| 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   |  ̈ |   | Smaller Reporting Company | x      |

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| PART I - FINANCIAL INFORMATION |
|-------------------------------------|
|                                |   |   |
| Item 1.                             | Financial Statements. | 3 |
|                                |   |   |
| Item 2.                             | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 17 |
|                                |   |   |
| Item 3.                             | Quantitative and Qualitative Disclosures About Market Risk. | 22 |
|                                |   |   |
| Item 4.                             | Controls and Procedures. | 22 |
|                                |   |   |
| PART II - OTHER INFORMATION         |
|                                |   |   |
| Item 1.                             | Legal Proceedings. | 24 |
|                                |   |   |
| Item 1A.                            | Risk Factors. | 24 |
|                                |   |   |
| Item 2.                             | Unregistered Sales of Equity Securities and Use of Proceeds. | 24 |
|                                |   |   |
| Item 3.                             | Defaults Upon Senior Securities. | 24 |
|                                |   |   |
| Item 4.                             | (Removed and Reserved). | 24 |
|                                |   |   |
| Item 5.                             | Other Information. | 24 |
|                                |   |   |
| Item 6.                             | Exhibits. | 25 |

----

|                                                                                                                                                                                                   | PAGE   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                   |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 (UNAUDITED) AND DECEMBER 31, 2010                                                                                                           | 4      |
|                                                                                                                                                                                                   |   |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 AND THE CUMULATIVE PERIOD FROM INCEPTION (FEBRUARY 27, 2001) TO MARCH 31, 2011            | 5      |
|                                                                                                                                                                                                   |   |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE CUMULATIVE PERIOD FROM INCEPTION (FEBRUARY 27, 2001) TO MARCH 31, 2011                          | 6      |
|                                                                                                                                                                                                   |   |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE  MONTHS ENDED MARCH 31, 2011 AND 2010 AND THE CUMULATIVE PERIOD FROM INCEPTION (FEBRUARY 27, 2001) TO MARCH 31, 2011 | 8      |
|                                                                                                                                                                                                   |   |
| NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                         | 10     |

----

|                                                                                                                                                                  |   | December 31, |    |   | March 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|----------------|--------|
|                                                                                                                                                                  |   | 2010              |    |   | 2011           |   |
|                                                                                                                                                             |   |              |    |   | (Unaudited)    |   |
| Assets                                                                                                                                                                |   |              |    |   |           |   |
|                                                                                                                                                                  |   |              |    |   |           |   |
| Current assets:                                                                                                                                                       |   |              |    |   |           |   |
| Cash and cash equivalents                                                                                                                                             |   | $                 | 2       |   |           | $      | 9 |   |
| Accounts receivable                                                                                                                                                   |   |              | -       |   |           |   | - |   |
| Prepaid financing costs                                                                                                                                               |   |              | 269     |   |           |   | 294 |   |
| Prepaid assets                                                                                                                                                        |   |              | 32      |   |           |   | 34 |   |
| Security deposit                                                                                                                                                      |   |              | 6       |   |           |   | - |   |
| Total current assets                                                                                                                                                  |   |              | 309     |   |           |   | 337 |   |
| Property and equipment, net                                                                                                                                           |   |              | 2       |   |           |   | 1 |   |
| Prepaid financing costs, net of current portion                                                                                                                       |   |              | 612     |   |           |   | 535 |   |
| Total assets                                                                                                                                                          |   |              | 923     |   |           |   | 873 |   |
|                                                                                                                                                                  |   |              |    |   |           |   |   |   |
| Liabilities and Stockholders’ Equity (Deficit)                                                                                                                  |   |              |    |   |           |   |   |   |
| Current liabilities:                                                                                                                                                  |   |              |    |   |           |   |   |   |
| Accounts payable                                                                                                                                                      |   |              | 2,793   |   |           |   | 2,843 |   |
| Accrued expenses                                                                                                                                                      |   |              | 1,231   |   |           |   | 1,334 |   |
| Current portion of capital lease obligation                                                                                                                           |   |              | 4       |   |           |   | 4 |   |
| Notes payable                                                                                                                                                         |   |              | 2,525   |   |           |   | 3,775 |   |
| Total current liabilities                                                                                                                                             |   |              | 6,553   |   |           |   | 7,956 |   |
|                                                                                                                                                                  |   |              |    |   |           |   |   |   |
| Derivative Instrument                                                                                                                                                 |   |              | 1,336   |   |           |   | 1,214 |   |
| Deferred purchase credit                                                                                                                                              |   |              | 500     |   |           |   | 500 |   |
| Deferred revenue                                                                                                                                                      |   |              | 1,727   |   |           |   | 1,727 |   |
| Long-term notes payable                                                                                                                                               |   |              | 1,250   |   |           |   | - |   |
| Total liabilities                                                                                                                                                     |   |              | 11,336  |   |           |   | 11,397 |   |
|                                                                                                                                                                  |   |              |    |   |           |   |   |   |
| Commitments and contingencies                                                                                                                                         |   |              | ― |   |           |   | ― |   |
|                                                                                                                                                                  |   |              |    |   |           |   |   |   |
| Stockholders’ equity (deficit):                                                                                                                                 |   |              |    |   |           |   |   |   |
| Preferred Stock, $.0001 par value; 1,000 authorized; 1 and  2 shares issued and outstanding at December 31, 2010 and March 31, 2011, respectively           |   |              | ― |   |           |   | ― |   |
| Common stock, $0.0001 par value; 480,000 authorized;  72,216 and 72,592 shares issued and outstanding at December 31, 2010 and March 31, 2011, respectively |   |              | 7       |   |           |   | 7 |   |
| Additional paid-in capital                                                                                                                                            |   |              | 79,458  |   |           |   | 79,854 |   |
| Subscription receivable                                                                                                                                               |   |              | (104    | )      |           |   | - |   |
| Deficit accumulated during the development stage                                                                                                                      |   |              | (87,804 | )      |           |   | (90,385 | ) |
| Total stockholders’ equity (deficit)                                                                                                                            |   |              | (10,443 | )      |           |   | (10,523 | ) |
| Total liabilities and stockholders’ equity (deficit)                                                                                                            |   | $                 | 923     |   |           | $      | 873 |   |

----

|                                                       |   | Three months endedMarch 31, |   |   | Cumulative fromInception(February 27,2001) toMarch 31, |   |
|------------------------------------------------------------|--------|--------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
|                                                       |   | 2010                                       |   |   | 2011                                                                       |   |   | 2011 |   |
|                                                       |   |                                       |   |   |                                                                       |   |   |   |   |
| Operating expenses                                         |   |                                       |   |   |                                                                       |   |   |   |   |
| Research and development                                   |   | $                                          | 20     |   |                                                                       | $      | 2 |   |   | $ | 61,435 |   |
| General and administrative                                 |   |                                       | 511    |   |                                                                       |   | 628 |   |   |   | 27,305 |   |
| Marketing                                                  |   |                                       | -      |   |                                                                       |   | - |   |   |   | 5,557 |   |
| Loss on investment in real estate                          |   |                                       | -      |   |                                                                       |   | - |   |   |   | 1,091 |   |
| Loss on lease termination                                  |   |                                       | -      |   |                                                                       |   | - |   |   |   | 374 |   |
| Total operating (income) expenses                          |   |                                       | 531    |   |                                                                       |   | 630 |   |   |   | 95,762 |   |
|                                                       |   |                                       |   |   |                                                                       |   |   |   |   |   |   |   |
| Operating (loss) income                                    |   |                                       | (531   | )      |                                                                       |   | (630 | ) |   |   | (95,762 | ) |
|                                                       |   |                                       |   |   |                                                                       |   |   |   |   |   |   |   |
| Gain on debt restructuring                                 |   |                                       | 204    |   |                                                                       |   | - |   |   |   | 6,766 |   |
| Interest income (expense), net                             |   |                                       | (53    | )      |                                                                       |   | (62 | ) |   |   | (1,154 | ) |
| Interest from derivative conversion feature                |   |                                       | -      |   |                                                                       |   | - |   |   |   | (2,586 | ) |
| Change in fair value of derivatives                        |   |                                       | -      |   |                                                                       |   | 121 |   |   |   | 2,371 |   |
|                                                       |   |                                       |   |   |                                                                       |   |   |   |   |   |   |   |
| Net loss                                                   |   | $                                          | (380   | )      |                                                                       | $      | (571 | ) |   | $ | (90,365 | ) |
|                                                       |   |                                       |   |   |                                                                       |   |   |   |   |   |   |   |
| Basic net loss per share                                   |   | $                                          | (0.01  | )      |                                                                       | $      | (0.01 | ) |   |   |   |   |
| Diluted net loss per  share                      |   | $                                          | (0.01  | )      |                                                                       | $      | ( 0.01 | ) |   |   |   |   |
| Weighted average common shares outstanding – basic   |   |                                       | 63,650 |   |                                                                       |   | 72,385 |   |   |   |   |   |
| Weighted average common shares outstanding – diluted |   |                                       | 63,650 |   |                                                                       |   | 72,385 |   |   |   |   |   |

----

|                                                    |   | Preferred stock |    |   | Common stock |   |    | AdditionalPaid-in- |   |   | Subscription |   |   | DeficitAccumulatedduring theDevelopment |    |   |       |   |
|--------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|-----------------------------------------|---------|--------|------------|--------|
|                                                         |   | 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 |   |    | AdditionalPaid-in- |   |   | Subscription |   |   | DeficitAccumulatedduring theDevelopment |    |   |       |   |
|----------------------------------------------------------------------------|--------|----------------------|---------|--------|-------------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|----------------------------------------------|---------|--------|------------|--------|
|                                                                       |   | 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                                        |   |                 | ― |   |              |   | ― |               |   |   | 528          |   |   |                                         | 1       |   |       |   | 50 |   |   |   | ― |   |   |   | ― |   |   |   | 51 |   |
| Issuance of warrants                                                       |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | 1,111 |   |   |   | ― |   |   |   | ― |   |   |   | 1,111 |   |
| Recapitalization of Company upon Merger  effective July 29, 2010 |   |                 | ― |   |              |   | ― |               |   |   | 7,695        |   |   |                                         | (57     | )      |       |   | (51 | ) |   |   | ― |   |   |   | ― |   |   |   | (108 | ) |
| Stock-based compensation                                                   |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | 231 |   |   |   | ― |   |   |   | ― |   |   |   | 231 |   |
| Sale of Preferred stock                                                    |   |                 | 1       |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | ― |   |   |   | (104 | ) |   |   | ― |   |   |   | (104 | ) |
| Dividends on convertible 4% preferred stock                                |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | ― |   |   |   | ― |   |   |   | (10 | ) |   |   | (10 | ) |
| Net loss                                                                   |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | ― |   |   |   | ― |   |   |   | (2,244 | ) |   |   | (2,244 | ) |
| Balances at December 31, 2010                                              |   |                 | 1       |   |              |   | ― |               |   |   | 72,216       |   |   |                                         | 7       |   |       |   | 79,458 |   |   |   | (104 | ) |   |   | (89,804 | ) |   |   | (10,443 | ) |
| Issuance of common stock under Equity Credit Agreement, net                |   |                 | ― |   |              |   | ― |               |   |   | 368          |   |   |                                         | -       |   |       |   | 83 |   |   |   | ― |   |   |   | ― |   |   |   | 83 |   |
| Sale of common stock under warrants                                        |   |                 | ― |   |              |   | ― |               |   |   | 8            |   |   |                                         | -       |   |       |   | 1 |   |   |   | ― |   |   |   | ― |   |   |   | 1 |   |
| Stock-based compensation                                                   |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | 46 |   |   |   | ― |   |   |   | ― |   |   |   | 46 |   |
| Sale of Preferred stock                                                    |   |                 | 1       |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | 266 |   |   |   | 104 |   |   |   | ― |   |   |   | 370 |   |
| Dividends on convertible 4% preferred stock                                |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | ― |   |   |   | ― |   |   |   | (10 | ) |   |   | (10 | ) |
| Net loss                                                                   |   |                 | ― |   |              |   | ― |               |   |   | ―      |   |   |                                         | ― |   |       |   | ― |   |   |   | ― |   |   |   | (571 | ) |   |   | (571 | ) |
| Balances at March 31, 2011                                                 |   |                 | 2       |   |              | $      | ― |               |   |   | 72,592       |   |   | $                                            | 7       |   |       | $      | 79,854 |   |   | $ | - |   |   | $ | (90,385 | ) |   | $ | (10,524 | ) |

----

|                                                                                 |   | Three MonthsEndedMarch 31, |    |   | Cumulativefrom Inception(February 27,2001) toMatch 31, |   |
|--------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|----------------------------------------------------------------------------|--------|
|                                                                                 |   | 2010                                 |    |   | 2011                                                                       |   |   | 2011 |   |
|                                                                                 |   |                                 |    |   |                                                                       |   |
| Cash flows from operating activities                                                 |   |                                 |    |   |                                                                       |   |   |   |   |
| Net income (loss)                                                                    |   | $                                    | (380    | )      |                                                                       | $      | (571 | ) |   | $ | (90,365 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Depreciation                                                                         |   |                                 | ― |   |                                                                       |   | 1 |   |   |   | 995 |   |
| Stock-based compensation expense                                                     |   |                                 | 188     |   |                                                                       |   | 46 |   |   |   | 4,116 |   |
| Common stock issued in exchange for consulting service                               |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 164 |   |
| Interest from derivative conversion feature                                          |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 2,586 |   |
| Change in fair value of derivatives                                                  |   |                                 | ― |   |                                                                       |   | (122 | ) |   |   | (2,372 | ) |
| Loss (gain) on disposal of property and equipment                                    |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 169 |   |
| Loss on investment in real estate                                                    |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 1,091 |   |
| Gain on restructuring of trade debt                                                  |   |                                 | (204    | )      |                                                                       |   | ― |   |   |   | (6,766 | ) |
| Changes in operating assets and liabilities:                                         |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Prepaid expenses                                                                     |   |                                 | 95      |   |                                                                       |   | (2 | ) |   |   | 49 |   |
| Security deposits                                                                    |   |                                 | (5      | )      |                                                                       |   | 6 |   |   |   | ― |   |
| Accounts payable                                                                     |   |                                 | 6       |   |                                                                       |   | 50 |   |   |   | 7,787 |   |
| Accrued expenses                                                                     |   |                                 | (58     | )      |                                                                       |   | 93 |   |   |   | 2,546 |   |
| Deferred purchase credit                                                             |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 500 |   |
| Deferred revenue                                                                     |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 1,727 |   |
| Net cash used in operating activities                                                |   |                                 | (358    | )      |                                                                       |   | (499 | ) |   |   | (77,773 | ) |
| Cash flows from investing activities                                                 |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                   |   |                                 | ― |   |                                                                       |   | ― |   |   |   | (1,195 | ) |
| Purchase of real estate investment                                                   |   |                                 | ― |   |                                                                       |   | ― |   |   |   | (3,155 | ) |
| Proceeds from the sale of property and equipment                                     |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 50 |   |
| Proceeds from the sale of real estate                                                |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 2,064 |   |
| Decrease in restricted cash                                                          |   |                                 | ― |   |                                                                       |   | ― |   |   |   | ― |   |
| Net cash provided by (used in) investing activities                                  |   |                                 | ― |   |                                                                       |   | ― |   |   |   | (2,236 | ) |
| Cash flows from financing activities                                                 |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Issuance of common stock                                                             |   |                                 | 199     |   |                                                                       |   | 136 |   |   |   | 74,898 |   |
| Issuance of Preferred Stock                                                          |   |                                 | ― |   |                                                                       |   | 266 |   |   |   | 1,162 |   |
| Proceed for subscription receivable on preferred stock                               |   |                                 | ― |   |                                                                       |   | 104 |   |   |   | 104 |   |
| Issuance of notes payable                                                            |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 5,011 |   |
| Issuance of long-term debt                                                           |   |                                 | ― |   |                                                                       |   | ― |   |   |   | 592 |   |
| Payments on notes payable                                                            |   |                                 | (54     | )      |                                                                       |   | ― |   |   |   | (1,342 | ) |
| Payments on capital lease obligation                                                 |   |                                 | ― |   |                                                                       |   | ― |   |   |   | (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                                            |   | $                                    | 145     |   |                                                                       | $      | 506 |   |   | $ | 80,018 |   |

----

|                                                                                                             |   | Three MonthsEndedMarch 31, |    |   | Cumulativefrom Inception(February 27,2001) toMarch 31, |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|----------------------------------------------------------------------------|--------|
|                                                                                                             |   | 2010                                 |    |   | 2011                                                                       |   |   | 2011 |   |
| Net increase (decrease) in cash and cash equivalents                                                             |   |                                 | (213    | )      |                                                                       |   | 7 |   |   |   | 9 |   |
| Cash and cash equivalents, beginning of period                                                                   |   |                                 | 631     |   |                                                                       |   | 2 |   |   |   | ― |   |
| Cash and cash equivalents, end of period                                                                         |   | $                                    | 418     |   |                                                                       | $      | 9 |   |   | $ | 9 |   |
|                                                                                                             |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Cash paid for interest                                                                                           |   | $                                    | 2       |   |                                                                       | $      | 1 |   |   | $ | 258 |   |
| Cash paid for income taxes                                                                                       |   | $                                    | ― |   |                                                                       | $      | ― |   |   | $ |  ― |   |
| Non-cash financing activities:                                                                                   |   |                                 |    |   |                                                                       |   |   |   |   |   |   |   |
| Conversion of trade payables to notes                                                                            |   | $                                    | ― |   |                                                                       | $      | ― |   |   | $ | 5,603 |   |
| Restructuring of trade debt                                                                                      |   | $                                    | 204     |   |                                                                       | $      | ― |   |   | $ | 6,766 |   |
| Issuance of warrant for accrued liability                                                                        |   | $                                    | ― |   |                                                                       | $      | ― |   |   | $ | 129 |   |
| Issuance of warrants for prepaid asset                                                                           |   | $                                    | ― |   |                                                                       | $      | ― |   |   | $ | (881 | ) |
| Net liabilities acquired in Merger Transaction                                                                   |   | $                                    | ― |   |                                                                       | $      | ― |   |   | $ | (92 | ) |
| Charge to Additional paid-in-capital for amortization of warrants issued with respect to Equity Credit Agreement |   | $                                    | ― |   |                                                                       | $      | 52 |   |   | $ | 52 |   |

----

----

----

|   | · | 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, |   |   | March 31, |   |
|-----------------------------------------------------------------|--------|-------------------|--------|--------|----------------|--------|
|                                                            |   | 2010              |   |   | 2011           |   |
|                                                            |   |              |   |   |           |   |
| Notes payable to clinical research sites                        |   | $                 | 407    |   |           | $      | 407 |   |
| Promissory Note dated September 15, 2006                        |   |              | 1,925  |   |           |   | 1,925 |   |
| Promissory Installment Note dated September 26, 2006            |   |              | 500    |   |           |   | 500 |   |
| 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    |   |           |   | 100 |   |
|                                                            |   |              | 3,775  |   |           |   | 3,775 |   |
| Less: Current portion of notes payable                          |   |              | 2,525  |   |           |   | 3,775 |   |
|                                                            |   | $                 | 1,250  |   |           | $      | - |   |

----

|                                                                                                                                                                         |   | December 31,2010 |       |   | March 31,2011 |   |       | ExercisePrice |   | Expiration Date |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|------------|--------|--------------------|--------|------------|---------------|--------|----------------------|--------|
|                                                                                                                                                                         |   |                  |       |   |               |   |       |          |   |                 |   |
| Warrants issued January 2006 through May 2007 in conjunction with private placement of common stock.                                                                         |   |                  | 3,095,800  |   |               |   | 3,088,000  |          |   | $                    | 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.                                                                                             |   |                  | 2,149,100  |   |               |   | 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    |   |               |   | 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  |   |               |   | 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    |   |               |   | 820,800    |          |   | $                    | 1.52   |   | September 15, 2015 |   |
|                                                                                                                                                                         |   |                  |       |   |               |   |       |          |   |                 |   |   |   |   |
| Warrants issued August 31, 2010 to outside vendor for development of the Company’s website.                                                                            |   |                  | 100,000    |   |               |   | 100,000    |          |   | $                    | 0.30   |   | August 31, 2015 |   |
|                                                                                                                                                                         |   |                  | 10,654,400 |   |               |   | 10,646,600 |          |   |                 |   |   |   |   |

----

|                                          |   | Three-months endedMarch 31, |   |
|-----------------------------------------------|--------|---------------------------------------|--------|
|                                          |   | 2010                                  |   |   | 2011 |   |
|                                          |   |                                  |   |   |   |   |
| Employee-related stock-based compensation     |   | $                                     | 59     |   |   | $ | 46 |   |
| Non-employee related stock based compensation |   |                                  | 129    |   |   |   | - |   |
|                                          |   | $                                     | 188    |   |   | $ | 46 |   |

----

|                                      |   | December 31, |   |   | March 31, |   |
|-------------------------------------------|--------|--------------|--------|--------|-----------|--------|
|                                      |   | 2010         |   |   | 2011      |   |
|                                      |   |         |   |   |      |   |
| Outstanding stock options                 |   |         | 3,528  |   |      |   | 3,528 |   |
| Outstanding warrants                      |   |         | 10,654 |   |      |   | 10,647 |   |
| Outstanding preferred stock at conversion |   |         | 2,429  |   |      |   | 3,701 |   |
|                                      |   |         | 16,611 |   |      |   | 17,876 |   |

|                               |   | Level 2                |   |   | Level 2             |   |
|------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|
|                               |   | December 31, 2010 |   |   | March 31, 2011 |   |
|                               |   | ($ thousands)          |   |   | ($ thousands)       |   |
|                               |   |                        |   |   |                     |   |
| Derivative instruments (long term) |   | $                           | 1,336  |   |                     | $      | 1,214 |   |
| Total                              |   | $                           | 1,336  |   |                     | $      | 1,214 |   |

----

----

----

|                                        |   | For the Three Months endedMarch 31, |   |
|---------------------------------------------|--------|-------------------------------------|--------|
|                                        |   | 2011                                |   |   | 2010 |   |
| Operating expenses:                         |   |                                |   |   |   |   |
| Research and development                    |   | $                                   | 2      |   |   | $ | 20 |   |
| General and administrative                  |   |                                | 628    |   |   |   | 511 |   |
| Marketing                                   |   |                                | -      |   |   |   | - |   |
| Total operating expenses                    |   |                                | 630    |   |   |   | 531 |   |
| Loss from operations                        |   |                                | (630   | ) |   |   | (531 | ) |
| Gain on debt restructuring                  |   |                                | -      |   |   |   | 204 |   |
| Interest income (expense), net              |   |                                | (62    | ) |   |   | (53 | ) |
| Interest from derivative conversion feature |   |                                | -      |   |   |   | - |   |
| Change in fair value of derivatives         |   |                                | 121    |   |   |   | - |   |
| Net loss                                    |   | $                                   | (571   | ) |   | $ | (380 | ) |

----

|                                |   | Three Months Ended       |   |   |   |   |   |          |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|---------------|--------|
|                                |   | March 31,                     |   |   |   |   |   |          |   |
|                                |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Research and development costs      |   | $                                  | 2      |   |   | $      | 20     |          |   | $ | 18 |   |   |   | (90.0 | )% |
| Percent of total operating expenses |   |                               | 0.4    | %      |   |   | 3.8    | %             |   |   |   |   |   |   |   |   |

|                                |   | Three Months Ended                 |   |   |   |   |   |     |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                |   | March 31,                          |   |   |   |   |   |     |   |
|                                |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
|                                |   |                               |   |   |   |   |   |     |   |   |   |   |
| General and administrative expenses |   | $                                  | 628    |   |   | $      | 511    |     |   | $ | 117 |   |   |   | 22.9 | % |
| Percent of total operating expenses |   |                               | 99.6   | %      |   |   | 96.3   | %        |   |   |   |   |   |   |   |   |

----

|                       |   | Three Months Ended       |   |   |   |   |   |          |   |
|----------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|---------------|--------|
|                       |   | March 31,                     |   |   |   |   |   |          |   |
|                       |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                       |   | (Unaudited - Dollars in thousands) |   |
| Gain on debt restructuring |   | $                                  | -      |   |   | $      | 204    |          |   | $ | (204 | ) |   |   | (100 | )% |

|                  |   | Three Months Ended       |   |   |   |   |   |          |   |
|-----------------------|--------|------------------------------------|--------|--------|--------|--------|--------|---------------|--------|
|                  |   | March 31,                     |   |   |   |   |   |          |   |
|                  |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                  |   | (Unaudited - Dollars in thousands) |   |
| Interest expense, net |   | $                                  | 62     |   |   | $      | 53     |          |   | $ | 9 |   |   |   | 17.0 | % |

|                                |   | Three Months Ended       |   |   |   |   |   |          |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|---------------|--------|
|                                |   | March 31,                     |   |   |   |   |   |          |   |
|                                |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                                |   | (Unaudited - Dollars in thousands) |   |
| Change in fair value of derivatives |   | $                                  | 121    |   |   | $      | -      |          |   | $ | 121 |   |   |   | 100.0 | % |

----

|     |   | Three Months Ended       |   |   |   |   |   |          |   |
|----------|--------|------------------------------------|--------|--------|--------|--------|--------|---------------|--------|
|     |   | March 31,                     |   |   |   |   |   |          |   |
|     |   | 2011                               |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|     |   | (Unaudited - Dollars in thousands) |   |
| Net loss |   | $                                  | (571   | )      |   | $      | (380   | )             |   | $ | (191 | ) |   |   | (50.3 | )% |

----

----

----

----

| ExhibitNo. |   | Description                                                                                                                                                      |
|------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                             |
| 3.1        |   | Series C Certificate of Designation                                                                                                                              |
|       |   |                                                                                                                                                             |
| 10.1       |   | Series C Convertible Preferred Stock Purchase Agreement, dated March 30, 2011, by and between Curaxis Pharmaceutical Corporation and C P Acquisition Partners LP |
|       |   |                                                                                                                                                             |
| 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)).     |
|       |   |                                                                                                                                                             |
| 32.1       |   | 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: May 11, 2011 | By:                           | /s/ Patrick S. Smith |
|                |                               | Name: Patrick S. Smith |
|                |                               | Title: Chief Executive Officer (Principal Executive Officer) |
|                |                               |   |
| Dated: May 11, 2011 | By:                                | /s/ David J. Corcoran |
|                |                               | Name: David J. Corcoran |
|                |                               | Title: Chief Financial Officer (Principal Accounting Officer) |

----