**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-K**

 

| **(Mark  One)** |
|-----------------|
| ** **      |
| **x**           | ** ** | **ANNUAL REPORT UNDER SECTION 13 OR  15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934.** |
| ** **      | ** ** | ** ** |
| ** **      | ** ** | **For the fiscal year ended June 30, 2008** |
| ** **      | ** ** | ** ** |
| ** **      | ** ** | **OR** |
| ** **      | ** ** | ** ** |
| **o**           | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.** |
| ** **      | ** ** | ** ** |
| ** **      | ** ** | **For the  transition period from                          to                      ** |

 

**Commission file number: 001-31326**

 

**SENESCOTECHNOLOGIES, INC.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                         | ** ** | **84-1368850**                       |
|----------------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer Identification No.) |
|                                                                 |       |                                 |
| **303 George Street, Suite 420, New  Brunswick, New Jersey**    | ** ** | **08901**                            |
| (Address of principal executive offices)                             |       | (Zip Code)                           |

 

**(732) 296-8400**

(Registrant’s telephone number, including area code)

 

**None**

Securities registered under Section 12(b) of the Act:

 
| **Title of each class**       | ** ** | **Name of each exchange on which registered** |
|----------------------------------------------|------------|-----------------------------------------------------------------------------|
| ** **                                   | ** ** | ** **                                                                  |
| **Common Stock, $0.01 par value per share.** | ** ** | **American Stock Exchange**                                                 |

 

Securities registered under Section 12(g) ofthe Act:

**None.**

 

Indicate bycheck mark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.

Yes  o    No **x**

 

Indicate bycheck mark if the registrant is not required to file reports pursuant toSection 13 or 15(d) of the Exchange Act. Yes  o    No **x**

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.       Yes ** ****x**  No  o

 

Indicate bycheck mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. **x**

 

Indicate bycheck mark whether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer or a smaller reporting company.  See definitions of “accelerated filer”, “largeaccelerated filer” and “smaller reporting company” in Rule 12b-2 of theExchange Act.

 

Largeaccelerated filer o                  Acceleratedfiler o

 

Non-acceleratedfiler o                    Smallerreporting company x

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No  **x**

 

As of September 15, 2008, the aggregatemarket value of the registrant’s common stock held by non-affiliates of theregistrant was****$20,858,486, based on the closingsales price as reported on the American Stock Exchange on that date.

 

Indicate the number of shares outstanding ofeach of the registrant’s classes of common stock, as of September 15,2008:

 
| **Class**                      | ** ** | **Number of Shares** |
|--------------------------------|------------|--------------------------------|
|                           |       |                           |
| Common  Stock, $0.01 par value |       | 18,377,512                     |

 

The followingdocuments are incorporated by reference into the Annual Report on Form 10-K:  Portions of the registrant’s definitive ProxyStatement for its 2008 Annual Meeting of Stockholders are incorporated byreference into Part III of this Report.

 

 

 

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TABLE OF CONTENTS

 
|                 | **Item** |                                                                                                               | **Page** |
|----------------------|----------|--------------------------------------------------------------------------------------------------------------------|----------|
|                 |     |                                                                                                               |     |   |
| PART I          | 1.       | Business                                                                                                           |     | 1 |
|                 |     |                                                                                                               |     |   |
|                 | 1A.      | Risk Factors                                                                                                       |     | 15 |
|                 |     |                                                                                                               |     |   |
|                 | 1B.      | Unresolved Staff Comments                                                                                          |     | 27 |
|                 |     |                                                                                                               |     |   |
|                 | 2.       | Properties                                                                                                         |     | 27 |
|                 |     |                                                                                                               |     |   |
|                 | 3.       | Legal Proceedings                                                                                                  |     | 27 |
|                 |     |                                                                                                               |     |   |
|                 | 4.       | Submission of Matters to a Vote of Security  Holders                                                               |     | 27 |
|                 |     |                                                                                                               |     |   |
| PART II         | 5.       | Market for Registrant’s Common Equity,  Related Stockholder Matters and Issuer Purchases of Equity Securities |     | 28 |
|                 |     |                                                                                                               |     |   |
|                 | 6.       | Selected Financial Data                                                                                            |     | 33 |
|                 |     |                                                                                                               |     |   |
|                 | 7.       | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                        |     | 34 |
|                 |     |                                                                                                               |     |   |
|                 | 7A.      | Quantitative and Qualitative Disclosures  About Market Risk                                                        |     | 45 |
|                 |     |                                                                                                               |     |   |
|                 | 8.       | Financial Statements and Supplementary Data                                                                        |     | 46 |
|                 |     |                                                                                                               |     |   |
|                 | 9.       | Changes in and Disagreements with  Accountants on Accounting and Financial Disclosure                              |     | 46 |
|                 |     |                                                                                                               |     |   |
|                 | 9A.      | Controls and Procedures                                                                                            |     | 46 |
|                 |     |                                                                                                               |     |   |
|                 | 9B.      | Other Information                                                                                                  |     | 47 |
|                 |     |                                                                                                               |     |   |
| PART III        | 10.      | Directors, Executive Officers and Corporate  Governance                                                            |     | 48 |
|                 |     |                                                                                                               |     |   |
|                 | 11.      | Executive Compensation                                                                                             |     | 48 |
|                 |     |                                                                                                               |     |   |
|                 | 12.      | Security Ownership of Certain Beneficial  Owners and Management and Related Stockholder Matters                    |     | 48 |
|                 |     |                                                                                                               |     |   |
|                 | 13.      | Certain Relationships and Related  Transactions and Director Independence                                          |     | 48 |
|                 |     |                                                                                                               |     |   |
|                 | 14.      | Principal Accounting Fees and Services                                                                             |     | 48 |
|                 |     |                                                                                                               |     |   |
|                 | 15.      | Exhibits and Financial Statement Schedules                                                                         |     | 48 |
|                 |     |                                                                                                               |     |   |
| SIGNATURES           |     | 49                                                                                                                 |
|                 |     |                                                                                                               |
| FINANCIAL STATEMENTS |     | F-1                                                                                                                |
|                      |          |                                                                                                                    |          |  |  |

 

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** **

**PART I**

 

# **Item 1.          Business.**

# ** **

*Our Business*

* *

The primary business of Senesco Technologies, Inc.,a Delaware corporation incorporated in 1999, and its wholly-owned subsidiary,Senesco, Inc., a New Jersey corporation incorporated in 1998, collectivelyreferred to as “Senesco,” “we,” “us” or “our,” is to utilize our patented andpatent-pending genes, primarily eucaryotic translation initiation Factor 5A, orFactor 5A, and deoxyhypusine synthase, or DHS, and related technologies forinhibition in human health applications to develop novel approaches to treatinflammatory diseases and cancer.

 

In agricultural applications we aredeveloping and licensing Factor 5A, DHS and Lipase to enhance the quality andproductivity of fruits, flowers, and vegetables and agronomic crops through thecontrol of cell death, referred to herein as senescence, and growth in plants.

 

*Human HealthApplications*

* *

We believethat our gene technology could have broad applicability in the human healthfield, by either inhibiting or inducing apoptosis.  Inhibiting apoptosis may be useful inpreventing or treating a wide range of inflammatory and ischemic diseasesattributed to premature apoptosis. Inducing apoptosis may be useful in treatingcertain forms of cancer because the cancerous cells have failed to initiateapoptosis on their own due to damaged or inhibited apoptotic pathways.

 

We havecommenced preclinical *in-vivo* and*in-vitro* research to determinethe ability of Factor 5A to regulate key execution genes, pro-inflammatorycytokines, receptors, and transcription factors, which are implicated innumerous apoptotic diseases.

 

Certain preclinical human health results todate include:

 

·                  demonstratedsignificant tumor regression and diminished rate of tumor growth of multiplemyeloma tumors in SCID mice treated with Factor 5A technology encapsulated innanoparticles;

 

·                  increasedmedian survival by approximately 250% in a tumor model of mice injected withmelanoma cancer cells;

 

·                  inducedapoptosis in both human cancer cell lines derived from tumors and in lungtumors in mice;

 

·                  inducedapoptosis of cancer cells in a human multiple myeloma cell line;

 

·                  measuredVEGF reduction in mouse lung tumors as a result of treatment with our genes;

 

·                  reducedHIV-1 replication by approximately 50 percent as evidenced by an equal decreasein HIV replication markers p24 and IL-8 in an HIV-1 infected human cell line;

 

·                  increasedthe survival, while maintaining functionality, of mouse pancreatic islet cellsisolated for transplantation, using intraperitaneal administration of ourtechnology.  Initial animal studies haveshown that our technology administered prior to harvesting beta islet cellsfrom a mouse, has a significant impact not only on the survival of the betaislet cells, but also on the retention of the cells’ functionality whencompared to the untreated 

 

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beta isletcells.  Additional studies have shownthat the treated beta islet cells survive a pro-inflammatory cytokinechallenge, while maintaining their functionality with respect to insulinproduction.  These further studies alsorevealed eIF-5A’s involvement in the modulation of inducible nitric oxidesynthase (iNOS), an important indicator of inflammation;

 

·                  demonstratedthat the efficacy of our technology is comparable to that of existing approvedanti-inflammatory prescription drugs in reducing certain inflammatory cytokinesin mice; and

 

·                  increasedthe survival rate of mice in a lethal challenge sepsis model.  Additionally, a broad spectrum of systemicpro-inflammatory cytokines were down-regulated, while not effecting theanti-inflammatory cytokine IL-10.

 

Accelerating Apoptosis

 

The data from ourpre-clinical studies indicate that the up-regulation of Factor 5A induces celldeath in cancer cells through both the p53 (intrinsic) and cell death receptor(extrinsic) apoptotic pathways. Tumors arise when abnormal cells fail toundergo apoptosis due to an inability to activate their apoptotic pathways.Just as the Factor 5A gene appears to facilitate expression of the entire suiteof genes required for programmed cell death in plants, the Factor 5A geneappears to regulate expression of a suite of genes required for programmed celldeath in human cells. Because the Factor 5A gene appears to function at theinitiation point of the apoptotic pathways, both intrinsic and extrinsic, webelieve that our gene technology has potential application as a means ofcombating a broad range of cancers. Based on the results obtained through our *in-vitro*studies, we have found that up-regulating Factor 5A results in: (i) theup-regulation of p53; (ii) increased inflammatory cytokine production; (iii) increasedcell death receptor formation; and (iv) increased caspase activity.  These features, coupled with a simultaneousdown-regulation Bcl-2, result in apoptosis of cancer cells.  In addition, our *in-vitro*studies have shown that the up-regulation of Factor 5A also down-regulatesVEGF, a growth factor which allows tumors to develop additional vascularizationneeded for growth beyond a small mass of cells.

** **

Inhibiting Apoptosis

 

Our preclinical studies indicate that down-regulation of ourproprietary Factor 5A gene may have potential application as a means forcontrolling the effects of a broad range of diseases that are attributable topremature cell death, ischemia, or inflammation. Such inflammatory diseasesinclude glaucoma, heart disease, and certain inflammatory diseases such asCrohn’s disease, sepsis and diabetic retinopathy, among many others.  We are engaged in preclinical research oncertain inflammatory diseases. Using small inhibitory RNA’s, or siRNA’s,against Factor 5A to inhibit its expression, the results of our studies haveindicated a reduction in pro-inflammatory cytokine formation and the formationof receptors for liposolysaccharide, or LPS, interferon-gamma andTNF-alpha.  Our studies have alsoindicated that by inhibiting Factor 5A iNOS, MAPK, NFkB, JAK1 and ICAM are downregulated,which decreases the inflammatory cytokines formed through these pathways.Additionally, a mouse study has indicated that our siRNA is comparable to asteroid and to a prescription anti-TNF drug in its ability to reduce cytokineresponse to LPS.  Other mouse studies have also indicated that the siRNA against 

 

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Factor 5A (i) protects thymocyte cellsfrom apoptosis and decreases formation of myeloperoxidase, or MPO, TNF-a,MIP-1alpha, and IL-1 in the lungs of mice challenged with LPS and (ii) increasesthe survival rate in which sepsis was induced by a lethal injection of LPS andreduced blood serum levels of inflammatory proteins, such as IL-1, IL-2, IL-6,IL-12, TNF-a, IFNg and MIP-1alpha, while not effecting IL-10, ananti-inflammatory cytokine.  Otherexperiments utilizing siRNA to Factor 5A include inhibition of or apoptosisduring the processing of mouse pancreatic beta islet cells for transplantation,the inhibition of early inflammatory changes associated with type-1 diabetes inan in-vivo rat model and the inhibition of viral replication in a human cellline infected with HIV-1.

 

Proteins required for cell deathinclude p53, interleukins, TNF-a and other cytokines and caspases.  Expression of these cell death proteins isrequired for the execution of apoptosis. Based on our studies, we believe that downregulating Factor 5A bytreatment with siRNA inhibits the expression of p53, a major cell deathtranscription factor that in turn controls the formation of a suite of othercell death proteins.  In addition, webelieve that the down-regulation of Factor 5A up-regulates Bcl-2, a suppressorof apoptosis.

 

*Human Health Target Markets*

* *

We believe that our gene technology couldhave broad applicability in the human health field, by either inhibiting oraccelerating apoptosis.  Inhibitingapoptosis may be useful in preventing or treating a wide range of inflammatoryand ischemic diseases attributed to premature apoptosis, including diabetes,diabetic retinopathy and lung inflammation, among others.  Accelerating apoptosis may be useful intreating certain forms of cancer because the body’s immune system is not ableto force cancerous cells to undergo apoptosis.

 

Our preclinical research hasyielded data that we have presented to various biopharmaceutical companies thatmay be prospective licensees for the development and marketing of potentialapplications of our technology. Additionally, we plan on using the proceeds of our recent financing toadvance our research in multiple myeloma with the goal of initiating a Phase Iclinical trial, and may select additional human health indications, to bringinto clinical trials on our own. We believe that the success of our futureoperations will likely depend on our ability to transform our research anddevelopment activities into a commercially feasible technology.

 

*Human Health Research Program*

* *

Our human health research program, which has consisted of pre-clinical *in-vitro* and *in-vivo*experiments designed to assess the role and method of action of the Factor 5Agenes in human diseases, is being performed by approximately 10 third partyresearchers, at our direction, at Mayo Clinic, the University of Virginia, andthe University of Waterloo.

 

Our researchand development expenses incurred on human health applications wereapproximately 56% and 42% of our total research and development expenses forthe fiscal years ended June 30, 2008 and 2007, respectively.  Since inception, the proportion of ourresearch and development expenses on human health applications has increased,as compared to our research and development expenses on agriculturalapplications.  This change is primarilydue to the fact 

 

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that our research focus on human health has increased and some of ourresearch costs for plant applications have shifted to our license partners.

 

Our planned future pre-clinicalresearch and development initiatives for human health include:

 

·                  MultipleMyeloma.  Our objective is to advance ourtechnology for the potential treatment of multiple myeloma with the goal ofinitiating a clinical trial.  Inconnection with the potential clinical trial, we have engaged a clinicalresearch organization, or CRO, to assist us through the process.  We have also determined the delivery systemfor our technology, contracted for the supply of pharmaceutical grade materialsto be used in toxicology and human studies and have contracted with a thirdparty laboratory to conduct toxicoly studies, Together with the assistance of our CRO, we will have the toxicologystudies performed with the goal of filing an investigational new drugapplication, or IND application, with the U.S. Food and Drug Administration, orFDA, for the review and consideration in order to initiate a clinicaltrial.  We estimate that it will takeless than eighteen months from June 30, 2008 to complete these objectives.

 

·                  HIV-1.  We are currently reviewing our HIV-1 projectto determine the direction of our future preclinical experiments.

 

·                  LungInflammation.  The objective of ourplanned future lung inflammation experiments is to optimize the delivery anddose of the siRNA to Factor 5A to the lungs. A mouse model system is currently being conducted to illustrate thesiRNA to Factor 5A’s ability to reduce morbidity and mortality of lunginflammation, caused by the up-regulation of pro-inflammatory cytokines inducedby a pathogen.

 

·                  Other.  We may continue to look at other diseasestates in order to determine the role of Factor 5A.

 

In order to pursue the above research initiatives, as well asother research initiatives that may arise, we completed private placements of$10 million of convertible notes and warrants.

 

However, it may be necessary for us to raise a significantamount of additional working capital in the future to continue to pursue someof the above and new initiatives.  If weare unable to raise the necessary funds, we may be required to significantlycurtail the future development of some of our research initiatives and we willbe unable to pursue other possible research initiatives.

 

We may further expand our research and development programbeyond the initiatives listed above to include other research centers.

 

*Human Health Competition*

* *

Our competitors in human healththat are presently attempting to distribute their technology have generallyutilized one of the following distribution channels:

 

·                  Entering intostrategic alliances, including licensing technology to major marketing anddistribution partners; or

 

·                  developingin-house production and marketing capabilities.

 

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In addition, some competitorsare established distribution companies, which alleviates the need for strategicalliances, while others are attempting to create their own distribution andmarketing channels.

 

There are many large companies anddevelopment stage companies working in the field of apoptosis researchincluding: Amgen; Centocor; Genzyme; OSI Pharmaceuticals, Inc.; Novartis;Introgen Therapeutics, Inc.; Genta, Inc.; and Vertex Pharmaceuticals, Inc.,amongst others.

 

*AgriculturalApplications*

* *

Our agricultural research focuses on thediscovery and development of certain gene technologies, which are designed toconfer positive traits on fruits, flowers, vegetables, forestry species andagronomic crops.  To date, we haveisolated and characterized the senescence-induced Lipase gene, DHS, and Factor5A in certain species of plants. Our goal is to modulate the expression ofthese genes in order to achieve such traits as extended shelf life, increasedbiomass, increased yield and increased resistance to environmental stresses anddisease, thereby demonstrating proof of concept in each category of crop.

 

Certainagricultural results to date include:

 

·                  longershelf life of perishable produce;

 

·                  increasedbiomass and seed yield;

 

·                  greatertolerance to environmental stresses, such as drought and soil salinity;

 

·                  greatertolerance to certain fungal and bacterial pathogens;

 

·                  moreefficient use of fertilizer; and

 

·                  advancementto field trials in banana, lettuce, and trees.

 

The technology presently utilized by theindustry for increasing the shelf life in certain flowers, fruits andvegetables relies primarily on reducing ethylene biosynthesis, and thereforeonly has application to the crops that are ethylene-sensitive.  Because Factor 5A, DHS and Lipase are alreadypresent in all plant cells, our technology may be incorporated into crops byusing either conventional breeding methods (non-genetically modified) orbiotechnology techniques.

 

We have licensed this technology to variousstrategic partners and have entered into a joint venture. We may continue tolicense this technology, as the opportunities present themselves, to additionalstrategic partners and/or enter into additional joint ventures.  Our commercial partners have licensed ourtechnology for use in lettuce, turfgrass, canola, corn, soybean, cotton,banana, alfalfa, rice and certain species of trees and bedding plants, and wehave obtained proof of concept for enhanced post harvest shelf life, seedyield, biomass, and resistance to disease in several of these plant species.

 

We have ongoing field trials of certain treesand bananas with our respective partners. The initial field trials conducted with ArborGen over a three yearperiod in certain species of trees have concluded and the trees have beenharvested for wood quality assessment.  

 

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Preliminary data from our joint field trials show significantlyenhanced growth rates in some of the trees relative to controls.

 

To date, banana field trials have indicatedthat our technology extends the shelf life of banana fruit by 100%.  In addition to the post harvest shelf lifebenefits, an additional field trial generated encouraging disease tolerancedata specific to Black Sigatoka (Black Leaf Streak Disease), for banana plants.Additional field trials for banana plants are ongoing for Black Sigatoka.

 

Commercialization by our partners may requirea combination of traits in a crop, such as both post harvest shelf life and diseaseresistance, or other traits.  Ournear-term research and development initiatives include modulating theexpression of DHS and Factor 5A genes in these plants and then propagation andphenotype testing of such plants.

 

Our ongoing research and developmentinitiatives for agriculture include assisting our license and joint venturepartners to:

 

·                  furtherdevelop and implement the DHS and Factor 5A gene technology in lettuce, melon,banana, canola, cotton, turfgrass, bedding plants, rice, alfalfa, corn, soybeanand trees; and

 

·                  testthe resultant crops for new beneficial traits such as increased yield,increased tolerance to environmental stress, disease resistance and moreefficient use of fertilizer.

 

*Agricultural Target Markets*

* *

In order toaddress the complexities associated with marketing and distribution in theworldwide market, we have adopted a multi-faceted commercialization strategy,in which we have entered into and plan to enter into, as the opportunitiespresent themselves, additional licensing agreements or other strategicrelationships with a variety of companies or other entities on a crop-by-cropbasis.  Weanticipate revenues from these relationships in the form of licensing fees,royalties,, usage fees, or the sharing of gross profits.  In addition, we anticipate payments fromcertain of our partners, which are described in the *AgriculturalDevelopment and License Agreements* section of this Form 10-K,  upon our achievement of certain research anddevelopment benchmarks.  Thiscommercialization strategy allows us to generate revenue at various stages ofproduct development, while ensuring that our technology is incorporated into awide variety of crops.  Our optimalpartners combine the technological expertise to incorporate our technology intotheir product line along with the ability to successfully market the enhancedfinal product, thereby eliminating the need for us to develop and maintain asales force.

 

Because the agricultural market is dominatedby privately held companies or subsidiaries of foreign owned companies, marketsize and market share data for the crops under our license and developmentagreements is not readily available. Additionally, because we have entered into confidentiality agreementswith our license and development partners, we are unable to report the specificfinancial terms of the agreements as well as any market size and market sharedata that our partners may have disclosed to us regarding their companies.

 

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* *

*AgriculturalDevelopment and License Agreements*

* *

Through September 15, 2008, we have entered into nine licenseagreements and one joint collaboration with established agriculturalbiotechnology companies or, in the case of Poet, as more fully described below,an established ethanol company, as follows:

 

·                  In November 2001, weentered into a worldwide exclusive development and license agreement with theHarris Moran Seed Company, referred to herein as the Harris Moran License, tocommercialize our technology in lettuce and certain melons for an indefinite term,unless terminated by either party pursuant to the terms of the agreement.  To date, the development steps performed byHarris Moran and us have all been completed in accordance with the protocol setforth in the Harris Moran License.  Therehas been extensive characterization of our genes in lettuce in a laboratorysetting. The initial lab work has produced genetically modified seed undergreenhouse containment, which has been followed by substantial field trials forevaluation.  These field trials representa vital step in the process necessary to develop a commercial product. Togetherwith Harris Moran, we will evaluate all results to date to determine thedirection of further research necessary for our work in lettuce and melon.** **Underthe Harris Moran License, we have received an upfront payment and we mayreceive benchmark payments upon achievement of certain research and marketingmilestones.

** **

·                  In June 2002, weentered into a three-year worldwide exclusive development and option agreementwith ArborGen, LLC to develop our technology in certain species of trees.  In June 2006, ArborGen exercised theiroption to license our technology and in December 2006, converted thedevelopment and option agreement into a license agreement, referred to hereinas the ArborGen Agreement.  To date, theresearch being conducted by ArborGen has proceeded according to schedule.  ArborGen has seen promising positive growthresponses in greenhouse-grown seedlings. These initial greenhouse data led to the initiation of field trials byArborGen in the second half of calendar 2004. At the end of the 2005 growing season, certain trees which were enhancedby our technology had approximately double the increase in volume relative tocontrol trees.  Further field trials areongoing to support these data and to analyze the growth rates of trees whichincorporate our technology. Under the ArborGen Agreement, we have received anupfront payment and benchmark payments and we may receive additional benchmarkpayments upon achievement of certain development milestones and royalties uponcommercialization.

 

·                  In September 2002, weentered into an exclusive development and license agreement with Cal/WestSeeds, referred to herein as the Cal/West License, to commercialize ourtechnology in certain varieties of alfalfa. The Cal/West License will continue until the expiration of the patentsset forth in the agreement, unless terminated earlier by either party pursuantto the terms of the agreement.  TheCal/West License also grants Cal/West an exclusive option to develop ourtechnology in various other forage crops. The Cal/West development effort successfully incorporated our technologyinto their alfalfa seed as of July 2004. Seed transformation and greenhouse trait analysis is ongoing.  Under the Cal/West License, we have receivedan upfront payment and we may receive benchmark payments as certain developmentmilestones are achieved and a royalty upon commercialization based upon thevolume of alfalfa seed sold that contains our 

 

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technology.

 

·                  In March 2004, weentered into an exclusive development and license agreement with The ScottsCompany, referred to herein as the Scotts Agreement, to commercialize ourtechnology in turfgrass and certain species of bedding plants.  Scotts is working on incorporating ourtechnology to enhance a variety of traits in these plants, includingenvironmental stress resistance, disease resistance and enhanced bloomproperties.  We are collaborating withScotts in the areas of ornamental bedding plants and turfgrass.  A large-scale greenhouse evaluation ofbedding plants was being conducted and additional greenhouse testing isplanned.  Transformation and initialtissue culture screening of events have been undertaken in turfgrass.  In tissue culture, turfgrass containing our technologyhas grown more successfully than control turfgrass without our technology.  Greenhouse testing of the grass containingour technology is the next planned development step. Under the ScottsAgreement, we have received an upfront payment and benchmark payments.  In January 2006, the development andlicense agreement with The Scotts Company was amended. Due to a change in thecorporate financial policy at Scotts, Scotts requested to defer certainmilestone payments, which were to be made on a calendar basis.  We agreed and these payments have now beendeferred and incorporated in the amount to be paid to us uponcommercialization.  Additionally,the commercialization fee has been increased. All other aspects of the agreement remain unchanged, and the projectcontinues to move forward without interruption. We may also receive royaltiesupon commercialization from the net sales of turfgrass seed and bedding plantscontaining our technology.

 

·                  In October 2005, weentered into an agreement with Poet to license our proprietary gene technologyto Poet to improve aspects of Poet’s ethanol production capabilities.  We are currently revising our work plan toincorporate our technology into those aspects of Poet’s ethanolproduction.  We will receive an annual paymentfor each Poet facility that incorporates our technology.  If Poet incorporates our technology into eachof its facilities, we would be entitled to receive an annual payment in excessof $1,000,000.

 

·                  On November 8, 2006, we entered into a licenseagreement with Bayer CropScience GmbH for the development and commercializationof Canola.  Under the terms of theagreement, we received an upfront payment, will receive milestone payments uponthe achievement of certain development milestones and will receive****commercialization fees based uponspecified benchmarks.  In August, 2008,Bayer CropScience GmbH successfully completed the first developmentmilestone related to this license.

 

·                  On July 17,2007 we entered into a license agreement with Bayer CropScience AG for thedevelopment and commercialization of cotton. Under the terms of the agreement, we received an upfront payment, willreceive milestone payments upon the achievement of certain development milestones,and additionally, upon commercialization, and a royalty on net sales.

 

·                  On August 6, 2007 we entered into a licenseagreement with Monsanto for the development and commercialization of corn andsoy.  Under the terms of the agreement, wereceived an upfront payment, will receive milestone payments upon theachievement of certain development milestones, and additionally, uponcommercialization, and a royalty on net sales.

 

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·                  On September 11, 2007 we entered into a licenseagreement with Bayer CropScience AG for the development and commercializationof rice.  Under the terms of theagreement, we received an upfront payment, will receive milestone payments uponthe achievement of certain development milestones, and additionally, uponcommercialization, and a royalty on net sales.

 

*Joint Venture*

 

On May 14, 1999, we entered into aagreement with Rahan Meristem Ltd., or Rahan Meristem, an Israeli companyengaged in the worldwide export marketing of banana germplasm, referred toherein as the Rahan Joint Venture**. **In general, bananas are growneither for local domestic consumption or grown for export.  According to the Food and AgricultureOrganization of the United Nations, there were approximately 16 million metrictons of bananas exported in 2004.  Thelevel of production equates to the fruit of approximately 480 million bananaplants.  A percentage of these plants arereplaced each year with new banana seedlings.** **Rahan Meristem accounts forapproximately 10% of the worldwide export of enhanced banana seedlings.

 

We have contributed, by way of a limited,exclusive, worldwide license to the Rahan Joint Venture, access to ourtechnology, discoveries, inventions and know-how, whether patentable orotherwise, pertaining to plant genes and their cognate expressed proteins thatare induced during senescence for the purpose of developing, on a joint basis,genetically enhanced banana plants which will result in a banana that has alonger shelf life.  Rahan Meristem hascontributed its technology, inventions and know-how with respect to bananaplants.  Rahan Meristem and Senesco haveequally shared the expense of field trials.

 

The Rahan Joint Venture applied for andreceived a conditional grant that totals approximately $340,000, whichconstituted 50% of the Rahan Joint Venture’s research and development budgetover the five-year period, ending on May 31, 2005, from the Israel - U.S.Binational Research and Development Foundation, or BIRD Foundation, referred toherein as the BIRD Grant.  Such grant,along with certain royalty payments, shall only be repaid to the BIRDFoundation upon the commercial success of the Rahan Joint Venture’s technology.The commercial success is measured based upon certain benchmarks and/ormilestones achieved by the Rahan Joint Venture. The Rahan Joint Venture reports these benchmarks periodically to theBIRD Foundation.

** **

All aspects of the Rahan Joint Venture’sresearch and development initiative are proceeding on time**. **Boththe DHS and lipase genes have been identified and isolated in banana, and theRahan Joint Venture is currently in the process of silencing these genes.  Two Israeli field trials indicated thatSenesco’s proprietary technology extends the shelf life of the banana fruit upto 100%, while allowing the banana fruit to ripen normally.  Later field trials have indicated what webelieve are promising disease tolerance results and we are currently performingadditional field trials to further assess disease tolerance.  However, as the banana modified with our technologymay be considered a genetically modified organism, or GMO, shelf life extensionmay have to be combined with disease tolerance to gain acceptance by thegrowers.

 

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* *

*Agricultural Research Program*

* *

Our agricultural research and development isperformed by three researchers, at our direction, at the University ofWaterloo, where the technology was developed. Additional agricultural research and development is performed by ourpartners in connection with the Harris Moran License, the Scotts Agreement, theArborGen License, the Cal/West License, the Bayer Licenses, the MonsantoLicense and through the Rahan Joint Venture.

 

The discoverer of our technology, John E.Thompson, Ph.D., is the Associate Vice President, Research and former Dean ofScience at the University of Waterloo in Ontario, Canada, and is our ExecutiveVice President and Chief Scientific Officer. Dr. Thompson is also one of our directors and owns 3.1% of the outstanding shares of ourcommon stock, $0.01 par value, as of June 30, 2008.  On September 1, 1998, we entered into, and have extended through August 31,2009, a research and development agreement with the University ofWaterloo and Dr. Thompson as the principal inventor.  The Research and Development Agreementprovides that the University of Waterloo will perform research and developmentunder our direction, and we will pay for the cost of this work and make certainpayments to the University of Waterloo. In return for payments made under the Research and Development Agreements,we have all rights to the intellectual property derived from the research.

 

## *AgriculturalCompetition*

## * *

Our competitors in both humanhealth and agriculture that are presently attempting to distribute theirtechnology have generally utilized one of the following distribution channels:

 

·                  licensingtechnology to major marketing and distribution partners;

 

·                  enteringinto strategic alliances; or

 

·                  developingin-house production and marketing capabilities.

 

In addition, some competitorsare established distribution companies, which alleviates the need for strategicalliances, while others are attempting to create their own distribution andmarketing channels.

 

Ourcompetitors in the field of delaying plant senescence are companies thatdevelop and produce transformed plants with a variety of enhanced traits.  Such companies include: Icora (formerlyParadigm Genetics); Mendel Biotechnology; Renessen LLC; Exelixis Plant Sciences, Inc.;Syngenta International AG; and Eden Bioscience, among others.

 

*AgriculturalDevelopment Program*

* *

Generally, projectswith our licensee’s and joint venture partner begin by transforming seed orgermplasm to incorporate our technology. Those seeds or germplasm are then grown in our partners’greenhouses.  After successful greenhousetrials, our partners will transfer the plants to the field for fieldtrials.  After completion of successfulfield trials, our partners may have to apply for and receive regulatoryapproval prior to initiation of any commercialization activities.

 

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Generally, the approximate timeto complete each sequential development step is as follows:

 
| Seed Transformation | approximately 1 to 2 years |   |
|---------------------|----------------------------|--------|
| Greenhouse          | approximately 1 to 2 years |   |
| Field Trials        | approximately 2 to 5 years |   |

 

The actual amount of time spenton each development phase depends on the crop, its growth cycle and the successof the transformation achieving the desired results.  As such, the amount of time for each phase ofdevelopment could vary, or the time frames may change.

 

The development of ourtechnology with Poet is different than our other licenses in that we aremodifying certain production inputs for ethanol.  That process involves modifying the inputs,testing such inputs in Poet’s production process and if successful, implementingsuch inputs in Poet’s production process on a plant by plant basis.

 

The status of each of ourprojects with our partners is as follows:

 
| **Project**          | ** ** | **Partner**        | ** ** | **Status**                         |
|----------------------|------------|--------------------|------------|------------------------------------|
|                 |       |               |       |                               |
| Banana               |       | Rahan Meristem     |       |                               |
| - Shelf Life         |       |               |       | Field trials                       |
| - Disease Resistance |       |               |       | Field trials                       |
| Lettuce              |       | Harris Moran       |       | Field trial data under  evaluation |
| Melon                |       | Harris Moran       |       | Seed transformation                |
|                 |       |               |       |                               |
| Trees                |       | Arborgen           |       |                               |
| - Growth             |       |               |       | Field trials                       |
| Alfalfa              |       | Cal/West           |       | Greenhouse                         |
| Corn                 |       | Monsanto           |       | Recently initiated                 |
| Cotton               |       | Bayer              |       | Recently initiated                 |
| Canola               |       | Bayer              |       | Seed transformation                |
| Rice                 |       | Bayer              |       | Recently initiated                 |
| Soybean              |       | Monsanto           |       | Recently initiated                 |
| Turfgrass            |       | The Scotts Company |       | Greenhouse                         |
| Bedding Plants       |       | The Scotts Company |       | Greenhouse                         |
| Ethanol              |       | Poet               |       | Modify inputs                      |

 

Commercializationby our partners may require a combination of traits in a crop, such as bothshelf life and disease resistance, or other traits.

 

Based upon ourcommercialization strategy, we anticipate that there may be a significantperiod of time before plants enhanced using our technology reachconsumers.  Thus, we have not begun toactively market our technology directly to consumers, but rather, we havesought to establish ourselves within the industry through presentations atindustry conferences, our website and direct communication with prospectivelicensees.

 

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Consistentwith our commercialization strategy, we intend to attract other companiesinterested in strategic partnerships or licensing our technology, which mayresult in additional license fees, revenues from contract research and otherrelated revenues.  Successful futureoperations will depend on our ability to transform our research and developmentactivities into a commercially feasible technology.

 

*Intellectual Property*

* *

## *We have nineteen issued patents from theUnited States Patent and Trademark Office, or PTO, and twenty-three issuedpatents from foreign countries, thirty-one of which are for the use of ourtechnology in agricultural applications and eleven of which relate to humanhealth applications.*

##  

In addition toour forty-two patents, we have a wide variety of patent applications, includingdivisional applications and continuations-in-part, in process with the PTO andinternationally.  We intend to continueour strategy of enhancing these new patent applications through the addition ofdata as it is collected.

 

*Government Regulation*

* *

At present, the U.S. federal governmentregulation of biotechnology is divided among three agencies: (i) the U.S.Department of Agriculture regulates the import, field-testing and interstatemovement of specific types of genetic engineering that may be used in thecreation of transformed plants; (ii) the Environmental Protection Agencyregulates activity related to the invention of plant pesticides and herbicides,which may include certain kinds of transformed plants; and (iii) the FDAregulates foods derived from new plant varieties.  The FDA requires that transformed plants meetthe same standards for safety that are required for all other plants and foodsin general.  Except in the case ofadditives that significantly alter a food’s structure, the FDA does not requireany additional standards or specific approval for genetically engineered foodsbut expects transformed plant developers to consult the FDA before introducinga new food into the market place.

 

In addition, our ongoing preclinical researchwith cell lines and lab animal models of human disease is not currently subjectto the FDA requirements that govern clinical trials.  However, use of our technology, if developedfor human health applications, will also be subject to FDA regulation.  Generally, the FDA must approve any drug orbiologic product before it can be marketed in the United States.  In addition, prior to being sold outside ofthe U.S., any products resulting from the application of our human healthtechnology must be approved by the regulatory agencies of foreigngovernments.  Prior to filing a new drugapplication or biologics license application with the FDA, we would have toperform extensive clinical trials, and prior to beginning any clinical trial,we need to perform extensive preclinical testing which could take several yearsand may require substantial expenditures.

 

We believe that our current activities, whichto date have been confined to research and development efforts, do not requirelicensing or approval by any governmental regulatory 

 

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agency.However, we, or our licensees, may be required to obtain such licensing orapproval from governmental regulatory agencies prior to the commercializationof our genetically transformed plants and the application of our human healthtechnology.

 

*Employees*

* *

In addition to the thirteen scientistsperforming funded research for us at Mayo Clinic, the University of Virginia,and the University of Waterloo, we have five employees and one consultant, fourof whom are executive officers and are involved in our management.   We do not anticipate hiring any additionalemployees over the next twelve months.

 

The officers are assisted by a ScientificAdvisory Board that consists of prominent experts in the fields of plant andhuman cell biology as follows:

 

·                  AlanBennett, Ph.D., who serves as the Chairman of the Scientific Advisory Board, isthe Associate Vice Chancellor of the Office of Technology Transfer at theUniversity of California.  His researchinterests include the molecular biology of tomato fruit development andripening, the molecular basis of membrane transport, and cell wall disassembly.

 

·                  CharlesA. Dinarello, M.D., who serves as a member of the Scientific Advisory Board, isa Professor of Medicine at the University of Colorado School of Medicine, amember of the U.S. National Academy of Sciences and the author of over 500published research articles.  In additionto his active academic research career, Dr. Dinarello has held advisorypositions with two branches of the National Institutes of Health and positionson the Board of Governors of both the Weizmann Institute and Ben GurionUniversity.

 

·                  JamesE. Meier is an Associate Professor of Medicine at Beth Israel Deaconess MedicalCenter, a teaching hospital of Harvard Medical School. He is also a practicingphysician in the Division of Hematology-Oncology at Beth Israel. Dr. Mier’sresearch is funded by the NIH and he is a member of numerous professionalsocieties.

 

Furthermore, pursuant to the Research andDevelopment Agreements, a substantial amount of our research and developmentactivities are conducted at the University of Waterloo under the supervision ofDr. Thompson, our Executive Vice President and Chief Scientific Officer.We utilize the University’s research staff including graduate and post-graduateresearchers.

 

We have also undertaken preclinical apoptosisresearch at the University of Colorado under the supervision of Dr. Dinarello.  In addition to the research being conductedat the University of Colorado, we have also undertaken preclinical apoptosisresearch at Mayo Clinic, and the University of Virginia.  This research is performed pursuant tospecific project proposals that have agreed-upon research outlines, timelinesand budgets.  We may also contractresearch to additional university laboratories or to other companies in orderto advance the development of our technology.

 

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*Safe HarborStatement*

* *

The statements contained in this AnnualReport on Form 10-K that are not historical facts are forward-lookingstatements within the meaning of Section 21E of the Securities Exchange Actof 1934, as amended, and the Private Securities Litigation Reform Act of 1995.Such forward-looking statements may be identified by, among other things, theuse of forward-looking terminology such as “believes,” “expects,” “may,” “will,”“should,” or “anticipates” or the negative thereof or other variations thereonor comparable terminology, or by discussions of strategy that involve risks anduncertainties.  In particular, ourstatements regarding the anticipated growth in the markets for our technologies,the continued advancement of our research, the approval of our patentapplications, the possibility of governmental approval in order to sell oroffer for sale to the general public a genetically engineered plant or plantproduct, the successful implementation of our commercialization strategy,including the success of the Harris Moran License, the ArborGen Agreement, theCal/West License, The Scotts License, the Broin License, the Bayer Licenses,the Monsanto License, and the Research and Development Agreements, thesuccessful implementation of the Rahan Joint Venture, statements relating toour patent applications, the anticipated longer term growth of our business,the results of our preclinical studies, our ability to comply with thecontinued listing standards of the AMEX, and the timing of the projects and trends in future operatingperformance are examples of such forward-looking statements.  The forward-looking statements include risksand uncertainties, including, but not limited to, the timing of revenues due tothe variability in size, scope and duration of research projects, regulatorydelays, research study results which lead to cancellations of researchprojects, and other factors, including general economic conditions andregulatory developments, not within our control.  The factors discussed herein and expressedfrom time to time in our filings with the Securities and Exchange Commissioncould cause actual results and developments to be materially different fromthose expressed in or implied by such statements.  The forward-looking statements are made onlyas of the date of this filing, and we undertake no obligation to publiclyupdate such forward-looking statements to reflect subsequent events or circumstances.

 

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** **

**FactorsThat May Affect Our Business, Future Operating Results and FinancialCondition**

 

The more prominent risks anduncertainties inherent in our business are described below. However, additionalrisks and uncertainties may also impair our business operations.  If any of the following risks actually occur,our business, financial condition or results of operations may suffer.

 

**Item 1A.           RiskFactors.**

** **

**RisksRelated to Our Business**

 

***Wehave a limited operating history and have incurred substantial losses andexpect future losses****.*

* *

We are adevelopment stage biotechnology company with a limited operating history andlimited assets and capital.  We haveincurred losses each year since inception and had an accumulated deficit of$30,223,030 at June 30, 2008. We have generated minimal revenues bylicensing our technology for certain crops to companies willing to share in ourdevelopment costs. In addition, our technology may not be ready forcommercialization for several years. We expect to continue to incur losses forthe next several years because we anticipate that our expenditures on researchand development, and administrative activities will significantly exceed ourrevenues during that period. We cannot predict when, if ever, we will becomeprofitable.

 

***We may need additional capitalto fund our operations until we are able to generate a profit.***

*** ***

Ouroperations to date have required significant cash expenditures.  Our future capital requirements will dependon the results of our research and development activities, preclinical andclinical studies, and competitive and technological advances.

 

In addition, the recent financings with YA Global Investments, L.P.,referred to herein as YA Global, and Stanford Venture Capital Holdings, Inc.,referred to herein as Stanford, are secured by all of our assets.  If we default under the convertible notes,the investors may foreclose on our assets and our business.  As a result, we may need to obtain morefunding in the future through collaborations or other arrangements withresearch institutions and corporate partners or public and private offerings ofour securities, including debt or equity financing.  We may not be able to obtain adequate funds forour operations from these sources when needed or on acceptable terms. Futurecollaborations or similar arrangements may require us to license valuableintellectual property to, or to share substantial economic benefits with, ourcollaborators.  If we raise additionalcapital by issuing additional equity or securities convertible into equity, ourstockholders may experience dilution and our share price may decline.  Any debt financing may result in restrictionson our spending.

 

If we areunable to raise additional funds, we will need to do one or more of thefollowing:

 

·                  delay, scale-back or eliminate some or all of ourresearch and product development programs;

·                  license third parties to develop and commercializeproducts or technologies that we would otherwise seek to develop andcommercialize ourselves;

·                  seek strategic alliances or business combinations;

 

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·                  attempt to sell our company;

·                  cease operations; or

·                  declare bankruptcy.

 

We believethat at the projected rate of spending we should have sufficient cash and investmentsto maintain our present operations for the next 13 months as of June 30,2008.

 

***Wedepend on a single principal technology and, if our technology is notcommercially successful, we will have no alternative source of revenue****.*

* *

Our primarybusiness is the development and licensing of technology to identify, isolate,characterize and promote or silence genes which control the death of cells inhumans and plants. Our future revenue and profitability critically depend uponour ability to successfully develop apoptosis and senescence gene technologyand later license or market such technology. We have conducted experiments on certain crops with favorable resultsand have conducted certain preliminary cell-line and animal experiments, whichhave provided us with data upon which we have designed additional researchprograms. However, we cannot give any assurance that our technology will becommercially successful or economically viable for any crops or human healthapplications.

 

In addition,no assurance can be given that adverse consequences might not result from theuse of our technology such as the development of negative effects on humans orplants or reduced benefits in terms of crop yield or protection.  Our failure to obtain market acceptance ofour technology or of our current or potential licensees to successfullycommercialize such technology would have a material adverse effect on ourbusiness.

 

***Weoutsource all of our research and development activities and, if we areunsuccessful in maintaining our alliances with these third parties, ourresearch and development efforts may be delayed or curtailed.***

*** ***

We rely onthird parties to perform all of our research and development activities.  Our research and development efforts takeplace at the University of Waterloo in Ontario, Canada, where our technologywas discovered, the University of Colorado, Mayo Clinic, the University ofVirginia, and with our commercial partners. At this time, we do not have the internal capabilities to perform ourresearch and development activities. Accordingly, the failure of third-partyresearch partners to perform under agreements entered into with us, or ourfailure to renew important research agreements with these third parties, maydelay or curtail our research and development efforts.

 

***Wehave significant future capital needs and may be unable to raise capital whenneeded, which could force us to delay or reduce our research and developmentefforts.***

* *

As of June 30, 2008, we had cash and highly-liquid investments of$6,176,985 and working capital of $5,673,107. Using our available reserves asof June 30, 2008, we believe that we can operate according to our currentbusiness plan for the next 13 months from June 30, 2008.  To date, we have generated minimal revenuesand anticipate that our operating costs will exceed any revenues generated overthe next several years. Therefore, we will be required to raise additionalcapital in the future in order to operate according to our current businessplan, and this funding may not be available on favorable terms, if at all.  If we are unable to raise 

 

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additional funds, we will need to do one or more of the following:

 

·                  delay, scale back or eliminate some or all of ourresearch and development programs;

·                  license third parties to develop and commercializeour technology that we would otherwise seek to develop and commercializeourselves;

·                  seek strategic alliances or business combinations;

·                  attempt to sell our company;

·                  cease operations; or

·                  declare bankruptcy.

 

In addition,in connection with any funding, if we need to issue more equity securities thanour certificate of incorporation currently authorizes, or more than 20% of theshares of our common stock outstanding, we may need stockholder approval.  If stockholder approval is not obtained or ifadequate funds are not available, we may be required to curtail operationssignificantly or to obtain funds through arrangements with collaborativepartners or others that may require us to relinquish rights to certain of ourtechnologies, product candidates, products or potential markets. Investors mayexperience dilution in their investment from future offerings of our commonstock. For example, if we raise additional capital by issuing equitysecurities, such an issuance would reduce the percentage ownership of existingstockholders.  In addition, assuming theexercise of all options and warrants outstanding and the conversion of thenotes into common stock, as of June 30, 2008, we had 7,957,957 shares ofcommon stock authorized but unissued and unreserved, which may be issued fromtime to time by our board of directors without stockholder approval.  The total number of shares that may be issuedunder the financing is subject to certain caps as more fully described in this Form 10-K.  Furthermore, we may need to issue securitiesthat have rights, preferences and privileges senior to our common stock.  Failure to obtain financing on acceptableterms would have a material adverse effect on our liquidity.

 

Since ourinception, we have financed all of our operations through private equity anddebt financings. Our future capital requirements depend on numerous factors,including:

 

·                  the scope of our research and development;

·                  our ability to attract business partners willing toshare in our development costs;

·                  our ability to successfully commercialize ourtechnology;

·                  competing technological and market developments;

·                  our ability to enter into collaborative arrangementsfor the development, regulatory approval and commercialization of otherproducts; and

·                  the cost of filing, prosecuting, defending andenforcing patent claims and other intellectual property rights.

 

***Ourbusiness depends upon our patents and proprietary rights and the enforcement ofthese rights.  Our failure to obtain andmaintain patent protection may increase competition and reduce demand for ourtechnology.***

*** ***

As a resultof the substantial length of time and expense associated with developingproducts and bringing them to the marketplace in the biotechnology andagricultural industries, obtaining and maintaining patent and trade secretprotection for technologies, products and processes is of vital importance.  Our success will depend in part on severalfactors, including, without limitation:

 

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·                  our ability to obtain patent protection for ourtechnologies and processes;

·                  our ability to preserve our trade secrets; and

·                  our ability to operate without infringing theproprietary rights of other parties both in the United States and in foreigncountries.

 

As of June 30,2008, we have been issued nineteen patents by the PTO and twenty-three patentsfrom foreign countries.  We have alsofiled numerous patent applications for our technology in the United States andin several foreign countries, which technology is vital to our primarybusiness, as well as several Continuations in Part on these patentapplications.  Our success depends inpart upon the grant of patents from our pending patent applications.

 

Although webelieve that our technology is unique and will not violate or infringe upon theproprietary rights of any third party, we cannot assure you that these claims willnot be made or if made, could be successfully defended against.  If we do not obtain and maintain patentprotection, we may face increased competition in the United States andinternationally, which would have a material adverse effect on our business.

 

Since patentapplications in the United States are maintained in secrecy until patents areissued, and since publication of discoveries in the scientific and patentliterature tend to lag behind actual discoveries by several months, we cannotbe certain that we were the first creator of the inventions covered by ourpending patent applications or that we were the first to file patentapplications for these inventions.

 

In addition,among other things, we cannot assure you that:

 

·                  our patent applications will result in the issuanceof patents;

·                  any patents issued or licensed to us will be freefrom challenge and that if challenged, would be held to be valid;

·                  any patents issued or licensed to us will providecommercially significant protection for our technology, products and processes;

·                  other companies will not independently developsubstantially equivalent proprietary information which is not covered by ourpatent rights;

·                  other companies will not obtain access to ourknow-how;

·                  other companies will not be granted patents that mayprevent the commercialization of our technology; or

·                  we will not require licensing and the payment ofsignificant fees or royalties to third parties for the use of theirintellectual property in order to enable us to conduct our business.

 

***Ourcompetitors may allege that we are infringing upon their intellectual propertyrights, forcing us to incur substantial costs and expenses in resultinglitigation, the outcome of which would be uncertain.***

*** ***

Patent law isstill evolving relative to the scope and enforceability of claims in the fieldsin which we operate.  We are like mostbiotechnology companies in that our patent protection is highly uncertain andinvolves complex legal and technical questions for which legal principles arenot yet firmly established.  In addition,if issued, our patents may not contain claims sufficiently broad to protect usagainst third parties with similar technologies or products, or provide us withany competitive advantage.

 

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The PTO and the courts have not established a consistent policyregarding the breadth of claims allowed in biotechnology patents.  The allowance of broader claims may increasethe incidence and cost of patent interference proceedings and the risk of infringementlitigation.  On the other hand, theallowance of narrower claims may limit the value of our proprietary rights.

 

The laws of some foreign countries do notprotect proprietary rights to the same extent as the laws of the United States,and many companies have encountered significant problems and costs inprotecting their proprietary rights in these foreign countries.

 

We could become involved in infringementactions to enforce and/or protect our patents. Regardless of the outcome, patent litigation is expensive and timeconsuming and would distract our management from other activities.  Some of our competitors may be able tosustain the costs of complex patent litigation more effectively than we couldbecause they have substantially greater resources.  Uncertainties resulting from the initiationand continuation of any patent litigation could limit our ability to continueour operations.

 

***If our technology infringes theintellectual property of our competitors or other third parties, we may berequired to pay license fees or damages.***

 

If any relevant claims of third-party patentsthat are adverse to us are upheld as valid and enforceable, we could beprevented from commercializing our technology or could be required to obtainlicenses from the owners of such patents. We cannot assure you that such licenses would be available or, ifavailable, would be on acceptable terms. Some licenses may be non-exclusive and, therefore, our competitors mayhave access to the same technology licensed to us.  In addition, if any parties successfullyclaim that the creation or use of our technology infringes upon theirintellectual property rights, we may be forced to pay damages, including trebledamages.

 

***Our security measures may not adequatelyprotect our unpatented technology and, if we are unable to protect theconfidentiality of our proprietary information and know-how, the value of ourtechnology may be adversely affected.***

*** ***

Our success depends upon know-how, unpatentable trade secrets, and theskills, knowledge and experience of our scientific and technicalpersonnel.  As a result, we require allemployees to agree to a confidentiality provision in their employment agreementthat prohibits the disclosure of confidential information to anyone outside ofour company, during the term of employment and thereafter.  We also require all employees to disclose andassign to us the rights to their ideas, developments, discoveries andinventions.  We also attempt to enterinto similar agreements with our consultants, advisors and researchcollaborators.  We cannot assure you thatadequate protection for our trade secrets, know-how or other proprietaryinformation against unauthorized use or disclosure will be available.

 

We occasionally provide information to research collaborators inacademic institutions and request the collaborators conduct certain tests.  We cannot assure you that the academicinstitutions will not assert intellectual property rights in the results of thetests conducted by the research collaborators, or that the academicinstitutions will grant licenses under such intellectual property rights to uson acceptable terms, if at all.  If theassertion of intellectual property rights by an academic institution issubstantiated, and the academic institution does not grant intellectualproperty rights to us, these events could limit our ability to commercializeour technology.

 

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*** ***

***As we evolve from a company primarilyinvolved in the research and development of our technology into one that isalso involved in the commercialization of our technology, we may havedifficulty managing our growth and expanding our operations.***

*** ***

As our business grows, we may need to add employees and enhance ourmanagement, systems and procedures.  Wemay need to successfully integrate our internal operations with the operationsof our marketing partners, manufacturers, distributors and suppliers to produceand market commercially viable products. We may also need to manage additional relationships with variouscollaborative partners, suppliers and other organizations.  Although we do not presently conduct researchand development activities in-house, we may undertake those activities in thefuture.  Expanding our business may placea significant burden on our management and operations.  We may not be able to implement improvementsto our management information and control systems in an efficient and timelymanner and we may discover deficiencies in our existing systems andcontrols.  Our failure to effectivelyrespond to changes may make it difficult for us to manage our growth and expandour operations.

 

***We have no marketing or sales history anddepend on third-party marketing partners. Any failure of these parties to perform would delay or limit ourcommercialization efforts.***

*** ***

We have no history of marketing, distributing or selling biotechnologyproducts and we are relying on our ability to successfully establish marketingpartners or other arrangements with third parties to market, distribute andsell a commercially viable product both here and abroad.  Our business plan envisions creatingstrategic alliances to access needed commercialization and marketing expertise.  We may not be able to attract qualifiedsub-licensees, distributors or marketing partners, and even if qualified, thesemarketing partners may not be able to successfully market agricultural productsor human health applications developed with our technology.  If our current or potential future marketingpartners fail to provide adequate levels of sales, our commercializationefforts will be delayed or limited and we may not be able to generate revenue.

 

***Wewill depend on joint ventures and strategic alliances to develop and market ourtechnology and, if these arrangements are not successful, our technology maynot be developed and the expenses to commercialize our technology willincrease.***

*** ***

In its current state of development, our technology is not ready to bemarketed to consumers.  We intend tofollow a multi-faceted commercialization strategy that involves the licensingof our technology to business partners for the purpose of further technologicaldevelopment, marketing and distribution. We have and are seeking business partners who will share the burden ofour development costs while our technology is still being developed, and whowill pay us royalties when they market and distribute products incorporatingour technology upon commercialization. The establishment of joint ventures and strategic alliances may createfuture competitors, especially in certain regions abroad where we do not pursuepatent protection.  If we fail toestablish beneficial business partners and strategic alliances, our growth willsuffer and the continued development of our technology may be harmed.

 

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*** ***

***Competition in the human health andagricultural biotechnology industries is intense and technology is changingrapidly.  If our competitors market theirtechnology faster than we do, we may not be able to generate revenues from thecommercialization of our technology.***

* *

Many human health and agricultural biotechnology companies are engagedin research and development activities relating to apoptosis andsenescence.  The market for plantprotection and yield enhancement products is intensely competitive, rapidlychanging and undergoing consolidation. We may be unable to compete successfully against our current and futurecompetitors, which may result in price reductions, reduced margins and theinability to achieve market acceptance for products containing ourtechnology.  Our competitors in the fieldof plant senescence gene technology are companies that develop and producetransgenic plants and include major international agricultural companies, specializedbiotechnology companies, research and academic institutions and, potentially,our joint venture and strategic alliance partners.  These companies include: Icoria (formerlyParadigm Genetics); Mendel Biotechnology; Renessen LLC; Exelixis Plant Sciences, Inc.;Syngenta International AG; and Eden Bioscience, among others.  Some of our competitors that are involved inapoptosis research include:  Amgen;Centocor; Genzyme; OSI Pharmaceuticals, Inc.; Novartis; IntrogenTherapeutics, Inc.; Genta, Inc.; and Vertex Pharmaceuticals, Inc.  Many of these competitors have substantiallygreater financial, marketing, sales, distribution and technical resources thanus and have more experience in research and development, clinical trials,regulatory matters, manufacturing and marketing.  We anticipate increased competition in thefuture as new companies enter the market and new technologies becomeavailable.  Our technology may berendered obsolete or uneconomical by technological advances or entirelydifferent approaches developed by one or more of our competitors, which willprevent or limit our ability to generate revenues from the commercialization ofour technology.

 

***Ourbusiness is subject to various government regulations and, if we or ourlicensees are unable to obtain regulatory approval, we may not be able tocontinue our operations.***

*** ***

At present,the U.S. federal government regulation of biotechnology is divided among threeagencies:

 

·                  the USDA regulates the import, field testing and interstate movement ofspecific types of genetic engineering that may be used in the creation oftransgenic plants;

·                  the EPA regulates activity related to the invention of plant pesticides andherbicides, which may include certain kinds of transgenic plants; and

·                  the FDA regulates foods derived from new plant varieties.

 

The FDA requires that transgenic plants meetthe same standards for safety that are required for all other plants and foodsin general.  Except in the case ofadditives that significantly alter a food’s structure, the FDA does not requireany additional standards or specific approval for genetically engineered foods,but expects transgenic plant developers to consult the FDA before introducing anew food into the marketplace.

 

Use of our technology, if developed for humanhealth applications, will also be subject to FDA regulation.  The FDA must approve any drug or biologicproduct before it can be marketed in the United States.  In addition, prior to being sold outside ofthe U.S., any products resulting from the application of our human healthtechnology must be approved by the regulatory agencies of foreigngovernments.  Prior to filing a new drugapplication or biologics license 

 

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application with the FDA, we would have toperform extensive clinical trials, and prior to beginning any clinical trial,we need to perform extensive preclinical testing which could take several yearsand may require substantial expenditures.

 

We believe that our current activities, which to date have beenconfined to research and development efforts, do not require licensing orapproval by any governmental regulatory agency. However, we are planning onperforming clinical trials, which would be subject to FDA approval.  Additionally, federal, state and foreignregulations relating to crop protection products and human health applicationsdeveloped through biotechnology are subject to public concerns and politicalcircumstances, and, as a result, regulations have changed and may changesubstantially in the future. Accordingly, we may become subject to governmental regulations orapprovals or become subject to licensing requirements in connection with ourresearch and development efforts. We may also be required to obtain suchlicensing or approval from the governmental regulatory agencies describedabove, or from state agencies, prior to the commercialization of ourgenetically transformed plants and human health technology.  In addition, our marketing partners whoutilize our technology or sell products grown with our technology may besubject to government regulations.  Ifunfavorable governmental regulations are imposed on our technology or if wefail to obtain licenses or approvals in a timely manner, we may not be able tocontinue our operations.

 

***Preclinicalstudies and clinical trials of our human health applications may beunsuccessful, which could delay or prevent regulatory approval.***

*** ***

Preclinical studies may reveal that our humanhealth technology is ineffective or harmful, and/or clinical trials may beunsuccessful in demonstrating efficacy and safety of our human healthtechnology, which would significantly limit the possibility of obtainingregulatory approval for any drug or biologic product manufactured with ourtechnology.  The FDA requires submissionof extensive preclinical, clinical and manufacturing data to assess theefficacy and safety of potential products. Furthermore, the success ofpreliminary studies does not ensure commercial success, and later-stageclinical trials may fail to confirm the results of the preliminary studies.

 

***Any inability to license from third parties their proprietarytechnologies or processes which we use in connection with the development ofour technology may impair our business.***

*** ***

Other companies, universities and research institutions have or mayobtain patents that could limit our ability to use our technology in a productcandidate or impair our competitive position.  As a result, we would have to obtain licensesfrom other parties before we could continue using our technology in a productcandidate.  Any necessary licenses maynot be available on commercially acceptable terms, if at all.  If we do not obtain required licenses, we maynot be able to develop our technology into a product candidate or we mayencounter significant delays in development while we redesign methods that arefound to infringe on the patents held by others.

 

***Clinical trials for our human health technology will be lengthy andexpensive and their outcome is uncertain***

*** ***

Before obtaining regulatoryapproval for the commercial sales of any product containing our technology, wemust demonstrate through clinical testing that our technology and product containingour technology is safe and effective for use in humans.  Conducting clinical trials is a 

 

22

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time-consuming, expensive anduncertain process and typically requires years to complete.  In our industry, the results from preclinicalstudies and early clinical trials often are not predictive of results obtainedin later-stage clinical trials.  Someproducts and technologies that have shown promising results in preclinicalstudies or early clinical trials subsequently fail to establish sufficientsafety and efficacy data necessary to obtain regulatory approval.  At any time during clinical trials we or theFDA might delay or halt any clinical trial for various reasons, including:

 

·                  occurrenceof unacceptable toxicities or side effects;

 

·                  ineffectivenessof the product candidate;

 

·                  negativeor inconclusive results from the clinical trials, or results that necessitateadditional studies or clinical trials;

 

·                  delaysin obtaining or maintaining required approvals from institutions, review boardsor other reviewing entities at clinical sites;

 

·                  delaysin patient enrollment; or

 

·                  insufficientfunding or a reprioritization of financial or other resources.

 

Any failure or substantial delayin successfully completing clinical trials and obtaining regulatory approvalfor our product candidates could severely harm our business.

 

***Even if we receive regulatoryapproval, consumers may not accept products containing our technology, whichwill prevent us from being profitable since we have no other source of revenue.***

*** ***

We cannot guarantee that consumers willaccept products containing our technology. Recently, there has been consumer concern and consumer advocate activismwith respect to genetically engineered agricultural consumer products.  The adverse consequences from heightenedconsumer concern in this regard could affect the markets for agriculturalproducts developed with our technology and could also result in increasedgovernment regulation in response to that concern. If the public or potentialcustomers perceive our technology to be genetic modification or geneticengineering, agricultural products grown with our technology may not gainmarket acceptance.

 

***We depend on our key personnel and, if we arenot able to attract and retain qualified scientific and business personnel, wemay not be able to grow our business or develop and commercialize ourtechnology.***

*** ***

We are highly dependent on our scientificadvisors, consultants and third-party research partners.  Our success will also depend in part on thecontinued service of our key employees and our ability to identify, hire andretain additional qualified personnel in an intensely competitive market.  Although we have employment agreements withall of our key employees and a research agreement with Dr. Thompson, theseagreements may be terminated upon short or no notice.  We do not maintain key person life insuranceon any member of management.  The failureto attract and retain key personnel could limit our growth and hinder ourresearch and development efforts.

 

23

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*** ***

***Certain provisions of our charter, by-lawsand Delaware law could make a takeover difficult.***

*** ***

Certain provisions of our certificate of incorporation and by-lawscould make it more difficult for a third party to acquire control of us, evenif the change in control would be beneficial to stockholders.  Our certificate of incorporation authorizesour board of directors to issue, without stockholder approval, except as may berequired by the rules of the American Stock Exchange, 5,000,000 shares ofpreferred stock with voting, conversion and other rights and preferences thatcould adversely affect the voting power or other rights of the holders of ourcommon stock.  Similarly, our by-laws donot restrict our board of directors from issuing preferred stock withoutstockholder approval.

 

In addition, we are subject to the Business Combination Act of theDelaware General Corporation Law which, subject to certain exceptions,restricts certain transactions and business combinations between a corporationand a stockholder owning 15% or more of the corporation’s outstanding votingstock for a period of three years from the date such stockholder becomes a 15%owner.  These provisions may have theeffect of delaying or preventing a change of control of us without action byour stockholders and, therefore, could adversely affect the value of our commonstock.

 

Furthermore, in the event of our merger or consolidation with or intoanother corporation, or the sale of all or substantially all of our assets inwhich the successor corporation does not assume outstanding options or issueequivalent options, our board of directors is required to provide acceleratedvesting of outstanding options.

 

***Increasing political and socialturmoil, such as terrorist and military actions, increase the difficulty for usand our strategic partners to forecast accurately and plan future businessactivities.***

*** ***

Recent political and social turmoil, can be expected to put furtherpressure on economic conditions in the United States and worldwide.  These political, social and economicconditions may make it difficult for us to plan future business activities.

 

**Risks Related to OurCommon Stock**

** **

***Ourmanagement and other affiliates have significant control of our common stockand could significantly influence our actions in a manner that conflicts withour interests and the interests of other stockholders.***

* *

As of June 30, 2008, our executive officers, directors andaffiliated entities together beneficially own approximately 70.7% of theoutstanding shares of our common stock, assuming the exercise of options andwarrants which are currently exercisable or will become exercisable within 60days of June 30, 2008, held by these stockholders. As a result, thesestockholders, acting together, will be able to exercise significant influenceover matters requiring approval by our stockholders, including the election ofdirectors, and may not always act in the best interests of otherstockholders.  Such a concentration ofownership may have the effect of delaying or preventing a change in control ofus, including transactions in which our stockholders might otherwise receive apremium for their shares over then current market prices.

 

24

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*** ***

***Asignificant portion of our total outstanding shares of common stock may be soldin the market in the near future, which could cause the market price of ourcommon stock to drop significantly.***

* *

As of June 30, 2008, we had 18,375,117 shares of our common stockissued and outstanding, of which approximately 5,319,639 shares are registeredpursuant to a registration statement on Form S-3 and the remainder ofwhich are either eligible to be sold under SEC Rule 144 or are in thepublic float.  In addition, we haveregistered 2,632,194 shares of our common stock underlying warrants previouslyissued on the Form S-3 registration statement and we registered 6,000,000shares of our common stock underlying options granted or to be granted underour stock option plan.  Consequently,sales of substantial amounts of our common stock in the public market, or theperception that such sales could occur, may have a material adverse effect onour stock price.

 

***Ourcommon stock has a limited trading market, which could limit your ability toresell your shares of common stock at or above your purchase price.***

*** ***

Our common stock is quoted on the American Stock Exchange and currentlyhas a limited trading market.  TheAmerican Stock Exchange requires us to meet minimum financial requirements inorder to maintain our listing.  Wecurrently believe that we meet the continued listing requirements of theAmerican Stock Exchange. However, we cannot assure you that we will continue tomeet such standards.  If we do not meetthe continued listing standards, we could be delisted.  We cannot assure you that an active trading marketwill develop or, if developed, will be maintained.  As a result, our stockholders may find itdifficult to dispose of shares of our common stock and, as a result, may suffera loss of all or a substantial portion of their investment.

 

***Ifour common stock is delisted from the American Stock Exchange, we may not beable to list on any other stock exchange, and our common stock may be subjectto the “penny stock” regulations which may affect the ability of ourstockholders to sell their shares.***

*** ***

The American Stock Exchangerequires us to meet minimum financial requirements in order to maintain ourlisting.  We have previously receivednotices from the American Stock Exchange that we did not meet each of Section 1003(a)(ii) ofthe American Stock Exchange Company Guide with shareholders’ equity of lessthan $4,000,000 and losses from continuing operations and/or net losses inthree out of our four most recent fiscal years and Section 1003(a)(iii) ofthe American Stock Exchange Company Guide with shareholders’ equity less than$6,000,000 and losses from continuing operations and/or net losses in the fivemost recent fiscal years.  We hadsubmitted a plan to the American Stock Exchange discussing how we intended toregain compliance with the continued listing requirements.  The American Stock Exchange had accepted ourplan and had given us until March 1, 2008 to effectuate the plan andregain compliance with the continued listing requirements.  On March 12, 2008, the American StockExchange notified us that we have regained compliance with the continuedlisting requirements. As of June 30, 2008, we believe that we continue tobe in compliance with the American Stock Exchange’s continued listingrequirements.  However, if we are unableto continue to be in compliance with the continued listing requirements, it ispossible that we will be delisted.  If weare delisted from the American Stock Exchange, our common stock likely willbecome a “penny stock.”  In general,regulations of the SEC define a “penny stock” to be an equity security that isnot listed on a national securities exchange or the NASDAQ Stock Market andthat has a market price of less than $5.00 per share or with an exercise priceof less than 

 

25

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$5.00 per share, subject to certain exceptions.  If our common stock becomes a penny stock,additional sales practice requirements would be imposed on broker-dealers thatsell such securities to persons other than certain qualified investors.  For transactions involving a penny stock,unless exempt, a broker-dealer must make a special suitability determinationfor the purchaser and receive the purchaser’s written consent to thetransaction prior to the sale.  Inaddition, the rules on penny stocks require delivery, prior to and afterany penny stock transaction, of disclosures required by the SEC.

 

If our stock is not accepted for listing onthe American Stock Exchange, we will make every possible effort to have itlisted on the Over the Counter Bulletin Board, or the OTC Bulletin Board.  If our common stock were to be traded on theOTC Bulletin Board, the Securities Exchange Act of 1934, as amended, andrelated SEC rules would impose additional sales practice requirements onbroker-dealers that sell our securities. These rules may adversely affect the ability of stockholders tosell our common stock and otherwise negatively affect the liquidity, tradingmarket and price of our common stock.

 

We believe that the listing of our commonstock on a recognized national trading market, such as the American StockExchange, is an important part of our business and strategy.  Such a listing helps our stockholders byproviding a readily available trading market with current quotations.  Without that, stockholders may have adifficult time getting a quote for the sale or purchase of our stock, the saleor purchase of our stock would likely be made more difficult and the tradingvolume and liquidity of our stock would likely decline.  The absence of such a listing may adverselyaffect the acceptance of our common stock as currency or the value accorded itby other parties.  In that regard, theabsence of a listing on a recognized national trading market will also affectour ability to benefit from the use of our operations and expansion plans,including for use in licensing agreements, joint ventures, the development ofstrategic relationships and acquisitions, which are critical to our businessand strategy and none of which is currently the subject of any agreement,arrangement or understanding, with respect to any future financing or strategicrelationship it may undertake.  Thedelisting from the American Stock Exchange would result in negative publicityand would negatively impact our ability to raise capital in the future.

 

***Themarket price of our common stock may fluctuate and may drop below the price youpaid.***

*** ***

We cannot assure you that you will be able to resell the shares of ourcommon stock at or above your purchase price. The market price of our common stock may fluctuate significantly inresponse to a number of factors, some of which are beyond our control.  These factors include:

 

·      quarterly variations inoperating results;

·                  the progress or perceived progress of our researchand development efforts;

·      changes in accounting treatmentsor principles;

·                  announcements by us or our competitors of newtechnology, product and service offerings, significant contracts, acquisitionsor strategic relationships;

·      additions or departures of keypersonnel;

·      future offerings or resales ofour common stock or other securities;

·                  stock market price and volume fluctuations ofpublicly-traded companies in general and development companies in particular;and

·      general political, economic andmarket conditions.

 

26

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*** ***

***Becausewe do not intend to pay, and have not paid, any cash dividends on our shares ofcommon stock, our stockholders will not be able to receive a return on theirshares unless the value of our common stock appreciates and they sell theirshares.***

*** ***

We have never paidor declared any cash dividends on our common stock and we intend to retain anyfuture earnings to finance the development and expansion of our business.  We do not anticipate paying any cashdividends on our common stock in the foreseeable future.  Therefore, our stockholders will not be ableto receive a return on their investment unless the value of our common stockappreciates and they sell their shares.

 

***Our stockholders mayexperience substantial dilution as a result of the conversion of outstandingconvertible debentures, or the exercise of options and warrants to purchase ourcommon stock.***

 

As of June 30, 2008, we have grantedoptions outside of our stock option plan to purchase 10,000 shares of ourcommon stock and outstanding warrants to purchase 19,796,926 shares of ourcommon stock.  In addition, as of June 30, 2008, we have reserved6,000,000 shares of our common stock for issuance upon the exercise of optionsgranted pursuant to our stock option plan, 3,805,600 of which have beengranted, 90,000 of which have been exercised since inception, 3,715,600 of whichare outstanding, and 2,194,400 of which may be granted in the future.  Theexercise of these options and warrants will result in dilution to our existingstockholders and could have a material adverse effect on our stock price. Inaddition, any shares issued in connection with the YA Global financing orStanford Financing, as further discussed elsewhere in this Form 10-Q, canalso have a dilutive effect and a possible material adverse effect on our stockprice.  The conversion price of thewarrants are also subject to certain anti-dilution adjustments.  The agreements with YA Global and Stanfordprovide for the potential issuance of up to an additional 61,833,332 shares ofour common stock.

 

**Item 1B.              UnresolvedStaff Comments.**

** **

None.

 

**Item 2.                 Properties.**

** **

We lease office space in New Brunswick, New Jersey for a currentmonthly rental fee of $6,460, subject to certain escalations for ourproportionate share of increases, over the base year of 2001, in the building’soperating costs.  The monthly rental fee willcontinue to increase by one percent each year through the expiration date ofthe lease.  The lease expires in May 2011.  The space is in good condition, and webelieve it will adequately serve as our headquarters over the term of thelease.  We also believe that this officespace is adequately insured by the lessor.

 

# **Item 3.                 Legal Proceedings.**

# ** **

We are not currently a party to any legalproceedings; however, we may become involved in various claims and legalactions arising in the ordinary course of business.

 

# **Item 4.                 Submission of Matters to a Voteof Security Holders.**

# ** **

None.

 

27

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**PART II**

** **

**Item5.****                    Marketfor Registrant’s Common Equity, Related Stockholde****r Matters and IssuerPurchases of Equity Securities.**

** **

Our commonstock trades on the American Stock Exchange under the symbol SNT.

** **

The followingtable sets forth the range of the high and low sales price for our common stockfor each of the quarters since the quarter ended September 30, 2006, asreported on the American Stock Exchange.

 

| **Quarter**             | ** ** | **Common  Stock** | ** ** |
|-------------------------|------------|-------------------|------------|
| **Ended**               | ** ** | **High**          | ** ** | **Low** | ** ** |
|                    |       |              |       |   |   |
| September 30, 2006 |       | $                 | 1.83       |   | $ | 1.08 |   |
| December 31, 2006  |       | $                 | 1.40       |   | $ | 0.90 |   |
| March 31, 2007     |       | $                 | 1.33       |   | $ | 0.97 |   |
| June 30, 2007      |       | $                 | 1.69       |   | $ | 0.80 |   |
| September 30, 2007 |       | $                 | 1.25       |   | $ | 0.78 |   |
| December 31, 2007  |       | $                 | 1.05       |   | $ | 0.38 |   |
| March 31, 2008     |       | $                 | 1.28       |   | $ | 0.29 |   |
| June 30, 2008      |       | $                 | 1.99       |   | $ | 1.00 |   |

 

As of September 15,2008, the approximate number of holders of record of our common stock was 275**. **Thisnumber does not include “street name” or beneficial holders, whose shares areheld of record by banks, brokers and other financial institutions.

 

We have neitherpaid nor declared dividends on our common stock since our inception and we donot plan to pay dividends on our common stock in the foreseeable future. Weexpect that any earnings, which we may realize, will be retained to finance thegrowth of our company.

 

The following table provides informationabout the securities authorized for issuance under our equity compensationplans as of June 30, 2008.

 

**EQUITYCOMPENSATION PLAN INFORMATION**

 
| ** **                                                  | ** ** | **Number of securities  to be issued upon   exercise of outstanding  options, warrants   and rights and restricted   stock units** | ** ** | **Weighted-average  exercise price of   outstanding options,   warrants and rights and  restricted stock units** | ** ** | **Number of securities remaining  available for future  issuance  under equity  compensation plans** | ** ** |
|-------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|
| Equity  compensation plans approved by security holders     |       | 4,053,300                                                                                                                          | (1)        | $                                                                                                                | 1.95       |                                                                                                 | 1,856,700  | (2) |
| Equity  compensation plans not approved by security holders |       | —                                                                                                                             |       | —                                                                                                           |       | —                                                                                               |       |
| Total                                                       |       | 4,053,300                                                                                                                          | (1)        | $                                                                                                                | 1.95       |                                                                                                 | 1,856,700  | (2) |
|                                                             |            |                                                                                                                                    |            |                                                                                                                  |            |                                                                                                      |            |  |  |

 

28

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----

(1)   Issued pursuant to our 1998Stock Plan.

 

(2)   Available for futureissuance pursuant to our 1998 Stock Plan.

* *

**RECENT SALES OF UNREGISTEREDSECURITIES**

** **

On August 1, 2007 and August 29,2007, we entered into binding Securities Purchase Agreements with YA Global andStanford to sell to each of YA Global and Stanford up to $5,000,000 of securedconvertible notes and accompanying warrants for an aggregate gross proceeds of$10,000,000.  The convertible notes convertinto our common stock at a fixed price of $0.90 per share subject to certainadjustments, referred to herein as the Fixed Conversion Price, for a period oftwo years immediately following the signing date.  After the second anniversary of the signingdate, the convertible notes may convert into shares of our common stock at thelower of the fixed conversion price or 80% of the lowest daily volume-weightedaverage price, referred to herein as the VWAP, of our common stock during thefive trading days prior to the conversion date. The maturity date of each ofthe convertible notes for YA Global is December 30, 2010.  The maturity date of each of the convertiblenotes for Stanford is December 31, 2010. At the fixed conversion price, the number of shares of common stockissuable upon conversion of the $10,000,000 of convertible notes and shares ofcommon stock to be issued upon exercise of the warrants represents, in theaggregate, 24,994,444 shares, plus an estimated additional 2,000,000 shares forthe payment of interest in stock under the convertible notes.

 

The convertible notes accrue interest ontheir outstanding principal balances at an annual rate of 8%.  We have the option to pay interest in cashor, upon certain conditions, common stock. If we pay interest in our common stock, the stock will be valued at a10% discount to the average daily VWAP for the five day trading period prior tothe interest payment date, referred to herein as the Interest Shares.

 

At our option, we can redeem a portion of, orall of, the principal owed under the convertible notes by providing theinvestors with at least 30 business days’ written notice, provided that, at thetime of receipt of the notice, either: (A)(i) the VWAP of our common stockexceeds 130% of the Fixed Conversion Price for at least 20 of 30 prior tradingdays and (ii) there is an effective registration statement for the resaleof our common stock that will be issued under the redemption or (B) weredeem a portion, or all, of the principal owed at a 20% premium above theprincipal then outstanding and any accrued interest thereupon.  If we redeem all or any of the principaloutstanding under the convertible notes, we will pay an amount equal to theprincipal being redeemed plus accrued interest.

 

If there is an effective registrationstatement for the resale of the shares underlying the convertible notes or ifsuch shares become freely tradable under rule 144, we will have the optionto force the investors to convert 50% and 100% of our then-outstandingconvertible notes if our common stock price exceeds 150% and 175% of the FixedConversion Price, respectively, for any 20 out of 30 trading days; providedthat such forced conversion meets certain conditions, referred to herein as theCall Option.  If we exercise our CallOption prior to the third anniversary of the signing date, we will issueadditional warrants to the investors equal to 50% of 

 

29

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the number of shares underlying theconvertible notes subject to the forced conversion.  These warrants will be exercisable at thefixed conversion price and will have the same maturity as the other warrantsissued under the YA Global Financing.

 

Our obligations under the convertible notesare secured by all of our and our subsidiary’s assets and intellectualproperty, as evidenced by the Security Agreements and the Patent SecurityAgreements.  Pursuant to a subordinationagreement, YA Global is the senior secured creditor.

 

We have issued warrants to purchase anaggregate of 5,550,000 shares of our common stock to YA Global and warrants topurchase an aggregate of 8,333,333 of our common stock to Stanford.  Such warrants are exercisable six months andone day from the date of issuance until their expiration on the date that isfive years from the date of issuance. The warrants have been  issued intwo series. The exercise price of the Series A warrants is $1.01 pershare, and the exercise price of the Series B warrants is $0.90 per share,subject to certain adjustments.  Thewarrants provide a right of cashless exercise if, at the time of exercise,there is no effective registration statement registering the resale of theshares underlying the warrants.

 

The conversion rate of each convertible noteand the exercise price of the Series B warrants are subject to adjustmentfor certain events, including dividends, stock splits, combinations and thesale of our common stock or securities convertible into or exercisable for ourcommon stock at a price less than the then applicable conversion or exerciseprice.

 

The investors have a right of first refusalon any future funding that involves the issuance of our capital stock for solong as a portion of the convertible notes are outstanding.

 

The total gross proceeds from the issuance ofthe convertible notes and warrants is $10,000,000 before payment of 3.25% ofthe purchase price in commissions to Wainwright & Co., Inc.,referred to herein as the Placement Agent. We have issued to the Placement Agent warrants to purchase 7% of thepurchase price, or 777,777 shares, of our common stock with similar terms tothe warrants that have been and will be issued to the investors.  We have paid YA Global and Stanford anon-refundable structuring/due diligence fee of $30,000 each.  We have also paid YA Global a commitment fee of5% and Stanford a commitment fee of 7% of their respective purchase prices.

 

*Specifics of YA Global Financing*

* *

Pursuant to the YA Global Securities PurchaseAgreement, we have issued three convertible notes in the aggregate amount of$5,000,000 and two Series A warrants in the amount of 1,387,500 shareseach on September 21, 2007 and October 16, 2007 and a Series Bwarrant in the amount of 2,775,000 shares on December 20, 2007.  On April 29, 2008, YA Global converted$500,000 of the convertible notes into 555,556 shares of our common stock.

 

The convertible notes and warrants issued toYA Global are subject to a maximum cap of 30,500,000 on the number of shares ofour common stock that can be issued upon the conversion of the convertiblenotes and the exercise of the warrants.

 

*Specifics of Stanford Financing*

* *

Pursuant to the YA Global Securities PurchaseAgreement, we have issued three convertible notes in the aggregate amount of$5,000,000 and Series A warrants in the aggregate amount of 4,166,666shares and Series B warrants in the aggregate amount of 4,166,667 shares 

 

30

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each on December 20, 2007 and June 30,2008.

 

The convertible notes and warrants issued toStanford will be subject to a maximum cap of 31,888,888 on the number of sharesof our common stock that can be issued upon the conversion of the convertiblenotes and the exercise of the warrants.

 

The costs associated with theissuances to YA Global and Stanford in the amount of $1,291,427, $639,645 ofwhich represent the black-scholes value of the warrants issued to the placementagent, have been recorded as deferred financing costs and are being amortizedratably over the term of the convertible notes.

 

**PERFORMANCE GRAPH**

** **

The following graph compares the cumulativetotal stockholder return on our common stock with the cumulative total returnon the AMEX Market Value (U.S.) Index and the RDG Microcap Biotechnology Indexfor the period beginning July 1, 2003 and ending on the last day of ourlast completed fiscal year. The stock performance shown on the graph below isnot indicative of future price performance.

 

31

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**COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN***

Among Senesco Technologies, Inc., The AMEX Composite Index

And The RDG MicroCap Biotechnology Index

 

 

----

*$100 investedon 6/30/03 in stock & index-including reinvestment of dividends.

Fiscal yearending June 30.

 
| ** **                       | ** ** | **7/1/03** | ** ** | **6/30/04** | ** ** | **6/30/05** | ** ** | **6/30/06** | ** ** | **6/30/07** | ** ** | **6/30/08** | ** ** |
|----------------------------------|------------|------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
|                             |       |       |       |        |       |        |       |        |       |        |       |        |       |
| Senesco Technologies, Inc.  |       | $          | 100.00     |        | $          | 148.58      |       | $           | 84.43      |        | $          | 89.62       |       | $ | 54.25 |   | $ | 87.26 |   |
| AMEX Market Value (U.S.) Index   |       | $          | 100.00     |        | $          | 128.79      |       | $           | 165.82     |        | $          | 204.19      |       | $ | 253.70 |   | $ | 243.41 |   |
| RDG Microcap Biotechnology Index |       | $          | 100.00     |        | $          | 97.45       |       | $           | 71.24      |        | $          | 59.29       |       | $ | 40.60 |   | $ | 19.01 |   |

 

 The informationin the performance graph is not deemed to be “soliciting material” or to be “filed”with the Securities and Exchange Commission, nor shall such information beincorporated by reference into any future filing under the Securities Act of1933 or Securities Exchange act of 1934, each as amended, except to the extentthat we specifically incorporate it by reference into such filing.

 

32

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# **Item 6.                Selected Financial Data.**

# ** **

                Thefollowing Selected Financial Data should be read in conjunction with “Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and “Item 8. Financial Statements and Supplementary Data” includedelsewhere in this Annual Report on Form 10-K.

 

# **SELECTED FINANCIAL DATA**

# ** **

| ** **                                                              | ** ** | **Year Ended June 30,**                             | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** **                                                              | ** ** | **2008**                                                           | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                              | ** ** | **(In thousands, except per share data)** | ** ** |
| **Statement of Operations Data:**                                       | ** ** | ** **                                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenue                                                                 |       | $                                                                  | 457        |   | $ | 300 |   | $ | 67 |   | $ | 125 |   | $ | 17 |   |
| Operating expenses:                                                     |       |                                                               |       |   |   |   |   |   |   |   |   |
| General and administrative                                              |       | 2,291                                                              |       | 2,413 |   | 1,920 |   | 2,030 |   | 2,907 |   |
| Research and development                                                |       | 1,765                                                              |       | 1,208 |   | 1,566 |   | 1,417 |   | 1,147 |   |
| Total operating expenses                                                |       | 4,056                                                              |       | 3,621 |   | 3,486 |   | 3,447 |   | 4,054 |   |
| Loss from operations                                                    |       | (3,599                                                             | )          | (3,321 | ) | (3,419 | ) | (3,322 | ) | (4,037 | ) |
| Noncash income                                                          |       | —                                                             |       | — |   | — |   | 136 |   | 186 |   |
| Sale of state income tax loss - net                                     |       | —                                                             |       | — |   | — |   | 153 |   | 91 |   |
| Amortization of debt discount and financing  costs                      |       | (668                                                               | )          | — |   | — |   | — |   | — |   |
| Interest expense – convertible notes                               |       | (434                                                               | )          | — |   | — |   | — |   | — |   |
| Interest income, net                                                    |       | 100                                                                |       | 69 |   | 104 |   | 54 |   | 33 |   |
| Net loss                                                                |       | $                                                                  | (4,601     | ) | $ | (3,252 | ) | $ | (3,315 | ) | $ | (2,979 | ) | $ | (3,727 | ) |
| Basic and diluted net loss per common share                             |       | $                                                                  | (.26       | ) | $ | (.19 | ) | $ | (.21 | ) | $ | (.21 | ) | $ | (.29 | ) |
| Basic and diluted weighted average number  of common shares outstanding |       | 17,660                                                             |       | 16,917 |   | 15,469 |   | 14,054 |   | 12,668 |   |
|                                                                    |       |                                                               |       |   |   |   |   |   |   |   |   |
| **Balance Sheet Data:**                                                 | ** ** | ** **                                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash, cash equivalents and investments                                  |       | $                                                                  | 6,176      |   | $ | 658 |   | $ | 1,168 |   | $ | 4,481 |   | $ | 4,136 |   |
| Working capital                                                         |       | 5,673                                                              |       | 259 |   | 859 |   | 3,959 |   | 3,840 |   |
| Total assets                                                            |       | 10,643                                                             |       | 3,322 |   | 3,535 |   | 6,113 |   | 5,211 |   |
| Accumulated deficit                                                     |       | (30,223                                                            | )          | (25,622 | ) | (22,370 | ) | (19,055 | ) | (16,076 | ) |
| Total stockholders’ equity                                         |       | 9,836                                                              |       | 2,690 |   | 2,952 |   | 5,590 |   | 4,731 |   |

 

33

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# **Item 7.                  Management’s Discussion andAnalysis of Financial Condition and Results of Operations.**

# ** **

The discussion in “Management’s Discussionand Analysis of Financial Condition and Results of Operations” contains trendanalysis, estimates and other forward-looking statements within the meaning of Section 27Aof the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statementscontaining the words “believes,” “anticipates,” “expects,” “continue,” andother words of similar import or the negative of those terms orexpressions.  Such forward-lookingstatements are subject to known and unknown risks, uncertainties, estimates andother factors that may cause our actual results, performance or achievements,or industry results, to be materially different from any future results,performance or achievements expressed or implied by such forward-lookingstatements.  Actual results could differmaterially from those set forth in such forward-looking statements as a resultof, but not limited to, the “Risk Factors” described in Part I, Item1A.  You should read the followingdiscussion and analysis along with the “Selected Financial Data” and thefinancial statements and notes attached to those statements included elsewherein this report.

 

# **Overview**

# ** **

We are a development stagecompany.  We do not expect to generatesignificant revenues for approximately the next one to three years, duringwhich time we will engage in significant research and development efforts.  However, we have entered into nineagricultural license agreements to develop and commercialize our technology incorn, soy, cotton, rice, canola, lettuce, melons, trees, alfalfa, beddingplants, turf grass, and ethanol.  Eightof the licenses provide for upfront payments, milestone payments and royaltypayments to us upon commercial introduction. The ethanol license provides for annual payments for each of thelicensee’s ethanol production facilities that incorporates our technology.  We also have entered into a joint venture todevelop and commercialize our technology in banana plants.  In connection with the joint venture, we willreceive 50% of the profits from the sale of enhanced banana plants.

 

Consistentwith our commercialization strategy, we intend to license our technology foradditional crops, as the opportunities may arise, that may result in additionallicense fees, revenues from contract research and other related revenues.  Successful future operations will depend onour and our partners’ ability to transform our research and developmentactivities into a commercially feasible technology.

 

We plan toemploy the same partnering strategy in both the human health and agriculturaltarget markets.

 

Our human health research program, which hasconsisted of pre-clinical in-vitro and in-vivo experiments designed to assessthe role and method of action of the Factor 5A genes in human diseases, isperformed by approximately thirteen third party researchers at our direction,at the University of Waterloo, Mayo Clinic and the University of Virginia.

 

Our primary human health initiative is toadvance our technology for the potential treatment of multiple myeloma with thegoal of initiating a clinical trial.  Inconnection with the potential clinical trial, we have engaged a CRO to assistus through the process.  Wehave also determined the delivery system for our technology, contracted for thesupply of pharmaceutical 

 

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grade materials to be used in toxicology andhuman studies and have contracted with a third party laboratory to conducttoxicoly studies,  Together with theassistance of our CRO, we will have the toxicology studies performed with thegoal of filing an investigational new drug application, or IND application,with the U.S. Food and Drug Administration, or FDA, for the review andconsideration in order to initiate a clinical trial..  We estimate that it will take lessthan eighteen months to complete these objectives.

 

Our preclinical human health research hasyielded data that we have presented to various biopharmaceutical companies thatmay be prospective licensees for the development and marketing of potentialapplications for our technology.

 

**Critical Accounting Policies and Estimates**

 

*Revenue Recognition*

* *

We record revenue under technology licenseand development agreements related to the following.  Actual fees received may vary from therecorded estimated revenues.

 

·                  Nonrefundable upfront license feesthat are received in exchange for the transfer of our technology to licensees,for which no further obligations to the licensee exist with respect to thebasic technology transferred, are recognized as revenue on the earlier of whenpayments are received or collections are assured.

 

·                  Nonrefundable upfront license feesthat are received in connection with agreements that include time-basedpayments are, together with the time-based payments, deferred and amortizedratably over the estimated research period of the license.

 

·                  Milestone payments, which arecontingent upon the achievement of certain research goals, are recognized asrevenue when the milestones, as defined in the particular agreement, areachieved.

 

The effect of any change in revenues from technology license anddevelopment agreements would be reflected in revenues in the period suchdetermination was made. Historically, no such adjustments have been made.

 

*Estimates of Expenses*

* *

Our research and development agreements with third parties provide foran estimate of our expenses and costs, which are variable and are based on theactual services performed by the third party. We estimate the aggregate amount of the expenses based upon theprojected amounts that are set forth in the agreements, and we accrue theexpenses for which we have not yet been invoiced.  In estimating the expenses, we consider,among other things, the following factors:

 

·                  the existence of any prior relationshipbetween us and the third party provider;

 

·                  the past results of prior researchand development services performed by the third party provider; and

 

·                  the scope and timing of the researchand development services set forth in the agreement with the third partyprovider.

 

35

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After the research services are performed and we are invoiced, we makeany adjustments that are necessary to accurately report research anddevelopment expense for the period.

 

*Valuation Allowances and Carrying Values*

* *

We have recorded valuation allowances against our entire deferred taxassets of $9,152,000 at June 30, 2008 and $7,719,000 at June 30,2007.  The valuation allowances relateprimarily to the net operating loss carryforward deferred tax asset where thetax benefit of such asset is not assured.

 

As of June 30, 2008 and 2007, we have determined that theestimated future discounted cash flows related to our patent applications willbe sufficient to recover their carrying value.

 

We have determined that we are receiving theeconomic benefit of the agricultural patent applications as well as all of theissued patents and are amortizing the agricultural patent application costs andall of the issued patents over seventeen years on a straight-line basis.

 

We do not have any off-balance sheetarrangements.

 

*Stock-Based Compensation*

* *

We adopted FAS No. 123R, “Share-BasedPayments”, effective July 1, 2005, using the modified-retrospectivemethod.  The adoption of this standardrequires the recognition of stock-based compensation expense in theconsolidated financial statements.  Priorto July 1, 2005, we followed Accounting Principles Board Opinion 25, “Accountingfor Stock Issued to Employees”, and related interpretations.

 

The fair value of each stock option andwarrant is estimated on the date of grant using the Black-Scholesoption-pricing model.  Expectedvolatility is based on the historical volatility of our stock and of similarcompanies.  The expected term of stockoptions and warrants granted is based upon the simplified method wherebyexpected term is calculated using the weighted average term of the vestingperiod of such options and warrants.  Theexpected term is calculated for and applied to all groups of stock options andwarrants as we do not expect substantially different exercise or post-vestingtermination behavior amongst our employee population.  The risk-free rate of stock options is basedon the U.S. Treasury rate in effect at the time of grant for the expected termof the stock options and warrants. Expected forfeitures are based on historical data.

 

In connection with our Short-Term andLong-Term incentive plans, our management reviews the specific goals of suchplans to determine if such goals have been achieved or are probable that theywill be achieved.  If the goals have beenachieved or are probable of being achieved, then the amount of compensationexpense determined on the date of grant related to those specific goals ischarged to compensation expense at such time.

 

*Convertible Notes*

* *

During the year we issuedconvertible notes and warrants for gross proceeds in the amount of$10,000,000.  The proceeds have beenallocated between convertible notes and warrants based upon their fair values,whereby the fair value of the warrants have been determined using theBlack-Scholes model.  The remainingamounts were allocated to the beneficial conversion feature based upon theeffective conversion price compared to the fair 

 

36

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value of the common stock on the date ofissuance of the convertible notes and warrants. As such, all of the proceeds of the convertible notes and warrants wererecorded as equity.  The convertiblenotes are being amortized to interest expense using the effective yield methodover the term of the notes.

 

*Research Program*

* *

We do not expect to generate significant revenues for approximately thenext one to three years, during which time we will engage in significantresearch and development efforts.  Weexpect to spend significant amounts on the research and development of ourtechnology.  We also expect our researchand development costs to increase as we continue to develop and ultimatelycommercialize our technology.  However,the successful development and commercialization of our technology is highlyuncertain.  We cannot reasonably estimateor know the nature, timing and expenses of the efforts necessary to completethe development of our technology, or the period in which material net cash inflowsmay commence from the commercialization of our technology, including theuncertainty of:

 

·      the scope, rate of progress and expense ofour research activities;

·      the interim results of our research;

·      the expense of additional research thatmay be required after review of the interim results;

·      the terms and timing of any collaborative,licensing and other arrangements that we may establish;

·      the expense and timing of regulatoryapprovals;

·      the effect of competing technological andmarket developments; and

·      the expense of filing, prosecuting,defending and enforcing any patent claims or other intellectual propertyrights.

 

# **Liquidity andCapital Resources**

# ** **

*Overview*

* *

As of June 30, 2008, our cashbalance and investments totaled $6,176,985**,**and we had working capital of $5,673,107. As of June 30, 2007, we had a federal tax loss carryforward ofapproximately $19,924,000 and a state tax loss carry-forward of approximately$12,565,000 to offset future taxable income. We cannot assure you that we willbe able to take advantage of any or all of such tax loss carryforwards, if atall, in future fiscal years.

 

37

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* *

*ContractualObligations*

* *

The following table lists our cash contractual obligations as of June 30,2008:

 
| ** **                                                           | ** ** | **Payments Due by Period** | ** ** |
|----------------------------------------------------------------------|------------|-------------------------------------------|------------|
| **Contractual Obligations**                                     | ** ** | **Total**                                 | ** ** | **Less than  1 year** | ** ** | **1 - 3 years** | ** ** | **4 - 5 years** | ** ** | **More than  5 years** | ** ** |
| Research and Development Agreements  (1)                             |       | $                                         | 1,103,707  |   | $ | 1,103,707 |   | $ | — |   | $ | — |   | $ | — |   |
| Facility, Rent and Operating  Leases (2)                             |       | $                                         | 231,496    |   | $ | 78,508 |   | $ | 152,988 |   | $ | — |   | $ | — |   |
| Employment, Consulting and  Scientific Advisory Board Agreements (3) |       | $                                         | 817,040    |   | $ | 752,846 |   | $ | 64,194 |   | $ | — |   | $ | — |   |
| Total Contractual Cash  Obligations                                  |       | $                                         | 2,152,243  |   | $ | 1,935,061 |   | $ | 217,182 |   | $ | — |   | $ | — |   |

 

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(1)   Certain of our research and development agreementsdisclosed herein provide that payment is to be made in Canadian dollars and,therefore, the contractual obligations are subject to fluctuations in theexchange rate.

 

(2)   The lease for our office space in New Brunswick, NewJersey is subject to certain escalations for our proportionate share ofincreases in the building’s operating costs.

 

(3)   Certain of our employment and consulting agreementsprovide for automatic renewal, which is not reflected in the table, unlessterminated earlier by the parties to the respective agreements.

** **

We expect our capital requirements to increase significantly over the nextseveral years as we commence new research and development efforts, increase ourbusiness and administrative infrastructure and embark on developing in-housebusiness capabilities and facilities. Our future liquidity and capital fundingrequirements will depend on numerous factors, including, but not limited to,the levels and costs of our research and development initiatives and the costand timing of the expansion of our business development and administrativestaff.

 

Effective September 1, 2008, we extended our research anddevelopment agreement with the University of Waterloo for an additionalone-year period through August 31, 2009, in the amount of CAD $735,000 orapproximately USD $735,000, which is not included in the above table ofcontractual obligations. Research and development expenses under this agreementaggregated $730,960 for the year ended June 30, 2008 and USD $568,872 forthe year ended June 30, 2007 and USD $4,627,264 for the cumulative periodfrom inception through June 30, 2008. Total research and developmentexpenses aggregated $1,764,426 for the year ended June 30, 2008 and$1,208,321 for the year ended June 30, 2007 and $9,957,595 for thecumulative period from inception through June 30, 2008.

 

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* *

*Capital Resources*

 

Since inception, we have generated revenues of $1,175,000 in connectionwith the initial fees and milestone payments received under our license anddevelopment agreements.  We have not beenprofitable since inception, we will continue to incur additional operatinglosses in the future, and we will require additional financing to continue thedevelopment and subsequent commercialization of our technology.  While we do not expect to generatesignificant revenues from the licensing of our technology for at least the nextone to three years, we may enter into additional licensing or other agreementswith marketing and distribution partners that may result in additional licensefees, receive revenues from contract research, or other related revenue.

 

*License Agreements*

 

On July 17, 2007 we entered into alicense agreement with Bayer CropScience AG for the development andcommercialization of Cotton.  Under theterms of the license agreement, we received an upfront payment, will receivemilestone payments upon the achievement of certain development milestones, andadditionally, upon commercialization, a royalty on net sales.

 

On August 6, 2007 we entered into alicense agreement with Monsanto for the development and commercialization ofCorn and Soy.  Under the terms of thelicense agreement, we received an upfront payment, will receive milestonepayments upon the achievement of certain development milestones, andadditionally, upon commercialization, a royalty on net sales.

* *

On September 11,2007 we entered into a license agreement with Bayer CropScience AG for thedevelopment and commercialization of Rice. Under the terms of the agreement, we received an upfront payment, willreceive milestone payments upon the achievement of certain developmentmilestones, and additionally, upon commercialization, a royalty on net sales.

 

*Financing*

* *

As discussed in Part II, Item5, Recent Sales of Unregistered Securities, in this Annual Report on Form 10-K,on August 1, 2007 and August 29, 2007, we entered into bindingSecurities Purchase Agreements with YA Global and Stanford and have sold toeach of YA Global and Stanford $5,000,000 of secured convertible notes andaccompanying warrants for aggregate gross proceeds in the amount of $10,000,000.

 

We anticipate that, based upon our currentcash and investments, we will be able to fund our operations for the next thirteenmonths from June 30, 2008.  Over the nexttwelve months from June 30, 2008, we plan to fund our research anddevelopment and commercialization activities by:

 

·                       utilizing our current cash balance and investments,

·                       achieving some of the milestones set forth in ourcurrent licensing agreements,

·                       through the execution of additional licensingagreements for our technology, and

·                       through the placement of equity or debt instruments.

 

We cannot assure you that we will be able toraise money through any of the foregoing transactions, or on favorable terms,if at all.

 

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**Results of Operations**

 

Fiscal Yearsended June 30, 2008, 2007 and 2006

 

*Revenue*

* *

Total revenues consisted ofinitial fees and milestone payments on our agricultural development and licenseagreements.  During the year ended June 30,2008, we earned revenue in the amount of $456,667 and during the year ended June 30,2007, we earned revenue in the amount of $300,000.  Such revenue consisted of initial payments,current milestone payments, and the amortized portion of previous milestonepayments in connection with certain license agreements.  During the year ended June 30, 2006, weearned revenue in the amount of $66,666 consisted of current milestone paymentsand the amortized portion of previous milestone payments in connection withcertain license agreements.

 

We anticipate that we willcontinue to receive milestone payments in connection with our currentagricultural development and license agreements while we continue to pursue ourgoal of attracting other companies to license our technologies in various othercrops.  Additionally, we anticipate thatwe will receive royalty payments from our license agreements when our partnerscommercialize their crops containing our technology.  However, it is difficult for us to determineour future revenue expectations because we are a development stagebiotechnology company.  As such, thetiming and outcome of our experiments, the timing of signing new partners andthe timing of our partners moving through the development process intocommercialization is difficult to accurately predict.

 

*Operating expenses*

* *
| ** **                 | ** ** | **Year Ended June 30,** | ** ** |
|----------------------------|------------|----------------------------------------|------------|
| ** **                 | ** ** | **2008**                               | ** ** | **2007** | ** ** | **Change** | ** ** | **%** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                 | ** ** | **(In thousands, except % values)**    | ** ** |
| General and administrative |       | $                                      | 2,291      |   | $ | 2,413 |   | $ | (122 | ) | (5 | )% | $ | 2,413 |   | $ | 1,920 |   | $ | 493 |   | 26 | % |
| Research and development   |       | 1,765                                  |       | 1,208 |   | 557 |   | 46 | % | 1,208 |   | 1,566 |   | (358 | ) | (23 | )% |
| Total operating expenses   |       | $                                      | 4,056      |   | $ | 3,621 |   | $ | 435 |   | 12 | % | $ | 3,621 |   | $ | 3,486 |   | $ | 135 |   | 4 | % |

 

We expect operating expenses toincrease over the next twelve months as we anticipate that research and developmentexpenses and other general and administrative expenses will increase as wecontinue to expand our research and development activities.

 

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*General and administrative expenses*

* *

General and administrativeexpenses consist of the following:

 
| ** **                                | ** ** | **Year ended June 30,** | ** ** |
|-------------------------------------------|------------|----------------------------------------|------------|
| ** **                                | ** ** | **2008**                               | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                | ** ** | **(In thousands)**                | ** ** |
| Stock-based compensation                  |       | $                                      | 749        |   | $ | 910 |   | $ | 488 |   |
| Payroll and benefits                      |       | 669                                    |       | 616 |   | 607 |   |
| Investor relations                        |       | 305                                    |       | 278 |   | 341 |   |
| Professional fees                         |       | 261                                    |       | 217 |   | 211 |   |
| Depreciation and amortization             |       | 97                                     |       | 166 |   | 40 |   |
| Other general and administrative expenses |       | 210                                    |       | 226 |   | 233 |   |
|                                      |       |                                   |       |   |   |   |   |
| Total general and administrative expenses |       | $                                      | 2,291      |   | $ | 2,413 |   | $ | 1,920 |   |

 

·                  Stock-basedcompensation consists primarily of the amortized portion of the Black-Scholesvalue of options and warrants granted to consultants, directors and employeesas well as the value of restricted stock units granted to employees. DuringFiscal 2008 and 2007, there were 1,069,600 and 240,000 options granted to suchdirectors, employees and consultants and 1,000 and 2,500 warrants granted to aconsultant. Additionally, during Fiscal 2008 and Fiscal 2007, 1,500,000warrants were extended and repriced in connection with a financial advisoryagreement.  Also, during Fiscal 2008there were 337,700 restricted stock units granted to employees under ourshort-term and long-term stock incentive programs, of which, 112,700 restrictedstock units have been issued under the short-term incentive plan.

 

Stock-based compensation was lower in Fiscal2008 due to the extension and repricng of warrants in connection with afinancial advisory agreement, The Black-Scholes value of the extension andrepricing of warrants amounted to $385 in Fiscal 2008 compared with $683 inFiscal 2007.  This was partially offsetby an increase in the Black-Scholes value of the options and warrants grantedduring Fiscal 2008 compared to the Black-Scholes value of the options andwarrants granted during Fiscal 2007 because we granted more options duringFiscal 2008.

 

Stock-based compensation was higher in Fiscal2007 due to the extension and repricng of warrants in connection with afinancial advisory agreement, which had a Black-Scholes value of $683.  This was partially offset by a decrease inthe Black-Scholes value of the options and warrants granted during Fiscal 2007compared to the Black-Scholes value of the options and warrants granted duringFiscal 2006 because the market price of the common stock on the date of grantin Fiscal 2007 was lower than the market price of the common stock on the dateof grant in Fiscal 2006.

 

·                  Payrolland benefits increased primarily as a result of salary and health insurancerate increases.

 

·                  Investorrelations expense for Fiscal 2008 is higher than Fiscal 2007 primarily as aresult of an increase in the cost of the annual report due to the inclusion ofadditional disclosure and the services of a proxy solicitor.

 

Investor relations expense for Fiscal 2007 islower than Fiscal 2006 primarily as a result of a decrease in the amount ofconsulting fees incurred.

 

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·                  Professionalfees increased during Fiscal 2008 compared to Fiscal 2007 primarily as a resultof an increase in accounting and legal fees in connection with the additionaldisclosure included in the annual report.

 

Professional fees increased during Fiscal2007 compared to Fiscal 2006 primarily as a result of an increase in accountingfees which was partially offset by a decrease in legal fees.

 

·                  Depreciationand amortization decreased during Fiscal 2008 compared to Fiscal 2007 primarilyas a result of a decrease in amortization of patent costs.  During Fiscal 2008, we did not amortize thecost of our human health pending patent applications.

 

Depreciation and amortization increasedduring Fiscal 2007 compared to Fiscal 2006 primarily as a result of an increasein amortization of patent costs.  DuringFiscal 2007, we began amortizing the cost of our pending patent applications.

 

We expect general and administrative expensesto modestly increase over the next twelve months primarily due to general priceincreases in the cost of services.

 

*Research and development expenses*

* *
| ** **                     | ** ** | **Year Ended June 30,**             | ** ** |
|--------------------------------|------------|----------------------------------------------------|------------|
| ** **                     | ** ** | **2008**                                           | ** ** | **2007** | ** ** | **Change** | ** ** | **%** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **(In thousands, except % values)** | ** ** |
| Stock-based compensation       |       | $                                                  | 148        |   | $ | 60 |   | $ | 88 |   | 147 | % | $ | 60 |   | $ | 189 |   | $ | (129 | ) | (68 | )% |
| Other research and development |       | 1,617                                              |       | 1,148 |   | 469 |   | 41 | % | 1,148 |   | 1,377 |   | (229 | ) | (17 | )% |
| Total research and development |       | $                                                  | 1,765      |   | $ | 1,208 |   | $ | 557 |   | 46 | % | $ | 1,208 |   | $ | 1,566 |   | $ | (358 | ) | (23 | )% |

 

·                  Stock-basedcompensation increased during Fiscal 2008 compared to Fiscal 2007 primarilybecause the Black-Scholes calculated fair value of the options and warrantsgranted during Fiscal 2008 were higher than Fiscal 2007 because the number ofoptions granted were higher in Fiscal 2008.

 

Stock-based compensation decreased duringFiscal 2007 compared to Fiscal 2006 primarily because the Black-Scholescalculated fair value of the options and warrants granted during Fiscal 2007were lower than Fiscal 2006 because the market price of the common stock on thedate of grant in Fiscal 2007 was lower than the market price of the commonstock on the date of grant in Fiscal 2006.

 

·                  Otherresearch and development costs increased during Fiscal 2008 compared to Fiscal2007 primarily as a result of the initiation of our multiple myeloma projectduring Fiscal 2008.  Additionally, thebudget in connection with the research agreement with the University ofWaterloo was increased and the U.S. dollar was weaker against the Canadiandollar.

 

Other research and development costsdecreased during Fiscal 2007 compared to Fiscal 2006 primarily as a result of areduction of the budget in connection with the research agreement with theUniversity of Waterloo as well as the completion of certain human healthresearch programs being performed at certain universities.

 

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The breakdownof our research and development expenses between our agricultural and humanhealth research programs are as follows:

 
| ** **                              | ** ** | **Year ended June 30,**             | ** ** |
|-----------------------------------------|------------|----------------------------------------------------|------------|
| ** **                              | ** ** | **2008**                                           | ** ** | **%** | ** ** | **2007** | ** ** | **%** | ** ** | **2006** | ** ** | **%** | ** ** |
| ** **                              | ** ** | **(In thousands, except % values)** | ** ** |
| Agricultural research programs          |       | $                                                  | 771        |   | 44 | % | $ | 701 |   | 58 | % | $ | 813 |   | 52 | % |
| Human health research programs          |       | 994                                                |       | 56 | % | 507 |   | 42 | % | 753 |   | 48 | % |
| Total research and development expenses |       | $                                                  | 1,765      |   | 100 | % | $ | 1,208 |   | 100 | % | $ | 1,566 |   | 100 | % |

 

·                  Agriculturalresearch expenses increased during Fiscal 2008 compared to Fiscal 2007primarily as a result of an increase in the budget in connection with ourresearch agreement at the University of Waterloo, an increase in stock-basedcompensation, and the U.S. dollar was weaker against the Canadian dollar.

 

Agricultural research expenses decreasedduring Fiscal 2007 compared to Fiscal 2006 primarily as a result of a decreasein the budget in connection with our research agreement at the University ofWaterloo and a decrease in stock-based compensation.

 

·                  Humanhealth research expenses increased during Fiscal 2008 compared to Fiscal 2007primarily as a result of the initiation of the multiple myeloma project.

 

Human health research expenses increased during Fiscal 2007 compared toFiscal 2006 primarily as a result of the completion of certain human healthresearch programs being performed at certain universities.

 

We expect the percentage of human healthresearch programs to increase as a percentage of the total research anddevelopment expenses as we continue to expand our human health initiatives.

 

*Amortization of debt discount and financing costs*

* *

During Fiscal2008, we issued $10,000,000 in convertible notes and warrants.  The net proceeds of those notes and warrantswere recorded as equity.  The discount onthe convertible notes is being amortized using the effective yield method overthe term of the convertible notes.  Therelated costs of issuance were recorded as deferred financing costs and areamortized on a straight line basis over the term of the convertible notes.

 

*Interest expense – convertible notes*

* *

Interestexpense – convertible notes represents the fair value of the common stockissued in lieu of paying cash for the 8% coupon rate of interest related to theconvertible notes issued during Fiscal 2008.

 

                                                *Interest income*

* *
| ** **      | ** ** | **Year Ended June 30,**             | ** ** |
|-----------------|------------|----------------------------------------------------|------------|
| ** **      | ** ** | **2008**                                           | ** ** | **2007** | ** ** | **Change** | ** ** | **%** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **      | ** ** | **(In thousands, except % values)** | ** ** |
| Interest income |       | $                                                  | 100        |   | $ | 69 |   | $ | 31 |   | 45 | % | $ | 69 |   | $ | 105 |   | $ | (36 | ) | (34 | )% |
|                 |            |                                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The increasein interest income for Fiscal 2008 compared to Fiscal 2007 is due to a 

 

43

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higher averagecash and investments balance during the year.

 

The decreasein interest income for Fiscal 2007 compared to fiscal 2006 is due to a loweraverage cash and investments balance during the year, which was partiallyoffset by higher interest rates.

 

From Inceptionon July 1, 1998 through June 30, 2008

 

From inceptionof operations on July 1, 1998 through June 30, 2008, we earnedrevenues in the amount of $1,175,000, which consisted of the initial licensefees and milestone payments in connection with our various development andlicense agreements.  We do not expect togenerate significant revenues for at least the next one to three years, duringwhich time we will engage in significant research and development efforts.

 

We haveincurred losses each year since inception and have an accumulated deficit of$30,223,030 at June 30, 2008.  Weexpect to continue to incur losses as a result of expenditures on research,product development and administrative activities.

 

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** **

**Item7A.****                          Quantitativeand Qualitative Disclosures About Market Risk.**

** **

*Foreign Currency Risk*

* *

Our financialstatements are denominated in United States dollars and, except for ouragreement with the University of Waterloo, which is denominated in Canadiandollars, all of our contracts are denominated in United States dollars.  Therefore, we believe that fluctuations inforeign currency exchange rates will not result in any material adverse effecton our financial condition or results of operations.  In the event we derive a greater portion ofour revenues from international operations or in the event a greater portion ofour expenses are incurred internationally and denominated in a foreigncurrency, then changes in foreign currency exchange rates could effect ourresults of operations and financial condition.

 

*Interest Rate Risk*

* *

We invest inhigh-quality financial instruments, primarily money market funds, federalagency notes, corporate debt securities and United States treasury notes, withan effective duration of the portfolio of less than nine months, and nosecurity with an effective duration in excess of one year, which we believe aresubject to limited credit risk.  Wecurrently do not hedge our interest rate exposure.  Due to the short-term nature of ourinvestments, which we plan to hold until maturity, we do not believe that wehave any material exposure to interest rate risk arising from our investments.

 

45

----

 

# **Item 8.**                                   FinancialStatements and Supplementary Data.

# ** **

The financialstatements required to be filed pursuant to this Item 8 are included in thisAnnual Report on Form 10-K.  A listof the financial statements filed herewith is found at “Item 15. Exhibits,Financial Statement Schedules.”

** **

# **Item 9.**                                   Changesin and Disagreements with Accountants on Accounting and Financial Disclosure.

# ** **

None.

 

# **Item 9A.**                          Controlsand Procedures.

# ** **

*DisclosureControls and Procedures*

* *

Our management,with the participation of our chief executive officer and chief financialofficer, evaluated the effectiveness of our disclosure controls and procedures(as defined in Rules 13a-15(e) and 15d-15(e) under the ExchangeAct) as of the end of the period covered by this Annual Report on Form 10-K.  Based on this evaluation, our chief executiveofficer and chief financial officer have concluded that, as of the end of suchperiod, our disclosure controls and procedures were adequate and effective.

 

*Internal Control Over Financial Reporting*

* *

Ourcompany’s management is responsible for establishing and maintaining adequateinternal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act as a process designed by, or under thesupervision of, our company’s principle executive and principal financialofficers and effected by our company’s board of directors, management and otherpersonnel to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles in theU.S. and includes those policies and procedures that:

 

·                  Pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of our company;

 

·                  Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, andthat receipts and expenditures of our company are being made only in accordancewith authorization of management and directors of our company; and

 

·                  Provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use ordisposition of our company’s assets that could have a material effect on thefinancial statements.

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Projections of any evaluation of effectiveness to future periods aresubject to the risks that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or proceduresmay deteriorate.

 

Managementassessed the effectiveness of our company’s internal control over financialreporting as of June 30, 2008.  Inmaking this assessment, management used the criteria 

 

46

----

 

established in *Internal Control-Integrated Framework* issued by theCommittee of Sponsoring Organizations of the Treadway Commission, or COSO.

 

Basedon this assessment, management has concluded that, as of June 30, 2008 ourcompany’s internal control over financial reporting is effective.

 

Thisreport does not include an attestation report of the Company’s registeredpublic accounting firm regarding internal control over financial reporting,pursuant to temporary rules of the Securities and Exchange Commission thatpermit the Company to provide only management’s report in this annual report.

 

Nochange in our internal controls over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) occurred during the fiscal year ended June 30,2008 that has materially affected, or is reasonably likely to materiallyaffect, our internal controls over financial reporting.

 

*Limitations on the Effectiveness of Controls*

* *

Ourcompany’s management, including its chief executive officer and chief financialofficer, does not expect that our disclosure controls and procedures or ourinternal control over financial reporting will prevent all error and allfraud.  A control system, no matter howwell conceived and operated, can provide only reasonable, not absolute,assurance that the objectives of the control system are met.  Further, the design of a control system mustreflect the fact that there are resource constraints, and the benefits of controlsmust be considered relative to their costs. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issuesand instances of fraud, if any, within an organization have been detected.  These inherent limitations include therealities that judgments in decision-making can be faulty, and that breakdownscan occur because of simple error or mistake.

 

Additionally,controls can be circumvented by the individual acts of some persons, bycollusion of two or more people, or by management override of the control.  The design of any system of controls also isbased in part upon certain assumptions about the likelihood of future events,and there can be no assurance that any design will succeed in achieving ourstated goals under all potential future conditions.  Over time, controls may become inadequatebecause of changes in conditions, or the degree of compliance with the policiesor procedures may deteriorate.  Becauseof the inherent limitations in a cost-effective control system, misstatements,due to error or fraud may occur and not be detected.

 

# **Item 9B.**                          Other Information.

** **

None.

 

47

----

** **

**PART III**

** **

# **Item 10.**                            Directors,Executive Officers and Corporate Governance.

# ** **

The informationrelating to our directors, nominees for election as directors and executiveofficers under the headings “Election of Directors” and “Executive Officers” inour definitive proxy statement for the 2008 Annual Meeting of Stockholders isincorporated herein by reference to such proxy statement.

** **

# **Item 11.**                            ExecutiveCompensation.

# ** **

The discussionunder the heading “Executive Compensation” in our definitive proxy statementfor the 2008 Annual Meeting of Stockholders is incorporated herein by referenceto such proxy statement.

** **

# **Item 12.**                            SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters.

# ** **

The discussionunder the heading “Security Ownership of Certain Beneficial Owners andManagement” in our definitive proxy statement for the 2008 Annual Meeting ofStockholders is incorporated herein by reference to such proxy statement.

** **

# **Item 13.**                            CertainRelationships and Related Transactions, and Director Independence.

# ** **

The discussionunder the heading “Certain Relationships and Related Transactions” in ourdefinitive proxy statement for the 2008 Annual Meeting of Stockholders isincorporated herein by reference to such proxy statement.

 

**Item 14.****                            PrincipalAccounting Fees and Services.**

** **

The discussionunder the heading “Principal Accountant Fees and Services” in our definitiveproxy statement for the 2008 Annual Meeting of Stockholders is incorporatedherein by reference to such proxy statement.

 

# **Item 15.**                            Exhibitsand Financial Statement Schedules.

# ** **

(a)                                  (1)                                  FinancialStatements.

 

Reference is made to the Index to FinancialStatements on Page F-1.

 

(a)                                  (2)                                  FinancialStatement Schedules.

 

None.

 

(a)                                  (3)                                  Exhibits.

 

Reference is made to the Exhibit Indexon Page F-38.

 

48

----

** **

**SIGNATURES**

 

Pursuant tothe requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized this 26th day of September 2008.

 

 
|   | SENESCO TECHNOLOGIES, INC. |
|--------|----------------------------|
|   |                       |
|   |                       |   |
|   | By:                        | /s/ Bruce C. Galton |
|   |                       | Bruce C. Galton, President and |
|   |                       | Chief Executive Officer |
|   |                       | (principal executive officer) |
|   |                       |   |
|   |                       |   |
|   | By:                        | /s/ Joel Brooks |
|   |                       | Joel Brooks, Chief Financial Officer |
|   |                       | (principal financial and accounting  officer) |

 

49

----

 

Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated.

 

| **Signature**          | ** ** | **Title**                                    | ** ** | **Date**                |
|------------------------|------------|----------------------------------------------|------------|-------------------------|
|                   |       |                                         |       |                    |
| /s/ Ruedi Stalder      |       | Chairman and Director                        |       | September 26, 2008 |
| Ruedi Stalder          |       |                                         |       |                    |
|                   |       |                                         |       |                    |
| /s/ Bruce C. Galton    |       | President and Chief Executive                |       | September 26, 2008 |
| Bruce C. Galton        |       | Officer (principal executive officer)        |       |                    |
|                   |       | and Director                                 |       |                    |
|                   |       |                                         |       |                    |
| /s/ Joel Brooks        |       | Chief Financial Officer and Treasurer        |       | September 26, 2008 |
| Bruce C. Galton        |       | (principal financial and accounting officer) |       |                    |
|                   |       |                                         |       |                    |
| /s/ John E. Thompson   |       | Executive Vice President, Chief              |       | September 26, 2008 |
| John E. Thompson       |       | Scientific Officer and Director              |       |                    |
|                   |       |                                         |       |                    |
| /s/ Christopher Forbes |       | Director                                     |       | September 26, 2008 |
| Christopher Forbes     |       |                                         |       |                    |
|                   |       |                                         |       |                    |
| /s/ Thomas C. Quick    |       | Director                                     |       | September 26, 2008 |
| Thomas C. Quick        |       |                                         |       |                    |
|                   |       |                                         |       |                    |
| /s/ David Rector       |       | Director                                     |       | September 26, 2008 |
| David Rector           |       |                                         |       |                    |
|                   |       |                                         |       |                    |
| /s/ Jack Van Hulst     |       | Director                                     |       | September 26, 2008 |
| Jack Van Hulst         |       |                                         |       |                    |
|                   |       |                                         |       |                    |
| /s/ John Braca         |       | Director                                     |       | September 26, 2008 |
| John Braca             |       |                                         |       |                    |

 

50

----

 

**SENESCOTECHNOLOGIES, INC.**

**  ANDSUBSIDIARY**

**(adevelopment stage company)**

 

**CONSOLIDATED FINANCIALSTATEMENTS**

 

**JUNE 30,2008**

 

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

 

**INDEX TO CONSOLIDATEDFINANCIAL STATEMENTS**

 
| **Reports of Independent  Registered Public Accounting Firms** |   | F-2 – F-3  |
|----------------------------------------------------------------|--------|-----------------|
| ** **                                                     |   |            |
| **Consolidated  Financial Statements:**                        |   |            |
| ** **                                                     |   |            |
| Balance Sheets                                                 |   | F-4             |
| Statements of Operations                                       |   | F-5             |
| Statements  of Stockholders’ Equity                       |   | F-6 - F-9       |
| Statements  of Cash Flows                                      |   | F-10 – F11 |
| Notes to  Consolidated Financial Statements                    |   | F-12 - F-37     |

 

F-1

----

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Board of Directorsand Stockholders 

Senesco Technologies, Inc.

 

We have audited theaccompanying consolidated balance sheet of Senesco Technologies, Inc. andSubsidiary (a development stage company) as of June 30, 2008, and therelated consolidated statements of operations, stockholders’ equity and cashflows for the year then ended and cumulative amounts from July 1, 1998(inception) to June 30, 2008. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit. The financial statements for the period from July 1, 1998(inception) to June 30, 2007 were audited by other auditors and ouropinion, insofar as it relates to cumulative amounts included for such periods,is based solely on the reports of such auditors.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basisfor our opinion.

 

In our opinion, based on ouraudit and the reports of other auditors, the consolidated financial statementsreferred to above present fairly, in all material respects, the financialposition of Senesco Technologies, Inc. and Subsidiary as of June 30,2008, and the results of their operations and their cash flows for the yearthen ended and cumulative amounts from July 1, 1998 (inception) to June 30,2008, in conformity with U.S. generally accepted accounting principles.

 

We were not engaged toexamine management’s assertion about the effectiveness of Senesco Technologies, Inc.’sinternal control over financial reporting as of June 30, 2008, included inthe accompanying Item 9A. Report on Internal Control Over Financial Reportingand, accordingly, we do not express an opinion thereon.

 

 
| /s/  McGladrey & Pullen, LLP |   |
|---------------------------------------|--------|
| New York, New York                    |   |
|                                  |   |
| September 26, 2008               |   |

 

F-2

----

 

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Board of Directorsof

Senesco Technologies, Inc.

 

We have audited theaccompanying consolidated balance sheet of Senesco Technologies, Inc. andSubsidiary (a development stage company) as of June 30, 2007, and therelated consolidated statements of operations, stockholders’ equity, and cashflows for each of the two years in the period ended June 30, 2007 andcumulative amounts from July 1, 1998 (inception) to June 30,2007.  These consolidated financialstatements are the responsibility of the Company’s management.  Our responsibility is to express an opinion onthese consolidated financial statements based on our audits.

 

We conducted our auditsin accordance with the Standards of the Public Company Accounting OversightBoard (United States).  Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free of materialmisstatement.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe consolidated financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overallconsolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Senesco Technologies, Inc.and Subsidiary as of June 30, 2007, and the results of their operationsand their cash flows for each of the two years in the period ended June 30,2007 and cumulative amounts from July 1, 1998 (inception) to June 30,2007 in conformity with United States generally accepted accounting principles.

 

The accompanyingconsolidated financial statements have been prepared assuming that the Companywill continue as a going concern.  TheCompany is a development stage company and has incurred recurring losses fromoperations that raise substantial doubt about its ability to continue as agoing concern.  The consolidatedfinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

 

 

**GOLDSTEINGOLUB KESSLER LLP**

New York, New York

 

September 26, 2007 

 

F-3

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

 

**CONSOLIDATED BALANCE SHEET**

 
| ** **                                                                                                                                                   | ** ** | **June 30,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|
| ** **                                                                                                                                                   | ** ** | **2008**          | ** ** | **2007** | ** ** |
| ** **                                                                                                                                                   | ** ** | ** **        | ** ** | ** ** | ** ** |
| **ASSETS**                                                                                                                                                   | ** ** | ** **        | ** ** | ** ** | ** ** |
| Current  Assets:                                                                                                                                             |       |              |       |   |   |
| Cash  and cash equivalents                                                                                                                                   |       | $                 | 5,676,985  |   | $ | 408,061 |   |
| Short-term  investments                                                                                                                                      |       | 500,000           |       | 250,000 |   |
| Prepaid  expenses and other current assets                                                                                                                   |       | 180,556           |       | 104,526 |   |
| **Total current assets**                                                                                                                                     |       | 6,357,541         |       | 762,587 |   |
| ** **                                                                                                                                                   |       |              |       |   |   |
| Property  and Equipment, net                                                                                                                                 |       | 5,459             |       | 7,526 |   |
| Intangibles,  net                                                                                                                                            |       | 3,213,543         |       | 2,544,447 |   |
| Deferred  Financing Costs, net of amortization of $168,706                                                                                                   |       | 1,059,230         |       | — |   |
| Deferred  Income Tax Asset, net of valuation allowance of $9,152,000 and $ 7,719,000,  respectively                                                     |       | —            |       | — |   |
| Security  Deposit                                                                                                                                            |       | 7,187             |       | 7,187 |   |
| **Total Assets**                                                                                                                                             |       | $                 | 10,642,960 |   | $ | 3,321,747 |   |
| ** **                                                                                                                                                   |       |              |       |   |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                | ** ** | ** **        | ** ** | ** ** | ** ** |
| Current  Liabilities:                                                                                                                                        |       |              |       |   |   |
| Accounts  payable                                                                                                                                            |       | $                 | 370,167    |   | $ | 109,258 |   |
| Accrued  expenses                                                                                                                                            |       | 314,267           |       | 377,359 |   |
| Deferred  revenue                                                                                                                                            |       | —            |       | 16,667 |   |
| **Total current liabilities**                                                                                                                                |       | 684,434           |       | 503,284 |   |
| ** **                                                                                                                                                   |       |              |       |   |   |
| Convertible  Notes Payable, net of discount of $9,499,943                                                                                                    |       | 57                |       | — |   |
| Grant  Payable                                                                                                                                               |       | 99,728            |       | 99,728 |   |
| Other  Liability                                                                                                                                             |       | 23,062            |       | 29,196 |   |
| **Total liabilities**                                                                                                                                        |       | 807,281           |       | 632,208 |   |
| ** **                                                                                                                                                   |       |              |       |   |   |
| Commitments                                                                                                                                                  |       |              |       |   |   |
|                                                                                                                                                         |       |              |       |   |   |
| Stockholders’  Equity:                                                                                                                                  |       |              |       |   |   |
| Preferred  stock - $0.01 par value; authorized 5,000,000 shares, no shares issued                                                                            |       | —            |       | — |   |
| Common  stock - $0.01 par value; authorized 100,000,000 and 60,000,000 shares,  respectively, issued and outstanding 18,375,117 and 17,473,694, respectively |       | 183,751           |       | 174,737 |   |
| Capital  in excess of par                                                                                                                                    |       | 39,874,958        |       | 28,136,342 |   |
| Deficit  accumulated during the development stage                                                                                                            |       | (30,223,030       | )          | (25,621,540 | ) |
| **Stockholders’ equity**                                                                                                                                |       | 9,835,679         |       | 2,689,539 |   |
| **Total Liabilities and Stockholders’ Equity**                                                                                                          |       | $                 | 10,642,960 |   | $ | 3,321,747 |   |

 

See Notes toConsolidated Financial Statements

 

F-4

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

 

### **CONSOLIDATEDSTATEMENT OF OPERATIONS**

### ** **

| ** **                                                              | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | **Cumulative** | ** ** |
|-------------------------------------------------------------------------|------------|----------------------------------------|------------|-----------------------|------------|------------|------------|----------------|------------|
| ** **                                                              | ** ** | **Year ended June 30,** | ** ** | **Amounts from** | ** ** |
| ** **                                                              | ** ** | **2008**                               | ** ** | **2007**              | ** ** | **2006**   | ** ** | **Inception**  | ** ** |
| ** **                                                              | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | ** **     | ** ** |
| Revenue                                                                 |       | $                                      | 456,667    |                  | $          | 300,000    |       | $              | 66,666     |   | $ | 1,175,000 |   |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Operating  expenses:                                                    |       |                                   |       |                  |       |       |       |           |       |
| General  and administrative                                             |       | 2,291,263                              |       | 2,412,679             |       | 1,919,740  |       | 21,725,456     |       |
| Research  and development                                               |       | 1,764,426                              |       | 1,208,321             |       | 1,566,267  |       | 9,957,595      |       |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Total  operating expenses                                               |       | 4,055,689                              |       | 3,621,000             |       | 3,486,007  |       | 31,683,051     |       |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Loss  from operations                                                   |       | (3,599,022                             | )          | (3,321,000            | )          | (3,419,341 | )          | (30,508,051    | )          |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Noncash  income                                                         |       | —                                 |       | —                |       | —     |       | 321,259        |       |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Sale  of state income tax loss - net                                    |       | —                                 |       | —                |       | —     |       | 586,442        |       |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Amortization  of debt discount and financing costs                      |       | (668,763                               | )          | —                |       | —     |       | (668,763       | )          |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Interest  expense – convertible notes                              |       | (434,154                               | )          | —                |       | —     |       | (434,154       | )          |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Interest  income - net                                                  |       | 100,449                                |       | 69,303                |       | 104,456    |       | 480,237        |       |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Net  loss                                                               |       | $                                      | (4,601,490 | )                     | $          | (3,251,697 | )          | $              | (3,314,885 | ) | $ | (30,223,030 | ) |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Basic  and diluted net loss per common share                            |       | $                                      | (.26       | )                     | $          | (.19       | )          | $              | (.21       | ) | — |   |
|                                                                    |       |                                   |       |                  |       |       |       |           |       |
| Basic  and diluted weighted-average number of common shares outstanding |       | 17,660,466                             |       | 16,916,918            |       | 15,469,881 |       | —         |       |

 

See Notes to Consolidated Financial Statements

 

F-5

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

**CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**

** **

**Periodfrom July 1, 1998 (date of inception) to June 30, 2008**

 
| ** **                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **       | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|---------------------|------------|------------------------|------------|------------------|------------|
| ** **                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**        | ** ** |
| ** **                                                                                              | ** ** | **Common Stock** | ** ** | **Capital** | ** ** | **During the** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                                              | ** ** | **Number of**    | ** ** | ** **  | ** ** | **in Excess**  | ** ** | **Development**        | ** ** | **Equity**       | ** ** |
| ** **                                                                                              | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **of Par**     | ** ** | **Stage**              | ** ** | **(Deficiency)** | ** ** |
| ** **                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | ** **             | ** ** | ** **       | ** ** |
| Common stock  outstanding                                                                               |       | 2,000,462             |       | $           | 20,005     |                | $          | (20,005                | )          | —           |       | — |   |
| Contribution of  capital                                                                                |       | —                |       | 85,179      |       | —              |       | —                 |       | $                | 85,179     |   |
| Issuance of  common stock in reverse merger on January 22, 1999 at $0.01 per share                 |       | 3,400,000             |       | 34,000      |       | (34,000             | )          | —                 |       | —           |       |
| Issuance of  common stock for cash on May 21, 1999 for $2.63437 per share                          |       | 759,194               |       | 7,592       |       | 1,988,390           |       | —                 |       | 1,995,982        |       |
| Issuance of  common stock for placement fees on May 21, 1999 at $0.01 per share                    |       | 53,144                |       | 531         |       | (531                | )          | —                 |       | —           |       |
| Net loss                                                                                                |       | —                |       | —      |       | —              |       | $                      | (1,168,995 | )                | (1,168,995 | ) |
| Balance at  June 30, 1999                                                                          |       | 6,212,800             |       | 62,128      |       | 2,019,033           |       | (1,168,995             | )          | 912,166          |       |
| Issuance of  common stock for cash on January 26, 2000 for $2.867647 per share                     |       | 17,436                |       | 174         |       | 49,826              |       | —                 |       | 50,000           |       |
| Issuance of  common stock for cash on January 31, 2000 for $2.87875 per share                      |       | 34,737                |       | 347         |       | 99,653              |       | —                 |       | 100,000          |       |
| Issuance of  common stock for cash on February 4, 2000 for $2.924582 per share                     |       | 85,191                |       | 852         |       | 249,148             |       | —                 |       | 250,000          |       |
| Issuance of  common stock for cash on March 15, 2000 for $2.527875 per share                       |       | 51,428                |       | 514         |       | 129,486             |       | —                 |       | 130,000          |       |
| Issuance of  common stock for cash on June 22, 2000 for $1.50 per share                            |       | 1,471,700             |       | 14,718      |       | 2,192,833           |       | —                 |       | 2,207,551        |       |
| Commissions,  legal and bank fees associated with issuances for the year ended  June 30, 2000      |       | —                |       | —      |       | (260,595            | )          | —                 |       | (260,595         | )          |
| Fair market  value of options and warrants granted and vested during the year ended  June 30, 2000 |       | —                |       | —      |       | 1,475,927           |       | —                 |       | 1,475,927        |       |
| Net loss                                                                                                |       | —                |       | —      |       | —              |       | (3,346,491             | )          | (3,346,491       | )          |
| Balance at  June 30, 2000                                                                          |       | 7,873,292             |       | 78,733      |       | 5,955,311           |       | (4,515,486             | )          | 1,518,558        |       |
|                                                                                                         |            |                       |            |             |            |                     |            |                        |            |                  |            |  |  |  |  |

 

(continued)

 

See Notes to ConsolidatedFinancial Statements

 

F-6

----

 
| ** **                                                                                                                   | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **       | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|---------------------|------------|------------------------|------------|------------------|------------|
| ** **                                                                                                                   | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**        | ** ** |
| ** **                                                                                                                   | ** ** | **Common Stock** | ** ** | **Capital** | ** ** | **During the** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                                                                   | ** ** | **Number of**    | ** ** | ** **  | ** ** | **in Excess**  | ** ** | **Development**        | ** ** | **Equity**       | ** ** |
| ** **                                                                                                                   | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **of Par**     | ** ** | **Stage**              | ** ** | **(Deficiency)** | ** ** |
| ** **                                                                                                                   | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | ** **             | ** ** | ** **       | ** ** |
| Fair market  value of options and warrants granted and vested during the year ended  June 30, 2001                      |       | —                |       | —      |       | $                   | 308,619    |                   | —     |             | $          | 308,619 |   |
| Net loss                                                                                                                     |       | —                |       | —      |       | —              |       | $                      | (2,033,890 | )                | (2,033,890 | ) |
| Balance at  June 30, 2001                                                                                               |       | 7,873,292             |       | $           | 78,733     |                | 6,263,930  |                   | (6,549,376 | )                | (206,713   | ) |
| Issuance of  common stock and warrants for cash from November 30, 2001 through  April 17, 2002 at $1.75 per unit   |       | 3,701,430             |       | 37,014      |       | 6,440,486           |       | —                 |       | 6,477,500        |       |
| Issuance of  common stock and warrants associated with bridge loan conversion on  December 3, 2001                      |       | 305,323               |       | 3,053       |       | 531,263             |       | —                 |       | 534,316          |       |
| Commissions,  legal and bank fees associated with issuances for the year ended  June 30, 2002                           |       | —                |       | —      |       | (846,444            | )          | —                 |       | (846,444         | )          |
| Fair market  value of options and warrants granted and vested during the year ended  June 30, 2002                      |       | —                |       | —      |       | 1,848,726           |       | —                 |       | 1,848,726        |       |
| Net loss                                                                                                                     |       | —                |       | —      |       | —              |       | (3,021,709             | )          | (3,021,709       | )          |
| Balance at  June 30, 2002                                                                                               |       | 11,880,045            |       | 118,800     |       | 14,237,961          |       | (9,571,085             | )          | 4,785,676        |       |
| Fair market value  of options and warrants granted and vested during the year ended  June 30, 2003                      |       | —                |       | —      |       | 848,842             |       | —                 |       | 848,842          |       |
| Net loss                                                                                                                     |       | —                |       | —      |       | —              |       | (2,778,004             | )          | (2,778,004       | )          |
| Balance at  June 30, 2003                                                                                               |       | 11,880,045            |       | 118,800     |       | 15,086,803          |       | (12,349,089            | )          | 2,856,514        |       |
| Issuance of  common stock and warrants for cash from January 15, 2004 through  February 12, 2004 at $2.37 per unit |       | 1,536,922             |       | 15,369      |       | 3,627,131           |       | —                 |       | 3,642,500        |       |
| Allocation of  proceeds to warrants                                                                                          |       | —                |       | —      |       | (2,099,090          | )          |                   |       | (2,099,090       | )          |
| Reclassification  of warrants                                                                                                |       | —                |       | —      |       | 1,913,463           |       | —                 |       | 1,913,463        |       |
| Commissions,  legal and bank fees associated with issuances from January 15, 2004 through  February 12, 2004            |       | —                |       | —      |       | (378,624            | )          | —                 |       | (378,624         | )          |
|                                                                                                                              |            |                       |            |             |            |                     |            |                        |            |                  |            |  |  |  |  |

 

(continued)

 

See Notes to ConsolidatedFinancial Statements

 

F-7

----

 
| ** **                                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **       | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|---------------------|------------|------------------------|------------|------------------|------------|
| ** **                                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**        | ** ** |
| ** **                                                                                                              | ** ** | **Common Stock** | ** ** | **Capital** | ** ** | **During the** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                                                              | ** ** | **Number of**    | ** ** | ** **  | ** ** | **in Excess**  | ** ** | **Development**        | ** ** | **Equity**       | ** ** |
| ** **                                                                                                              | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **of Par**     | ** ** | **Stage**              | ** ** | **(Deficiency)** | ** ** |
| ** **                                                                                                              | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | ** **             | ** ** | ** **       | ** ** |
| Fair market  value of options and warrants vested during the year ended June 30, 2004                              |       | —                |       | —      |       | $                   | 1,826,514  |                   | —     |             | $          | 1,826,514 |   |
| Options and  warrants exercised during the year ended June 30, 2004 at exercise  prices ranging from $1.00 - $3.25 |       | 370,283               |       | $           | 3,704      |                | 692,945    |                   | —     |             | 696,649    |   |
| Net loss                                                                                                                |       | —                |       | —      |       | —              |       | $                      | (3,726,951 | )                | (3,726,951 | ) |
| Balance at  June 30, 2004                                                                                          |       | 13,787,250            |       | 137,873     |       | 20,669,142          |       | (16,076,040            | )          | 4,730,975        |       |
| Issuance of  common stock and warrants for cash on May 9, 2005 at $2.11 per unit                                   |       | 1,595,651             |       | 15,957      |       | 3,350,872           |       | —                 |       | 3,366,829        |       |
| Allocation of  proceeds to warrants                                                                                     |       | —                |       | —      |       | (1,715,347          | )          | —                 |       | (1,715,347       | )          |
| Reclassification  of warrants                                                                                           |       | —                |       | —      |       | 1,579,715           |       | —                 |       | 1,579,715        |       |
| Commissions,  legal and bank fees associated with issuance on May 9, 2005                                          |       | —                |       | —      |       | (428,863            | )          | —                 |       | (428,863         | )          |
| Fair market  value of options and warrants vested during the year ended June 30, 2005                              |       | —                |       | —      |       | 974,235             |       | —                 |       | 974,235          |       |
| Options and  warrants exercised during the year ended June 30, 2005 at exercise  prices ranging from $1.50 - $3.25 |       | 84,487                |       | 844         |       | 60,281              |       | —                 |       | 61,125           |       |
| Net loss                                                                                                                |       | —                |       | —      |       | —              |       | (2,978,918             | )          | (2,978,918       | )          |
| Balance at  June 30, 2005                                                                                          |       | 15,467,388            |       | 154,674     |       | 24,490,035          |       | (19,054,958            | )          | 5,589,751        |       |
| Fair market  value of options and warrants vested during the year ended June 30, 2006                              |       | —                |       | —      |       | 677,000             |       | —                 |       | 677,000          |       |
| Warrants  exercised during the year ended June 30, 2006 at an exercise price of  $0.01                             |       | 10,000                |       | 100         |       | —              |       | —                 |       | 100              |       |
| Net loss                                                                                                                |       | —                |       | —      |       | —              |       | (3,314,885             | )          | (3,314,885       | )          |
| Balance at  June 30, 2006                                                                                          |       | 15,477,388            |       | 154,774     |       | 25,167,035          |       | (22,369,843            | )          | 2,951,966        |       |
|                                                                                                                         |            |                       |            |             |            |                     |            |                        |            |                  |            |  |  |  |  |

 

(continued)

 

See Notes to ConsolidatedFinancial Statements

 

F-8

----

 
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Deficit**            | ** ** | ** **       | ** **  |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|---------------------|------------|------------------------|------------|------------------|-------------|
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | **Accumulated**        | ** ** | **Total**        | ** **  |
| ** **                                                                                                                                     | ** ** | **Common Stock** | ** ** | **Capital** | ** ** | **During the** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                                                                                     | ** ** | **Number of**    | ** ** | ** **  | ** ** | **in Excess**  | ** ** | **Development**        | ** ** | **Equity**       | ** **  |
| ** **                                                                                                                                     | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **of Par**     | ** ** | **Stage**              | ** ** | **(Deficiency)** | ** **  |
| ** **                                                                                                                                     | ** ** | ** **            | ** ** | ** **  | ** ** | ** **          | ** ** | ** **             | ** ** | ** **       | ** **  |
| Issuance of  common stock and warrants for cash on October 10, 2006 at $1.135 per  unit                                                   |       | 1,986,306             |       | $           | 19,863     |                | $          | 2,229,628              |       | —           |        | $ | 2,249,491 |   |
| Commissions,  legal and bank fees associated with issuance on October 10, 2006                                                            |       | —                |       | —      |       | (230,483            | )          | —                 |       | (230,483         | )           |
| Warrants  exercised during the year ended June 30, 2007 at an exercise price of  $0.01                                                    |       | 10,000                |       | 100         |       | —              |       | —                 |       | 100              |        |
| Fair market  value of options and warrants vested during the year ended June 30, 2007                                                     |       | —                |       | —      |       | 970,162             |       | —                 |       | 970,162          |        |
| Net loss                                                                                                                                       |       | —                |       | —      |       | —              |       | $                      | (3,251,697 | )                | (3,251,697  | ) |
| Balance at  June 30, 2007                                                                                                                 |       | 17,473,694            |       | 174,737     |       | 28,136,342          |       | (25,621,540            | )          | 2,689,539        |        |
| Allocation of  proceeds, net of fees paid to holder, from issuance of convertible notes and  warrants during the year ended June 30, 2008 |       | —                |       | —      |       | 9,340,000           |       | —                 |       | 9,340,000        |        |
| Convertible  notes converted into common stock during the year ended June 30, 2008,  net of deferred financing costs                      |       | 555,556               |       | 5,556       |       | 430,952             |       | —                 |       | 436,508          |        |
| Issuance of  common stock in lieu of cash payment for interest during the year ended  June 30, 2008                                       |       | 345,867               |       | 3,458       |       | 430,696             |       | —                 |       | 434,154          |        |
| Fair market  value of options and warrants vested during the year ended June 30, 2008                                                     |       | —                |       | —      |       | 1,536,968           |       | —                 |       | 1,536,968        |        |
| Net loss                                                                                                                                       |       | —                |       | —      |       | —              |       | (4,601,490             | )          | (4,601,490       | )           |
| Balance at  June 30, 2008                                                                                                                 |       | 18,375,117            |       | $           | 183,751    |                | $          | 39,874,958             |       | $                | (30,223,030 | ) | $ | 9,835,679 |   |

 

F-9

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

#### **CONSOLIDATEDSTATEMENT OF CASH FLOWS**

#### ** **

| ** **                                                                                      | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | **Cumulative** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|-----------------------|------------|------------|------------|----------------|------------|
| ** **                                                                                      | ** ** | **Year ended June 30,** | ** ** | **Amounts from** | ** ** |
| ** **                                                                                      | ** ** | **2008**                               | ** ** | **2007**              | ** ** | **2006**   | ** ** | **Inception**  | ** ** |
| Cash flows from  operating activities:                                                          |       |                                   |       |                  |       |       |       |           |       |
| Net loss                                                                                        |       | $                                      | (4,601,490 | )                     | $          | (3,251,697 | )          | $              | (3,314,885 | ) | $ | (30,223,030 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities:                    |       |                                   |       |                  |       |       |       |           |       |
| Noncash capital  contribution                                                                   |       | —                                 |       | —                |       | —     |       | 85,179         |       |
| Noncash  conversion of accrued expenses into equity                                             |       | —                                 |       | —                |       | —     |       | 131,250        |       |
| Noncash income  related to change in fair value of warrant liability                            |       | —                                 |       | —                |       | —     |       | (321,259       | )          |
| Issuance of  common stock and warrants for interest                                             |       | 434,154                                |       | —                |       | —     |       | 443,469        |       |
| Share-based  compensation expense                                                               |       | 897,321                                |       | 970,162               |       | 677,000    |       | 9,696,097      |       |
| Depreciation and  amortization                                                                  |       | 96,847                                 |       | 166,172               |       | 40,112     |       | 460,688        |       |
| Amortization of  convertible note discount                                                      |       | 500,057                                |       | —                |       | —     |       | 500,057        |       |
| Amortization of  deferred financing costs                                                       |       | 168,706                                |       | —                |       | —     |       | 168,706        |       |
| (Increase)  decrease in operating assets:                                                       |       |                                   |       |                  |       |       |       |           |       |
| Prepaid expenses  and other current assets                                                      |       | (76,030                                | )          | 35,058                |       | 16,960     |       | (180,556       | )          |
| Security deposit                                                                                |       | —                                 |       | —                |       | —     |       | (7,187         | )          |
| Increase  (decrease) in operating liabilities:                                                  |       |                                   |       |                  |       |       |       |           |       |
| Accounts payable                                                                                |       | 260,909                                |       | 31,563                |       | (139,874   | )          | 370,167        |       |
| Accrued expenses                                                                                |       | (63,092                                | )          | 47,475                |       | 149,882    |       | 314,267        |       |
| Deferred revenue                                                                                |       | (16,667                                | )          | (25,000               | )          | 8,334      |       | —         |       |
| Other liability                                                                                 |       | (6,134                                 | )          | (5,222                | )          | 32,082     |       | 23,062         |       |
| **Net  cash used in operating activities**                                                      |       | (2,405,419                             | )          | (2,031,489            | )          | (2,530,389 | )          | (18,539,090    | )          |
| Cash flows from  investing activities:                                                          |       |                                   |       |                  |       |       |       |           |       |
| Patent costs                                                                                    |       | (761,093                               | )          | (495,852              | )          | (792,069   | )          | (3,506,800     | )          |
| Redemption  (purchase) of investments, net                                                      |       | (250,000                               | )          | 600,000               |       | 3,339,395  |       | (500,000       | )          |
| Purchase of  property and equipment                                                             |       | (2,783                                 | )          | (2,179                | )          | —     |       | (172,890       | )          |
| **Net  cash provided by (used in) investing activities**                                        |       | (1,013,876                             | )          | 101,969               |       | 2,547,326  |       | (4,179,690     | )          |
| Cash flows from  financing activities:                                                          |       |                                   |       |                  |       |       |       |           |       |
| Proceeds from  grant                                                                            |       | —                                 |       | —                |       | 9,578      |       | 99,728         |       |
| Proceeds from  issuance of bridge notes                                                         |       | —                                 |       | —                |       | —     |       | 525,000        |       |
| Proceeds from  issuance of convertible notes                                                    |       | 9,340,000                              |       | —                |       | —     |       | 9,340,000      |       |
| Deferred  financing costs                                                                       |       | (651,781                               | )          | —                |       | —     |       | (651,781       | )          |
| Proceeds from  issuance of common stock and warrants, net and exercise of warrants and  options |       | —                                 |       | 2,019,108             |       | 100        |       | 19,082,818     |       |
| **Net  cash provided by financing activities**                                                  |       | 8,688,219                              |       | 2,019,108             |       | 9,678      |       | 28,395,765     |       |
| Net increase in  cash and cash equivalents                                                      |       | 5,268,924                              |       | 89,588                |       | 26,615     |       | 5,676,985      |       |
| Cash and cash  equivalents at beginning of period                                               |       | 408,061                                |       | 318,473               |       | 291,858    |       | —         |       |
| Cash and cash  equivalents at end of period                                                     |       | $                                      | 5,676,985  |                  | $          | 408,061    |       | $              | 318,473    |   | $ | 5,676,985 |   |

 

See Notes to ConsolidatedFinancial Statements

 

F-10

----

#### ** **

| ** **                                                                                        | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | **Cumulative** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|-----------------------|------------|------------|------------|----------------|------------|
| ** **                                                                                        | ** ** | **Year ended June 30,** | ** ** | **Amounts from** | ** ** |
| ** **                                                                                        | ** ** | **2008**                               | ** ** | **2007**              | ** ** | **2006**   | ** ** | **Inception**  | ** ** |
| ** **                                                                                        | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | ** **     | ** ** |
| **Supplemental  disclosure of cash flow information:**                                            | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | ** **     | ** ** |
| Cash paid during  the period for interest                                                         |       | $                                      | —     |                  | $          | —     |       | $              | —     |   | $ | 22,317 |   |
| **Supplemental  schedule of noncash financing activity:**                                         | ** ** | ** **                             | ** ** | ** **            | ** ** | ** ** | ** ** | ** **     | ** ** |
| Conversion of  bridge notes into common stock                                                     |       | $                                      | —     |                  | $          | —     |       | $              | —     |   | $ | 534,316 |   |
| Conversion of  convertible note into common stock, net of unamortized financing costs of  $63,492 |       | $                                      | 500,000    |                  | $          | —     |       | $              | —     |   | $ | 500,000 |   |
| Allocation of  convertible debt proceeds to warrants and beneficial conversion feature            |       | $                                      | 9,340,000  |                  | $          | —     |       | $              | —     |   | $ | 9,340,000 |   |
| Warrants issued  for financing costs                                                              |       | $                                      | 639,645    |                  | $          | —     |       | $              | —     |   | $ | 639,645 |   |
| Issuance of  common stock for interest payments on convertible notes                              |       | $                                      | 434,154    |                  | $          | —     |       | $              | —     |   | $ | 443,469 |   |

 

See Notes to ConsolidatedFinancial Statements

 

F-11

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.   PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES:**

 

The accompanying consolidated financial statementsinclude the accounts of Senesco Technologies, Inc. (“ST”) and its whollyowned subsidiary, Senesco, Inc. (“SI”) (collectively, the “Company”). Allsignificant intercompany accounts and transactions have been eliminated inconsolidation.

 

The Company is a developmentstage biotechnology company whose mission is to develop novel approaches totreat programmed cell death diseases in humans (apoptosis), and to enhance thequality and productivity of fruits, flowers, vegetables and agronomic cropsthrough the control of cell death in plants (senescence).

 

SI, a New Jersey corporation, was incorporated on November 24,1998 and is the successor entity to Senesco, L.L.C., a New Jersey limitedliability company that was formed on June 25, 1998 but commencedoperations on July 1, 1998.

 

*Liquidity*

 

TheCompany has a limited operating history and limited assets and capital and hasincurred losses each year since inception. The Company has generated minimalrevenues by licensing its technology for certain crops to companies willing toshare in its development costs. In addition, the Company’s technology may notbe ready for commercialization for several years. The Company expects tocontinue to incur losses for the next several years because it anticipates thatits expenditures on research and development, and administrative activitieswill significantly exceed its revenues during that period. The Company cannotpredict when, if ever, it will become profitable.

 

TheCompany’s operations to date have required significant cash expenditures. TheCompany’s future capital requirements will depend on the results of its researchand development activities, preclinical and clinical studies, and competitiveand technological advances.

 

TheCompany may not be able to obtain adequate funds for its operations when neededor on acceptable terms. If the Company is unable to raise additional funds, itwill need to do one or more of the following:

 

·      delay, scale-back or eliminate some or all of itsresearch and product development programs;

·      license third parties to develop and commercializeproducts or technologies that it would otherwise seek to develop andcommercialize itself;

·      seek strategic alliances or business combinations;

·      attempt to sell the Company;

·      cease operations; or

·      declare bankruptcy.

 

*Cash, Cash Equivalents andInvestments*

 

Cash equivalents consistof investments which are readily convertible into cash with original maturitiesof three months or less. The Company maintains its cash in money market andbank deposit accounts which, at times, may exceed

 

F-12

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

federally insured limits.The Company believes that there is no significant credit risk with respect tothese accounts.

 

The Company invests inUnited States treasury notes and high-grade corporate debt instruments. Basedon the Company’s intentions regarding these instruments, the Company hasclassified all marketable debt securities as held-to-maturity and has accountedfor these investments at amortized cost. Marketable securities maturing in oneyear or less are classified as current assets. 

 

*Property and Equipment*

 

Property and equipmentare stated at cost, less accumulated depreciation. Depreciation of property andequipment is provided for by the straight-line method over the estimated usefullives of the assets.

 

*Intangibles*****

 

TheCompany conducts research and development activities, the cost of which isexpensed as incurred, in order to generate patents that can be licensed tothird parties in exchange for license fees and royalties. Because the patents arethe basis of the Company’s future revenue, the patent costs are capitalized.The capitalized patent costs represent the outside legal fees incurred by theCompany to submit and undertake all necessary efforts to have such patentapplications issued as patents.

 

Thelength of time that it takes for an initial patent application to be approvedis generally between four to six years. However, due to the unique nature ofeach patent application, the actual length of time may vary. If a patentapplication is denied, the associated cost of that application would be writtenoff. However, the Company has not had any patent applications denied as of June30, 2008. Additionally, should a patent application become impaired during theapplication process, the Company would write down or write off the associatedcost of that patent application. 

 

Issuedpatents and agricultural patent applications pending are being amortized over aperiod of 17 years, the expected economic life of the patent. 

 

TheCompany assesses the impairment in value of intangible assets whenever eventsor circumstances indicate that their carrying value may not be recoverable.Factors the Company considers important which could trigger an impairmentreview include the following: 

 

·  significant negative industry trends: 

·  significant underutilization of the assets: 

·  significant changes in how the Company uses theassets or its plans for their use; and 

·  changes in technology and the appearance of competingtechnology.

 

If the Company’s review determines that the futurediscounted cash flows related to these assets will not be sufficient to recovertheir carrying value, the Company will reduce the carrying values of theseassets down to its estimate of fair value and continue amortizing them overtheir remaining useful lives. To date, the Company has not recorded anyimpairment of 

 

F-13

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

intangible assets.

 

*Deferred Financing Costs*

 

Deferred financing costs represent the costs related to theplacement of convertible notes during the year ended June 30, 2008. Suchcosts are being amortized ratably over the term of the convertible notes, (seeNote 7).

 

*Deferred Income Tax Asset*

 

Deferred income taxassets and liabilities are recognized for the future tax consequencesattributable to differences between financial statement carrying amounts ofexisting assets and liabilities and their respective tax bases. Deferred taxassets are reduced by a valuation allowance when, in the opinion of management,it is more likely than not that some portion or all of the deferred tax assetswill not be realized. Deferred tax assets and liabilities are measured usingenacted rates expected to apply when the differences are expected to berealized.

 

*Deferred Revenue and RevenueRecognition*

* *

The Company receivescertain nonrefundable upfront fees in exchange for the transfer of itstechnology to licensees. Upon delivery of the technology, the Company has nofurther obligations to the licensee with respect to the basic technologytransferred and, accordingly, recognizes revenue at that time. The Company may,however, receive additional payments from its licensees in the event suchlicensees achieve certain development or commercialization milestones in theirparticular field of use. Other nonrefundable upfront fees and milestonepayments, where the milestone payments are a function of time as opposed toachievement of specific achievement-based milestones, are deferred andamortized ratably over the estimated research period of the license.

 

*Convertible Notes*

 

During the year endedJune 30, 2008, the Company issued $10,000,000 of convertible notes andwarrants. The proceeds of the convertible notes and warrants have beenallocated between the convertible notes and warrants based upon their fairvalues whereby the fair value for the warrants have been determined using theBlack-Scholes model. Additional amounts were allocated to the beneficialconversion feature based upon the effective conversion price compared to thefair value of the common stock on the date of issuance of the convertible notesand warrants. Debt discount associated with the Convertible Notes is amortizedto interest expense, using the effective yield method, over the remaining lifeof the Convertible Notes. Upon conversion of the Convertible Notes into CommonStock, any unamortized debt discount relating to the portion converted will becharged to interest for amortization of debt discount and equity.

 

*FairValue of Financial Instruments*

 

The carrying value ofcash and cash equivalents, short-term investments, prepaid and other currentassets, accounts payable and accrued expenses reported in the

 

F-14

----

 

**SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY**

**(a development stage company)**

** **

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

consolidated balancesheets equal or approximate fair value due to their short maturities. The fairvalue of the convertible notes approximates the amortized portion of theprincipal amount as such instruments are at market rates currently available tothe Company.

 

*Common Stock*

 

On December 12,2002, the stockholders approved a proposal to increase the authorized CommonStock of the Company from 20,000,000 shares to 30,000,000 shares. OnDecember 14, 2006, the stockholders approved a proposal to increase theauthorized Common Stock of the Company from 30,000,000 shares to 60,000,000 shares.On December 13, 2007, the stockholders approved a proposal to increase theauthorized Common Stock of the Company from 60,000,000 shares to 100,000,000shares.

 

*Share Based Payments*

 

Asfurther discussed in Note 7, the Company adopted FAS No. 123R, “Share-BasedPayment” (“FAS No. 123R”) effective July 1, 2005 using themodified-retrospective method. The adoption of this standard requires therecognition of stock-based compensation expense in the consolidated financialstatements. Prior to July 1, 2005, the Company followed AccountingPrinciples Board Opinion 25, “Accounting for Stock Issued to Employees” (“APBNo. 25”), and related interpretations.

 

*Loss Per Common Share*

 

Loss per common share iscomputed by dividing the loss by the weighted-average number of common sharesoutstanding during the period.  Shares tobe issued upon the exercise of the outstanding options and warrants aggregating23,522,526 and 7,790,315 as of June 30, 2008 and 2007, respectively, arenot included in the computation of loss per share as their effect isanti-dilutive.  Additionally, as of June 30,2008, 10,555,556 shares to be issued upon the conversion of convertible notesat a fixed conversion price of $0.90 are not included in the computation ofdiluted loss per share as the effect is anti-dilutive.

 

*Management Estimates and Judgments*

* *

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States of Americarequires management to make estimates and judgments that affect the reportedamounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts ofrevenue and expenses during the reporting period.  The critical accounting policies that requiremanagement’s most significant estimate and judgment are the assessment of the recoverabilityof intangible assets, and the valuation allowance on deferred tax assets.  Actual results experienced by the Company maydiffer from management’s estimates.

 

*Recent Accounting Pronouncements Applicable to theCompany*

* *

*EITF Issue No. 07-1 –Accounting for Collaborative Arrangements*

 

F-15

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

This pronouncement defines a collaborativearrangement as a contractual arrangement that involves a joint operatingactivity that involves two or more parties who are both active participants inthe activity and exposed to significant risks and rewards dependent on thecommercial success of the activity.  Thepronouncement also defines how the costs incurred and revenues generated fromtransactions with third parties should be recorded and presented in eachentity’s income statement.  Thispronouncement is effective for financial statements issued for fiscal yearsbeginning after December 15, 2008, and interim periods within those fiscalyears, and shall be applied retrospectively to all prior periods presented forall collaborative arrangements existing as of the effective date.  The Company does not believe that thispronouncement will have any material effect on its financial statements.

 

*EITF Issue No. 07-3 – Accounting forNonrefundable Advance Payments for Goods or Services Received for Use in FutureResearch and Development Activities.*

* *

This pronouncement states that nonrefundable advancepayments for future research and development activities should be deferred andcapitalized.  This pronouncement iseffective for financial statements issued for fiscal years beginning afterDecember 15, 2007, and interim periods within those fiscal years.  Early application is not permitted.  The Company does not believe that thispronouncement will have any material effect on its financial statements.

 

*SFASNo. 157 – Fair Value Measurements*

* *

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting standards that require or permit fair value measurements.  Accordingly, SFAS No. 157 does not require any new fair value measurement. SFAS No. 157 emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. Companies will be required to disclose the extent to which fair value is used to measure assets and liabilities, the inputs used to develop the measurements and the effect of certain of the measurements on earnings (or changes in net assets) for the period. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the effect, if any, that SFAS No. 157 will have on its consolidated financial position or results of operations.

 

*SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities–Including an Amendment of FASB Statement No. 115*

* *

In February 2007, the FASB issued SFAS No. 159, “The FairValue Option for Financial Assets and Financial Liabilities—Including anAmendment of FASB Statement No. 115” (“SFAS No. 159”).  SFAS No. 159 permits entities to chooseto measure many financial instruments and certain other items at fair valuethat are not currently required to be measured at fair value.  SFAS No. 159 is

 

F-16

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the effect, if any, that SFAS No. 159 will have on its consolidated financial position or results of operations.

 

*FASB Interpretation No. 48 – Accountingfor Uncertainty in Income Taxes*

* *

InJuly 2006, the Financial Accounting Standards Board issued FASBInterpretation No. 48, “Accounting for Uncertainty in Income Taxes – aninterpretation of FASB Statement No. 109” (“FIN 48”).  FIN 48 clarifies the accounting for uncertaintyin income taxes recognized in an entity’s financial statements in accordancewith FASB Statement No. 109, “Accounting for Income Taxes”.  FIN 48 prescribes a recognition threshold andmeasurement attribute for financial statement disclosure of tax positions takenor expected to be taken on a tax return. Additionally, FIN 48 provides guidance on derecognition, classification,interest and penalties, accounting in interim periods, disclosure andtransition.  The Company adopted FIN 48effective July 1, 2007 and there was no material effect on our results ofoperations or financial position.

 

*FASB Staff Position No. EITF 00-19-2*

 

In December 2006, the FASB issued FASB Staff Position No. EITF 00-19-2. This FSP addresses an issuer’s accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB No. 5. The guidance in this FSP amends FASB Statements 133 and 150 and FASB Interpretation No. 45 to include scope exceptions for registration payment arrangements. This FSP further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2006 and for transactions entered on or after December 22, 2006. The standard did not impact the Company’s consolidated financial position or results of operations for the year ended June 30, 2008.

 

Management does not believe that any other recently issued, but not yeteffective, accounting standards if currently adopted would have a materialeffect on the accompanying financial statements.

 

**2.   INVESTMENTS:**

** **

At June 30, 2008 and 2007, the amortized cost basis, aggregatefair value, gross unrealized gains and maturity by majority security type wereas follows:

 

F-17

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 
| ** **                                            | ** ** | **Gross**                   | ** ** | ** **          | ** ** | ** **          | ** ** |
|-------------------------------------------------------|------------|-----------------------------|------------|---------------------|------------|---------------------|------------|
| ** **                                            | ** ** | **Unrealized**              | ** ** | **Aggregate**       | ** ** | **Amortized**       | ** ** |
| ** **                                            | ** ** | **Gain / (Loss)** | ** ** | **Fair Value** | ** ** | **Cost Basis** | ** ** |
| ** **                                            | ** ** | ** **                  | ** ** | ** **          | ** ** | ** **          | ** ** |
| June 30, 2008                                    |       |                        |       |                |       |                |       |
|                                                  |       |                        |       |                |       |                |       |
| Held-to-maturity  securities:                         |       |                        |       |                |       |                |       |
| Corporate  debt securities (maturing within one year) |       | $                           | -0-        |                | $          | 500,000             |       | $ | 500,000 |   |
|                                                  |       |                        |       |                |       |                |       |
| June 30, 2007                                    |       |                        |       |                |       |                |       |
|                                                  |       |                        |       |                |       |                |       |
| Held-to-maturity  securities:                         |       |                        |       |                |       |                |       |
| Corporate  debt securities (maturing within one year) |       | $                           | -0-        |                | $          | 250,000             |       | $ | 250,000 |   |

 

Realized gains andlosses are determined based on the specific-identification method.

 

**3.   PREPAID EXPENSES AND OTHER CURRENT ASSETS:**

** **

The following areincluded in prepaid expenses and other current assets at:

** **
| ** **                              | ** ** | **June 30,** | ** ** |
|-----------------------------------------|------------|-------------------|------------|
| ** **                              | ** ** | **2008**          | ** ** | **2007** | ** ** |
| ** **                              | ** ** | ** **        | ** ** | ** ** | ** ** |
| Prepaid insurance                       |       | $                 | 37,117     |   | $ | 34,361 |   |
| Prepaid research and  research supplies |       | 119,153           |       | 11,796 |   |
| Prepaid legal                           |       | —            |       | 41,051 |   |
| Prepaid other                           |       | 24,286            |       | 17,318 |   |
|                                    |       | $                 | 180,556    |   | $ | 104,526 |   |

 

**4.   PROPERTY AND EQUIPMENT:**

 

Property and equipment, at cost, consists of the following at:

 
| ** **                | ** ** | **June 30,** | ** ** | **Estimated** | ** ** |
|---------------------------|------------|-------------------|------------|---------------|------------|
| ** **                | ** ** | **2008**          | ** ** | **2007**      | ** ** | **Useful Life** | ** ** |
|                      |       |              |       |          |       |   |   |
| Equipment                 |       | $                 | 35,736     |          | $          | 32,953 |   | 4 years |   |
| Furniture and fixtures    |       | 67,674            |       | 67,674        |       | 7 years |   |
|                      |       | 103,410           |       | 100,627       |       |   |   |
| Accumulated  depreciation |       | (97,951           | )          | (93,101       | )          |   |   |
|                      |       |              |       |          |       |   |   |
|                      |       | $                 | 5,459      |          | $          | 7,526 |   |   |   |

 

Depreciationexpense aggregated $4,850, $4,971, $19,720 and $167,431****forthe years ended June 30, 2008, 2007, 2006, and cumulatively from inceptionthrough June 30, 2008, respectively.

 

**5.   INTANGIBLE ASSETS:**

 

Intangible assets, at cost, consists of the following at:

 
| ** **                | ** ** | **June 30,** | ** ** |
|---------------------------|------------|-------------------|------------|
| ** **                | ** ** | **2008**          | ** ** | **2007** | ** ** |
|                      |       |              |       |   |   |
| Patents approved          |       | $                 | 809,863    |   | $ | 473,847 |   |
| Patents pending           |       | 2,696,937         |       | 2,271,860 |   |
|                      |       |              |       |   |   |
|                      |       | 3,506,800         |       | 2,745,707 |   |
| Accumulated  amortization |       | (293,257          | )          | (201,260 | ) |
|                      |       |              |       |   |   |
|                      |       | $                 | 3,213,543  |   | $ | 2,544,447 |   |

 

F-18

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

Amortization expenseamounted to $91,997, $161,201, $20,392 and $293,257 for the years ended June 30,2008, 2007, 2006, and cumulatively from inception through June 30, 2008,respectively.

 

Estimated amortizationexpense for the next five years is as follows:

 
| **Year ending June 30,** | ** ** | ** ** | ** ** |
|-----------------------------------------|------------|------------|------------|
| ** **                              | ** ** | ** ** | ** ** |
| 2009                                    |       | $          | 102,000    |   |
| 2010                                    |       | 102,000    |       |
| 2011                                    |       | 102,000    |       |
| 2012                                    |       | 102,000    |       |
| 2013                                    |       | 102,000    |       |
|                                         |            |            |            |  |

 

**6.      ACCRUEDEXPENSES:**

** **

The following are included in accrued expenses at:

 
| ** **                        | ** ** | **June 30,** | ** ** |
|-----------------------------------|------------|-------------------|------------|
| ** **                        | ** ** | **2008**          | ** ** | **2007** | ** ** |
| ** **                        | ** ** | ** **        | ** ** | ** ** | ** ** |
| Accrued research                  |       | $                 | 149,154    |   | $ | 271,000 |   |
| Accrued deferred  financing costs |       | 96,962            |       | — |   |
| Accrued accounting                |       | —            |       | 40,000 |   |
| Accrued patent costs              |       | 50,000            |       | 45,000 |   |
| Accrued legal                     |       | 9,489             |       | 10,186 |   |
| Accrued other                     |       | 8,662             |       | 11,173 |   |
|                              |       |              |       |   |   |
|                              |       | $                 | 314,267    |   | $ | 377,359 |   |

 

**7.   STOCKHOLDERS’ EQUITY ANDCONVERTIBLE NOTES:**

 

*2005 Private Placement of Common Stock and Warrants*

* *

In May 2005, the Company completed a privateplacement to certain accredited investors (the “2005 Accredited InvestorPrivate Placement”) for an aggregate amount of 1,595,651 shares of Common Stockand warrants to purchase 797,836 shares of Common Stock for the aggregate cashconsideration of $3,366,829.  The 2005Accredited Investor Private Placement offered units of one share of CommonStock and a five-year warrant to purchase 0.50 shares of Common Stock at aprice equal to $2.11 per unit.  Thewarrants were issued at an exercise price equal to $3.38 per share, with suchwarrants vesting on the date of grant. The costs associated with the 2005 Accredited Investor Private Placementtotaled $428,863.  In addition, theCompany has caused its directors and officers to enter into Lock-up Agreementsfor a period of six months from the Closing Date with the Placement Agent forthe benefit of the Purchasers.

 

On May 27, 2005, the Company filed a registrationstatement with the SEC on Form S-3 to register all of the shares and theshares underlying the warrants acquired by the purchasers and placement agent(see below) in the 2005 

 

F-19

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

Accredited Investor Private Placement.  The registration statement was declaredeffective by the SEC on June 17, 2005, and remained in effect untilMay 9, 2007.

 

Due to the Company’sobligation to file a registration statement to register for resale the sharesunderlying the warrants under the Securities Act of 1933, as amended, inaccordance with EITF 00-19, “Accounting for Derivative Financial InstrumentsIndexed To, and Potentially Settled In a Company’s Own Common Stock,” the valueof the warrants amounting to $1,715,347 was recorded as a liability until thefiling was declared effective.  Thedecrease in market value of the Common Stock from the closing of its financingto June 17, 2005, the effective date of the registration statement, resultedin noncash other income to reflect the decrease in Black-Scholes value of thewarrants between those two dates.  As aresult, the Company incurred a decrease in liability and other noncash incomeof $135,632 as of June 17, 2005. Upon the Company meeting its obligation to file a registrationstatement, the fair value of the warrants amounting to $1,579,715, wasreclassified to equity.

 

Oppenheimer and Co. Inc.(“Oppenheimer”) acted as the placement agent for the 2005 Accredited InvestorPrivate Placement, As consideration for their services to the Company,Oppenheimer was issued warrants to purchase an aggregate of 167,544 shares of Common Stock, on thesame terms and conditions as the warrants issued to the purchasers in the 2005Accredited Investor Private Placement.

 

*2006Private Placement of Common Stock and Warrants*

* *

On October 11, 2006, the Company completed aprivate placement to certain members of the Company’s board of directors,institutional and accredited investors (the “Private Placement”) for anaggregate amount of 1,986,306****shares ofCommon Stock and warrants to purchase 993,153 shares of Common Stock for theaggregate cash consideration of $2,249,491. The Private Placement offered units of one share of Common Stock and afive-year warrant to purchase 0.50 shares of Common Stock at a price equal to$1.1325 per unit.  The warrants wereissued at an exercise price equal to $1.18 per share, with such warrantsvesting on the date of grant, but not exercisable for a six-month period fromthe date of closing.  The costsassociated with the Private Placement totaled $230,483.  In addition, the Company entered into aRegistration Rights Agreement with these purchasers.  The Registration Rights Agreement required theCompany to file a registration statement for the shares within 30 days of theclosing date (the “Filing Date”), and to have such registration statementdeclared effective within 120 days of the closing date (the “EffectiveDate”).  If the Company failed to file aregistration statement on or before the Filing Date, it was required to pay toeach purchaser in the Private Placement 1.0% of the aggregate purchase pricefor each 30 day period that such registration statement had not beenfiled.  If the registration statement wasnot declared effective on or before the Effective Date, the Company wasrequired to pay to each purchaser in the Private Placement 2.0% of theaggregate purchase price paid by such purchaser for the first thirty day periodfollowing the Effective Date and 1.0% for each thirty day period thereafter,with all payments subject to a maximum of 10.0% of the purchase price.   The Company filed the registration statementon November 3, 2006 and the registration statement was declared effectiveby the SEC on November 27, 2006, and will remain in effect, subject to theCompany 

 

F-20

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

being in compliance with all the applicablerules and regulations, until October 10, 2011.  Accordingly, the Company was not required topay any liquidated damages to any of the purchasers.

 

H.C. Wainwright andCo., Inc. (“Wainwright”) acted as the placement agent for the PrivatePlacement.  As consideration for theirservices to the Company, Wainwright was issued a five-year warrant to purchase 139,041 shares of Common Stock, at astrike price equal to $1.07.  Suchwarrant is immediately exercisable.

 

*2007Private Placement of Convertible Notes and Warrants*

* *

On August 1,2007 and August 29, 2007, the Company entered into binding SecuritiesPurchase Agreements with YA Global Investments L.P. (“YA Global”) and StanfordVenture Capital Holdings, Inc. (“Stanford”), respectively, to sell to eachof YA Global and Stanford up to $5,000,000 of secured convertible notes andaccompanying warrants for an aggregate gross proceeds of $10,000,000.  The convertible notes convert into theCompany’s common stock at a fixed price of $0.90 per share subject to certainadjustments (the “Fixed Conversion Price”), for a period of two yearsimmediately following the signing date, provided that the Company has achievedthe following milestones by January 31, 2008: (i) successfulcompletion of animal studies, other than toxicology studies, necessary for theadvancement of Factor 5A1 in human clinical trials, (ii) the engagement ofa contract research organization for human clinical studies of Factor 5A1, and(iii) the signing of at least one (1) corporate partnership orlicense agreement after August 1, 2007 with an agricultural companyutilizing the Company’s proprietary platform. As of January 31, 2008, theCompany has completed all of the three required milestones.  After the second anniversary of the signingdate, the convertible notes may convert into shares of the Company’s commonstock at the lower of the fixed conversion price or 80% of the lowest dailyvolume-weighted average price (the “VWAP”), of the common stock during the fivetrading days prior to the conversion date. The maturity date of each of theconvertible notes for YA Global and Stanford is December 30, 2010 andDecember 31, 2010, respectively. Currently, at the fixed conversion price, the number of shares of commonstock issuable upon conversion of the remaining $9,500,000 (during the yearended June 30, 2008, YA Global converted $500,000 of convertible notesinto 555,556 shares of common stock) of convertible notes outstanding andshares of common stock to be issued upon exercise of the warrants outstandingat June 30, 2008 represents, in the aggregate, 24,438,888 shares, plus anestimated additional 1,400,000 shares for the payment of interest in stockunder the convertible notes.

 

The convertiblenotes accrue interest on their outstanding principal balances at an annual rateof 8%.  The Company has the option to payinterest in cash or, upon certain conditions, common stock.  If the Company pays interest in common stock,the stock will be valued at a 10% discount to the average daily VWAP for the fiveday trading period prior to the interest payment date (the “Interest Shares”).

 

At the Company’soption, it can redeem a portion of, or all of, the principal owed under theconvertible notes by providing the investors with at least 30 business days’written notice, provided that, at the time of receipt of the notice, either:(A)(i) the VWAP of the common stock exceeds 130% of the Fixed Conversion 

 

F-21

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

Price for at least20 of 30 prior trading days and (ii) there is an effective registrationstatement for the resale of the common stock that will be issued under theredemption or (B) it redeems a portion, or all, of the principal owed at a 20%premium above the principal then outstanding and any accrued interestthereupon.  If the Company redeems all orany of the principal outstanding under the convertible notes, it will pay anamount equal to the principal being redeemed plus accrued interest.

 

If there is aneffective registration statement for the resale of the shares underlying theconvertible notes or if such shares become 144(k) eligible, the Company willhave the option to force the investors to convert 50% and 100% of its then-outstandingconvertible notes if its common stock price exceeds 150% and 175% of the FixedConversion Price, respectively, for any 20 out of 30 trading days; providedthat such forced conversion meets certain conditions (the “Call Option”).  If the Company exercises its Call Optionprior to the third anniversary of the signing date, it will issue additionalwarrants to the investor equal to 50% of the number of shares underlying theconvertible note subject to the forced conversion.  These warrants will be exercisable at thefixed conversion price and will have the same maturity as the other warrantsissued under the YA Global financing.

 

The Company’sobligations under the convertible notes are secured by all of its and itssubsidiary’s assets and intellectual property, as evidenced by certain SecurityAgreements and certain Patent Security Agreements by and between the Companyand each of YA Global and Stanford. Pursuant to a subordination agreement, YA Global is the senior securedcreditor.

 

The agreementswith YA Global and Stanford provide for the issuance of warrants to purchase anaggregate of 5,550,000 and 8,333,333, respectively, of the Company’s CommonStock, exercisable six months and one day from the date of issuance until theirexpiration on the date that is five years from the date of issuance.  The warrants have been issued in two series.The exercise price of the Series A warrants is $1.01 per share, and theexercise price of the Series B warrants is $0.90 per share, subject tocertain adjustments.  The warrantsprovide a right of cashless exercise if, at the time of exercise, there is noeffective registration statement registering the resale of the sharesunderlying the warrants.

 

The conversionrate of each convertible note and the exercise price of the Series Bwarrants are subject to adjustment for certain events, including dividends,stock splits, combinations and the sale of the Company’s Common Stock orsecurities convertible into or exercisable for the Company’s Common Stock at aprice less than the then applicable conversion or exercise price.

 

The investors havea right of first refusal on any future funding that involves the issuance ofthe Company’s capital stock for so long as a portion of the convertible notesis outstanding.

 

Both YA Global andStanford entered into Registration Rights Agreements.  Generally Stanfords registration rights donot become effective until all of YA Globals registration rights have beenfulfilled.  Pursuant to YA Global’sRegistration Rights Agreement, the Company filed an initial registrationstatement on October 12, 2007 to register 3,333,333 shares of commonstock, 

 

F-22

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

underlying theconvertible notes, issuable to YA Global, and such registration statementbecame effective on November 1, 2007. The Company was required to register an additional 891,667 shares ofcommon stock issuable to YA Global. However, YA Global has amended itsRegistration Rights Agreement deferring its right to have such additionalshares registered.  If the sharesissuable to YA Global remain outstanding after all shares under theregistration statements have been sold, the Company may be required to fileadditional registration statements for those shares.  These registration rights for YA Global willcease once the shares issuable to YA Global on December 20, 2007 areeligible for sale by the investor without restriction under Rule 144(k),which is December 20, 2008.  Theregistration rights for Stanford will cease once the shares issuable toStanford on June 30, 2008 are eligible for sale by the investor withoutrestriction under Rule 144(k), which is June 30, 2009.  Upon certain events, the Company has agreedto pay as partial liquidated damages an amount equal to 1.0% of the aggregatepurchase price paid by the investors for any convertible debentures then heldby the investors, but these payments may not exceed 12% of the aggregatepurchase price paid by the investors. The maximum liquidated damages payable under the Registration RightsAgreement was $600,000.  The Company didnot record an estimated registration rights liability as the Companyanticipated that it would fulfill its obligations under the Registration RightsAgreement.

 

The total grossproceeds from the issuance of the convertible notes and warrants was$10,000,000 before a payment of 3.25% of the purchase price in commissions toWainwright & Co., Inc. (the “Placement Agent”).  On April 29, 2008, YA Global converted$500,000 of the Convertible Notes into 555,556 shares of the Company’s commonstock.

 

The Company hasissued to the Placement Agent warrants to purchase 7% of the purchase price, or777,777 shares, of the Company’s Common Stock with similar terms to thewarrants that will be issued to the investors. The Company paid YA Global and Stanford a non-refundable structuring/duediligence fee of $30,000 each.  TheCompany has also paid YA Global and Stanford a commitment fee of 5% and 7%,respectively, of its purchase price, which was paid proportionately at eachclosing.

 

*Specificsof YA Global Financing*

* *

Pursuant to the YAGlobal Securities Purchase Agreement, the Company has issued three convertiblenotes in the aggregate amount of $5,000,000 and two Series A warrants inthe amount of 1,387,500 shares each on September 21, 2007 andOctober 16, 2007 and a Series B warrant in the amount of 2,775,000shares on December 20, 2007.

 

The gross proceeds,less $280,000 paid to YA Global, of $4,720,000 from the issuance of convertiblenotes and warrants have been allocated between the convertible notes andwarrants based upon their fair values, whereby the fair value for the warrantshave been  determined using theBlack-Scholes model.  Additional amountswere allocated to the beneficial conversion feature based upon the effectiveconversion price compared to the fair value of the common stock on the date ofissuance of the convertible notes and warrants. The material factors incorporated in the Black-Scholes model in estimatingthe value of the warrants include the following:

 

F-23

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 
| Estimated  life in years |   | 5           |   |
|--------------------------|--------|-------------|--------|
| Risk-free  interest rate |   | 3.5% - 4.4% |   |
| Volatility               |   | 100%        |   |
| Dividend  paid           |   | None        |   |

 

As of June 30, 2008, net proceeds of $4,720,000 were allocated to thewarrants and beneficial conversion feature and recorded as equity.

 

The convertiblenotes and warrants issued to YA Global are subject to a maximum cap of30,500,000 on the number of shares of common stock that can be issued upon theconversion of the convertible notes and the exercise of the warrants.

 

*Specificsof Stanford Financing*

* *

Pursuant to theStanford Securities Purchase Agreement, on December 20, 2007 andJune 30, 2008, the Company issued an aggregate of three convertible notesin the aggregate amount of $5,000,000 and three Series A and threeSeries B warrants in the aggregate amount of 8,333,333 shares

 

The grossproceeds, less $380,000 paid to Stanford, of $4,620,000 from the issuance ofthe convertible notes and warrants have been allocated between the convertiblenotes and warrants based upon their fair values, whereby the fair value for thewarrants have been  determined using theBlack-Scholes model.  Additional amountswere allocated to the beneficial conversion feature based upon the effectiveconversion price compared to the fair value of the common stock on the date ofissuance of the convertible notes and warrants. The material factors incorporated in the Black-Scholes model in estimatingthe value of the warrants include the following:

 
| Estimated  life in years |   | 5           |   |
|--------------------------|--------|-------------|--------|
| Risk-free  interest rate |   | 3.4% - 3.5% |   |
| Volatility               |   | 100%        |   |
| Dividend  paid           |   | None        |   |

 

The convertiblenotes and warrants issued to Stanford are subject to a maximum cap of31,888,888 on the number of shares of common stock that can be issued upon theconversion of the convertible notes and the exercise of the warrants.

 

As ofJune 30, 2008, the outstanding balance of the Convertible Notes were $57,which is comprised of notes with an aggregate face amount of $9,500,000 lessunamortized debt discount of $9,499,943.

 

Debt discountassociated with the Convertible Notes is amortized to interest expense, usingthe effective yield method, over the remaining life of the ConvertibleNotes.  Upon conversion of theConvertible Notes into Common Stock, any unamortized debt discount relating tothe portion converted will be charged to interest.  Total charges to interest for amortization ofdebt discount were $500,057 for the year ended June 30, 2008 and frominception through June 30, 2008.

 

F-24

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

The costs associated with the issuances in the amountof $1,291,427 have been recorded as deferred financing costs and are beingamortized ratably over the term of the convertible notes.  The balance of deferred financing costs as ofJune 30, 2008 amounted to $1,059,230.

 

*Stock Option Plan*

 

In 1999, the Company adoptedthe 1998 Stock Incentive Plan, as amended (the “Plan”), which provides for thegrant of stock options and stock purchase rights to certain designatedemployees and certain other persons performing services for the Company, asdesignated by the board of directors. Pursuant to the Plan, an aggregate of 6,000,000 shares of common stockhave been reserved for issuance.  On March 28,2003, the Company filed a registration statement with the SEC to register allof the 3,000,000 shares of Common Stock underlying the Plan.  On January 26, 2007, the Company amendedthe registration statement to register an additional 3,000,000 shares of CommonStock underlying the Plan. The registration statement and amendment was deemedeffective upon filing.

 

The terms and vesting schedules for share-based awards vary by type ofgrant and the employment status of the grantee. Generally, the awards vest based upon time-based conditions.

 

The fair value of each stock option granted has beendetermined using the Black-Scholes model. The material factors incorporated in the Black-Scholes model inestimating the value of the options reflected in the above table include thefollowing:

 
| ** **                   | ** ** | **Year Ended June 30,** |
|------------------------------|------------|------------------------------|
| ** **                   | ** ** | **2008**                     | ** ** | **2007** | ** ** | **2006** |
| Estimated  life in years     |       | 4-6                          |   | 6-10 |   | 6-10 |
| Risk-free  interest rate (1) |       | 1.9%-4.1%                    |   | 4.2%-4.65% |   | 4.2%-4.5% |
| Volatility                   |       | 100%                         |   | 70%-80% |   | 70%-111% |
| Dividend  paid               |       | None                         |   | None |   | None |

 

----

(1)            represents the interest rate on aU.S. Treasury security with a maturity date corresponding to that of the optionterm.

 

The economic values of the options will depend on the futureprice of the Company’s common stock, par value $0.01 (the “Common Stock”),which cannot be forecast with reasonable accuracy.

 

F-25

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

Stock option activity under the Plan is summarized asfollows:

 
| ** **                                                                               | ** ** | ** ** | ** ** | **Weighted-average** | ** ** |
|------------------------------------------------------------------------------------------|------------|------------|------------|----------------------|------------|
|                                                                                     |       | **Shares** | ** ** | **Exercise  Price**  |       |
| Options outstanding at  July 1, 2005                                                |       | 2,111,500  |       | $                    | 2.74       |   |
| Granted                                                                                  |       | 318,000    |       | $                    | 1,40       |   |
| Exercised                                                                                |       | —     |       | —               |       |
| Expired                                                                                  |       | (3,000     | )          | $                    | 3.48       |   |
| Options outstanding at  June 30, 2006                                               |       | 2,426,500  |       | $                    | 2.56       |   |
| Granted                                                                                  |       | 338,000    |       | $                    | 1.08       |   |
| Exercised                                                                                |       | —     |       | —               |       |
| Expired                                                                                  |       | (118,500   | )          | $                    | 3.42       |   |
| Options outstanding at  June 30, 2007                                               |       | 2,646,000  |       | $                    | 2.33       |   |
| Granted                                                                                  |       | 1,069,600  |       | $                    | 0.99       |   |
| Exercised                                                                                |       | —     |       | —               |       |
| Expired                                                                                  |       | —     |       | —               |       |
| Options outstanding at  June 30, 2008                                               |       | 3,715,600  |       | $                    | 1.95       |   |
|                                                                                     |       |       |       |                 |       |
| Options exercisable at  June 30, 2006                                               |       | 2,181,337  |       | $                    | 2.64       |   |
| Options exercisable at  June 30, 2007                                               |       | 2,396,334  |       | $                    | 2.45       |   |
| Options exercisable at  June 30, 2008                                               |       | 2,778,336  |       | $                    | 2.25       |   |
|                                                                                     |       |       |       |                 |       |
| Weighted-average fair  value of options granted during the year ended June 30, 2006 |       |       |       | $                    | 0.92       |   |
| Weighted-average fair  value of options granted during the year ended June 30, 2007 |       |       |       | $                    | 0.85       |   |
| Weighted-average fair  value of options granted during the year ended June 30, 2008 |       |       |       | $                    | 0.77       |   |

 

Non-vested stock option activity under the Plan is summarized asfollows:

 
| ** **                                      | ** ** | ** **     | ** ** | **Weighted-average** | ** ** |
|-------------------------------------------------|------------|----------------|------------|----------------------|------------|
|                                            |       | **Number  of** | ** ** | **Grant-Date**       |       |
|                                            |       | **Options**    | ** ** | **Fair  Value**      |       |
| Non-vested stock  options at July 1, 2005  |       | 276,992        |       | $                    | 2.98       |   |
| Granted                                         |       | 318,000        |       | $                    | 0.92       |   |
| Vested                                          |       | (349,162       | )          | $                    | 2.05       |   |
| Forfeited                                       |       | (667           | )          | $                    | 3.23       |   |
| Non-vested stock  options at June 30, 2006 |       | 245,163        |       | $                    | 1.47       |   |
| Granted                                         |       | 338,000        |       | $                    | 0.86       |   |
| Vested                                          |       | (328,497       | )          | $                    | 1.30       |   |
| Forfeited                                       |       | (5,000         | )          | $                    | 0.87       |   |
| Non-vested stock  options at June 30, 2007 |       | 249,666        |       | $                    | 1.07       |   |
| Granted                                         |       | 1,069,600      |       | $                    | 0.76       |   |
| Vested                                          |       | (382,002       | )          | $                    | 0.82       |   |
| Forfeited                                       |       | —         |       | —               |       |
| Non-vested stock  options at June 30, 2008 |       | 937,264        |       | $                    | 0.77       |   |

 

F-26

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

The following tablesummarizes information about stock options outstanding at June 30, 2008:

 
| ** **               | ** ** | ** **                  | ** ** | **Options Outstanding** | ** ** | **Options Exercisable** | ** ** |
|--------------------------|------------|-----------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **               | ** ** | ** **                  | ** ** | **Weighted -average**   | ** ** | **Weighted-**                | ** ** | ** ** | ** ** | **Weighted-** | ** ** |
| ** **               | ** ** | **Number**                  | ** ** | **Remaining**                | ** ** | **average**                  | ** ** | **Number** | ** ** | **average** | ** ** |
| **Ranges of**       | ** ** | **Outstanding at**     | ** ** | **Contractual**              | ** ** | **Exercise**                 | ** ** | **Exercisable at** | ** ** | **Exercise** | ** ** |
| **Exercise Prices** | ** ** | **June 30, 2008** | ** ** | **Life (Years)**        | ** ** | **Price**                    | ** ** | **June 30, 2008** | ** ** | **Price** | ** ** |
| ** **               | ** ** | ** **                  | ** ** | ** **                   | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| $0.99 - $1.65            |       | 1,813,100                   |       | 8.5                          |       | $                            | 1.11       |   | 875,836 |   | $ | 1.17 |   |
| $2.05 - $2.35            |       | 1,025,000                   |       | 2.9                          |       | $                            | 2.12       |   | 1,025,000 |   | $ | 2.12 |   |
| $3.15 - $4.00            |       | 877,500                     |       | 4.3                          |       | $                            | 3.49       |   | 877,500 |   | $ | 3.49 |   |
|                     |       |                        |       |                         |       |                         |       |   |   |   |   |
| $0.99 - $4.00            |       | 3,715,600                   |       | 6.0                          |       | $                            | 1.95       |   | 2,778,336 |   | $ | 2.25 |   |

 

As of June 30, 2008, the aggregate intrinsic value ofstock options outstanding was $1,343,166, with a weighted-average remainingterm of 6.0 years.  The aggregateintrinsic value of stock options exercisable at that same date was $544,809,with a weighted-average remaining term of 4.9 years.  As of June 30, 2008, the Company has1,856,700 shares available for future stock option grants.

 

As of June 30, 2008, total compensation expense not yetrecognized related to stock option grants amounted to $183,413, which will berecognized over the next 18 months, and an additional $640,000 which may berecognized as achievement of certain target goals under the Company’s Long-TermIncentive Program become probable over the next 30 months.

 

*Short-Term Incentive Program*

* *

On December 13, 2007, upon recommendation of theCompany’s Compensation Committee, the Board adopted a Short-Term EquityIncentive Program for the members of the executive management team.  The Programs are intended to ensure the achievementof certain goals of the Company, continuity of the Company’s executivemanagement, and to align the interests of the executive management with thoseof the shareholders.

 

Pursuant to and as defined in the Short-Term EquityIncentive Program, each executive will be awarded shares of the Company’sCommon Stock, or options to acquire shares of the Company’s Common Stock, ifthe Company achieves certain target goals relating to research, financing,licensing, investor relations and other administrative items during the fiscalyear ending June 30, 2008.

 

The number of eligible shares and options to be awarded tothe executive is based upon the following weightings:

 

1.          45% ofeligible shares and options for contributions relating to the Company’s MultipleMyeloma project;

 

2.          25% ofeligible shares and options for contributions relating to the Company’s currentfinancing;

 

3.          15% ofeligible shares and options for contributions relating to the Company’slicensing and licensing support activities;

 

F-27

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

4.          5% ofeligible shares and option for contributions relating to the Company’s auditsand Securities and Exchange filings;

 

5.          4% of theeligible shares and options for contributions relating to the administration ofthe Company’s intellectual property;

 

6.          3% of theeligible shares and options for contributions relating to the Company’s investorrelations program;

 

7.          1% of theeligible shares and options for contributions relating to the administration ofthe Company’s website;

 

8.          1% of theeligible shares and options for contributions relating to the administrationand monitoring of the requirements of the American Stock Exchange; and

 

9.          1% of theeligible shares and options for contributions relating to planning for futurefinancing requirements.

 

If the target goals are achieved by the Company, theexecutive officers would be awarded the following number of shares and optionsfor the Fiscal year ended June 30, 2008:

 
| ** **               | ** ** | **Number of Shares** | ** ** | **Number of Options (1)** | ** ** |
|--------------------------|------------|--------------------------------|------------|------------------------------------------|------------|
| ** **               | ** ** | ** **                     | ** ** | ** **                               | ** ** |
| Bruce  C. Galton         |       | 50,225                         |       | —                                   |       |
| John  E. Thompson, Ph.D. |       | —                         |       | 52,676                                   |       |
| Joel  Brooks             |       | 37,275                         |       | —                                   |       |
| Richard  Dondero         |       | —                         |       | 71,924                                   |       |
| Sascha  P. Fedyszyn      |       | 25,200                         |       | —                                   |       |
|                     |       |                           |       |                                     |       |
| Total                    |       | 112,700                        |       | 124,600                                  |       |

 

----

(1)            Suchoptions are exercisable at a strike price of $0.99, which represents theclosing price of the common stock on December 12, 2007.

 

As of June 30, 2008, the Company has determined thatthe target goals have been achieved.  Thetotal amount of compensation expense in connection with the short-termincentive program in the amount of $206,269 has been recorded ratably over thesix and one-half month period from December 13, 2007 through June 30,2008.  Such compensation expense wasdetermined under a black-scholes model on the date of adoption of theShort-Term Equity Incentive Program.

 

*Long-Term Incentive Program*

* *

On December 13, 2007, upon recommendation of theCompany’s Compensation Committee, the Board adopted a Long-Term EquityIncentive Program for the members of the executive management team.  The Programs are intended to ensure theachievement of certain goals of the Company, continuity of the Company’sexecutive management, and to align the interests of the executive managementwith those of the shareholders.

 

Pursuant to and as defined in the Long-Term Equity IncentiveProgram, each executive will be awarded shares of the Company’s Common Stockand options to acquire shares of the Company’s Common Stock if the Companyachieves certain target goals relating to its Multiple Myeloma research projectover the next three fiscal years.

 

F-28

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

The number of eligible shares and options to be awarded tothe executive is based upon the following weightings:

 

1.          20% of theeligible shares upon the execution of a research agreement to conduct a phaseI/II clinical trial at a research facility;

 

2.          20% of theeligible shares upon the filing and acceptance by the FDA of an investigationalnew drug application; and

 

3.          60% of theeligible shares upon the successful completion of a FDA approved phase I/IIclinical trial .

 

If the target goals are achieved by the Company, theexecutive officers would be awarded the following number of shares and options:

 
| ** **               | ** ** | **Goal 1** | ** ** | **Goal 2** | ** ** | **Goal 3** | ** ** |
|--------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| Number  of Shares        |       |            |       |            |       |            |       |
|                     |       |            |       |            |       |            |       |
| Bruce  C. Galton         |       | 25,000          |       | 25,000          |       | 75,000          |       |
| Joel  Brooks             |       | 10,000          |       | 10,000          |       | 30,000          |       |
| Sascha  P. Fedyszyn      |       | 10,000          |       | 10,000          |       | 30,000          |       |
|                     |       |            |       |            |       |            |       |
| Total  number of shares  |       | 45,000          |       | 45,000          |       | 135,000         |       |
|                     |       |            |       |            |       |            |       |
| Number  of Options (1)   |       |            |       |            |       |            |       |
|                     |       |            |       |            |       |            |       |
| John  E. Thompson, Ph.D. |       | 50,000          |       | 50,000          |       | 150,000         |       |
| Richard  Dondero         |       | 60,000          |       | 60,000          |       | 180,000         |       |
|                     |       |            |       |            |       |            |       |
| Total  number of options |       | 110,000         |       | 110,000         |       | 330,000         |       |

 

----

(1)            Suchoptions are exercisable at a strike price of $0.99, which represents theclosing price of the common stock on December 12, 2007.

 

As of June 30, 2008, the Company is not able todetermine if the achievement of the target goals under the Long-Term EquityIncentive Program are probable and, therefore, has not yet begun to recognizeany of the $640,000 compensation expense that was computed on the date ofadoption of the program.  The Companywill begin recognizing such compensation expense ratably over the remainingterm of the plan at such time that the Company is able to determine that theachievement of the target goals are probable.

 

*Warrants*

* *

On September 7,1999, the Company granted to its patent counsel, as partial consideration forservices rendered, options to purchase 10,000 shares of the Company’s CommonStock at an exercise price equal to $3.50 per share, with 3,332 options vestingon the date of grant, 3,334 options vesting on the first anniversary of thedate of grant, and 3,334 options vesting on the second anniversary of the dateof grant.  Such options were grantedoutside of the Company’s Plan.

 

F-29

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

The following tablerepresents warrants outstanding as of:

 
|               |       | **June 30,** | ** ** |
|--------------------|------------|-------------------|------------|
| **Exercise Price** |       | **2008**          | ** ** | **2007** |   |
| ** **         |       | ** **        | ** ** | ** ** |   |
| $                  | 7.00       |              | 10,000     |   | 10,000 |   |
|               | 3.79       |              | 842,141    |   | 842,141 |   |
|               | 3.59       |              | 237,600    |   | 237,600 |   |
|               | 3.50       |              | 280,000    |   | 280,000 |   |
|               | 3.45       |              | 15,000     |   | 15,000 |   |
|               | 3.38       |              | 965,380    |   | 965,380 |   |
|               | 3.25       |              | —     |   | 750,000 |   |
|               | 3.15       |              | 20,000     |   | 20,000 |   |
|               | 2.35       |              | 15,000     |   | 15,000 |   |
|               | 2.15       |              | 110,000    |   | 110,000 |   |
|               | 2.00       |              | —     |   | 750,000 |   |
|               | 1.40       |              | 5,000      |   | 5,000 |   |
|               | 1.18       |              | 993,153    |   | 993,153 |   |
|               | 1.08       |              | 2,500      |   | 2,500 |   |
|               | 1.07       |              | 139,041    |   | 139,041 |   |
|               | 1.01       |              | 7,175,000  |   | — |   |
|               | 1.00       |              | 1,500,000  |   | — |   |
|               |   .99 |              | 1,000      |   | — |   |
|               |   .90 |              | 7,330,555  |   | — |   |
|               |   .74 |              | 155,556    |   | — |   |
|               |       |              | 19,796,926 |   | 5,134,815 |   |

 

As of June 30, 2008,19,796,259 of the above warrants are exercisable expiring at various datesthrough 2017.  At June 30, 2008, theweighted-average exercise price on the above warrants was $1.29.

 

*Share Based Compensation*

* *

Effective July 1, 2005, the Company adopted FAS No. 123R,utilizing the modified-retrospective method. FAS No. 123R requires the recognition of stock-based compensationexpense in the consolidated financial statements.  Under the modified-retrospective method, theprovisions of FAS No. 123R apply to all awards granted or modified afterthe date of adoption. Prior year results have been adjusted to reflect theamortized portion of the fair value of the options granted prior to the date ofadoption, which have been measured under the original provisions of FAS No. 123.  In addition, the unamortized portion of theoptions that were granted prior to the date of adoption, also determined underthe original provisions of FAS No. 123, shall be recognized in the periodsafter the date of adoption.

 

The following stock-based compensation expense of $897,321, $970,162,$677,000 and $9,696,097 was recognized for the years ended June 30, 2008,2007, 2006 and cumulatively from inception through June 30, 2008,respectively:

 

F-30

----

** **

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 
| ** **                               | ** ** | **Year Ended June 30,** | ** ** | **Cumulative** | ** ** |
|------------------------------------------|------------|----------------------------------------|------------|----------------|------------|
| ** **                               | ** ** | **2008**                               | ** ** | **2007**       | ** ** | **2006** | ** ** | **From Inception** | ** ** |
| General  and administrative expenses     |       | $                                      | 749,100    |           | $          | 909,848 |   | $ | 488,000 |   | $ | 8,286,041 |   |
| Research  and development expenses       |       | 148,221                                |       | 60,314         |       | 189,000 |   | 1,410,056 |   |
| Total  stock-based compensation expense  |       | $                                      | 897,321    |           | $          | 970,162 |   | $ | 677,000 |   | $ | 9,696,097 |   |
| Basic  and diluted loss per common share |       | $                                      | .05        |           | $          | .06 |   | $ | .04 |   |   |   |

 

**8.   INCOME TAXES:**

 

The Company files a consolidated federal income tax return.  The subsidiary files separate state and localincome tax returns.

 

The reconciliation of the effective income tax rate to the federalstatutory rate is as follows:

 
| **Year ended June 30,**             | ** ** | **2008**   | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|----------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Federal statutory rate                             |       | (34.0      | )%         | (34.0      | )%         | (34.0      | )%         |
| Stock based  compensation                          |       | 0.5        | %          | 2.7        | %          | 5.9        | %          |
| Interest expense paid  with common stock           |       | 2.5        | %          | —     |       | —     |       |
| Amortization of debt  discount and financing costs |       | 2.9        | %          | —     |       | —     |       |
| Other                                              |       | 0.1        | %          | 0.1        | %          | 0.1        | %          |
| Valuation allowance                                |       | 28.0       | %          | 31.2       | %          | 28.0       | %          |
|                                               |       | -0-        | %          | - 0 -      | %          | - 0 -      | %          |

 

The deferredincome tax asset consists of the following at:

 
| ** **                       | ** ** | **June 30,** | ** ** |
|----------------------------------|------------|-------------------|------------|
| ** **                       | ** ** | **2008**          | ** ** | **2007** | ** ** |
| ** **                       | ** ** | ** **        | ** ** | ** ** | ** ** |
| Deferred tax asset:              |       |              |       |   |   |
| Net  operating loss carryforward |       | $                 | 7,528,000  |   | $ | 6,443,000 |   |
| Stock-based  compensation        |       | 1,506,000         |       | 1,181,000 |   |
| Other                            |       | 118,000           |       | 95,000 |   |
|                             |       | 9,152,000         |       | 7,719,000 |   |
|                             |       |              |       |   |   |
| Valuation  allowance             |       | (9,152,000        | )          | (7,719,000 | ) |
|                             |       | $                 | - 0-       |   | $ | - 0 - |   |

 

At June 30, 2008, the Company has federaland state net operating loss carryforwards of approximately $19,924,000 and$12,565,000, respectively, available to offset future taxable income expiringon various dates through 2028.  The timingand extent to which the Company can utilize future tax deductions in any yearmay be limited by provisions of the Internal Revenue Code regarding changes inownership of Corporations (i.e. IRS Code Section 382).

 

F-31

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

**9.      COMMITMENTS:**

* *

*Research Agreement*

* *

Effective September 1, 1998, the Company enteredinto a research and development agreement, which has subsequently been renewed,with a university that a researcher, who is an officer, director andstockholder of the Company, is affiliated. Pursuant to the agreement, the university provides research anddevelopment under the direction of the researcher and the Company.  The agreement is renewable annually by theCompany which has the right of termination upon 30 days’ advance writtennotice.  Effective September 1,2008, the Company extended the research and development agreement for anadditional one-year period through August 31, 2009, in the amount of Can$735,000, or approximately U.S. $735,000. Research and development expenses under this agreement for the yearsended June 30, 2008, 2007 and 2006 aggregated U.S. $730,960, U.S. $568,872and U.S. $692,982, respectively, and U.S. $4,627,264 for the cumulative periodthrough June 30, 2008.  Futureobligations to be paid under the agreement through August 31, 2009 equalapproximately $855,000.

 

*Supply Agreements*

* *

OnJune 27, 2008, the Company entered into a supply agreement with VGXI, Inc.(“VGXI”) under which VGXI will supply the Company with the plasmid portion ofthe Company’s combination therapy consisting of the Factor 5A gene and siRNAagainst Factor 5A (the “Plasmid Product”).   The agreement has an initial term that commences on the date of theagreement and runs for a period of five (5) years.  The agreement shall, upon mutual agreement,renew for consecutive one (1) year periods thereafter.  The Company’s financial obligation under theagreement is dependent upon the amount of Plasmid Product ordered by theCompany.

 

OnJune 30, 2008, the Company entered into a supply agreement with POLYPLUSunder which POLYPLUS will supply the Company with its “*in vivo*-jetPEI” (the “Product”), which isused for systemic delivery of the Company’s combination therapy of siRNAagainst Factor 5A and a plasmid of the Factor 5A gene.  The agreement has an initial term whichcommences on the date of the agreement and runs until the eighth anniversary ofthe first sale of the Product.  Theagreement shall automatically renew for consecutive one (1) year periodsthereafter, except if terminated by either party upon six (6) monthswritten notice prior to the initial or any subsequent renewal term.  The Company’s financial obligation under theagreement is dependent upon the amount of Product ordered by the Company.

 

Inthe aggregate, the Company anticipates that it will pay $876,000 under theterms of the supply agreements over to the next 12 months.

 

*Employment and Consulting Agreements*

* *

Effective May 1, 1999, the Company entered into aconsulting agreement for research and development with a researcher.  Effective January 1, 2003, 2005, and2007, the agreement was amended to provide for an increase in the monthly

 

F-32

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

payments from $3,000 to $5,000, $5,000 to $5,200, and$5,200 to $5,417, respectively.  Theagreement was renewed for an additional two-year term through June 30,2009.  Future obligations to be paidunder the agreement equal $65,000.

 

The Company hasemployment agreements with certain employees, all of whom are also stockholdersof the Company.  These agreements providefor a base compensation and additional amounts, as defined.  The agreements expire between January 2009and October 2009.  Future basecompensation to be paid through October 2009 under the agreements as of June 30,2008 is $665,540.

 

*FacilityLease*

* *

The Company is obligatedunder a noncancelable operating lease of office space expiring on May 31,2011.  The aggregate minimum futurepayments, subject to certain escalations, is payable as follows:

 
| **Year  ending June 30,** | ** ** | ** ** | ** ** |
|--------------------------------|------------|------------|------------|
| 2009                           |       | 78,508     |       |
| 2010                           |       | 79,420     |       |
| 2011                           |       | 73,568     |       |
|                           |       | $          | 231,496    |   |
|                                |            |            |            |  |

 

Rent expense charged tooperations aggregated $75,602, $92,872, $86,849 and $585,809 for the yearsended June 30, 2008, 2007, 2006, and from inception through June 30,2008, respectively.

 

The lease provides forscheduled increases in base rent.  Rentexpense is charged to operations ratably over the term of the lease, whichresults in deferred rent payable and represents the cumulative rent expensecharged to operations from inception of the lease in excess of the requiredlease payments.

 

*FinancialAdvisory Agreement*

* *

On October 11, 2006,the Company entered into a three-year non-exclusive financial advisoryagreement with Stanford Group Company (“Stanford”).  As compensation under the agreement, previouslyissued warrants that were purchased by Stanford and its affiliates in a privateplacement were amended.  The originalexercise prices on 1,500,000 warrants, 750,000 of which had an exercise priceof $3.25 and 750,000 of which had an exercise price of $2.00, were reduced to$2.00 and $1.50, respectively. Additionally, the original expiration dates of December 2006 and January 2007were each extended for a three-year period through December 2009 and January 2010,respectively.  Stock-based compensationin the amount of $683,000related to the amendment of such warrants was recorded during the year ended June 30,2007. Stanford was also granted piggyback registration rights in connectionwith the shares underlying the warrants.

 

On February 14**,** 2008, the Company amended the agreement.  The amendment extended the term of theagreement through June 30, 2012 and expanded the 

 

F-33

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

services to be provided tothe Company.  As compensation for theterm extension and expansion of services, previously issued warrants wereamended.  The exercise prices of the 1,500,000shares of Common Stock underlying the warrants, 750,000 of which had anexercise price of $2.00 and 750,000 of which had an exercise price of $1.50,were reduced to $1.01.  Additionally, theexpiration dates of December 2009 and January 2010 were each extendedthrough June 30**,** 2012.  A compensation charge in the amount of$384,500 was recorded during the year ended June 30, 2008 in connectionwith extension and repricing of the warrants. The agreement may be terminated by either party upon sixty days writtennotice.

 

**10.**    JOINT VENTURE:

** **

On May 14, 1999, the Company entered into a jointventure agreement (“Joint Venture”) with an Israeli partnership that is engagedin the worldwide marketing of tissue culture plants.  The purpose of the Joint Venture is to developenhanced banana plants which will result in banana fruit with improvedconsumer- and grower-driven traits.  Forthe period from inception on May 14, 1999 to June 30, 2008, the JointVenture has had no revenue, expenses, assets or liabilities.  The program has been performed as a jointcollaboration whereby the Company pays for 50% of the research costs of theprogram.  The Company’s portion ofthe  expenses of the collaborationapproximated $205,000 and $162,500 for the years ended June 30, 2008 and2007, respectively, and is included in research and development expenses.

 

In July 1999, the Joint Venture applied for andreceived a conditional grant from the Israel - United States BinationalResearch and Development Foundation (the “BIRD Foundation”).  This agreement, as amended, allowed the JointVenture to receive $340,000 over a five-year period ending May 31,2004.  Grants received from the BIRDFoundation will be paid back only upon the commercial success of the JointVenture’s technology, as defined.  TheCompany has received a total of $99,728, of which $9,578 was received duringthe year ended June 30, 2006 and none was received during the years ended June 30,2008 and June 30, 2007.

 

**11.**    LICENSE AND DEVELOPMENTAGREEMENTS:

** **

InJune 2002, the Company entered into a three-year exclusive worldwidedevelopment and option agreement with ArborGen, (“ArborGen”) (the “Agreement”)to develop the Company’s technology in certain species of trees.  In July 2002, the Company received aninitial fee.  In November 2004 and January 2006,the Company received milestone payments. On December 21, 2006, ArborGenconverted the Agreement into a commercial license agreement for the developmentand commercialization of certain species of trees.  Under the terms of the license agreement, theCompany will receive certain annual payments over two years and, additionally,upon commercialization, a royalty on incremental net sales.

 

On November 8, 2006, the Company entered into a licenseagreement with Bayer CropScience GmbH for the development and commercializationof Canola (the “Agreement”).  Under theterms of the Agreement, the Company (i) received an upfront payment, (ii) willreceive milestone payments upon the achievement of certain developmentmilestones, and (iii) will receive****commercializationfees based upon specified benchmarks.

 

F-34

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

On July 17, 2007, the Company entered into a licenseagreement with Bayer CropScience AG for the development and commercializationof cotton (the “Bayer Cotton Agreement”). Under the terms of the Bayer Cotton Agreement, the Company (i) receivedan upfront initial payment, (ii) will receive milestone payments upon theachievement of certain development milestones, and (iii) additionally,upon commercialization, a royalty on net sales.

 

On August 6, 2007, the Company entered into a licenseagreement with the Monsanto Company for the development and commercializationof corn and soy (the “Monsanto Agreement”). Under the terms of the Monsanto Agreement, the Company (i) receivedan upfront initial payment, (ii) will receive milestone payments upon theachievement of certain development milestones, and (iii) additionally,upon commercialization, a royalty on net sales.

 

On September 11, 2007, the Company entered into alicense agreement with Bayer CropScience AG for the development andcommercialization of Rice (the “Bayer Rice Agreement”).  Under the terms of the Bayer Rice Agreement,the Company (i) received an upfront payment, (ii) will receivemilestone payments upon the achievement of certain development milestones, and (iii) additionally,upon commercialization, a royalty on net sales.

 

**12.**    VALUATION AND QUALIFYING ACCOUNTS:

** **
| **Years Ended June 30, 2008, 2007, and 2006.** |
|-----------------------------------------------------------------------------------|
| ** **                                                                        | ** ** | **Balance at** | ** ** | **Additions** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                                        | ** ** | **Beginning of** | ** ** | **Charged** | ** ** | ** ** | ** ** | **Balance at** | ** ** |
| ** **                                                                        | ** ** | **Year** | ** ** | **to Expense(*)** | ** ** | **Deductions** | ** ** | **End of Year** | ** ** |
| Year ended  June 30, 2008: Valuation allowance –deferred tax asset      |   | $ | 7,719,000 |   | $ | 1,433,000 |   | $ | 0 |   | $ | 9,152,000 |   |
| Year ended  June 30, 2007: Valuation allowance –deferred tax asset      |   | $ | 6,523,000 |   | $ | 1,196,000 |   | $ | 0 |   | $ | 7,719,000 |   |
| Year ended  June 30, 2006: Valuation allowance –deferred tax asset      |   | $ | 5,428,000 |   | $ | 1,095,000 |   | $ | 0 |   | $ | 6,523,000 |   |

 

----

(*)Offset to tax benefit of net operation losses.

 

F-35

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

**13.**    QUARTERLY FINANCIAL DATA(UNAUDITED) :

 
| ** **                                                              | ** ** | **Year Ended June 30, 2008** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **Quarter Ended**                                                  | ** ** | **September 30**                            | ** ** | **December 31** | ** ** | **March 31** | ** ** | **June 30** | ** ** |
| ** **                                                              | ** ** | ** **                                       | ** ** | **(Restated)** | ** ** | **(Restated)** | ** ** | ** ** | ** ** |
| ** **                                                              | ** ** | ** **                                       | ** ** |
| Revenue                                                                 |       | $                                                | 371,250    |   | $ | 6,250 |   | $ | 79,167 |   | $ | — |   |
| Total operating  expenses                                               |       | 741,954                                          |       | 978,105 |   | 1,351,142 |   | 984,488 |   |
| Loss from  operations                                                   |       | (370,704                                         | )          | (971,855 | ) | (1,271,975 | ) | (984,488 | ) |
| Interest expense  and amortization of debt discount and financing costs |       | (18,221                                          | )          | (103,210 | ) | (254,149 | ) | (727,337 | ) |
| Interest income                                                         |       | 6,879                                            |       | 25,227 |   | 43,907 |   | 24,436 |   |
| Net loss                                                                |       | $                                                | (382,046   | ) | $ | (1,049,838 | ) | $ | (1,482,217 | ) | $ | (1,687,389 | ) |
| Basic and  diluted net loss per common share                            |       | $                                                | (0.02      | ) | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.09 | ) |
| Basic and  diluted weighted-average number of common shares outstanding |       | 17,473,694                                       |       | 17,474,870 |   | 17,583,461 |   | 18,113,932 |   |

 
| ** **                                                              | ** ** | **Year Ended June 30, 2007** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| **Quarter Ended**                                                  | ** ** | **September 30**                            | ** ** | **December 31** | ** ** | **March 31** | ** ** | **June 30** | ** ** |
| ** **                                                              | ** ** | ** **                                       | ** ** |
| Revenue                                                                 |       | $                                                | 81,250     |   | $ | 181,250 |   | $ | 6,250 |   | $ | 31,250 |   |
| Total operating  expenses                                               |       | 692,633                                          |       | 1,342,989 |   | 828,483 |   | 756,895 |   |
| Loss from  operations                                                   |       | (611,383                                         | )          | (1,161,739 | ) | (822,233 | ) | (725,645 | ) |
| Interest income                                                         |       | 10,918                                           |       | 26,102 |   | 20,916 |   | 11,367 |   |
| Net loss                                                                |       | $                                                | (600,465   | ) | $ | (1,135,637 | ) | $ | (801,317 | ) | $ | (714,278 | ) |
| Basic and  diluted net loss per common share                            |       | $                                                | (0.04      | ) | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.04 | ) |
| Basic and  diluted weighted-average number of common shares outstanding |       | 15,480,649                                       |       | 17,257,791 |   | 17,473,694 |   | 17,473,694 |   |

 

Certain quarterly amounts for the quarters ended December 31, 2007 andMarch 31, 2008 have been restated. Effective April 1, 2008, the Companychanged the method of amortization of debt discount from the straight-linemethod to the effective yield method in accordance with EITF 98-5.  The effect of this restatement, on aquarterly basis, is as follows:

 

F-36

----

 

**SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY**

**(adevelopment stage company)**

** **

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 
| ** **                                                                          | ** ** | **Quarter Ended** | ** ** |
|-------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                          | ** ** | **December 31,**  | ** ** | **March 31,** | ** ** |
| ** **                                                                          | ** ** | **2007**               | ** ** | **2008** | ** ** |
| ** **                                                                          | ** ** | ** **             | ** ** |
| Decrease in  interest expense and amortization of debt discount and financing costs |       | $                      | 244,833    |   | $ | 561,950 |   |
| Decrease in net  loss                                                               |       | $                      | 244,833    |   | $ | 561,950 |   |
| Decrease in  basic and diluted net loss per common share                            |       | $                      | 0.01       |   | $ | 0.04 |   |
| Decrease in  convertible notes payable                                              |       | $                      | 244,833    |   | $ | 806,783 |   |
| Increase in  stockholder’s Equity                                              |       | $                      | 244,833    |   | $ | 806,783 |   |

 

F-37

----

 

**EXHIBITINDEX**

 
| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                                           |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **       | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                           |
| 2.1              |       | Merger  Agreement and Plan of Merger by and among Nava Leisure USA, Inc., an  Idaho corporation, the Principal Stockholders (as defined therein), Nava  Leisure Acquisition Corp., and Senesco, Inc., dated October 9,  1998. (Incorporated by reference to Senesco Technologies, Inc.  definitive proxy statement on Schedule 14A dated January 11, 1999.) |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.2              |       | Merger  Agreement and Plan of Merger by and between Senesco Technologies, Inc.,  an Idaho corporation, and Senesco Technologies, Inc., a Delaware  corporation, dated September 30, 1999. (Incorporated by reference to  Senesco Technologies, Inc. quarterly report on Form 10-QSB for the  period ended September 30, 1999.)                         |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.1              |       | Amended  and Restated Certificate of Incorporation of Senesco Technologies, Inc.  filed with the State of Delaware on January 22, 2007. (Incorporated by  reference to Senesco Technologies, Inc. quarterly report on  Form 10-Q for the period ended December 31, 2006.)                                                                                   |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2              |       | Certificate  of Amendment to the Amended and Restated Certificate of Incorporation of  Senesco Technologies, Inc. filed with the State of Delaware on  January 22, 2008. (Incorporated by reference to Exhibit 3.1 of  Senesco Technologies, Inc. quarterly report on Form 10-Q for the  period ended December 31, 2007.)                              |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.3              |       | Amended  and Restated By-laws of Senesco Technologies, Inc. as adopted on  October 2, 2000. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended December 31, 2000.)                                                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.1              |       | Form of  Warrant with Forbes, Inc. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended September 30, 1999.)                                                                                                                                                                                     |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.2              |       | Form of  Option Agreement with Kenyon & Kenyon. (Incorporated by reference to  Senesco Technologies, Inc. quarterly report on Form 10-QSB for the  period ended September 30, 1999.)                                                                                                                                                                    |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.3              |       | Form of  Warrant with Parenteau Corporation. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended December 31, 1999.)                                                                                                                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.4              |       | Form of  Warrant with Strategic Growth International, Inc. (Incorporated by  reference to Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended December 31, 1999.)                                                                                                                                                              |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.5              |       | Form of  Warrant issued to Stanford Venture Capital Holdings, Inc. and certain  officers of Stanford Venture Capital Holdings, Inc. (with attached  schedule of parties and terms thereto). (Incorporated by reference to  Exhibit 4.1 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended December 31, 2001.)    |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.6              |       | Form of  Warrant issued to certain accredited investors (with attached schedule of  parties and terms thereto). (Incorporated by reference to Exhibit 4.2 of  Senesco                                                                                                                                                                                                      |

 

F-38

----

 
| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                       |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                             |
|             |       | Technologies, Inc.  quarterly report on Form 10-QSB for the period ended December 31,  2002.)                                                                                                                                                                                                     |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.7              |       | Form of Warrant  issued to certain third parties for services rendered (with attached schedule  of parties and terms thereto). (Incorporated by reference to Exhibit 4.3  of Senesco Technologies, Inc. quarterly report on Form 10-QSB for  the period ended December 31, 2002.)       |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.8              |       | Warrant  issued to Sands Brothers International Ltd. dated September 25, 2003.  (Incorporated by reference to Exhibit 4.1 of Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended September 30, 2003.)                                                     |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.9              |       | Warrant  issued to Sands Brothers International Ltd. Dated September 25, 2003.  (Incorporated by reference to Exhibit 4.1 of Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended September 30, 2003.)                                                     |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.10             |       | Form of  Warrant issued to certain accredited investors (with attached schedule of  parties and terms thereto). (Incorporated by reference to Exhibit 4.1 of  Senesco Technologies, Inc. Current Report on Form 8-K, filed on  February 3, 2004.)                                       |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.11             |       | Form of  Warrant issued to certain accredited investors (with attached schedule of parties  and terms thereto). (Incorporated by reference to Exhibit 4.1 of Senesco  Technologies, Inc. Current Report on Form 8-K, filed on May 4,  2005.)                                            |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.12             |       | Form of  Warrant issued to Oppenheimer & Co. Inc. or its designees, dated as  of May 9, 2005. (Incorporated by reference to Exhibit 4.2 of  Senesco Technologies, Inc. quarterly report on Form 10-QSB for the  period ended March 31, 2005.)                             |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.13             |       | Form of  Warrant issued to H.C. Wainwright & Co., Inc., or its  designees, dated as of October 10, 2006 (Incorporated by reference to  Exhibit 10.42 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2006.)                  |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.14             |       | Form or  Warrant issued to certain accredited investors dated October 10, 2006  (with attached schedule of parties and terms thereto). (Incorporated by  reference to Exhibit 10.40 of Senesco Technologies, Inc. annual  report on Form 10-K for the period ended June 30, 2006.) |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.15             |       | Form of  Series A Warrant issued to YA Global Investments, L.P. (Incorporated by  reference to Exhibit 4.15 of Senesco Technologies, Inc. annual  report on Form 10-K for the period ended June 30, 2007.)                                                                         |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.16             |       | Form of  Series A Warrant issued to Stanford Venture Capital Holdings, Inc.  (Incorporated by reference to Exhibit 4.16 of Senesco Technologies, Inc.  annual report on Form 10-K for the period ended June 30, 2007.)                                                        |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.17             |       | Form of  Debenture issued to YA Global Investments, L.P. (Incorporated by reference to  Exhibit 4.17 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2007.)                                                                                          |
|             |       |                                                                                                                                                                                                                                                                                                             |
| 4.18             |       | Form of  Debenture issued to Stanford Venture Capital Holdings, Inc.  (Incorporated by reference to Exhibit 4.18 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007.)                                                                        |

 

F-39

----

 
| **Exhibit  No.**        | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                |
|-------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                    |       | for  the period ended June 30, 2007.)                                                                                                                                                                                                                                                                                                                                                                                                |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   4.19        |       | Form of  Series B Warrant issued to YA Global Investments, L.P. (Incorporated by  reference to Exhibit 4.19 of Senesco Technologies, Inc. annual  report on Form 10-K for the period ended June 30, 2007.)                                                                                                                                                                                                  |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   4.20        |       | Form of  Series B Warrant issued to Stanford Venture Capital Holdings, Inc.  (Incorporated by reference to Exhibit 4.20 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007.)                                                                                                                                                                                |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   4.21 † |       | Form of  Warrant issued to H.C. Wainwright & Co., Inc or its designees.                                                                                                                                                                                                                                                                                                                                                     |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.1                    |       | Indemnification  Agreement by and between Senesco Technologies, Inc. and Christopher  Forbes, dated January 21, 1999. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended December 31, 1998.) (Incorporated by reference to Exhibit 4.1  of Senesco Technologies, Inc. Current Report on   Form 8-K, filed on February 3, 2004.) |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.2                    |       | Indemnification  Agreement by and between Senesco Technologies, Inc. and Thomas C. Quick,  dated February 23, 1999. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended March 31, 1999.)                                                                                                                                                             |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.3                    |       | Indemnification Agreement  by and between Senesco Technologies, Inc. and Ruedi Stalder, dated  March 1, 1999. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended March 31, 1999.)                                                                                                                                                                   |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.4                    |       | Indemnification Agreement by and between Senesco  Technologies, Inc. and Bruce C. Galton, dated October 4, 2001.  (Incorporated by reference to Exhibit 10.10 of Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the quarterly  period ended December 31, 2001.)                                                                                                                            |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.5                    |       | Indemnification Agreement by and between Senesco  Technologies, Inc. and Jack Van Hulst, dated January 16, 2007.  (Incorporated by reference to Exhibit 10.13 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007)                                                                                                                                                |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.6                    |       | Indemnification Agreement by and between Senesco  Technologies, Inc. and John Braca, dated October 8, 2003.  (Incorporated by reference to Exhibit 10.38 of Senesco  Technologies, Inc. annual report on Form 10-KSB for the period  ended June 30, 2004.)                                                                                                                                                  |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.7                    |       | Indemnification Agreement with David Rector dated as of April, 2002.  (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended September 30, 2004.)                                                                                                                                                                                            |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.8 *                  |       | Employment Agreement by and between Senesco, Inc. and Sascha P.  Fedyszyn, dated January 21, 1999. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended December 31, 1998.)                                                                                                                                                                           |
|                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.9*                   |       | Employment  Agreement by and between Senesco Technologies, Inc. and Bruce C. Galton,  dated October 4, 2001. (Incorporated by reference to Exhibit 10.9  of Senesco Technologies, Inc. quarterly report on Form 10-QSB for  the period ended December 31, 2001.)                                                                                                                                            |

 

F-40

----

 
| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                             |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.10*           |       | Employment  Agreement by and between Senesco Technologies, Inc. and Joel Brooks,  dated July 1, 2003. (Incorporated by reference to Exhibit 10.29 of  Senesco Technologies, Inc. annual report on Form 10-KSB for the  period ended June 30, 2003.)                                                                                      |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.11*           |       | Employment  Agreement by and between Senesco Technologies, Inc. and Richard Dondero,  dated July 19, 2004. (Incorporated by reference to Exhibit 10.39 of  Senesco Technologies, Inc. annual report on Form 10-KSB for the  period ended June 30, 2004.)                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.12*           |       | Consulting  Agreement by and between Senesco Technologies, Inc. and John E.  Thompson, Ph.D., dated July 12, 1999. (Incorporated by reference to  Senesco Technologies, Inc. annual report on Form 10-KSB for the  period ended June 30, 2000.)                                                                                               |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.13*           |       | Amendment  to Consulting Agreement of July 12, 1999, as modified on  February 8, 2001, by and between Senesco, Inc. and John E.  Thompson, Ph.D., dated December 13, 2002. (Incorporated by reference to  Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended December 31, 2002.) |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.14  *         |       | Amendment#  5 to Consulting Agreement of July 12, 1999, as modified, by and between  Senesco, Inc. and John E. Thompson, Ph.D., dated June 15, 2007.  (Incorporated by reference to Exhibit 10.49 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007.)                                   |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.15  +         |       | License  Agreement by and between Senesco Technologies, Inc. and Harris Moran  Seed Company, dated November 19, 2001. (Incorporated by reference to  Exhibit 10.8 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended December 31, 2001.)                                                                |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.16  +         |       | Development  Agreement by and between Senesco Technologies, Inc. and ArborGen, LLC,  dated June 28, 2002. (Incorporated by reference to Exhibit 10.31 of  Senesco Technologies, Inc. annual report on Form 10-KSB for the  year ended June 30, 2002.)                                                                                    |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.17  +         |       | Commercial  License Agreement by and between Senesco Technologies, Inc. and  ArborGen, LLC dated as of December 21, 2006. (Incorporated by reference  to Senesco Technologies, Inc. quarterly report on Form 10-Q for the  period ended December 31, 2006.)                                                                                   |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.18  +         |       | Development  and License Agreement by and between Senesco Technologies, Inc. and  Calwest Seeds, dated September 14, 2002. (Incorporated by reference to  Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended September 30, 2002.)                                                          |
|             |       |                                                                                                                                                                                                                                                                                                                                                                   |
| 10.19  +         |       | Development  and License Agreement by and between Senesco Technologies, Inc. and The  Scotts Company, dated****March 8,  2004. (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. quarterly report on   Form 10-QSB for the period ended March 31, 2004.)                                                         |

 

F-41

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| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                                 |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.20  +         |       | Development  and License Agreement with Broin and Associates, Inc. (currently known  as Poet) dated as of October 14, 2004. (Incorporated by reference to  Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended September 30, 2004.)                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.21  +         |       | License  Agreement by and between Senesco Technologies, Inc. and Bayer  CropScience GmbH, dated as of November 8, 2006. (Incorporated by  reference to Senesco Technologies, Inc. quarterly report on  Form 10-Q for the quarterly period ended December 31, 2006.)                                                                               |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.22  +         |       | License  Agreement with Bayer CropScience AG dated as of July 23, 2007.  (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. quarterly report on Form 10-Q for the period  ended September 30, 2007.)                                                                                                                       |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.23  +         |       | Patent  License Agreement with Monsanto Company dated as of August 6, 2007.  (Incorporated by reference to Exhibit 10.2 of Senesco  Technologies, Inc. quarterly report on Form 10-Q for the period  ended September 30, 2007.)                                                                                                                   |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.24  +         |       | License  Agreement with Bayer CropScience AG dated as of September 17, 2007.  (Incorporated by reference to Exhibit 10.3 of Senesco  Technologies, Inc. quarterly report on Form 10-Q for the period  ended September 30, 2007.)                                                                                                                  |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.25            |       | Research  Agreement by and among Senesco Technologies, Inc., Dr. John E.  Thompson and the University of Waterloo, dated September 1, 1998, as  amended. (Incorporated by reference to Senesco Technologies, Inc.  quarterly report on Form 10-QSB for the period ended December 31,  1998.)                                                 |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.26            |       | Research  Agreement by and among Senesco Technologies, Inc., Dr. John E.  Thompson and the University of Waterloo, dated May 1, 2002. (Incorporated  by reference to Exhibit 10.29 of Senesco Technologies, Inc. annual  report on   Form 10-KSB for the year ended June 30, 2002.)                                                     |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.27            |       | Amendment  to Research Agreement by and among the University of Waterloo,  Senesco, Inc., and Dr. John E. Thompson, Ph.D., dated  August 1, 2007. (Incorporated by reference to Exhibit 10.42 of  Senesco Technologies, Inc. annual report on Form 10-K for the  period ended June 30, 2007.)                                           |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.28†      |       | Amendment  to Research Agreement by and among the University of Waterloo,  Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated  August 25, 2008.                                                                                                                                                                                                           |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.29†+     |       | Master  Product Sale Agreement with VGXI, Inc. dated as of June 27, 2008.                                                                                                                                                                                                                                                                                        |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.30†      |       | Master  Product Sale Agreement with Polyplus-transfection dated as of June 30,  2008.                                                                                                                                                                                                                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.31            |       | Agreement  for Service on Senesco Technologies, Inc. Scientific Advisory Board by  and between Senesco Technologies, Inc. and Dr. Charles A.  Dinarello, dated February 12, 2002. (Incorporated by reference to  Exhibit 10.6 of Senesco Technologies, Inc. quarterly report on  Form 10-QSB for the period ended March 31, 2002.) |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.32            |       | Agreement  for Service on Senesco Technologies, Inc. Scientific Advisory Board by                                                                                                                                                                                                                                                                                     |

 

F-42

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| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                          |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|             |       | and  between Senesco Technologies, Inc. and James W. Mier, M.D., dated  April 2, 2007. (Incorporated by reference to Exhibit 10.43 of  Senesco Technologies, Inc. annual report on Form 10-K for the  period ended June 30, 2007.)                                                                                                                                                                                    |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.33            |       | Financial  Advisory Agreement by and among Senesco Technologies, Inc., Stanford  Group Company, Stanford Venture Capital Holdings, Inc., Stanford  International Bank, Ltd., Ronald Stein, Daniel Bogar, Osvaldo Pi and William  Fusselmann dated October 11, 2006. (Incorporated by reference to  Exhibit 10.35 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2006.)  |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.34            |       | Amendment  No. 1 to the financial advisory agreement by and between Stanford Group  Company and Senesco Technologies, Inc., dated February 14, 2008.  (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. quarterly report on Form 10-Q for the period  ended December 31, 2007.)                                                                                                          |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.35            |       | Form of  Securities Purchase Agreement by and between Senesco Technologies, Inc.  and certain accredited investors (with attached schedule of parties and terms  thereto). (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. Current Report on Form 8-K, filed on  February 3, 2004.)                                                                                                         |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.36            |       | Form of  Registration Rights Agreement by and between Senesco Technologies, Inc.  and certain accredited investors (with attached schedule of parties and terms  thereto). (Incorporated by reference to Exhibit 10.2 of Senesco  Technologies, Inc. Current Report on Form 8-K, filed on  February 3, 2004.)                                                                                                         |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.37            |       | Amendment  No. 1 to the Securities Purchase Agreement by and between Senesco  Technologies, Inc. and Crestview Capital Master, L.L.C. (Incorporated by  reference to Exhibit 10.1 of Senesco Technologies, Inc. Current  Report on Form 8-K, filed on February 13, 2004.)                                                                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.38            |       | Amendment  No. 1 to the Registration Rights Agreement by and between Senesco  Technologies, Inc. and Crestview Capital Master, L.L.C. (Incorporated by  reference to Exhibit 10.2 of Senesco Technologies, Inc. Current  Report on Form 8-K, filed on February 13, 2004.)                                                                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.39            |       | Form of  Securities Purchase Agreement by and between the Company and certain  accredited investors (with schedule of parties and terms thereto).  (Incorporated by reference to Exhibit 10.1 of Senesco  Technologies, Inc. Current Report on Form 8-K filed on May 4,  2005.)                                                                                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.40            |       | Registration  Rights Agreement by and among Senesco Technologies, Inc., Stanford Group  Company, Stanford Venture Capital Holdings, Inc., Stanford International  Bank, Ltd., Ronald Stein, Daniel Bogar, Osvaldo Pi and William Fusselmann  dated October 11, 2006. (Incorporated by reference to Exhibit 10.36  of Senesco Technologies, Inc. annual report on Form 10-K for the  period ended June 30, 2006.) |
|             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.41            |       | Form of  Securities Purchase Agreement by and between Senesco Technologies, Inc.  and certain accredited investors dated October 10, 2006 (with attached  schedule of parties and terms thereto). (Incorporated by reference to  Exhibit 10.38 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2006.)                                                                    |

 

F-43

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| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                                                                                                                                                 |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.42            |       | Form of  Registration Rights Agreement by and between Senesco Technologies, Inc and  certain accredited investors dated October 10, 2006 (with attached  schedule of parties and terms thereto). (Incorporated by reference to  Exhibit 10.39 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2006.) |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.43            |       | Placement  Agent Agreement by and between Senesco Technologies, Inc. and H.C.  Wainwright & Co., Inc., dated May 1, 2006. (Incorporated  by reference to Exhibit 10.41 of Senesco Technologies, Inc. annual  report on Form 10-K for the period ended June 30, 2006.)                                                          |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.44            |       | Amendment  to Placement Agent Agreement by and between Senesco Technologies, Inc.  and H.C. Wainwright & Co., Inc. dated August 3, 2007.  (Incorporated by reference to Exhibit 10.41 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007.)                                          |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.45            |       | Securities  Purchase Agreement by and between Senesco Technologies, Inc. and YA  Global Investments, L.P. (Incorporated by reference to Exhibit 10.44 of  Senesco Technologies, Inc. annual report on Form 10-K for the period  ended June 30, 2007.)                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.46            |       | Registration  Rights Agreement by and between Senesco Technologies, Inc. and YA Global  Investments, L.P. (Incorporated by reference to Exhibit 10.45 of Senesco  Technologies, Inc. annual report on Form 10-K for the period ended  June 30, 2007.)                                                                                             |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.47            |       | Securities  Purchase Agreement by and between Senesco Technologies, Inc. and  Stanford Venture Capital Holdings, Inc. (Incorporated by reference to  Exhibit 10.46 of Senesco Technologies, Inc. annual report on  Form 10-K for the period ended June 30, 2007.)                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.48            |       | Registration  Rights Agreement by and between Senesco Technologies, Inc. and Stanford  Venture Capital Holdings, Inc. (Incorporated by reference to  Exhibit 10.47 of Senesco Technologies, Inc. annual report on Form 10-K  for the period ended June 30, 2007.)                                                                            |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.49            |       | Security  Agreement dated as of September 21, 2007 by and between Senesco  Technologies, Inc. and its subsidiaries and YA Global Investments, L.P.  (Incorporated by reference to Exhibit 10.48 of Senesco Technologies, Inc.  annual report on Form 10-K for the period ended June 30, 2007.)                                               |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.50 †     |       | Security  Agreement dated as of December 20, 2007 by and between Senesco  Technologies, Inc. and its subsidiaries and Stanford Venture Capital  Holdings, Inc.                                                                                                                                                                                              |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.51            |       | Office  lease by and between Senesco Technologies, Inc. and Matrix/AEW NB, LLC,  dated March 16, 2001. (Incorporated by reference to Senesco  Technologies, Inc. quarterly report on Form 10-QSB for the period  ended March 31, 2001.)                                                                                                           |
|             |       |                                                                                                                                                                                                                                                                                                                                                                       |
| 10.52            |       | First  amendment of office lease by and between Senesco Technologies, Inc. and  Matrix/AEW NB, LLC, dated May 13, 2005 (Incorporated by reference to  Exhibit 10.8 of Senesco Technologies, Inc annual report on  Form 10-KSB for the period ended June 30, 2005.)                                                                                |

 

F-44

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| **Exhibit  No.** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                      |
| 10.53 *          |       | 1998  Stock Incentive Plan, as amended on December 13, 2002. (Incorporated by  reference to Exhibit 10.7 of Senesco Technologies, Inc. quarterly  report on Form 10-QSB for the period ended December 31, 2002.) |
|             |       |                                                                                                                                                                                                                                      |
|   21   |       | Subsidiaries  of the Registrant. (Incorporated by reference to Senesco  Technologies, Inc. annual report on Form 10-KSB for the period  ended June 30, 1999.)                                                              |
|             |       |                                                                                                                                                                                                                                      |
| 23.1 †      |       | Consent  of Goldstein Golub Kessler LLP.                                                                                                                                                                                                  |
|             |       |                                                                                                                                                                                                                                      |
| 23.2 †      |       | Consent  of McGladrey Pullen, LLP.                                                                                                                                                                                                        |
|             |       |                                                                                                                                                                                                                                      |
| 31.1 †      |       | Certification  of the principal executive officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                                                                                        |
|             |       |                                                                                                                                                                                                                                      |
| 31.2 †      |       | Certification  of the principal financial and accounting officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                         |
|             |       |                                                                                                                                                                                                                                      |
| 32.1 †      |       | Certification  of the principal executive officer pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                                                        |
|             |       |                                                                                                                                                                                                                                      |
| 32.2 †      |       | Certification  of the principal financial and accounting officer pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                         |

 

----

| *      |   | A  management contract or compensatory plan or arrangement required to be filed  as an exhibit pursuant to Item 13(a) of Form 10-K. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                          |
| † |   | Filed  herewith.                                                                                                                              |
|   |   |                                                                                                                                          |
| +      |   | The  SEC granted Confidential Treatment for portions of this Exhibit.                                                                         |

 

F-45

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