 30, 2012 respectively and are included in cost of sales. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | During June 2012, the Company committed to purchase equipment totalling $147,500 for which a deposit of $75,000 was recorded as at June 30, 2012. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

| 11.  | Financial Instruments |
|-----------|-----------------------|

| 12.  | Capital Management |
|-----------|--------------------|

----

Index

----

| 13.  | Segmented Information |
|-----------|-----------------------|

| As at June 30, 2012                    |   | United States |       |   | Honduras |   |    | Total  |   |
|----------------------------------------|--------|---------------|------------|--------|----------|--------|---------|--------|--------|
|                                   |   |          |       |   |     |   |    |   |   |
| Equipment                              |   | $             | 76,311     |   |     | $      | 126,794 |   |   | $ | 203,105 |   |
| Total assets                           |   | $             | 2,359,677  |   |     | $      | 284,020 |   |   | $ | 2,643,697 |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Six month period ended June 30, 2012   |   | United States |       |   | Honduras |   |    | Total  |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Revenues                               |   | $             | 2,981,560  |   |     | $      | 190,490 |   |   | $ | 3,172,050 |   |
| Net income (loss) for the period       |   | $             | (863,643   | )      |     | $      | (45,123 | )      |   | $ | (908,766 | ) |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Three month period ended June 30, 2012 |   | United States |       |   | Honduras |   |    | Total  |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Revenues                               |   | $             | 2,395,676  |   |     | $      | 87,081  |   |   | $ | 2,482,757 |   |
| Net income (loss) for the period       |   | $             | 664,421    |   |     | $      | (30,655 | )      |   | $ | 633,766 |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| As at December 31, 2011                |   | United States |       |   | Honduras |   |    | Total  |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Equipment                              |   | $             | 72,421     |   |     | $      | 141,430 |   |   | $ | 213,851 |   |
| Total assets                           |   | $             | 655,065    |   |     | $      | 306,438 |   |   | $ | 961,503 |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Six month period ended June 30, 2011   |   | United States |       |   | Honduras |   |    | Total  |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Revenues                               |   | $             | -          |   |     | $      | 229,001 |   |   | $ | 229,001 |   |
| Net loss for the period                |   | $             | (1,260,027 | )      |     | $      | 18,528  |   |   | $ | (1,241,499 | ) |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Three month period ended June 30, 2011 |   | United States |       |   | Honduras |   |    | Total  |   |
|                                   |   |          |       |   |     |   |    |   |   |   |   |   |
| Revenues                               |   | $             | -          |   |     | $      | 104,216 |   |   | $ | 104,216 |   |
| Net loss for the period                |   | $             | (1,037,389 | )      |     | $      | 15,080  |   |   | $ | (1,022,309 | ) |

----

Index

----

| 14.  | Income Taxes |
|-----------|--------------|

| 15.  | Subsequent Events |
|-----------|-------------------|

----

Index

----

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

----

Index

----

----

Index

----

----

Index

----

|   Quarter Ended |  Accounting Policies |   |   | Total Revenues ($) |      |   |  Net Income (Loss)($) |   |       |  Basic and DilutedNet Loss PerCommon Share |   |
|---------------------------|---------------------------|--------|--------|--------------------|-----------|--------|----------------------------|--------|------------|-------------------------------------------------|--------|
| June 30, 2012             | US GAAP                   |   |   | $                  | 2,482,757 |   |                       |   | 633,766    |                                            |   | $ | 0.02 |   |
| March 31, 2012            | US GAAP                   |   |   |               | 689,293   |   |                       |   | (1,542,532 | )                                               |   | $ | (0.05 | ) |
| December 31, 2011         | US GAAP                   |   |   |               | 133,980   |   |                       |   | (210,795   | )                                               |   | $ | (0.01 | ) |
| September 30, 2011        | IFRS                      |   |   |               | 489,421   |   |                       |   | (412,772   | )                                               |   | $ | (0.01 | ) |
| June 30, 2011             | IFRS                      |   |   |               | 104,216   |   |                       |   | (1,022,309 | )                                               |   | $ | (0.03 | ) |
| March 31, 2011            | IFRS                      |   |   |               | 124,785   |   |                       |   | (219,190   | )                                               |   | $ | (0.01 | ) |
| December 31, 2010         | Canadian GAAP             |   |   |               | 88,780    |   |                       |   | (369,143   | )                                               |   | $ | (0.01 | ) |
| September 30, 2010        | Canadian GAAP             |   |   |               | 93,311    |   |                       |   | (800,361   | )                                               |   | $ | (0.03 | ) |

----

Index

----

| 2012       |   | $      | 187,584   |   |
|------------|--------|--------|-----------|--------|
| 2013       |   |   | 376,532   |   |
| 2014       |   |   | 378,417   |   |
| 2015       |   |   | 350,530   |   |
| 2016       |   |   | 330,000   |   |
| Thereafter |   |   | 1,815,000 |   |
|       |   | $      | 3,438,063 |   |

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Index

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|   | (a) | The Company has entered into two separate agreements with one individual. The first agreement, a production and purchasing agreement effective June 2004, entitles the individual to receive $3.25 per vial of Anvirzel sold to third parties in exchange for the use of facilities and production supervision. The second agreement, a consulting agreement effective January 2007, entitles the individual to receive an additional $3.25 per vial of Anvirzel sold to third parties in exchange for consulting services in relation to the production of Anvirzel.  Both agreements remain in effect for as long as Anvirzel is produced in Honduras. The commissions paid are not significant and are included in cost of sales. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Prior to 2004, the Company entered into a consulting agreement which entitles the consultant to receive $1.00 per vial of Anvirzel sold to third parties in Central America and $2.00 per vial for patients coming from countries other than Central America, to a maximum of $20,000 per month, expiring in 2018.  The commissions paid are not significant and are included in cost of sales. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | During 2011, the Company entered into a consulting agreement which entitles the consultant to receive a 5% commission, based on a per unit price charged on each product produced for commercial sale to the end consumer, that was formulated by the consultant.  The agreement expires in 2031.  The commission incurred is $29,896 and $40,664 for the three-month and six-month period ended June 30, 2012 respectively and are included in cost of sales. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | During June 2012, the Company committed to purchase equipment totalling $147,500 for which a deposit of $75,000 was recorded as at June 30, 2012. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
|---------|------------------------------------------------------------|

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Index

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| Item 4. | Controls and Procedures |
|---------|-------------------------|

| (a) | Evaluation of Disclosure Controls and Procedures |
|-----|--------------------------------------------------|

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Index

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| Item 1. | Legal Proceedings |
|---------|-------------------|

| Item 1A | Risk Factors |
|---------|--------------|

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Index

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Index

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Index

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

| Item 3. | Defaults upon Senior Securities |
|---------|---------------------------------|

| Item 4. | Mine Safety Disclosures |
|---------|-------------------------|

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Index

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| Item 5. | Other Information |
|---------|-------------------|

| Item 6. | Exhibits |
|---------|----------|

| Exhibit No. | Name of Exhibit                                                                                                                                                                             |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                        |
| 31.1        | Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)                                                                            |
| 31.2        | Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)                                                                            |
| 32.1        | Certifications pursuant to Securities Exchange Act of 1934 Rule13a-14(b) or 15d-14(b) and 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.      |
| 32.2        | Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. SecSection 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

| NERIUM BIOTECHNOLOGY, INC |
|---------------------------|
|                      |
|                      | By: |  /s/ Dennis R. Knocke |
|                      |   | Dennis R. Knocke |
|                      |   | President and Chief Executive Officer |

|   | By:    |  /s/ Joseph B. Nester              |
|--------|--------|-----------------------------------------|
|   |   | Joseph B. Nester                        |
|   |   | Vice-President, Chief Financial Officer |

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