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| Nevada                          |   | 26-1919261             |
|---------------------------------|--------|------------------------|
| (State or other Jurisdiction of |   | (I.R.S. Employer       |
| incorporation or organization)  |   | Identification Number) |

|  ̈ | Large Accelerated Filer |  ̈ | Accelerated Filer         |
|--------|-------------------------|--------|---------------------------|
|  ̈ | Non-Accelerated Filer   | þ | Smaller Reporting Company |

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|                                           |                                                                                                                                                                                                         |   | Page   |   |
|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| PART I — FINANCIAL INFORMATION |                                                                                                                                                                                                         |
|                                           |                                                                                                                                                                                                         |   |   |   |
| Item 1.                                        | Financial Statements                                                                                                                                                                                         |   |   | 1      |   |
|                                           | Condensed  Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009                                                                                                  |   |   | 1      |   |
|                                           | Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009 and the cumulative period from Inception (February 27, 2001) to September 30, 2010 |   |   | 2      |   |
|                                           | Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the cumulative Period from Inception (February 27, 2001) to September 30, 2010                            |   |   | 3      |   |
|                                           | Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 and the cumulative period from Inception (February 27, 2001) to September 30, 2010           |   |   | 5      |   |
|                                           | Notes to Unaudited Condensed Consolidated Financial  Statements                                                                                                                                    |   |   | 7      |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 2.                                        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                  |   |   | 14     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 3.                                        | Quantitative and Qualitative disclosures about Market Risk                                                                                                                                                   |   |   | 21     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 4.                                        | Controls and Procedures                                                                                                                                                                                      |   |   | 21     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| PART II — OTHER INFORMATION         |                                                                                                                                                                                                         |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 1.                                        | Legal Proceedings                                                                                                                                                                                            |   |   | 22     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item1A.                                        | Risk Factors                                                                                                                                                                                                 |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 2.                                        | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                  |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 3.                                        | Defaults Upon Senior Securities                                                                                                                                                                              |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 4.                                        | (Removed and Reserved)                                                                                                                                                                                       |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 5.                                        | Other Information                                                                                                                                                                                            |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Item 6.                                        | Exhibits                                                                                                                                                                                                     |   |   | 23     |   |
|                                           |                                                                                                                                                                                                         |   |   |   |   |
| Signatures                                     |                                                                                                                                                                                                         |   | 24     |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Deceber 31, |    |   | September 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|--------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2009        |    |   | 2010               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   | (Unaudited)        |   |
| Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |        |    |   |               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |
| Current assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |        |    |   |               |   |
| Cash and cash equivalents                                                                                                                                |   | $           | 631     |   |               | $      | 273 |   |
| Accounts receivable                                                                                                                                      |   |        | 11      |   |               |   | 3 |   |
| Prepaid financing costs                                                                                                                                  |   |        | -       |   |               |   | 294 |   |
| Prepaid assets                                                                                                                                           |   |        | 135     |   |               |   | 32 |   |
| Security deposit                                                                                                                                         |   |        | 4       |   |               |   | 6 |   |
| Total current assets                                                                                                                                                              |   |        | 781     |   |               |   | 608 |   |
| Property and equipment, net                                                                                                     |   |        | -       |   |               |   | - |   |
| Prepaid financing costs, net of current portion                                                                                 |   |        | -       |   |               |   | 587 |   |
| Total assets                                                                                                                                                                      |   |        | 781     |   |               |   | 1,195 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |   |   |
| Liabilities and Stockholders’ Equity (Deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |   |   |
| Accounts payable                                                                                                                                         |   |        | 2,619   |   |               |   | 2,572 |   |
| Accrued expenses                                                                                                                                         |   |        | 1,345   |   |               |   | 1,195 |   |
| Current portion of capital lease obligation                                                                                                              |   |        | 4       |   |               |   | 4 |   |
| Notes payable                                                                                                                                            |   |        | 2,426   |   |               |   | 2,688 |   |
| Total current liabilities                                                                                                                                                         |   |        | 6,394   |   |               |   | 6,459 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |        |    |   |               |   |   |   |
| Derivative Instrument                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |        | -       |   |               |   | 3,157 |   |
| Deferred purchase credit                                                                                                        |   |        | 500     |   |               |   | 500 |   |
| Deferred revenue                                                                                                                |   |        | 1,727   |   |               |   | 1,727 |   |
| Long-term notes payable                                                                                                         |   |        | 1,750   |   |               |   | 1,350 |   |
| Total liabilities                                                                                                                                                                 |   |        | 10,371  |   |               |   | 13,193 |   |
| Commitments and contingencies                                                                                                   |   |        | ― |   |               |   | ― |   |
| Stockholders’ equity (deficit):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |        |    |   |               |   |   |   |
| Preferred Stock, $.0001 par value; 1,000 authorized; -0- and  1 shares issued and outstanding at December 31, 2009 and September 30, 2010                                                                                                                                                                                                                                                                                                                                                                                             |   |        | ― |   |               |   | ― |   |
| Common stock, $0.001 par value; 100,000 authorized;  62,811 and 72,031 shares issued and outstanding at December 31, 2009 and September 30, 2010, respectively                                                                                                                                                                                                                                                                                                                                                                        |   |        | 62      |   |               |   | 7 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |        | 77,898  |   |               |   | 79,376 |   |
| Subscription receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |        | ― |   |               |   | (190 | ) |
| Deficit accumulated during the development stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |        | (87,550 | )      |               |   | (91,191 | ) |
| Total stockholders’ equity (deficit)                                                                                                                                        |   |        | (9,590  | )      |               |   | (11,998 | ) |
| Total liabilities and stockholders’ equity (deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $           | 781     |   |               | $      | 1,195 |   |

----

|                                                                                                                                                                                                                                                                                                                       |   | Three months ended September 30, |   |   | Nine months ended September 30, |   |   | Cumulative from Inception (February 27, 2001) toSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                       |   | 2009                                  |   |   | 2010                            |   |   | 2009                                                               |   |   | 2010 |   |   | 2010 |   |
| Operating expenses                                                                                                                                                                                                                                                                                                         |   |                                  |   |   |                            |   |   |                                                               |   |   |   |   |   |   |   |
| Research and development                                                                                                                                                                                                                                                                                                   |   | $                                     | 16     |   |                            | $      | 19     |                                                               |   | $ | 74 |   |   | $ | 62 |   |   | $ | 61,417 |   |
| General and administrative                                                                                                                                                                                                                                                                                                 |   |                                  | 506    |   |                            |   | 569    |                                                               |   |   | 451 |   |   |   | 1,493 |   |   |   | 26,311 |   |
| Marketing                                                                                                                                                                                                                                                                                                                  |   |                                  | -      |   |                            |   | -      |                                                               |   |   | - |   |   |   | - |   |   |   | 5,557 |   |
| Loss on investment in real estate                                                                                                                                                                                                                                                                                          |   |                                  | -      |   |                            |   | -      |                                                               |   |   | - |   |   |   | - |   |   |   | 1,091 |   |
| Loss on lease termination                                                  |   |                                  | -      |   |                            |   | -      |                                                               |   |   | - |   |   |   | - |   |   |   | 374 |   |
| Total operating (income) expenses                                                                                                                                                                                                                                                                                          |   |                                  | 522    |   |                            |   | 588    |                                                               |   |   | 525 |   |   |   | 1,555 |   |   |   | 94,750 |   |
|                                                                                                                                                                                                                                                                                                                       |   |                                  |   |   |                            |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                                    |   |                                  | (522   | )      |                            |   | (588   | )                                                                  |   |   | (525 | ) |   |   | (1,555 | ) |   |   | (94,750 | ) |
|                                                                                                                                                                                                                                                                                                                       |   |                                  |   |   |                            |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on debt restructuring                                                 |   |                                  | 6,562  |   |                            |   | -      |                                                               |   |   | 6,562 |   |   |   | 204 |   |   |   | 6,766 |   |
| Interest income (expense), net                                                                                                                                                                                                                                                                                             |   |                                  | (96    | )      |                            |   | (41    | )                                                                  |   |   | (299 | ) |   |   | (133 | ) |   |   | (1,050 | ) |
| Interest from derivative conversion feature                                                                                                                                                                                                                                                                                |   |                                  | -      |   |                            |   | (2,586 | )                                                                  |   |   |   |   |   |   | (2,586 | ) |   |   | (2,586 | ) |
| Change in fair value of derivatives                                                                                                                                                                                                                                                                                        |   | ­                                |   |   |                            | 429    |   |                                                               |   | - |   |   |   | 429 |   |   |   | 429 |   |
|                                                                                                                                                                                                                                                                                                                       |   |                                  |   |   |                            |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                          |   | $                                     | 5,944  |   |                            | $      | (2,786 | )                                                                  |   | $ | 5,738 |   |   | $ | ( 3,641 | ) |   | $ | (91,191 | ) |
| Basic net income (loss) per share                                                                                                                                                                                                                                                                                          |   | $                                     | 0.10   |   |                            | $      | (0.04  | )                                                                  |   | $ | 0.10 |   |   | $ | (0.06 | ) |   |   |   |   |
| Diluted net income (loss) per  share                                                                                                                                                                                                                                                                             |   | $                                     | 0.10   |   |                            | $      | ( 0.04 | )                                                                  |   | $ | 0.10 |   |   | $ | (0.06 | ) |   |   |   |   |
| Weighted average common shares outstanding – basic                                                                                                                                                                                                                                                                   |   |                                  | 57,716 |   |                            |   | 69,408 |                                                               |   |   | 56,134 |   |   |   | 65,690 |   |   |   |   |   |
| Weighted average common shares outstanding – diluted                                                                                                                                                                                                                                                                 |   |                                  | 61,359 |   |                            |   | 69,408 |                                                               |   |   | 59,016 |   |   |   |    65,690 |   |   |   |   |   |

----

|                                                         |   | Preferred stock |    |   | Common stock |   |    | Additional Paid-in- |   |   | Subscription |   |   | Deficit Accumulated during the Development |    |   |       |   |
|--------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|---------|---------------------|--------|--------|--------------|--------|--------|--------------------------------------------|---------|--------|------------|--------|
|                                                         |   | Shares          |    |   | Amount       |   |    | Shares              |   |   | Amount       |   |   | Capital                                    |    |   | receivable |   |   | Stage |   |   | Total |   |
|                                                         |   |            |    |   |         |   |    |                |   |   |         |   |   |                                       |    |   |       |   |   |   |   |   |   |   |
| Balances at Inception (February 27, 2001)               |   |            | ― |   |         | $      | ― |                |   |   | ―      |   |   | $                                          | ― |   |       | $      | ― |   |   | $ | ― |   |   | $ | ― |   |   | $ | ― |   |
| Sale of common stock                                         |   |            |    |   |         |   |    |                |   |   | 25,657       |   |   |                                       | 26      |   |       |   | 1,073 |   |   |   |   |   |   |   | ― |   |   |   | 1,099 |   |
| Stock-based compensation                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | 100 |   |   |   | ― |   |   |   | ― |   |   |   | 100 |   |
|     Net loss                             |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (1,219 | ) |   |   | (1,219 | ) |
| Balances at December 31, 2001                                |   |            | ― |   |         |   | ― |                |   |   | 25,657       |   |   |                                       | 26      |   |       |   | 1,173 |   |   |   | ― |   |   |   | (1,219 | ) |   |   | (20 | ) |
| Sale of common stock                                         |   |            | ― |   |         |   | ― |                |   |   | 4,054        |   |   |                                       | 4       |   |       |   | 4,105 |   |   |   | ― |   |   |   | ― |   |   |   | 4,109 |   |
| Issuance of common stock in exchange for consulting services |   |            | ― |   |         |   | ― |                |   |   | 12           |   |   |                                       | ― |   |       |   | 10 |   |   |   | ― |   |   |   | ― |   |   |   | 10 |   |
| Stock-based compensation                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | 272 |   |   |   | ― |   |   |   | ― |   |   |   | 272 |   |
|     Net loss                             |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (3,190 | ) |   |   | (3,190 | ) |
| Balances at December 31, 2002                                |   |            | ― |   |         |   | ― |                |   |   | 29,723       |   |   |                                       | 30      |   |       |   | 5,560 |   |   |   | ― |   |   |   | (4,409 | ) |   |   | 1,181 |   |
| Sale of common stock                                         |   |            | ― |   |         |   | ― |                |   |   | 4,794        |   |   |                                       | 5       |   |       |   | 8,239 |   |   |   | ― |   |   |   | ― |   |   |   | 8,244 |   |
| Issuance of common stock in exchange for consulting services |   |            | ― |   |         |   | ― |                |   |   | 36           |   |   |                                       | ― |   |       |   | 55 |   |   |   | ― |   |   |   | ― |   |   |   | 55 |   |
| Repurchase of common stock                                   |   |            | ― |   |         |   | ― |                |   |   | (330         | )      |   |                                       | ― |   |       |   | (379 | ) |   |   | ― |   |   |   | ― |   |   |   | (379 | ) |
| Stock-based compensation                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | 78 |   |   |   | ― |   |   |   | ― |   |   |   | 78 |   |
|     Net loss                             |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (6,633 | ) |   |   | (6,633 | ) |
| Balances at December 31, 2003                                |   |            | ― |   |         |   | ― |                |   |   | 34,223       |   |   |                                       | 35      |   |       |   | 13,553 |   |   |   | ― |   |   |   | (11,042 | ) |   |   | 2,546 |   |
| Sale of common stock                                         |   |            | ― |   |         |   | ― |                |   |   | 4,388        |   |   |                                       | 4       |   |       |   | 12,491 |   |   |   | ― |   |   |   | ― |   |   |   | 12,495 |   |
| Issuance of common stock in exchange for consulting services |   |            | ― |   |         |   | ― |                |   |   | 20           |   |   |                                       | ― |   |       |   | 66 |   |   |   | ― |   |   |   | ― |   |   |   | 66 |   |
|     Net loss                             |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (11,626 | ) |   |   | (11,626 | ) |
| Balances at December 31, 2004                                |   |            | ― |   |         |   | ― |                |   |   | 38,631       |   |   |                                       | 39      |   |       |   | 26,110 |   |   |   | ― |   |   |   | (22,668 | ) |   |   | 3,481 |   |
| Sale of common stock                                         |   |            | ― |   |         |   | ― |                |   |   | 3,305        |   |   |                                       | 3       |   |       |   | 28,839 |   |   |   | ― |   |   |   | ― |   |   |   | 28,842 |   |
| Issuance of common stock in exchange for consulting services |   |            | ― |   |         |   | ― |                |   |   | 4            |   |   |                                       | ― |   |       |   | 33 |   |   |   | ― |   |   |   | ― |   |   |   | 33 |   |
| Stock-based compensation                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | 10 |   |   |   | ― |   |   |   | ― |   |   |   | 10 |   |
| Repurchase of common stock                                   |   |            | ― |   |         |   | ― |                |   |   | (1           | )      |   |                                       | ― |   |       |   | (9 | ) |   |   | ― |   |   |   | ― |   |   |   | (9 | ) |
|     Net loss                             |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (32,904 | ) |   |   | (32,904 | ) |
| Balances at December 31, 2005                                |   |            | ― |   |         |   | ― |                |   |   | 41,939       |   |   |                                       | 42      |   |       |   | 54,983 |   |   |   | ― |   |   |   | (55,572 | ) |   |   | (547 | ) |
| Sale of common stock                                         |   |            | ― |   |         |   | ― |                |   |   | 1,513        |   |   |                                       | 1       |   |       |   | 15,127 |   |   |   | ― |   |   |   | ― |   |   |   | 15,128 |   |
| Sale of common stock under   warrants         |   |            | ― |   |         |   | ― |                |   |   | 2,886        |   |   |                                       | 3       |   |       |   | 286 |   |   |   | ― |   |   |   | ― |   |   |   | 289 |   |
| Stock-based compensation                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | 1,155 |   |   |   | ― |   |   |   | ― |   |   |   | 1,155 |   |
| Repurchase of common stock                                   |   |            | ― |   |         |   | ― |                |   |   | (150         | )      |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | ― |   |   |   | ― |   |
| Net loss                                                     |   |            | ― |   |         |   | ― |                |   |   | ―      |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (28,235 | ) |   |   | (28,235 | ) |
| Balances at December 31, 2006                                |   |            | ― |   |         |   | ― |                |   |   | 46,188       |   |   | $                                          | 46      |   |       | $      | 1,551 |   |   | $ | ― |   |   | $ | (83,807 | ) |   | $ | (12,210 | ) |

----

|                                                                                                                     |   | Preferred stock |    |   | Common stock |   |    | Additional Paid-in- |   |   |  Subscription |   |   | Deficit Accumulated during the Development |    |   |       |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|---------|---------------------|--------|--------|--------------------|--------|--------|--------------------------------------------|---------|--------|------------|--------|
|                                                                                                                     |   | Shares          |    |   | Amount       |   |    | Shares              |   |   | Amount             |   |   | Capital                                    |    |   | receivable |   |   |  Stage |   |   | Total |   |
|     Sale of common stock                                                                             |   |            | ― |   |         | $      | ― |                |   |   | 1,822              |   |   | $                                          | 2       |   |       | $      | 2,336 |   |   | $ | ― |   |   | $ | ― |   |   | $ | 2,338 |   |
|     Sale of common stock  under warrants                                              |   |            |    |   |         |   |    |                |   |   | 1,971              |   |   |                                       | 2       |   |       |   | 171 |   |   |   |   |   |   |   | ― |   |   |   | 173 |   |
| Stock-based compensation                                                                                                 |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 889 |   |   |   | ― |   |   |   | ― |   |   |   | 889 |   |
| Net loss                                                                                                                 |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (6,744 | ) |   |   | (6,744 | ) |
| Balances at December 31, 2007                                                                                            |   |            | ― |   |         |   | ― |                |   |   | 49,981             |   |   |                                       | 50      |   |       |   | 74,947 |   |   |   | ― |   |   |   | (90,551 | ) |   |   | (15,554 | ) |
| Sale of common stock                                                                                                     |   |            | ― |   |         |   | ― |                |   |   | 5,120              |   |   |                                       | 5       |   |       |   | 518 |   |   |   | ― |   |   |   | ― |   |   |   | 523 |   |
|     Sale of common stock  under warrants                                              |   |            | ― |   |         |   | ― |                |   |   | 41                 |   |   |                                       | ― |   |       |   | 4 |   |   |   | ― |   |   |   | ― |   |   |   | 4 |   |
| Stock-based compensation                                                                                                 |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 469 |   |   |   | ― |   |   |   | ― |   |   |   | 469 |   |
| Net loss                                                                                                                 |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | (1,986 | ) |   |   | (1,986 | ) |
| Balances at December 31, 2008                                                                                            |   |            | ― |   |         |   | ― |                |   |   | 55,142             |   |   |                                       | 55      |   |       |   | 75,938 |   |   |   | ― |   |   |   | (92,537 | ) |   |   | (16,544 | ) |
| Sale of common stock, net                                                                                                |   |            | ― |   |         |   | ― |                |   |   | 6,071              |   |   |                                       | 6       |   |       |   | 1,096 |   |   |   | ― |   |   |   | ― |   |   |   | 1,102 |   |
| Sale of common stock  under warrants                                                                           |   |            | ― |   |         |   | ― |                |   |   | 1,448              |   |   |                                       | 1       |   |       |   | 143 |   |   |   | ― |   |   |   | ― |   |   |   | 144 |   |
| Issuance of warrants                                                                                                     |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 330 |   |   |   | ― |   |   |   | ― |   |   |   | 330 |   |
| Stock grant                                                                                                              |   |            | ― |   |         |   | ― |                |   |   | 150                |   |   |                                       | ― |   |       |   | 30 |   |   |   | ― |   |   |   | ― |   |   |   | 30 |   |
|     Stock-based compensation                                                                         |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 361 |   |   |   | ― |   |   |   | ― |   |   |   | 361 |   |
|     Net income                                                                                       |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | ― |   |   |   | ― |   |   |   | 4,987 |   |   |   | 4,987 |   |
| Balances at December 31, 2009                                                                                            |   |            | ― |   |         |   | ― |                |   |   | 62,811             |   |   |                                       | 62      |   |       |   | 77,898 |   |   |   | ― |   |   |   | (87,550 | ) |   |   | (9,590 | ) |
|                                                                                                                     |   |            |    |   |         |   |    |                |   |   |               |   |   |                                       |    |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Sale of common stock, net                                                                        |   |            | ― |   |         |   | ― |                |   |   | 1,182              |   |   |                                       | 1       |   |       |   | 219 |   |   |   | ― |   |   |   | ― |   |   |   | 220 |   |
|     Sale of common stock  under warrants                                                   |   |            | ― |   |         |   | ― |                |   |   | 343                |   |   |                                       | 1       |   |       |   | 33 |   |   |   | ― |   |   |   | ― |   |   |   | 34 |   |
|     Issuance of warrants                                                                             |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 1,111 |   |   |   | ― |   |   |   | ― |   |   |   | 1,111 |   |
|     Recapitalization of Company   upon Merger  effective July 29, 2010 |   |            | ― |   |         |   | ― |                |   |   | 7,695              |   |   |                                       | (57     | )      |       |   | (51 | ) |   |   | ― |   |   |   | ― |   |   |   | (108 | ) |
|     Stock-based compensation                                                                         |   |            | ― |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | 166 |   |   |   | ― |   |   |   | ― |   |   |   | 166 |   |
| Sale of Preferred stock                                                                                                  |   |            | 1       |   |         |   | ― |                |   |   | ―            |   |   |                                       | ― |   |       |   | ― |   |   |   | (190 | ) |   |   | ― |   |   |   | (190 | ) |
|     Net loss                                                                                         |   |            |    |   |         |   |    |                |   |   |               |   |   |                                       |    |   |       |   |   |   |   |   |   |   |   |   | (3,641 | ) |   |   | (3,641 | ) |
| Balances at September  30, 2010                                                                                |   |            | 1       |   |         | $      | ― |                |   |   | 72,031             |   |   | $                                          | 7       |   |       | $      | 79,376 |   |   | $ | (190 | ) |   | $ | (91,191 | ) |   | $ | (11,998 | ) |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  Nine Months EndedSeptember 30, |    |   | Cumulative from Inception (February 27, 2001) toSeptember 30, |          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|--------------------------------------------------------------------|---------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2009                                 |    |   | 2010                                                               |          |   | 2010 |   |
| Cash flows from operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |                                                               |          |   |   |   |
| Net income (loss)                                                                                  |   | $                                    | 5,738   |   |                                                               | $             | (3,641 | ) |   | $ | (91,191 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |                                                               |          |   |   |   |   |   |   |
| Depreciation                                                                                                      |   |                                 | 40      |   |                                                               |          | ― |   |   |   | 994 |   |
| Stock-based compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 416     |   |                                                               |          | 396 |   |   |   | 4,006 |   |
| Common stock issued in exchange for consulting service                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | ― |   |                                                               |          | ― |   |   |   | 164 |   |
| Interest from derivative conversion feature                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | ― |   |                                                               |          | 2,586 |   |   |   | 2,586 |   |
| Change in fair value of derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 |    |   |                                                               |          | (429 | ) |   |   | (429 | ) |
| Loss (gain) on disposal of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | (9      | )      |                                                               |          | ― |   |   |   | 169 |   |
| Loss on investment in real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                 | ― |   |                                                               |          | ― |   |   |   | 1,091 |   |
| Gain on restructuring of trade debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | (6,562  | )      |                                                               |          | (204 | ) |   |   | (6,766 | ) |
| Changes in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                 |    |   |                                                               |          |   |   |   |   |   |   |
| Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 47      |   |                                                               |          | 103 |   |   |   | 51 |   |
| Accounts receivable                                                                                                         |   |                                 | (8      | )      |                                                               |          | 8 |   |   |   | (3 | ) |
| Security deposits                                                                                                           |   |                                 | ― |   |                                                               |          | (2 | ) |   |   | (6 | ) |
| Other assets                                                                                                                |   |                                 | 3       |   |                                                               |          | ― |   |   |   | ― |   |
| Accounts payable                                                                                                            |   |                                 | 18      |   |                                                               |          | (10 | ) |   |   | 7,516 |   |
| Accrued expenses                                                                                                            |   |                                 | 298     |   |                                                               |          | (15 | ) |   |   | 2,427 |   |
| Deferred purchase credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                 | ― |   |                                                               |          | ― |   |   |   | 500 |   |
| Deferred revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | ― |   |                                                               |          | ― |   |   |   | 1,727 |   |
| Accrued compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | (351    | )      |                                                               | ­― |   |   |   | ― |   |
| Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | (370    | )      |                                                               |          | (1,208 | ) |   |   | (77,164 | ) |
| Cash flows from investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |   |                                                               |          |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | ― |   |                                                               |          | ― |   |   |   | (1,193 | ) |
| Purchase of real estate investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 | ― |   |                                                               |          | ― |   |   |   | (3,155 | ) |
| Proceeds from the sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                 | 10      |   |                                                               |          | ― |   |   |   | 50 |   |
| Proceeds from the sale of real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 | ― |   |                                                               |          | ― |   |   |   | 2,064 |   |
| Decrease in restricted cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                 | ― |   |                                                               |          | ― |   |   |   | ― |   |
| Net cash provided by (used in) investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | 10      |   |                                                               |          | ― |   |   |   | (2,234 | ) |

| Cash flows from financing activities           |   |   |    |   |   |   |    |   |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Issuance of common stock                       |   |   | 1,239   |   |   |   | 254     |   |   |   | 74,744 |   |
| Issuance of Preferred Stock                    |   |   |    |   |   |   | 810     |   |   |   | 810 |   |
| Issuance of notes payable                      |   |   | ― |   |   |   |    |   |   |   | 5,011 |   |
| Issuance of long-term debt                     |   |   | ― |   |   |   | ― |   |   |   | 592 |   |
| Payments on notes payable                      |   |   | (11     | )      |   |   | (214    | )      |   |   | (1,079 | ) |
| Payments on capital lease obligation           |   |   | (4      | )      |   |   | ― |   |   |   | (16 | ) |
| Repurchase of common stock                     |   |   | ― |   |   |   | ― |   |   |   | (388 | ) |
| Repayments of notes payable to related parties |   |   | ― |   |   |   | ― |   |   |   | (202 | ) |
| Payments on long-term debt                     |   |   | ― |   |   |   | ― |   |   |   | (3 | ) |
| Proceeds from notes payable to related parties |   |   | ― |   |   |   | ― |   |   |   | 202 |   |
| Repayment of mortgage note payable             |   |   | ― |   |   |   | ― |   |   |   | (3,100 | ) |
| Proceeds from the issuance of mortgage note    |   |   | ― |   |   |   | ― |   |   |   | 3,100 |   |
| Net cash provided by financing activities      |   | $      | 1.224   |   |   | $      | 850     |   |   | $ | 79,671 |   |

----

|                                                 |   |   Nine Months EndedSeptember 30, |    |   |   Cumulative from Inception (February 27, 2001) toSeptember30, |   |
|------------------------------------------------------|--------|---------------------------------------|---------|--------|---------------------------------------------------------------------|--------|
|                                                 |   | 2009                                  |    |   | 2010                                                                |   |   | 2010 |   |
| Net increase (decrease) in cash and cash equivalents |   | $                                     | 864     |   |                                                                | $      | (358 | ) |   | $ | 273 |   |
| Cash and cash equivalents, beginning of period       |   |                                  | 5       |   |                                                                |   | 631 |   |   |   | ― |   |
| Cash and cash equivalents, end of period             |   | $                                     | 869     |   |                                                                | $      | 273 |   |   | $ | 273 |   |
|                                                 |   |                                  |    |   |                                                                |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:    |   |                                  |    |   |                                                                |   |   |   |   |   |   |   |
| Cash paid for interest                               |   | $                                     | 2       |   |                                                                | $      | ― |   |   | $ | 242 |   |
| Cash paid for income taxes                           |   | $                                     | ― |   |                                                                | $      | ― |   |   | $ | ― |   |
| Non-cash financing activities:                       |   |                                  |    |   |                                                                |   |   |   |   |   |   |   |
| Conversion of trade payables to notes                |   | $                                     | ― |   |                                                                | $      | ― |   |   | $ | 5,603 |   |
| Restructuring of trade debt                          |   | $                                     | 6,562   |   |                                                                | $      | 204 |   |   | $ | 6,766 |   |
| Issuance of warrant for accrued liability            |   | $                                     | ― |   |                                                                | $      | ― |   |   | $ | 129 |   |
| Issuance of warrants for prepaid asset               |   | $                                     | ― |   |                                                                | $      | (881 | ) |   | $ | (881 | ) |
| Net liabilities acquired in Merger Transaction       |   | $                                     | ― |   |                                                                | $      | (92 | ) |   | $ | (92 | ) |

----

| 1.   |  Description of business and basis of presentation |
|----------------|---------------------------------------------------------|

----

----

|   ●      | Level 1 — Quoted prices in active markets for identical assets or liabilities |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------|

|   ●      | Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   ●      | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | December 31, |   |   | September 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2009         |   |   | 2010          |   |
| Notes payable to clinical research sites                                                                                               |   | $            | 407    |   |          | $      | 393 |   |
| Promissory Note dated September 15, 2006                                                                                               |   |         | 2,000  |   |          |   | 1,950 |   |
| Promissory Installment Note dated September 26, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | 924    |   |          |   | 750 |   |
| Promissory Note dated July 1, 2007                                                                                                     |   |         | 300    |   |          |   | 300 |   |
| Promissory Note dated August  21, 2007                                                                                       |   |         | 420    |   |          |   | 420 |   |
| Promissory Note and Security Agreement dated September 22, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |         | 26     |   |          |   | 26 |   |
| Default judgment dated October 29, 2009                                                                                                |   |         | 99     |   |          |   | 99 |   |
| Promissory note dated July 29, 2010                                                                                                    |   |         | -      |   |          |   | 100 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         | 4,176  |   |          |   | 4,038 |   |
| Less: Current portion of notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |         | 2,426  |   |          |   | 2,688 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $            | 1,750  |   |          | $      | 1,350 |   |

----

|                                                                                                                                                                         |   | December 31,2009 |      |   | September 30,2010 |   |       | ExercisePrice |   | ExpirationDate |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|-----------|--------|-------------------|--------|------------|---------------|--------|----------------|
| Warrants issued January 2006 through May 2007 in conjunction with private placement of common stock.                                                                         |   |             | 3,615,700 |   |              |   | 3,280,900  |          |   | $              | 0.10 |   | December 31, 2011 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued to select vendors to satisfy, in part, liabilities generated from services performed in conjunction with our terminated Phase III clinical trial, VP-AD-301. |   |             | 54,800    |   |              |   | 54,800     |          |   | $              | 0.50 |   | December 31, 2011 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued under Transaction Management Agreement executed with Southridge.                                                                                             |   |             | 1,656,500 |   |              |   | 2,149,100  |          |   | $              | 0.001 |   | August 31, 2016 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued to outside consultants for services rendered in connection with the financing round completed on February 5, 2010.                                           |   |             | -         |   |              |   | 844,400    |          |   | $              | 0.22 |   | August 31, 2016 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued as consideration for the cancellation of 181,285,000 shares of common stock upon consummation of the Merger transaction effective July 29, 2010.             |   |             | -         |   |              |   | 3,589,500  |          |   | $              | 0.001 |   | July 29, 2017 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued to Southridge under the Transaction Management Agreement upon execution of Equity Credit Agreement dated September 14, 2010.                                 |   |             | -         |   |              |   | 820,800    |          |   | $              | 1.52 |   | September 15, 2015 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
| Warrants issued August 31, 2010 to outside vendor for development of the Company’s website.                                                                            |   |             | -         |   |              |   | 100,000    |          |   | $              | 0.30 |   | August 31, 2015 |
|                                                                                                                                                                         |   |             |      |   |              |   |       |          |   |           |   |   |   |
|                                                                                                                                                                         |   |             |      |   |              |   | 10,839,500 |          |   |           |   |   |   |

----

|                                          |   | Three-months endedSeptember 30, |   |   | Nine months ended September 30, 2010 |   |
|-----------------------------------------------|--------|---------------------------------|--------|--------|-------------------------------------------|--------|
|                                          |   | 2009                            |   |   | 2010                                      |   |   | 2009 |   |   | 2010 |   |
| Employee-related stock-based compensation     |   | $                               | 117    |   |                                      | $      | 53 |   |   | $ | 295 |   |   | $ | 167 |   |
| Non-employee related stock based compensation |   |                            | 109    |   |                                      |   | - |   |   |   | 121 |   |   |   | 229 |   |
|                                          |   | $                               | 226    |   |                                      | $      | 53 |   |   | $ | 416 |   |   | $ | 396 |   |

----

|                               |   | Level 2            |   |   | Level 2           |   |
|------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                               |   | September 30, 2010 |   |   | December 31, 2009 |   |
|                               |   | ($ thousands)      |   |   | ($ thousands)     |   |
| Derivative instruments (long term) |   | $                  | 3,157  |   |              | $      | 0 |   |
|                               |   |               |   |   |              |   |
| Total                              |   | $                  | 3,157  |   |              | $      | 0 |   |

----

----

----

|                                        |   | For the Three Months endedSeptember 30, |   |
|---------------------------------------------|--------|-----------------------------------------|--------|
|                                        |   | 2010                                    |   |   | 2009 |   |
| Operating expenses:                         |   |                                    |   |   |   |   |   |   |
| Research and development                    |   | $                                  | 19     |   |   |  $ | 16 |   |
| General and administrative                  |   |                                    | 569    |   |   |   | 506 |   |
| Marketing                                   |   |                                    | -      |   |   |   | - |   |
| Total operating expenses                    |   |                                    | 588    |   |   |   | 522 |   |
| (Loss) income from operations               |   |                                    | (588   | ) |   |   | (522 |  ) |
| Gain on debt restructuring                  |   |                                    | -      |   |   |   | 6,562 |   |
| Interest income (expense), net              |   |                                    | (41    | ) |   |   | (96) |   |
| Interest from derivative conversion feature |   |                                    | (2,586 | ) |   |   | - |   |
| Change in fair value of derivatives         |   |                                    | 429    |   |   |   | - |   |
| Net income (loss)                           |   | $                                       | (2,786 | ) |   | $ | 5,944 |   |

----

|                                            |   | For the Nine Months endedSeptember 30, |   |
|-------------------------------------------------|--------|----------------------------------------|--------|
|                                            |   | 2010                                   |   |   | 2009 |   |
| Operating expenses:                             |   |                                   |   |   |   |   |   |   |
| Research and development                        |   | $                                 | 62     |   |   |  $ | 74 |   |
| General and administrative                      |   |                                   | 1.493  |   |   |   | 451 |   |
| Marketing                                       |   |                                   | -      |   |   |   | - |   |
| Total operating expenses                        |   |                                   | 1,555  |   |   |   | 525 |   |
| (Loss) income from operations                   |   |                                   | (1,555 | ) |   |   | (525 |  ) |
| Gain on debt restructuring                      |   |                                   | 204    |   |   |   | 6,562 |   |
| Interest income (expense), net                  |   |                                   | (133   | ) |   |   | (299) |   |
| Interest expense on convertible preferred stock |   |                                   | (2,586 | ) |   |   | - |   |
| Change in fair value of derivatives             |   |                                   | 429    |   |   |   | - |   |
| Net income (loss)                               |   | $                                      | (3,641 | ) |   | $ | 5,738 |   |

|                                |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Research and development costs      |   | $                                  | 19     |   |   | $      | 16     |     |   | $ | 3 |   |   |   | 18.8 | % |
| Percent of total operating expenses |   |                               | 3.2    | %      |   |   | 3.1    | %        |   |   |   |   |   |   |   |   |

|                                |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Research and development costs      |   | $                                  | 62     |   |   | $      | 74     |     |   | $ | (12) |   |   |   | (16.2) | % |
| Percent of total operating expenses |   |                               | 3.9    | %      |   |   | 14.1   | %        |   |   |   |   |   |   |   |   |

----

|                                |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| General and administrative expenses |   | $                                  | 569    |   |   | $      | 506    |     |   | $ | 63 |   |   |   | 12.5 | % |
| Percent of total operating expenses |   |                               | 96.8   | %      |   |   | 96.9   | %        |   |   |   |   |   |   |   |   |

|                                |   |                               |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| General and administrative expenses |   | $                                  | 1,493  |   |   | $      | 451    |     |   | $ | 1,042 |   |   |   | 231.0 | % |
| Percent of total operating expenses |   |                               | 96.1   | %      |   |   | 85.9   | %        |   |   |   |   |   |   |   |   |

----

|                       |   | Three Months Ended                 |   |   |   |   |   |     |   |
|----------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                       |   | September 30,                      |   |   |   |   |   |     |   |
|                       |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                       |   | (Unaudited - Dollars in thousands) |   |
| Gain on debt restructuring |   | $                                  | -      |   |   | $      | 6,562  |     |   | $ | (6,562) |   |   |   | (100 | )% |

|                       |   |                               |   |   |   |   |   |     |   |
|----------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                       |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|                       |   | September 30,                      |   |   |   |   |   |     |   |
|                       |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                       |   | (Unaudited - Dollars in thousands) |   |
| Gain on debt restructuring |   | $                                  | 204    |   |   | $      | 6,562  |     |   | $ | (6,358) |   |   |   | (96.9) | % |

|                  |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-----------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                  |   | September 30,                      |   |   |   |   |   |     |   |
|                  |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                  |   | (Unaudited - Dollars in thousands) |   |
| Interest expense, net |   | $                                  | 41     |   |   | $      | 96     |     |   | $ | (55 | ) |   |   | (57.3 | %) |

|                  |   |                               |   |   |   |   |   |     |   |
|-----------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                  |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|                  |   | September 30,                      |   |   |   |   |   |     |   |
|                  |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                  |   | (Unaudited - Dollars in thousands) |   |
| Interest expense, net |   | $                                  | 133    |   |   | $      | 299    |     |   | $ | (166 | ) |   |   | (55.5 | %) |

----

|                                        |   | Three Months Ended                 |   |   |   |   |   |     |   |
|---------------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                        |   | September 30,                      |   |   |   |   |   |     |   |
|                                        |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                        |   | (Unaudited - Dollars in thousands) |   |
| Interest from derivative conversion feature |   | $                                  | 2,586  |   |   | $      | -      |     |   | $ | 2,586 |   |   |   | 100.0 | % |

|                                        |   |                               |   |   |   |   |   |     |   |
|---------------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                        |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|                                        |   | September 30,                      |   |   |   |   |   |     |   |
|                                        |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                        |   | (Unaudited - Dollars in thousands) |   |
| Interest from derivative conversion feature |   | $                                  | 2,586  |   |   | $      | -      |     |   | $ | 2,586 |   |   |   | 100.0 | % |

|                                |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Change in fair value of derivatives |   | $                                  | 429    |   |   | $      | -      |     |   | $ | 429 |   |   |   | 100.0 | % |

|                                |   |                               |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|                                |   | September 30,                      |   |   |   |   |   |     |   |
|                                |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Change in fair value of derivatives |   | $                                  | 429    |   |   | $      | -      |     |   | $ | 429 |   |   |   | 100.0 | % |

----

|              |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|              |   | September 30,                      |   |   |   |   |   |     |   |
|              |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|              |   | (Unaudited - Dollars in thousands) |   |
| Net income (loss) |   | $                                  | (2,786 | )      |   | $      | 5,944  |     |   | $ | (8,730 | ) |   |   | (146.9 | %) |

|              |   |                               |   |   |   |   |   |     |   |
|-------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|              |   | Nine Months Ended                  |   |   |   |   |   |     |   |
|              |   | September 30,                      |   |   |   |   |   |     |   |
|              |   | 2010                               |   |   | 2009   |   |   | $ Change |   |   | % Change |   |
|              |   | (Unaudited - Dollars in thousands) |   |
| Net income (loss) |   | $                                  | (3,641 | )      |   | $      | 5,738  |     |   | $ | (9,379 | ) |   |   | (163.5 | %) |

----

----

----

| ExhibitNo. |   |  Description                                                                                                                                             |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1       |   | Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).  |
| 31.2       |   | Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). |
| 32.1       |   | Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.             |
| 32.2       |   | Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.            |

----

|                     | CURAXIS PHARMACEUTICAL CORPORATION |                                                  |
|--------------------------|------------------------------------|-------------------------------------------------------|
|                     |                               |                                                  |   |
|                     |                               |                                                  |   |
| Dated: November 12, 2010 | By:                                | /s/ Patrick S. Smith                                  |   |
|                     |                               | Patrick S. Smith                                      |   |
|                     |                               | Chief Executive Officer, Principal Executive Officer  |   |
|                     |                               |                                                  |   |
|                     |                               |                                                  |   |
| Dated: November 12, 2010 | By:                                | /s/ David J. Corcoran                                 |   |
|                     |                               | David J. Corcoran                                     |   |
|                     |                               | Chief Financial Officer, Principal Accounting Officer |   |